RESTRICTED
WORLD TRADE WT/CTE/W/40
12November 1996
ORGANIZATION(96-4805)
Committee onTrade andEnvironment
REPORT (1996) OFTHE COMMITTEE ONTRADE AND ENVIRONMENT
I.INTRODUCTION
1. TheCommittee onTrade andEnvironment (CTE) wasestablished bytheWTO General
Council inJanuary 1995. TheCTE'smandate andterms ofreference arecontained inthe
Marrakesh Ministerial Decision onTrade andEnvironment of15April 1994 (Annex I).This
Decision mandates theCTE toreport tothefirstbiennial meeting oftheMinisterial Conference
when thework andterms ofreference oftheCommittee willbereviewed, inthelightof
recommendations oftheCTE.
2. TheCTE hasstructured itswork around thetenItems listed intheDecision onTrade and
Environment. Forseveral oftheItems, theCTE wasabletobuild ondiscussions thathadtaken
place in1992-93 intheGATT Group onEnvironmental Measures andInternational Trade (EMIT)
andondiscussions in1994 inaSub-Committee onTrade andEnvironment oftheWTO
Preparatory Committee.1
3. TheCTE metformally sixtimes in1995 andseven times in1996 under thechairmanship
ofAmbassador Sánchez Arnau ofArgentina.2Membership oftheCTE isopentoallWTO
Members; observer governments andobservers from inter-governmental organizations were
invited toparticipate.3Informal meetings were alsoheld, including ajointinformal meeting with
theCommittee onTechnical Barriers toTrade ontheissue ofeco-labelling.
4. TheCTE heldtwostocktaking exercises, on26-27 October 1995 and28-29 May1996.
During theOctober stocktaking exercise, specific issues ontheItems ofthework programme
were identified.4AttheMaystocktaking exercise, theschedule ofmeetings through toSingapore
1Report byAmbassador H.Ukawa (Japan), Chairman oftheGroup onEnvironmental Measures andInternational
Trade, tothe49thSession oftheCONTRACTING PARTIES, L/7402, 2February 1994. Minutes ofthemeetings of
theSub-Committee onTrade andEnvironment oftheWTO Preparatory Committee anditsbackground documents are
contained indocument series PC/SCTE/M/- andPC/SCTE/W/-.
2Minutes ofthemeetings oftheWTO CTE arecontained indocument series WT/CTE/M/-.
3SeeItem10ofthisReport.
4SeetheSummary ofActivities oftheCTE(1995) presented bytheChairman oftheCTE(WT/CTE/W/17), contained
inAnnex IItothisReport, foralistofthespecific issues identified forItems onthework programme.WT/CTE/W/40
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andtheformat oftheReport were adopted.5TheCTE wasassisted bybackground documents
prepared bytheSecretariat and
documents, proposals andnon-papers submitted byMembers which, along withthemany
statements made intheCTE meetings, provided thebasis fordrawing upthisReport.6
II.BACKGROUND, ANALYSIS, DISCUSSIONS AND PROPOSALS
ITEM 1 Therelationship between theprovisions ofthemultilateral trading system and
trade measures forenvironmental purposes, including those pursuant to
multilateral environmental agreements
5. Under thisItem, theissue oftrade measures applied unilaterally byaWTO Member to
address environmental problems thatlieoutside itsnational jurisdiction hasbeendiscussed.
TheCTE hasexamined whether there isaneedtoclarify thescope thatexists under WTO
provisions tousetrade measures pursuant tomultilateral environmental agreements (MEAs). It
hasalsoexamined whether there isanyneedtoenlarge thatscope, andifsoinwhat
circumstances, withwhatobjectives andthrough whatmeans.
6. Itwasstated during thecourse ofdiscussions under thisItemthatthere isalready scope
under theWTO provisions tousetrade measures forenvironmental purposes. These provisions
aimtoensure thatWTO Members mayadopt orenforce measures inpursuit ofimportant public
policy objectives fortheprotection oftheirenvironmental resources, while safeguarding Members '
WTO rights against arbitrary orunjustifiable discrimination anddisguised restrictions ontrade.
7. Most ofthedelegations which intervened inthedebate onthisissue stated thatthey
consider thattheprovisions ofGATT Article XXdonotpermit aMember toimpose unilateral
trade restrictions thatareotherwise inconsistent withitsWTO obligations forthepurpose of
protecting environmental resources thatlieoutside itsjurisdiction. Forthem, arenewed
commitment needs tobetaken byWTO Members toavoid using trade measures unilaterally for
thatpurpose, andnumerous proposals havebeenmade intheCTE tothateffect. Another viewis
thatthere isnothing inthetextofArticle XXwhich indicates thatitonlyapplies topolicies to
protect animal orplant resources orconserve natural resources within theterritory ofthecountry
invoking theprovision. Anumber ofMembers noted thatthere were differing views astowhat
constituted "unilateralism".
8. MEAs based oninternational consensus areviewed bytheinternational community asthe
bestwayofcoordinating policy action totackle global andtransboundary environmental problems
cooperatively7.TheWTO hasnocompetence intheareaofenvironmental matters perse,butit
isconcerned withtrade measures applied pursuant toMEAs which canaffect WTO Members '
rights andobligations. Ofthemany MEAs currently ineffect, onlyabout 20contain trade
provisions.8There areconsiderable differences between thetrade provisions ofdifferent MEAs,
inparticular thekinds oftrade measures thatMEA Parties areauthorized orrequired toapply and
5SeetheResults oftheStocktaking Exercise (WT/CTE/W/33), contained inAnnex IIIofthisReport.
6Acomplete listofdocuments andnon-papers iscontained inAnnex IVtothisReport.
7SeeAgenda 21.
8PC/SCTE/W/3, 13October 1994.WT/CTE/W/40
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theconditions pursuant towhich themeasures aretaken. NoGATT orWTO trade dispute has
arisen sofarovertheuseoftrade measures applied pursuant toanMEA. Nevertheless, doubts
havebeenexpressed bysome WTO Members about theWTO consistency ofcertain trade
measures applied pursuant tosome MEAs, inparticular discriminatory trade restrictions applied
byMEA Parties against non-parties thatinvolve extra-jurisdictional action. Forsome, the
uncertainty these doubts create forWTO Members andforthenegotiators ofMEAs makes
clarification oftherelationship between WTO provisions andthese trade measures desirable. For
some others, trade measures applied pursuant toanMEA byWTO Members should beconsistent
withWTO rules anddisciplines.
9. Coordination between trade andenvironment officials innational capitals andduring the
negotiation ofMEAs andnewtrade rules hasbeenrecognized bymany intheCTE tobean
important means ofensuring coherence between MEAs andtheWTO. Some consider itcanbe
enhanced through closer cooperation between theWTO andMEAs. Several suggestions have
beenputforward toimprove theflowofinformation between theWTO andMEAs. One
proposal9isfortheCTE toinvite representatives ofMEAs tobriefitontheuseoftrade measures
applied pursuant totheMEAs, andfortheCTE tohaveanopportunity toexpress itsviewto
MEA authorities ontrade measures which arecontemplated inanMEA. Ithasalsobeen
suggested thatconsultation andcooperation between theSecretariats oftheWTO andMEAs
should beencouraged, especially during initial negotiations andamendments ofMEAs. Another
proposal10istoenhance transparency, dialogue andcooperation between MEAs, relevant
international organizations andtheWTO from theinitial stage ofnegotiation ofanMEA toits
implementation. Thiscooperation mayinclude exchange ofinformation, mutual participation in
meetings, mutual access todocuments anddatabases, andbriefing sessions, asnecessary. Another
proposal11isthatafactual reference guide containing WTO principles should becompiled bythe
WTO Secretariat which, afterbeing agreed bytheCTE, could beusedbyMEA negotiators in
theirconsideration ofproposed trade measures. Aproposal12hasbeenmade toconclude
cooperation agreements between theWTO andcompetent MEA institutions, providing: (i)forthe
WTO Secretariat torespond torequests forfactual information about relevant WTO provisions;
and(ii)forMEAs toinform theWTO ofallenvisaged trade provisions, which would be
examined bytheCTE andthereport ofthemeeting would becommunicated backtotheMEA
authorities. While acknowledging theimportance ofcontacts between theWTO andMEA
Secretariats, some areoftheviewthatpolicy dialogue must takeplace innational capitals, thatthe
WTO andMEAs must respect theirspecific areas ofcompetence, andthattheWTO Secretariat
hasalready theauthority toprovide factual information about themultilateral trading system.
10. When account istaken ofthelimited number ofMEAs thatcontain trade provisions, and
thefactthatnotrade dispute hasarisen overtheuseofthose measures todate, some feelthat
there isnoevidence ofarealconflict between theWTO andMEAs; existing WTO rules already
provide sufficient scope toallow trade measures tobeapplied pursuant toMEAs, anditisneither
necessary nordesirable toexceed thatscope. According tothisview, theproper course ofaction
toresolve anyunderlying conflict which maybefelttoexistinthisareaisforWTO Members to
avoid using trade measures inMEAs which areinconsistent withtheirWTO obligations. Any
9Proposal byJapan, WT/CTE/W/31, 30May 1996.
10Non-paper bytheRepublic ofKorea, 12June 1996.
11Non-paper byHong Kong, 22July1996.
12Non-paper bySwitzerland, 20May 1996.WT/CTE/W/40
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clarification inthatrespect canbeprovided, asnecessary, expostthrough theWTO dispute
settlement mechanism.
11. Oneproposal13isthustoconfirm thattheexisting provisions ofGATT 1994 areadequate
todealwithtrade measures taken pursuant tolegitimate environmental objectives contained in
existing MEAs, andthattrade measures pursuant tofuture MEAs should beformulated keeping in
mind theprovisions ofthemultilateral trading system. Theproposal stated thattrade measures
which arerestrictive innature inMEAs, eveniftaken forenhancing environmental protection,
must respect therule-based nature ofthemultilateral trading system andtheircosts interms of
trade restriction must befullytaken intoaccount. Inaddition, anytrade measures taken for
achieving environmental objectives should beappropriately dealtwithwithin thescope of
Article XXofGATT 1994; thatistheonlywaytoensure non-discrimination which isthe
foundation ofthemultilateral trading system.
12. Some feelscope fortheuseoftrade measures applied pursuant toMEAs canbeprovided,
ifnecessary, through recourse totheexisting waiver provisions ofArticle IXoftheWTO. These
provide theopportunity forMembers toseek, inexceptional circumstances, awaiver toaWTO
obligation, subject toapproval ataminimum bythree-quarters oftheWTO membership. A
waived obligation istime-limited, andmust berenewed periodically; andatrade measure applied
pursuant toawaiver could stillbechallenged inWTO dispute settlement onthegrounds of
non-violation, nullification andimpairment ofWTO rights. Thestrictness ofthese conditions is
considered bysome tobeappropriate forprotecting therights ofWTO Members incircumstances
inwhich, forexample, MEA Parties apply WTO-inconsistent discriminatory trade measures
against non-parties. Thisapproach, theyfeel,could provide ameasured, case-by-case response to
anyproblems which might ariseinthefuture. Evidence ofamultilateral consensus, avoiding the
needforaseparate definition intheWTO ofanMEA, would beestablished onthemerits ofeach
casesince itcould bepresumed thatanMEA which could genuinely claim broad support from the
international community would findequally broad support among WTO Members.
13. Totheextent thatconcerns existabout thetime-limited nature ofWTO waivers, ithas
beensuggested that,subject tocertain conditions, aspecial "multi-year" waiver could beprovided
fortrade measures applied pursuant toMEAs. Onesuchproposal14suggests thatallmeasures
taken under MEAs would beeligible forawaiver, provided theymeetspecified criteria15,anda
"negative vetting" approach could beadopted whereby thewaiver would beautomatically renewed
ifnonewdevelopments affect theexceptional circumstances which justified itsgranting inthefirst
instance. Another proposal16suggests thatspecific trade measures contained inexisting andfuture
MEAs, whether among Parties oragainst non-parties, maybegranted awaiver onacase-by-case
13Non-paper byIndia, 23July1996.
14Non-paper byHong Kong, 22July1996.
15Thecriteria would be,forinstance: (i)thenegotiation ofandparticipation intheMEA reflect agenuine international
consensus; (ii)theMEA meets thecriteria setoutintheheadnote toGATT Article XX; (iii)thegrant ofthewaiver does
notprejudice WTO Members 'rights andobligations under theDSU, irrespective ofwhether theyareParties totheMEA
inquestion. Additional criteria, suchasnecessity, leasttrade-restrictiveness, effectiveness andproportionality, would apply
fornon-specific trade measures. Furthermore, thecriterion of"least-inconsistent withWTO provisions" should apply to
specific trade measures.
16Proposal from ASEAN, WT/CTE/W/39, 24July1996.WT/CTE/W/40
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basis subject tonon-binding guidelines.17Thewaiver would beextended annually untilits
termination aslongastherequirements contained inArticle IXaremet,andthe"exceptional
circumstances" referred tointhatprovision would cover specific trade measures included in
MEAs. WTO Members would retain theirrights toresort tonon-violation dispute settlement
procedures intheWTO.
14. Some others donotconsider theWTO waiver provisions offer auseful approach tothe
useoftrade measures inMEAs because waivers aredesigned todealonlywithtemporary
measures involving exceptional circumstances. Recourse toanuncertain testofvoting ona
waiver intheWTO could failtoprovide MEA negotiators withanecessary degree ofsecurity or
predictability intheirnegotiations anditmight involve theWTO passing judgement overother
international legalinstruments. This, theyfeel,could giverisetoanuntenable situation for
WTO Members thathaveaccepted obligations under boththeWTO andanMEA.
15. Some others havesuggested theissue oftheuseoftrade measures inMEAs needs tobe
addressed more from anexantepoint ofviewandnotonlythrough theexpostmeans available
under theWTO dispute settlement orwaiver provisions. Forthem, international co-operation is
themost environmentally effective means oftackling transboundary andglobal problems, because
thejointefforts ofallcountries concerned arerequired: thisisreflected intheincreasing agenda
ofMEA negotiations. Although noconflict hassofararisen asregards trade measures pursuant
toMEAs andWTO rules, these Members feelthatitisimportant toadopt apreventive attitude
andprovide greater certainty. Thiswould bebeneficial bothforenvironment andtrade policy
makers. Forthose Members, thekeypoint isthatMEAs andtheWTO bothrepresent different
bodies ofinternational law. Various proposals havebeenputforward, withaviewtoestablishing
aframework fortherelationship between MEAs andWTO. Although these proposals differ in
nature, scope andlevelofambition, theyareallbased ontheviewthattheWTO should be
supportive ofaction atthemultilateral levelfortheprotection oftheenvironment. They develop
theviewthat,subject tospecific conditions being met,certain trade measures taken pursuant to
MEAs should benefit from special treatment under WTO provisions; thisapproach hasbeen
described ascreating an"environmental window" intheWTO. They haveanumber ofcommon
features.
16. Oneisthatalthough itmaybedesirable toclarify thetreatment under WTO provisions of
trade measures applied pursuant toMEAs, noadditional scope thanthatwhich exists already isto
bemade available under GATT Article XXfortheuseofunilateral measures forenvironmental
purposes. Asecond isthatimportance isattached toenhancing thetransparency oftrade measures
applied pursuant toMEAs. Several proposals make notification ofthemeasures totheWTO a
pre-condition forthem benefitting from anyadditional accommodation thattheproposals suggest
themeasures might begranted under WTO provisions. Athirdcommon feature istherolewhich
WTO dispute settlement would playinthecaseofaconflict arising overtheuseoftrade measures
applied pursuant toMEAs; discussions onthisissue aredescribed inmore detail under Item5of
thework programme.
17. Oneproposal18elaborates twooptions. Thefirstistoinclude measures taken pursuant to
specific provisions ofMEAs inGATT Article XX. Thesecond istointroduce areference not
onlytothese measures but,alsoinmore general terms, tomeasures necessary toprotect the
"environment"; andtoimprove theconsistency oftherules ofthemultilateral trading system
17Thenon-binding guidelines would include criteria such asnecessity, least trade-restrictiveness, effectiveness,
proportionality andthedegree ofscientific evidence.
18Non-paper bytheEuropean Community, 19February 1996.WT/CTE/W/40
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taking intoaccount boththecommitment expressed inthefirstpreambular paragraph ofthe
Agreement establishing theWTO andthefactthattheenvironment isalready mentioned inseveral
WTO Agreements. Bothoptions suggest thedevelopment ofanUnderstanding under the
provisions ofGATT Article XXthatintheevent atrade measure applied pursuant toanMEA is
challenged intheWTO, subject tocertain procedural criteria being met19thedispute settlement
panel would examine onlywhether themeasure hasbeenapplied inconformity withthe
requirements intheheadnote language ofArticle XXandwould notconsider itsnecessity. The
aimistosendapolitical signal oftheWTO 'ssupport formultilateral measures asameans of
discouraging theuseofmore trade-disruptive andless-environmentally efficient unilateral ones,
andsotostrengthen themultilateral trading system byestablishing aframework todealwith
problems thatarise. TheWTO would notjudge thelegitimacy oftheenvironmental objectives or
thenecessity ofthemeasures taken toachieve these objectives because themultilateral character
ofthetrade measures would bethebestguarantee against abuse. Atthesame time, theWTO
would retain itspower tocounter protectionist implementation ofamultilaterally-agreed measure
through theheadnote language inArticle XX.
18. Asecond proposal20istodevelop anUnderstanding, applicable across all
WTO Annex 1Agreements, ondifferentiated treatment fortrade measures applied pursuant to
MEAs, depending onwhether theyapply between Parties oragainst non-parties andwhether they
arespecifically mandated inanMEA. Specific andjointly notified trade measures applied among
MEA Parties would prevail overtheirWTO obligations totheextent ofthemandated
inconsistency, andWTO dispute settlement would notbeavailable tothem fortrade action within
theterms ofthenotified measures. Non-consensual measures (those applied among Parties but
notspecifically mandated inanMEA, andthose applied against non-parties which arespecifically
mandated inanMEA) could betested through WTO dispute settlement against procedural and
substantive criteria which would besetoutintheUnderstanding. TheUnderstanding would not
apply totrade measures taken against non-parties toanMEA thatwere notspecifically mandated
intheMEA; norwould itapply tounilateral measures. These would continue tobesubject to
existing WTO provisions. Theproposed procedural criteria aimatensuring thatanMEA reflects
agenuine "multilateral" consensus through requiring: (i)negotiation ofandparticipation inan
MEA tobeopenonequitable terms toallinterested countries; (ii)broad participation of
interested countries inbothgeographical terms andrepresenting varying levels ofdevelopment;
and(iii)adequate representation ofconsumer andproducer nations oftheproducts covered bythe
MEA. Theproposed substantive criteria aimatensuring thatthetrade measure isnecessary to
achieve theenvironmental objective oftheMEA, including through consideration of:(i)the
effectiveness ofthetrade measure inachieving theenvironmental objective; (ii)whether the
measure istheleasttrade-restrictive ordistorting; and(iii)theproportionality ofthemeasure to
theneedfortrade restriction toachieve theenvironmental objective.
19. Athirdproposal21istointroduce "acoherence clause". Itwould provide thatincaseofa
WTO dispute overatrade measure mandated under anMEA, thedispute panel would examine
whether themeasure wasapplied inamanner thatconstitutes arbitrary discrimination between
countries where thesame conditions prevail orwithaviewtoachieving trade advantages, butit
would notexamine thelegitimacy oftheenvironmental objective northemeasure 'snecessity. A
19Those terms would bewhether theMEA wasopen toparticipation byallparties concerned withtheenvironmental
objectives oftheMEA, andreflected, through adequate participation, theirinterests, including significant trade andeconomic
interests.
20Submission byNew Zealand, WT/CTE/W/20, 15February 1996.
21Non-paper bySwitzerland, 20May 1996.WT/CTE/W/40
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listofMEAs benefiting from thecoherence clause would beestablished. Twopossible
approaches were identified toestablish thelist:either theGeneral Council could make adecision
concerning theinclusion ofeachMEA onthelist,oreachMEA could benotified totheWTO
Director-General byitsdepositary inwhich casetheGeneral Council would beasked toreach a
decision onlyifaWTO Member objected toaproposed listing.
20. Another approach22proposes the"possibility ofsetting differentiated WTO disciplines" for
trade measures applied pursuant toMEAs based onwhether thetrade measures arespecifically
mandated byanMEA andwhether theyareapplied among Parties oragainst non-parties. The
skeleton ofthisapproach isillustrated inamatrix inAnnex V.Trade measures taken among
Parties would beeligible forqualified codification onalapse oftimebasis, subject tothem
meeting appropriate conditions which would belessstrict formeasures specifically mandated inan
MEA thanforthose simply authorized bytheMEA. Under thisproposal itwould bepremature
toconsider theaccommodation ofanyother typeoftrade measures taken pursuant toanMEA (for
example, against anon-party) thatgoesbeyond thescope ofexisting WTO disciplines.
21. Adifferent approach suggested bysome Members istodevelop guidelines toprovide
more predictability thanexists atpresent overthetreatment ofcertain trade measures applied
pursuant toMEAs andallow forthedevelopment ofmutually supportive trade andenvironment
policies, asenvisaged inAgenda 21.Oneproposal23made inthisregard istodraw up
non-binding interpretative guidelines, withthepossibility ofmaking them legally-binding with
appropriate modifications asnecessary. Guidelines could beusedbyMEA negotiators toprovide
them withanauthoritative point ofreference ontheapplication ofWTO provisions when theyare
considering theuseoftrade measures pursuant toMEAs, theycould beusedbyWTO dispute
panels when examining thecompatibility withWTO rules oftrade measures applied pursuant to
MEAs, ortheycould serve asabasis onwhich theWTO Secretariat would provide technical
advice onWTO provisions toMEA Secretariats andenvironmental negotiators. Theproposed
guidelines arenotintended tobeuseddirectly inapanel examination, although theycould havea
certain impact onthescrutiny ofpanels. Formal decisions concerning substantive criteria made
bytherelevant MEA authority should betaken intosufficient account onthecondition thatthe
MEA meets procedural criteria thatwould reflect itsconsensual basis.24These substantive criteria
could incorporate characteristics ofMEA trade measures suchastheirnecessity, effectiveness and
proportionality.25
22. Oneproposal26suggested thattheCommittee develop anagreed framework for
endorsement bytheSingapore Ministerial Conference thatwould include, interalia,thefollowing
22Non-paper bytheRepublic ofKorea, 12June 1996.
23Proposal byJapan, WT/CTE/W/31, 30May 1996.
24Examples ofprocedural criteria are:(i)negotiation oftheMEA isopen toallcountries, andtakes place preferably
under theUNaegis; (ii)countries from different geographical regions andatdifferent stages ofeconomic andsocial
development which areParties totheMEA have participated inthenegotiations andmust bereflected inthemembership
oftheagreement; and(iii)theMEA deals withenvironmental protection ofatransboundary orglobal nature.
25Substantive criteria are,forexample: (i)trade measures arechosen onlywhen effective andwhen alternative measures
areineffective inachieving theenvironmental objective, orwhen other measures areinefficient without trade measures as
partoftheMEA; (ii)trade measures arenotmore trade-restrictive thanrequired toachieve theenvironmental objective;
(iii)trade measures donotconstitute arbitrary orunjustifiable discrimination; (iv)trade withnon-parties ispermitted on
thesame basis aswithParties ifnon-parties provide equivalent environmental protection; and(v)trade measures andthe
circumstances under which theycanbetaken areclearly defined.
26Non-paper bytheUnited States, 11September 1996.WT/CTE/W/40
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points: thestrong appreciation among WTO Members oftheimportance ofMEAs; thatWTO
rules should nothamper theability ofMEAs toachieve theirenvironmental objectives; thattrade
measures havebeenandwillcontinue tobeanimportant toolforachieving important
environmental objectives; thattrade measures willnotalways beneeded, andshould beused
prudently butshould beavailable when needed, andMEA negotiators areinthebestposition to
determine when thisisso;thattheWTO should recognize andrespect thetechnical and
environmental expertise ofMEA negotiators; andthatpanels can,andshould, seek input from
relevant MEA bodies inanydispute involving questions relating toanMEA.
23. There havebeenmany reactions tothese proposals andsuggestions.
24. Onesetofreactions hasbeenexpressed toproposals thatwould increase thescope under
theWTO forapplying pursuant toMEAs trade measures thatareconsidered tobeinconsistent at
present withitsprovisions, orthatwould limittherecourse ofWTO Members todispute
settlement. Some areconcerned thatthiscould undermine theexisting balance ofWTO rights and
obligations andcreate aloophole fortrade protectionism. These Members believe thatitcould
leadalsotothelegitimization ofunilateral measures andtheirextrajurisdictional application, as
wellastheuseoftrade measures based onnon-product-related processes andproduction methods
(PPMs), forwhich intheviewofthese delegations nobasis exists inWTO rules. Singling out
trade measures pursuant toMEAs would require determining whether those trade measures are
necessary oreffective. Thiswould require holistic consideration ofallother measures, including
positive measures, taken within theframework ofanMEA, which isclearly outside theWTO 's
scope. Some feelalsothatthere isariskofintroducing adirect linkbetween "necessity" and
"environment" intheWTO atatimewhen aclear andcomplete definition of"environmental
necessity" isstillevolving inother intergovernmental fora.
25. Concerns bysome havebeenexpressed inparticular overproposals thatwould enlarge the
scope under theWTO fortheuseofdiscriminatory trade measures against non-parties toan
MEA. There isconcern about whoisentitled tojudge themerit ofacountry 'sdecision notto
joinanMEA, andthataccount betaken ofthereasons whyacountry would takethatdecision
(itmayfindthescientific evidence unpersuasive, itmaynotbeabletoafford tojoinorhave
access tonecessary technology onfavourable terms, itmaynotagree withagiven environmental
objective orwiththemeans toachieve theobjective, oritmayconsider there aremore pressing
national policy problems which deserve higher priority). Inthisregard, mention hasbeenmade
ofPrinciple 7oftheRioDeclaration ,which states thatthere isa"common butdifferentiated
responsibility" ofStates inresolving environmental problems ofaglobal nature. Some feelthat
trade measures, andinparticular discriminatory trade measures against non-parties toMEAs, are
notanappropriate waytopursue international environmental objectives. They consider that
discriminatory trade measures should notbeusedtocoerce countries tobecome signatories toan
MEA andthatthisisnottheWTO 'srole,andtrade measures areoneofthealternatives inthe
package ofinstruments thatcanbeusedtoachieve MEA objectives. They alsobelieve that
positive measures andincentives suchasfinancial andtechnology transfers, increased market
access andtechnical assistance aremore efficient andeffective. Therefore, changes inWTO rules
toaccommodate MEA trade measures which areinconsistent withWTO rules areanunbalanced
andisolated approach aslongasthere isnoparallel commitment tofirstuseandenforce positive
measures, asameans inparticular toincrease participation inMEAs.27
26. Concern wasalsoexpressed bysome overanypossible extension oforderogation from
WTO rules formeasures which arenotspecifically prescribed orauthorized inMEAs, since this
could permit justification forunilateral measures disguised asmultilateralism andopenthedoor
forprotectionist measures. Itwasemphasized thattheaccommodation oftrade measures pursuant
27Seeinparticular theNon-paper byIndia, 23July1996 andtheSubmission byASEAN, WT/CTE/W/39, 24July1996.WT/CTE/W/40
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toMEAs, orenlarging thescope fortheuseofdiscriminatory trade measures, could sendthe
wrong signals tomany countries, particularly developing countries which havecommitted
themselves totrade liberalization. Other concerns include thelackofanoperational definition of
MEAs todifferentiate them from regional andplurilateral environmental agreements, and
uncertainty about theeffectiveness oftrade measures vis-à-vis other measures. Forsome, an
operational definition ofMEAs isapre-condition fordiscussing theuseoftrade measures applied
pursuant toMEAs, andtheimportance offurther work onprocedural criteria, suchasthose
described above inparagraph 18,hasbeenunderlined inthisrespect.
27. Doubts havebeenexpressed bysome about theneedfora"coherence clause" when only
certain trade measures applied pursuant toMEAs areviewed asbeing potentially
WTO-inconsistent, andabout theappropriateness oftheWTO being seentopassjudgement on
individual MEAs. With regard toproposed guidelines forenvironmental negotiators, some feel
these would appear toallow theWTO tosecond guess MEAs inareas outside itscompetence and
would sendasignal ofmistrust tonegotiators representing, indifferent fora, Members ofthe
WTO. Inthissense, some stated withconcern thatthecondition thatmeasures arenottaken with
aviewtoachieving trade advantages would imply shifting theburden ofproof from theMember
invoking the"coherence clause" totheMember thatmaydecide tochallenge themeasure, thereby
reversing GATT/WTO dispute settlement practice.
28. Doubts havebeenexpressed bysome delegations about theappropriateness andeventhe
feasibility offormulating procedural andsubstantive criteria against which toevaluate the
WTO-consistency oftrade measures applied pursuant toMEAs. They havepointed outinthis
regard thatthebestpolicy package ofanMEA islikely tovaryaccording tothespecific
circumstances ofagiven environmental problem, sotrade measures havebeenapplied pursuant to
MEAs foravariety ofreasons andinanumber ofways inthepast,andthere isnoclear
indication ofhowtheywillbeusedinthefuture. Inlightofthis,andconsistent withtheview
thattheWTO doesnothavecompetence inenvironmental matters perse,theyconsider thatthe
WTO should notformulate criteria which would limittheflexibility forenvironmental policy-
makers tojudge thelegitimacy ofenvironmental objectives andtypes oftrade measures needed.
29. Specific concerns havebeenraised bysome about thesubstantive criteria thathavebeen
proposed. With regard to"necessity", aconcern hasbeenvoiced about applying inthiscontext
theinterpretation thathasbeengiven byGATT dispute panels totheterm"necessary" in
Article XX(b) which, ithasbeenstated, isnotuniversally accepted. According tothisviewthe
criterion of"necessity" isnotfound inother provisions ofArticle XX,notably Article XX(g), and
arecent Appellate Body Report hasbeencitedinthatregard.28However, itwasalsostated that
thenotion ofnecessity wasparticularly relevant inother GATT Article XXprovisions thatcould
berelated totrade measures taken forenvironmental purposes. Inaddition, ithasbeenstated that
theconcept of"effectiveness" cannot befound inWTO provisions orjurisprudence, andthat
"least trade-restrictive" and"proportionality" arenotconcepts thatcanbefound inArticle XX.
Theviewofsome istherefore thatsince suchcriteria would gobeyond theexisting conditions
attached totheapplication oftrade measures under GATT Article XX,theywould make itmore
difficult tousetrade measures forenvironmental purposes. Thiswould sendthewrong message
withrespect tothesupport oftheinternational community forresolving global andtransboundary
environmental problems through multilateral action andcould furthermore actasadisincentive to
theuseofmultilateral action.
30. According tosome others, these criteria ofnecessity, effectiveness, leasttrade
restrictiveness andproportionality areimplicitly included inWTO disciplines. Theconsideration
ofthese criteria, inparticular thatof"necessity", isessential toanyeffort tobetter accommodate
28WT/DS2/AB/R, 22April 1996.WT/CTE/W/40
Page10
trade measures pursuant toMEAs. Thenecessity ofthese measures should notbetaken for
granted, inparticular, when theirusedepends more onpolitical pressure thanenvironmental
necessity. Some stated thattrade measures applied forenvironmental purposes arerelated to
GATT Article XXprovisions other thansub-paragraph (g)where theconcept ofnecessity is
particularly relevant. Some feelthattheconcept ofnecessity needs tobeconsidered andredefined
intheenvironmental context onthebasis ofUNCED principles, suchas"common but
differentiated responsibilities", equity andinternational cooperation. Some consider alsothat
procedural criteria would beessential, especially intheabsence ofanyaccepted definition ofan
MEA.
31. Anumber ofWTO Members remarked ontheusefulness ofthe"differentiated approach"
asamethodology foranalysing issues related tothisItem: theapproach differentiated, ontheone
handtrade, measures applied among MEA Parties from those applied against non-parties toan
MEA, and,ontheother hand, trade measures specifically mandated ordefined inMEAs from
those thatarenot.
ITEM 5 Therelationship between thedispute settlement mechanisms inthemultilateral
trading system andthose found inmultilateral environmental agreements
32. ThisItemhasbeendiscussed inconjunction withItem1.Oneissue examined waswhat
thecompetent forum would betosettle adispute which arose between twoWTO Members over
trade measures applied pursuant toanMEA. Asecond waswhatscope there might befor
enhanced institutional cooperation inthisarea, inparticular theinvolvement ofenvironmental
expertise inWTO dispute settlement proceedings andoftrade expertise inMEA dispute settlement
proceedings when disputes concern trade measures applied pursuant toanMEA. Thepossibility
ofproviding public access toWTO dispute settlement proceedings, asisthecaseforcertain
MEAs, wasalsoraised.
33. LiketheWTO, MEAs emphasize theavoidance ofdisputes. They include provisions to
increase transparency through thecollection andexchange ofinformation, coordination of
technical andscientific research, andcollective monitoring ofimplementing measures aswellas
consultation provisions. Most oftheMEAs thatarethefocus oftheCTE'swork contain
mechanisms forresolving disputes. These range from non-binding, consensus-building
mechanisms tobinding, judicial procedures ofarbitration, andincertain cases resort tothe
International Court ofJustice.
34. Some feelitiseachgovernment 'sresponsibility toavoid entering intoconflicting
obligations intreaties itissignatory to;thatisbestdoneatthenegotiating anddrafting stage.
Some alsohavestated thatdisputes canbeavoided ifWTO Members, which areParties toan
MEA, review trade measures applied byother countries pursuant totheMEA inthecontext ofthe
totality oftheirinternational obligations. Some havesaidthatWTO Members should notresort to
theWTO dispute settlement mechanism tocircumvent orimpair theobligations theyhaveaccepted
bybecoming MEA Parties. Article 3oftheDispute Settlement Understanding (DSU) hasbeen
citedinthatregard, which callsonMembers before bringing acasetoexercise theirjudgement
about whether action through theDSBwould befruitful.
35. OneviewisthatthisItemraises procedural issues which could bestbeaddressed once
conclusions havebeendrawn under Item1ofthework programme. Another viewisthat
procedural issues dowarrant attention; iftrade measures aretaken pursuant tonewMEAs inthe
future, thepossibility ofatrade dispute arising mayincrease. Inthatcase, attempts should be
made toensure thatbothtrade andenvironment interests aretaken intoaccount andthatWT/CTE/W/40
Page11
implementing onetreaty 'ssetofrules doesnotjeopardise thefulfilment oftheobjectives ofthe
other.
36. Doubts havebeenexpressed about anyapriori WTO determination oftheforum under
which adispute which involved WTO rights andobligations should behandled. Some feela
case-by-case approach would beapragmatic solution. Others stress theimportance ofWTO
Members maintaining theirrighttosubmit anyconflict involving trade measures toWTO dispute
settlement, andrecall thattheDSU explicitly states thatthepurpose oftheWTO dispute
settlement system istopreserve therights andobligations ofWTO Members. Thus, these
Members areoftheviewthattheWTO remains competent todealwithaconflict arising from the
useofanytrade measure independently ofitspolicy objective.
37. Some feelthatadispute between WTO Members, Parties toanMEA, overtrade measures
taken pursuant totheMEA should inthefirstinstance bepursued under theMEA dispute
settlement mechanism. Onesuggestion isthatMEA Parties might stipulate exantethatthey
intend trade disputes among them arising outofimplementation oftheobligations oftheMEA to
besettled under theMEA'sprovisions. Onecontribution29notes thatthe1982 UNConvention on
theLawoftheSea,andinparticular the1994 Agreement Relating totheImplementation of
PartXIoftheConvention (Section 6:Production Policy), attributes competence totheWTO in
settling disputes involving trade-related measures, notably production subsidies andtrade
restricting measures. Thisapproach, itissuggested, canhelpensure theconvergence oftheaims
ofMEAs andtheWTO while safeguarding theirrespective spheres ofcompetence, thus
overcoming problems arising from overlapping jurisdictions. There maybevalue instrengthening
MEA dispute settlement mechanisms, butitisrecognized thatthismatter liesoutside WTO
competence. Another suggested approach istoexamine whether recourse toarbitration, as
provided forinDSU Article 25,canbeanappropriate means ofresolving trade andenvironment
disputes.
38. Intheevent ofadispute between twoWTO Members, oneanon-party toanMEA, over
trade measures applied pursuant totheMEA, some havenoted thattheWTO would provide the
onlyavailable dispute settlement mechanism since thenon-party would havenorights under, nor
access to,theMEA dispute settlement mechanism. Insuchcircumstances, itwould beimportant
fortheDSBtoavoid becoming involved inpureenvironmental conflicts, butaWTO dispute
settlement panel could seekrelevant environmental expertise andtechnical advice.
39. Article 13andAppendix 4oftheDSU allow apanel toseekinformation andtechnical
advice from anyindividual orbody which itdeems appropriate, toseekinformation from any
relevant source andtoconsult experts toobtain theiropinion oncertain aspects ofthematter, and
torequest areport inwriting from anadvisory review group withrespect toafactual issue
concerning ascientific orother technical matter raised byaparty toadispute. Thisfacility is
available topanels examining disputes thatariseovertheuseofanyenvironment-related trade
measures, whether these havebeenapplied pursuant toanMEA ornot.
40. Oneviewisthatthese DSU provisions aresufficient andthere arenogrounds formaking
special provision forenvironmental expertise. Some havestated thatfulluseofthese provisions
should beencouraged. Nevertheless, mechanisms could beexplored toinform panels ofMEA
provisions, including theapplication andinterpretation ofanMEA orjudgements on
environmental matters inMEAs. Onesuggestion hasbeentheestablishment ofcooperation and
consultation arrangements between MEAs andtheWTO toensure thatanMEA'senvironmental
objectives aregiven appropriate consideration.
29Communication from Chile, WT/CTE/W/2, 16February 1995.WT/CTE/W/40
Page12
41. Some havesuggested strengthening theroleofexpert groups inWTO disputes involving
environmental issues, particularly inanydisputes thatmight ariseovertheuseoftrade measures
applied pursuant toMEAs, forexample byrequiring theuseofsuchgroups where there are
scientific andtechnical points atissue inthedispute. Ithasbeennoted inthatconnection that
under theprovisions oftheGATS Annex onFinancial Services "panels fordisputes onprudential
issues andother financial matters shallhavethenecessary expertise relevant tothespecific
financial service under dispute". Inthisregard, itisfeltthatenvironmental expertise would be
particularly important inanydisputes involving theinterpretation andapplication ofanMEA, for
testing thenecessity ofanenvironment-related trade measure andfortheassessment ofscientific
evidence. However, concerns havebeenraised thattheindependence ofWTO panellists tojudge
adispute should notbecompromised; expert opinion could helpinform apanel, butoutside
experts should notbecome involved injudging whether ornotmeasures areWTO consistent.
Also, doubts havebeenexpressed about thelegalbasis forWTO panels totakeaccount ofan
MEA'sobjectives orprovisions, andabout whether theCTE istheappropriate forum toconsider
changes intheprovisions oftheDSU. Oneproposal30hasbeentoconfirm thatDSU provisions
areadequate todealwithanytrade dispute brought totheWTO which maybelinked to
environmental issues.
42. Thepossibility ofproviding, upon request, trade expertise toMEA dispute settlement
proceedings hasbeendiscussed. Onecircumstance which could warrant thatiswhere anMEA
refers explicitly toWTO provisions.
43. Some MEAs provide opportunities forthepublic tohaveknowledge ofandobserve their
dispute settlement proceedings. OneviewisthattheDSU might suffer incomparison inthis
regard. Ithasbeenrecalled thattheUNCommission forSustainable Development atits
1994 session stressed theimportance oftransparency andactive involvement ofthepublic and
experts inwork ontrade andenvironment, including indispute settlement processes, and
considered there wasconsiderable needforimprovement inthese areas.
ITEM 2 Therelationship between environmental policies relevant totrade and
environmental measures withsignificant trade effects andtheprovisions
ofthemultilateral trading system
44. ThisItemcovers environmental polices andmeasures notalready covered under other
Items ofthework programme.
45. Property rights, market-making measures suchastradeable emission permits, fiscal
instruments, emission taxes, financial subsidies andsoftloans, liability systems, andbond and
deposit-refund systems havebeenmentioned bysome. Some consider thatcompared totraditional
regulatory approaches towards theinternalization ofenvironmental externalities, measures suchas
these canoften beusedmore flexibly inamarket economy andtheycanbemore transparent.
Others consider that,nevertheless, depending onhowtheyaredesigned andimplemented, they
cangenerate significant trade effects andraisenational concerns about relative competitiveness
differentials which canprovoke demands forcompensatory trade measures tobeimposed.
46. Environmental subsidies were discussed. Subsidies canbeusedtocreate incentives for
producers toadopt environmentally-sustainable production practices, andthespecific,
environmentally-related, non-actionable subsidies identified inArticle 8.2(c) oftheAgreement on
30Non-paper byIndia, 23July1996.WT/CTE/W/40
Page13
Subsidies andCountervailing Measures (SCM) were noted inthatregard.31Some were ofthe
opinion thatenvironmental subsidies maydiffer from more traditional forms ofproduction
subsidies buttheycanstillexert animportant influence onprices andproducers 'incomes, and
hence ontrade. Further analysis hasbeensuggested oftherelationship oftheSCM Agreement to
various forms ofenvironmental incentives, oftheextent towhich WTO provisions encouraged
subsidization thatcould beenvironmentally-harmful, inparticular butnotlimited toenergy use,
andoftheuseofenvironmental subsidies inrelation totheAgreement onAgriculture, particularly
itsAnnex 2.12.
47. Oneproposal andadraftDecision32recommends thatnational governments undertake
environmental reviews oftrade agreements likely tohavesignificant environmental effects, and
thatWTO Members beinvited toprovide copies ofsuchreviews andrelated material and
methodologies totheWTO Secretariat forreference byother Members. Some feelthatthisissue
fallsoutside themandate andcompetence oftheWTO, andthattheWTO should nottherefore be
making recommendations ofthisnature. Some others feelthatenvironmental reviews fitwithin
theprovision oftheterms ofreference calling foridentification oftherelationship between
environmental measures andtrade measures.
48. Oneproposal33istoconsider therelationship andcomparability ofgeneral trade and
environmental principles. Among theprinciples tobeconsidered areinteraliatheprinciple of
sustainable development, Principle 12oftheRioDeclaration34,MFN andnational treatment,
transparency, theconcepts ofleasttrade-restrictiveness, proportionality andequivalence, special
anddifferential treatment fordeveloping countries, common butdifferentiated responsibility,
sovereignty overenvironmental resources, fairandequitable sharing ofbenefits, andthespecial
needs ofdeveloping countries. Some feelthatconsideration ofenvironmental principles lies
outside themandate oftheWTO. Some feelthatsummarizing complex principles could create
misunderstandings. Some feelthatanysuchlistofprinciples should becomprehensive and
include theprinciple oftheobligation tocooperate, thepolluter paysprinciple, andthe
precautionary principle. Arelated suggestion istoanalyse theflexibility oftrade principles to
accommodate current andemerging environmental policies, todetermine whether theyprevent the
internalization ofenvironmental externalities, andwhether thetrade rules contribute tointegrated
sustainable development policies. Another suggestion isthattherelationship between specific
environmental policies andspecific WTO Agreements could onlybeusefully examined ona
case-by-case basis.
31Itwasnoted thatSCM Article 8.2(c) provides forone-time, non-recurring measures tomeetspecified conditions with
thepurpose ofpromoting theadaptation ofexisting facilities tomeet newenvironmental regulations andstandards. Itwas
alsopointed outthatArticle 8.3requires exantenotification ofsubsides claimed under theprovisions ofArticle 8.2(c).
32Submission bytheUnited States, WT/CTE/W/37, 23July1996 andNon-paper bytheUnited States,
11September 1996.
33Non-paper byIndia, Item2,23July1996.
34"States should cooperate topromote asupportive andopeninternational economic system thatwould leadtoeconomic
growth andsustainable development inallcountries, tobetter address theproblems ofenvironmental degradation. Trade
policy measures forenvironmental purposes should notconstitute ameans ofarbitrary orunjustifiable discrimination ora
disguised restriction oninternational trade. Unilateral actions todealwithenvironmental challenges outside thejurisdiction
oftheimporting country should beavoided. Environmental measures addressing transboundary orglobal environmental
problems should, asfaraspossible, bebased onaninternational consensus."WT/CTE/W/40
Page14
ITEM 3(A) Therelationship between theprovisions ofthemultilateral trading system and
charges andtaxes forenvironmental purposes
49. Oneissue examined istheapplication ofGATT rules onBorder TaxAdjustment (BTA) to
environmental taxes andcharges. Thepotential effects ofenvironmental taxes ontrade and
problems involved inthevaluation fortaxpurposes oftradeable environmental products havealso
beendiscussed.
50. Views havebeenpresented onthepotential trade effects andgeneral economic and
environmental effectiveness oflevying environmental taxes andcharges onimports andrebating
them onexports, depending onwhether theyareassigned tocorrecting consumption orproduction
externalities andarelevied atthenational orinternational levels.
51. With regard tothetreatment ofenvironmental taxes andcharges under theBTA
provisions, the1970 Report oftheGATT Working Party hasbeentaken asapoint ofreference
andseveral ofitsfindings were noted.35These were thattheBTA provisions arebased onthe
concept oftrade neutrality andtheyapply thedestination principle. Furthermore, theWorking
Party concluded thatcertain taxes notlevied directly onproducts areineligible forBTA. There
wasaconvergence ofviews intheWorking Party thattaxes levied directly onproducts are
considered eligible fortaxadjustment, andadivergence ofviews regarding theapplication of
BTA fortaxes occultes (consumption taxes oncapital equipment, auxiliary materials andservices
usedinthetransportation andproduction ofother taxable goods, forexample taxes onadvertising,
energy, machinery andtransport).36
52. Views havebeenpresented intheCTE ontheapplication ofBTA toenvironmental taxes
orcharges applied tonon-product-related PPMs. OneviewisthatBTA applies solely totaxes
levied onproducts orproduct-related PPMs, andthattaxes orcharges levied on
non-product-related PPMs arenoteligible forBTA. Another isthatGATT jurisprudence remains
unclear onthispoint, andthatcertain important environmental taxes andcharges might fallinto
thecategory oftaxes occultes onwhich the1970 Working Party didnotreach afirmconclusion.
Since theBTA provisions could influence aMember 'schoice ofwhatenvironmental taxes and
charges toapply, some feelthatitisimportant toclarify them incertain aspects. Some suggested
thatenvironmental taxes andcharges might needtobeaccorded different treatment under WTO
rules thanother fiscal measures, andcautioned against drawing premature conclusions onBTA
disciplines which would make itmore difficult toapply them. Some feelthattheenvironmental
policy decision toimpose theinternal taxorcharge should betaken asgiven andshould not
influence consideration oftheadequacy ofWTO rules onBTA.
53. Reference hasbeenmade totheAgreement onSubsidies andCountervailing Measures
(SCM), inparticular itsprovisions on"Prohibited Subsidies" (Article 2andAnnex I)andits
"Guidelines onConsumption ofInputs intheProduction Process" (Annex II).Different views
havebeenexpressed onthelikely treatment under theAgreement ofarebate forexported
products ofindirect environmental taxes onanon-product-related PPM inexcess ofthetax
rebated onlikeproducts when soldfordomestic consumption. Oneviewisthatenergy taxes
appear tobecovered byFootnote 61oftheSCM Agreement. Another isthattheprinciple of
physical incorporation remains thebasis upon which BTA isapplied.
35BISD 18S/97.
36TheWorking Party noted thatitappeared adjustment wasnotnormally made fortaxes occultes except incountries
having acascade tax.WT/CTE/W/40
Page15
54. Views havebeenpresented bysome andquestions were raised byothers onmethodologies
tovalue environmental resources forthepurposes oftaxation, andthepotential impact ofdifferent
types ofenvironmental taxes andcharges onthetrade ofdeveloping countries.
ITEM 3(B) Therelationship between theprovisions ofthemultilateral trading system and
requirements forenvironmental purposes relating toproducts, including standards
andtechnical regulations, packaging, labelling andrecycling
55. Thekeypoint ofreference fordiscussion ofthisItemhasbeentheWTO Agreement on
Technical Barriers toTrade (TBT) anditsrelationship toenvironmental regulations andvoluntary
standards. Discussions focused onenvironmental labelling (eco-labelling) schemes/programmes
andmeasures andtheirrelationship totheprovisions oftheTBTAgreement37.Considerable
empirical andanalytical work wasdonebytheGATT EMIT Group inthisarea, covering notonly
eco-labelling butalsoenvironmental packaging andwaste handling requirements. Thatwork has
beenrecalled, andsome stressed theircontinued interest intaking upagain theanalysis on
environmental packaging, waste handling, andrelated requirements.
56. Discussions oneco-labelling havebeenenriched bypresentations ofseveral existing
eco-labelling schemes/programmes atajointinformal session oftheCTE andthe
TBTCommittee.38Those presentations illustrated thevariety ofapproaches thathavebeen
adopted towards eco-labelling byWTO Members anddescribed theperceived environmental
benefits andcosteffectiveness ofthedifferent approaches.
57. Some consider there arestillfeweco-labelling schemes/programmes inoperation in
WTO Member countries andtheyhaveexpressed doubts about them becoming asignificant new
force inthemarket. Inthisregard, some questioned whytheCTE spent alarge amount oftime
discussing voluntary eco-labelling schemes/programmes, given thatapproximately 20
schemes/programmes were inoperation. Some feelthatadeeper analysis ofeco-labelling
schemes/programmes isrequired todetermine theireffectiveness aspolicy instruments for
environmental protection, particularly inviewoftheirpotential trade-distorting nature.
58. Some noted thatAgenda 21recognized theimportance ofeco-labelling asan
environmental policy tooltoassist consumers inmaking informed choices, along withtheneedto
develop criteria andmethodologies fortheassessment ofenvironmental impacts andresource
requirements throughout thefulllife-cycle ofproducts andprocesses.
59. Some havenoted thateco-labelling schemes/programmes arevariously administered in
different Members bycentral governments, localgovernment bodies, andnon-governmental
bodies. Some ofthose administered atthelocalgovernment levelorbynon-governmental
standardizing bodies havesignificant government involvement atvarious stages oftheprocess
from product selection toproduct certification andtheaward ofalabel.
60. Existing eco-labelling schemes/programmes areoverwhelmingly voluntary innature,
which some consider should relieve concerns thatmayexistabout theirpotential trade restricting
effects. Some others express doubts inthatregard, however, saying thatifthe
schemes/programmes aresuccessful theyinfluence consumer behaviour andthatinthisrespect
theycanaffect significantly market access andconditions ofcompetition.
37OneMember suggested thatthetermvoluntary labels beusedinstead ofeco-labelling schemes/programmes, since
itwasfeltthatvoluntary labels werenotonlylimited toenvironmental issues butcould beusedtohelpachieve other objectives.
38WT/CTE/W/23-G/TBT/W/23, 19March 1996.WT/CTE/W/40
Page16
61. Onefocus ofdiscussion hasbeentheimplications thattheuseofLife-Cycle Approaches
(LCA) insome eco-labelling schemes/programmes canhaveinrequiring interaliatheuseof
non-product-related PPMs inorder foraproduct tobeeligible toreceive aneco-label. Some have
saidinthiscontext thatLCA canresult instandards thatarebased onamixture ofcriteria relating
toproduct andperformance characteristics, product-related PPMs andnon-product-related PPMs.
They havesuggested thatitwould notbepractical toseparate thecoverage under WTO provisions
ofeco-labelled products according tothenature ofthecriteria used, andthatallcriteria involved
ingranting aneco-label should becovered byWTO disciplines. From anoperational perspective
aneco-labelling scheme programme needs tobetreated asanintegrated whole under WTO
provisions.
62. OneMember noted thatthebusiness community inbothdeveloped anddeveloping
countries acknowledged non-product-related PPMs asoneoftherealities ofthemarketplace. In
many cases, business wasmore concerned about transparency andconsultation issues, rather than
withwhether ornotaparticular standard wasbased upon non-product-related PPMs. However,
developing country exporters appeared torequire additional timetoadapt tonewrequirements. A
number ofindividual casestudies demonstrated thepragmatic attitude ofsome developing country
textile exporters inmeeting non-product-related PPM requirements.39
63. Another Member noted thatanumber ofdeveloping countries hadreported difficulties in
complying withstandards based onnon-product-related PPM.40These problems were particularly
acute forsmall firms, because ofdifficulties inobtaining andadapting required technology, among
other factors. While transparency wasabasic requirement, itwasnotconsidered adequate, as
complying withthestandard would restrict theirmarket access.
64. Some others haveexpressed concern thatmultiple criteria-based schemes/programmes will
inevitably reflect theenvironmental conditions, preferences andpriorities prevailing inthe
domestic market, andthatthiscancreate market access difficulties. Overseas suppliers operating
under different setsofenvironmental conditions could finditdifficult andcostly, especially in
developing countries, toadjust theirproducts tomeetthecriteria required intheirexport markets,
andmayevenbeplaced inasituation ofhaving toadopt practices unsuited totheirlocal
environmental conditions. They haveexpressed concern alsoabout theimplications oftheuseof
LCA based interaliaonnon-product-related PPMs, particularly where these arechosen
selectively byaneco-labelling authority, forthemaintenance ofWTO disciplines based onthe
principle of"like product".
65. Theviewofsome isthatthere isaneedtoextend theexamination todifferent types of
eco-labelling standards anddiscuss thetrade implications ofeach. Inthisregard, itisfelt
important when designing LCA-based eco-labelling standards torecognize adequately different
countries 'particular environmental conditions andtoaccommodate different approaches that
produce anequivalent, environmentally-beneficial result. Also, eco-labelling
schemes/programmes should bedesigned soastoensure thattheyprovide sufficient andaccurate
information toconsumers regarding therelative environmental impacts ofcompeting products, and
inthatrespect theprinciples oftruthfulness, scientific basis andsubstantiability areimportant.
39International Trade Centre, Eco-labelling andother environmental quality requirements intextiles andclothing:
Implications fordeveloping countries, 1996
40UNCTAD casestudies, 1992-1995.WT/CTE/W/40
Page17
66. TheCTE examined therelationship oftheprovisions oftheTBTAgreement to
eco-labelling inthelightofadocument prepared bytheWTO Secretariat.41TheCTE discussed
(i)theapplication ofthenotification andother transparency provisions oftheTBTAgreement to
voluntary eco-labelling standards, and(ii)theapplicability oftheprovisions oftheTBT
Agreement tovoluntary eco-labelling schemes/programmes based, interalia,oncriteria on
non-product-related PPMs.
67. Divergent views were expressed inthisregard. Some expressed theviewthattheanalysis
ofthetwoissues maynotbeconducted separately, andconsequently should bedealtwith
together.
68. With regard tothefirstissue, given various trade-related concerns about eco-labelling
schemes/programmes, itisawidely heldviewthatfulltransparency plays apivotal rolein
avoiding potential trade difficulties andincreasing thelegitimacy ofsuchschemes/programmes and
participation byinterested parties intheirdevelopment. Itwasrecalled thattheTBTCommittee
hasdecided thatmandatory labelling requirements aresubject tothenotification provisions of
Article 2.9oftheTBTAgreement regardless ofthekindofinformation thatisprovided onthe
label.42
69. Some consider thatallvoluntary eco-labelling standards aresubject tothetransparency
provisions oftheCode ofGood Practice forthePreparation, Adoption andtheApplication of
Standards (Annex 3oftheTBTAgreement). Some others consider thatvoluntary
schemes/programmes based onLCA donotseem tobefullycovered bythetransparency
provisions oftheTBTAgreement totheextent thatcriteria concerning non-product-related PPMs
donotfallwithin thedefinition of"Standard" inAnnex 1.Furthermore, inaccordance withthis
view, apartial coverage isnotinpractical terms sensible, because intheoperation ofthese
schemes/programmes allcriteria established forspecific categories ofproducts havetobejointly
taken intoaccount when awarding thelabel.
70. With regard tothesecond issue, many delegations expressed theviewthatthenegotiating
history oftheTBTAgreement indicates clearly thatthere wasnointention oflegitimizing theuse
ofmeasures based onnon-product-related PPMs under theTBTAgreement, andthatvoluntary
standards based onsuchPPMs areinconsistent withtheprovisions oftheAgreement aswellas
withother provisions oftheGATT. There isobjection43toanyattempt through CTE work on
eco-labelling toextend thescope oftheTBTAgreement topermit theuseofstandards based on
non-product-related PPMs.
71. Another viewisthatthedefinition oftheterm"Standard" intheTBTAgreement is
ambiguous withrespect toitscoverage ofstandards based onnon-product-related PPMs. Some
Members suggested thatthedefinition doesnotseem tocover standards based, interalia,on
non-product-related PPMs. Itcannot bestated, therefore, apriori ,thatsuchstandards are
inconsistent withtheterms oftheAgreement. Ithasbeensuggested that,ifanykindof
41WT/CTE/W/10-G/TBT/W/11, 29August 1995."Note bytheSecretariat ontheNegotiating History oftheAgreement
onTechnical Barriers toTrade withRegard toLabelling Requirements, Voluntary Standards, andProcess andProduction
Methods unrelated toProduct Characteristics."
42"Inconformity withArticle 2.9oftheAgreement, Parties areobliged tonotify allmandatory labelling requirements
thatarenotbased substantially onarelevant international standard andthatmayhave asignificant effect onthetrade of
other Parties. Thatobligation isnotdependent upon thekindofinformation which isprovided onthelabel, whether itis
inthenature ofatechnical specification ornot." (G/TBT/1/Rev.3).
43Non-paper bytheArab Republic ofEgypt, 18June 1996.WT/CTE/W/40
Page18
inconsistency between theuseofLCA tools inthecontext ofvoluntary eco-labelling andthe
provisions ofthemultilateral trading system were identified, theCTE should, inaccordance with
itsterms ofreference andthefirstpreambular paragraph oftheAgreement establishing theWTO,
devise positive solutions topreserve theintegrity ofLCA. Thiswould notimply thattheuseof
non-product-related PPM requirements would begenerally allowed.
72. Stillothers havestated thattheTBTAgreement doesnotcover measures based on
non-product-related PPMs, andvoluntary eco-labelling schemes/programmes based onLCA are
notcovered bytransparency provisions oftheAgreement, since criteria concerning non-product-
related PPMs donotfallwithin thedefinition of"Standard" inAnnex 1.TheCTE isnotthe
proper forum todiscuss preserving theintegrity ofLCA. Further, environmental impacts of
different stages ofaproduct depend ontheabsorptive capacities ofdifferent countries.
73. Another viewisthatallforms ofeco-labelling, including eco-labels thatinvolve
non-product-related PPMs, arecovered bytheTBTAgreement andthattheinclusion of
non-product-related PPM-based elements inaneco-labelling regime isnotperseaviolation of
WTO rules. According tothisview, theTBTAgreement provides sufficient flexibility topermit
non-product-related PPM-based eco-labelling tobeused, subject toappropriate trade disciplines,
andthevalidity ofanyeco-labelling regime under theWTO must bejudged according tothe
relevant rules ofthemultilateral trading system.
74. Anumber ofspecific proposals havebeenmade. One44istoconfirm thattheprovisions
oftheTBTAgreement anditsCode ofGood Practice forthePreparation, Adoption and
Application ofStandards apply toalleco-labelling schemes/programmes, whether voluntary or
mandatory, andwhether administered bygovernmental ornon-governmental bodies. Inaddition,
theCTE, jointly withtheTBTCommittee should initsfuture work-programme analyse theimpact
ofthedevelopment ofinternational standards based onLCA inawaythatdoesnotprejudice the
views ofMembers regarding non-product-related PPMs. Inthisregard ithasbeensuggested45
thatthescope oftheTBTAgreement should beinterpreted tocover theuseofstandards based
upon non-product-related PPMs ineco-labelling schemes/programmes provided thatthese
standards adhere tomultilaterally-agreed eco-labelling guidelines based onscientific criteria, are
transparent, consensual andnon-discriminatory.
75. Inresponse tothisproposal, some havestated thattheydonotseeanyneedtoconfirm
whatisalready included inexisting provisions oftheTBTAgreement, andtheyhaveopposed
changing theinterpretation orapplication oftheTBTAgreement topermit standards tobebased
onnon-product-related PPMs. Inthisregard, theyhaveobjected toincluding asapoint of
reference intheTBTAgreement international standards based onLCA thatarecurrently being
developed bytheInternational Organization forStandardization (ISO). Intheirview, accepting
LCA under theTBTAgreement would permit onecountry toimpose itsenvironmental priorities
onanother. They havealsoexpressed concern about theISOprocess andthedifficulties forsome
WTO Members, particularly developing countries, toparticipate effectively initbecause ofthe
considerable resource commitments itinvolves. Consequently, theydonotconsider thattheISO
standards currently being developed inthisfieldtaketheirtrade interests adequately intoaccount.
76. Some havesuggested more generally thatwhere environmental standards, notonly
eco-labelling butalsoinsuchareas aspackaging andwaste handling, arebased onnational
environmental attributes which arenotnecessarily shared byother countries, international
standardization willnotprove tobeanacceptable wayforward under WTO provisions asameans
44Draft Decision byCanada, WT/CTE/W/38-G/TBT/W/30, 22July1996.
45Submission byCanada, WT/CTE/W/21-G/TBT/W/21, 21February 1996.WT/CTE/W/40
Page19
ofavoiding unnecessary trade restriction ordistortion. Rather, theyconsider there isaneedto
examine anddevelop theTBTprovisions relating tothe"equivalence" ofstandards and"mutual
recognition" ofconformity assessment procedures asawayofalleviating trade concerns. They
havereferred tothework ofUNEP andUNCTAD inthisregard.
77. Another proposal46isthatfulltransparency should beencouraged toenable timely public
input ateachstage ofaneco-labelling programme 'sdevelopment. Thiswould reduce theriskthat
environmental criteria ineco-labelling schemes/programmes narrowly reflect national
considerations, takedifferent environmental approaches intoaccount, andhelpensure thatforeign
producers orcountries withsignificant trade interests inalabelled product havebothtimely and
effective input throughout theentire eco-labelling process. Transparency provisions should
emphasize thetimely access toinformation regarding product group definition; theidentification
andelaboration ofenvironmental criteria; procedures usedintheawarding oflabels, andother
factors. Transparency, ithasbeennoted, isofimportance notonlytothetrading system butto
theenvironmental policy objectives aswell.
78. Another proposal47insupport oftheimportance offulltransparency inthedevelopment
andoperation ofvoluntary eco-labelling schemes/programmes based onLCA suggests thattwo
possible options should beconsidered: (i)seeking fullcoverage bytheTBTAgreement; and
(ii)negotiating anadhocinstrument suchasacodeofconduct taking asapoint ofreference the
mechanisms andprocedures established intheTBTAgreement. However, theproposal notes that
itmaybeinappropriate toaddress thetransparency issue without firstclarifying thestatus of
LCA-based voluntary eco-labelling schemes/programmes.
79. Inresponse tothisproposal, some haveexpressed objection todeveloping aseparate code
ofconduct.
80. Oneproposal48emphasizes thepotentially adverse market access impact which
eco-labelling schemes/programmes canhaveondeveloping countries, andseeks clarification ofthe
extent towhich countries, particularly developing countries, areabletoparticipate effectively in
existing transparency provisions. Article 12oftheTBTAgreement hasbeenrecalled, inwhich
special anddifferential treatment ofdeveloping country Members should beaccorded. Inthis
regard, theproposal includes consideration ofthetransfer ofappropriate technologies asone
aspect ofaneffective transparency regime withregard toeco-labelling schemes/programmes.
81. Some consider thatthediscussions onthisItemtodatehavefocused oneco-labelling to
suchanextent thatinsufficient attention hasbeengiven toother environmental product
requirements, notably packaging andwaste handling requirements, including recycling
requirements. Inthatregard, oneviewisthateco-packaging requirements generally arebased on
conditions which reflect thenational priorities inthecountry which imposes them. Applying these
measures toimports might notonlybeenvironmentally inappropriate butalsohaveanegative
impact onmarket access. According tothisview, indepth discussion isnecessary onthebest
wayofensuring thateco-packaging requirements effectively comply withtherelevant provisions
onnon-discrimination andnational treatment, since these requirements might leadtosignificant
defacto trade barriers. Equality ofopportunity tocompete iscentral tothisissue, andthe
effective application oftheconcept ofnecessity isalsoimportant.
46SubmissionbytheUnitedStates,WT/CTE/W /27;G/TBT/W /29,25March1996, andasproposed ina"DraftDecision
onTransparency inEco-labelling Programmes", 11September 1996.
47Non-paper bytheEuropean Community, 24July1996.
48Non-paper byIndia, 22July1996.WT/CTE/W/40
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ITEM 4 Theprovisions ofthemultilateral trading system withrespect tothetransparency
oftrade measures usedforenvironmental purposes andenvironmental measures
andrequirements which havesignificant trade effects
82. Ensuring thattrade measures usedforenvironmental purposes andenvironmental measures
andrequirements which havesignificant trade effects (hereinafter trade-related environmental
measures) aretransparent helps toavoid unnecessary trade restriction anddistortion from
occurring andprovide important information toproducers andtraders about overseas market
access opportunities. Therolewhich transparency plays indispute avoidance wasalsonoted.
83. Trade-related environmental measures should notberequired tomeetmore onerous
transparency requirements thanother measures thataffect trade. However, ithasbeenfelt
important toexamine whether anycategory oftrade-related environmental measures currently
escapes entirely coverage byWTO transparency provisions, whether existing levels of
transparency provided forareadequate inthelightofameasure 'spotential trade effects, andwhat
improvements might bemade tofacilitate WTO Members 'access toinformation about these
measures. Many emphasize thehorizontal nature oftransparency anditslinks todiscussions
under Items 1,3,6,7,8and9.
84. There were initial concerns intheCTE thatcertain categories oftrade-related
environmental measures maynotbecovered atallbyWTO transparency provisions andthat
consequently there maybeabsolute gapswhich would needtobefilled. Alistwasdrawn upof
themeasures mentioned inthisregard.49Onthebasis ofaSecretariat survey, itwasnoted that
notifications ofthese measures arebeing made byatleastoneMember under oneorother WTO
provisions. From thepoint ofviewofsome therefore, thenewUruguay Round Agreements have
filled thegapswhich were previously identified. Ithasbeennoted alsothatsome Trade Policy
Review (TPR) reports contain information onthese measures, andthatTBTandSPSenquiry
points areavailable toprovide supplementary information onmeasures covered bythose
Agreements.
85. Asregards theadequacy ofexisting levels oftransparency forparticular categories of
trade-related environmental measures, ithasbeennoted thatWTO provisions provide incremental
degrees oftransparency. Beyond thegeneral GATT obligation topublish information about all
trade-related measures, higher degrees oftransparency areachieved through expostnotification
requirements, exantenotification requirements, andthrough theestablishment ofenquiry points
under theTBTandSPSAgreements. Oneviewisthatthedegree oftransparency should be
correlated withthepotential significance ofameasure 'strade effects, andasuggestion wasmade
fortheCTE toconduct more work onthepotential significance oftheeffects oftrade-related
environmental measures. Some feelthatinanyevent these measures warrant being made subject
toexantenotification sothatforeign suppliers cancomment upon them atanearly stage inthe
development oflegislation, andthatspecial enquiry points should beestablished ineachMember
toprovide upon request additional information about them. Others feel,however, thatwhile the
introduction ofmore stringent transparency requirements might bewarranted inspecific instances,
notransparency provision iswithout costandthisissue should bepursued onacase-by-case basis
under other Items oftheCTE work programme orinspecialized WTO Committees. Specific
concerns raised about theadequacy ofexisting provisions forensuring thetransparency oftrade
measures taken pursuant toMEAs andofvoluntary eco-labelling schemes/programmes were
pursued further under other Items ofthework programme dealing directly withthose measures.
86. Theissue ofestablishing special enquiry points inMembers toprovide upon request
information about trade-related environmental measures wastaken upinthecontext ofdiscussions
49"Potential Identified Gaps inExisting Transparency Provisions," Annex, WT/CTE/W/28, 19April 1996.WT/CTE/W/40
Page21
onwhatimprovements might bemade tofacilitate Members 'access toinformation about these
measures. Oneproposal50suggests consideration begiven toestablishing enquiry points.
Another51proposes thatinformation ontrade-related environmental measures which donotfall
within thepurview ofTBTorSPSenquiry points should beprovided through national enquiry
points orrelevant authorities. They could handle requests foradditional information onmeasures
notified under theWTO, ormore generally supply information toMembers, especially developing
country Members, about anynon-notified trade-related environment measures ineffect aswellas
informing exporters about market opportunities created byenvironmental measures, suchas
government incentives fortheconsumption ofcertain products, government procurement
requirements which givepreference toproducts thatfulfilled voluntary environmental standards,
andinformation onNGO programmes forenvironmentally-friendly products.
87. Concern hasalsobeenexpressed about thecreation ofenquiry points. Some have
expressed doubts about theappropriateness ofestablishing amechanism thatisbased ona
measure 'spolicy purpose rather thanitscharacteristics, which isnottraditional WTO practice.
There areconcerns alsoabout theadministrative costs involved inoperating them, which itisfelt
would needtobeweighed against theirpotential benefit interms ofincreased transparency in
order tojustify theuseofresources. Some stress theneednottoduplicate thework ofTBTand
SPSenquiry points orother WTO transparency provisions, andsome express concern about the
essentially bilateral nature ofthetransparency which would begenerated inthisway.
88. Views havebeenexpressed thatlackoftransparency maybeassociated more with
differences ininterpretation among Members ofhowexisting WTO transparency provisions apply
totrade-related environmental measures ordifferences incompliance withthose provisions than
withanysystemic inadequacy. Thiscould make itdifficult forMembers tohavecomprehensive
andconsistent information about trade-related environmental measures. Itisproposed,52
therefore, thatMembers should collectively clarify existing notification obligations covering
trade-related environmental measures. Some others feelthismatter could beaddressed more
properly intheWorking Group onTransparency Obligations andImplementation thanintheCTE,
anditissuggested thattheresults oftheCTE'sdiscussions onthisissue should betransmitted to
thatWorking Party.
89. Some havenoted thattheabsence ofacentralized collection point intheWTO for
notifications oftrade-related environmental measures which makes itdifficult atpresent for
Members toretrieve information about these measures easily andefficiently. Inthisrespect, a
proposal wasmade thattheSecretariat should therefore collect from theCentral Registry allsuch
notifications inasingle database, which would beregularly updated.53Thedatabase could contain
thefollowing information foreachnotified measure: itsnature/title; objective(s); product
coverage; relevant WTO orMEA provisions; adescription ofhowitoperates; andcomments
onitstrade effects. Itcould include alsoinformation provided onanessentially bilateral basis by
national enquiry points, which should becopied totheWTO Secretariat sothatthiscould bemade
available onamultilateral basis, aswellasinformation ontrade-related environmental measures
provided inTPRreports. Attention hasbeendrawn inthiscontext totheexistence ofother
databases ofthisnature, forexample onemaintained byUNCTAD, anditisfeltitwould be
important nottocreate duplication.
50Non-paper byHong-Kong, 28May 1996.
51Non-paper byBrazil, 22July1996.
52Non-paper byHong Kong, 28May 1996.
53Non-paper byHong Kong, 28May 1996.WT/CTE/W/40
Page22
90. Some suggest thatTPRreports canhelpimprove transparency bycovering trade-related
environmental measures systematically. However, others feelitisnotappropriate fortheTPRM
tobecome involved inenvironment-related issues which theyconsider lieoutside itsmandate.
91. Onepoint raised inrelation toallofthese proposals isthedifficulty ofdefining theterm
"environment" inanoperational wayfortheWTO. Many trade-related measures canbe
associated withavariety ofdifferent policy objectives, andenvironmental orconservation aims
maybeonlyasecondary orrelated policy characteristic. Forsome, thismakes itdifficult to
arrive atanyconclusion onwhether gapsintransparency exist, andtheyfeelthatgreater
definitional clarity would beparticularly important inthecontext ofconsidering proposals for
enquiry points dedicated totrade-related environmental measures.
ITEM 6 Theeffect ofenvironmental measures onmarket access, especially inrelation to
developing countries, inparticular totheleastdeveloped among them, and
environmental benefits ofremoving trade restrictions anddistortions
92. ThisItemisofrelevance tomany aspects oftheCTE'sterms ofreference andtoWTO
Members 'agreement toconduct theirtrade relations inawaywhich allows fortheoptimal useof
theworld 'sresources inaccordance withtheobjective ofsustainable development, while seeking
tobothprotect andpreserve theenvironment andtoenhance themeans fordoing soinamanner
consistent withtheirrespective needs andconcerns atdifferent levels ofeconomic development.54
93. Extensive reference hasbeenmade bysome during discussions under thisItemtothe
importance ofanumber ofthegeneral principles contained intheRioDeclaration.
94. Oneisthatpoverty isabasic cause ofenvironmental degradation inmany Member
countries, andthatthecontribution trade canmake totheeradication ofpoverty byraising income
levels isanindispensable requirement forthepromotion ofsustainable development.
95. Asecond isthatitisnottrade thatisgenerally attherootofenvironmental degradation,
butrather unsustainable production andconsumption processes. Some consider thishasimportant
implications forchoosing andassigning corrective policy measures efficiently. Some havenoted
inthisregard thatthekeytotheachievement ofenvironmental benefits isthedevelopment of
more sustainable patterns ofproduction andconsumption.
96. Athirdistheprinciple of"common butdifferentiated responsibility". Some feelthis
should beapplied toanexamination oftheintroduction ofnewtrade-related environmental
measures which could create highadjustment costs fordeveloping countries exporters. Some
others havenoted thatallcountries havethesovereign righttomake theirownjudgements onthe
standards which theyapply within theirownterritories andthatinthisregard there isaneedto
ensure flexibility andfairness intheimplementation ofsustainable development strategies inall
countries.
97. Afourth principle isthatpolicy measures applied topromote theinternalization of
environmental costs should notdistort international trade andinvestment. Onecomment made in
thisregard isthatmeasures toimprove environmental conditions inonecountry should notshift
thecosts ontoothers. Another isthatthepolluter should, inprinciple, bearthecosts ofpollution.
98. AfifthisthatMembers should cooperate topromote asupportive andopeninternational
economic system thatwould leadtoeconomic growth andsustainable development inall
54Preamble totheMarrakesh Agreement Establishing theWorld Trade Organization.WT/CTE/W/40
Page23
countries, tobetter combat theproblems ofenvironmental degradation. Some considered that
where trade liberalization doesnotbring environmental benefits, itshould beaccompanied by
complementary environmental andresource management policies ifitsfullpotential contribution to
better protecting theenvironment andpromoting sustainable development through more efficient
allocation anduseofresources istoberealized. Some others stressed thatwhile anopen
multilateral trading system makes possible amore efficient useofnatural resources inboth
economic andenvironmental terms, theachievement ofsustainable development depends crucially
ontheimplementation ofsound environmental policies atthenational andasappropriate atthe
international level. Some consider thattrade liberalisation ingeneral results inenvironmental
benefits although insome cases itmayneedaccompanying environmental policies.
99. Oneproposal55describes theproblems oflow-income, commodity-dependent countries
andother countries which remain marginal participants inworld trade, andnotes thatthemost
urgent environmental problems theyfaceareoften different from those ofother countries. It
suggests thataction bytheirtrading partners toassist theexpansion anddiversification oftheir
export opportunities, including diversification intohigher value-added products, could helpthese
countries intheirefforts tobothreduce poverty andprotect theenvironment. Some others
consider thattrade liberalization should beaccompanied bytechnology andfinancial transfers to
developing countries.
100. Some consider there isaneedformore empirical andanalytical work onthedesign and
sequencing oftrade andenvironmental policies toaddress thefactthattrade liberalization might
exacerbate environmental problems interms oftheincome, scale, composition, technology and
product effects resulting, incertain circumstances, from market andpolicy failures. Some take
theviewthattheelimination oftrade restrictions anddistortions thataffect international
commodity prices isasinequanonforachieving thegoals ofenvironmental protection and
sustainable development, particularly indeveloping countries; theirelimination should notbe
made conditional onchanges inenvironmental policies inexporting countries. Some feelthat
evenifincertain circumstances trade liberalization maymagnify existing environmental problems,
theproper policy response istoputinplace thenecessary environmental anddomestic resource
management policies. Policy choices inthatregard, itisfelt,aretheresponsibility of
governments atthenational level.
101. Oneproposal56suggests that:(i)freertrade cancontribute toanexpansion ofeconomic
growth; (ii)economic growth, accompanied bysound environmental policy, canimprove
environmental quality; (iii)eliminating market distortions leads tomore rational andefficient use
ofmarket resources, thereby supporting sustainable development; (iv)opening agricultural
markets contributes toamore efficient allocation ofresources andmayimprove environmental
quality; and(v)agro-environmental policies thatinternalize environmental externalities contribute
toamore efficient allocation ofresources andimprove environmental quality. Italsonotes that
sound environmental policies directed atthose unique nationally-specific environmental problems
arepreferable totrade restrictions. Itconcludes thatfreetrade andenvironmental policies can
work intandem toachieve social benefit, economic growth andenvironmental quality.
102. Many consider thatenvironmental problems should bedealtwithatthenational levelby
Members attheirsource, andnotindirectly through trade restricting ordistorting measures
applied bytheirtrading partners. Inthisregard, Principle 11oftheRioDeclaration wasrecalled.
ThisPrinciple recognizes that"States shallenact effective environmental legislation.
Environmental standards, management objectives andpriorities should reflect theenvironmental
55Submission byAustralia, WT/CTE/W/36, 23July1996.
56Submission bytheUnited States,WT/CTE/W/35, 23July1996.WT/CTE/W/40
Page24
anddevelopment context towhich theyapply. Standards applied bysome countries maybe
inappropriate andofunwarranted economic andsocial costtoother countries, inparticular
developing countries." Measures based onnon-product-related PPMs were referred toparticularly
inthisregard. Some expressed concern thatwhile itmight prove necessary tobaseenvironmental
measures onlifecycle analysis andnon-product-related PPMs, these should notbeapplied insuch
awayastodifferentiate "like products" attheborder. Some havenoted thatMembers havea
responsibility toensure thatactivities within theirjurisdiction donotcause physical environmental
damage elsewhere, buttransboundary environmental problems should beresolved cooperatively
through thenegotiation ofMEAs; claims thatunilateral action maybenecessary where itproves
difficult tonegotiate anMEA areunacceptable andsuchaction would damage seriously the
trading system.
103. Inthatcontext, many havenoted thatenvironmental standards differ from onecountry to
another andtrade-related measures should notbeusedtotrytoharmonize them orcompensate for
differences between them. Some feelthiscould amount totheextra-jurisdictional imposition ofa
country 'senvironmental standards onitstrading partners. Inaddition, itcould cause bothadverse
economic andadverse environmental effects where producers arerequired toadapt toPPMs that
arenotsuited tothelocalenvironmental conditions ofcountries inwhich theirproduction is
based. Some havereferred tothe1995 Report onTrade andEnvironment totheOECD Council
atMinisterial Level inwhich governments confirmed theircommitment toAgenda 21and
Principle 12oftheRioDeclaration, andagreed that"these principles alsoextend tounilateral
import restrictions based onPPM-related requirements". Ithasbeensuggested bysome that
enhanced market access could begranted forsome sectors likewood products, fisheries and
agriculture, particularly todeveloping countries having better environmental absorptive capacities,
thereby enhancing theirincome andengendering balanced environmental protection.
104. Theeffect ofenvironmental measures onmarket access, especially inrelation to
developing countries, inparticular totheleastdeveloped among them, iswidely viewed asa
cross-cutting issue which could betaken upinpartinamore detailed wayinrespect ofparticular
trade-related environmental measures addressed under other Items oftheCTE work programme.
105. Atthegeneral level, some haverecalled theconclusions oftheOECD57thathighlevels of
environmental protection canhavepositive effects onthecompetitiveness ofdomestic producers
byencouraging them toeconomize onresource useandotherwise increase theirefficiency, and
canstimulate thedevelopment ofnewproducts, services andtechnologies, thereby creating new
market opportunities.
106. Some others consider these opportunities maynotbeeasytoaccess byproducers ina
large number ofWTO Members, particularly small andmedium scale enterprises (SMEs) in
developing andleastdeveloped countries. Analysis andempirical work byUNCTAD was
recalled inthisregard which, itwasstated, showed thatcompliance costs could beconsiderably
more burdensome fordeveloping countries. Substantial financial andtechnological resources as
wellastechnical andadministrative expertise, andincertain cases evenmaterial resource
endowments, might berequired toadapt tonewregulations andstandards inexport markets, and
these arefrequently notavailable todeveloping country producers. Thiscould takeonan
important dimension andleadtothecreation ofnon-tariff trade barriers. Eco-labelling and
packaging requirements andeco-taxes havebeenmentioned inthisconnection. There is,
therefore, concern thatenvironmental measures could have, anddohaveintheviewofsome,
significant adverse trade effects, particularly fordeveloping countries.
57Report onTrade andEnvironment totheOECD Council atMinisterial Level,Paris, 1995.WT/CTE/W/40
Page25
107. Oneviewisthattomitigate andeliminate theiradverse trade effects, environmental
measures should bebased onthecriteria ofsound science, transparency, andequity, andthey
must becompatible withtheopen, equitable andnon-discriminatory nature ofthetrading system
andconform toitsbasic provisions anddisciplines. Some consider thatinthedesign of
environmental measures, useofenvironmental principles suchastheprecautionary principle and
theprinciple ofproportionality between environmental benefits andeconomic costs should be
studied from thepoint ofviewoftheeffects oftheirapplication onthetrade ofdeveloping
countries.
108. Some consider thatstrengthened WTO disciplines might bejustified toreduce and
eliminate theadverse trade effects ofcertain environmental measures. Inthisregard, one
contribution58suggests thatwork should focus onsafeguarding existing market access
opportunities, particularly forSMEs which account foralarge share ofmanufactured exports in
developing countries. Various WTO provisions should bereviewed from thispoint ofview, in
particular theprovisions oftheTBTandSPSAgreements, theAgreement onSubsidies and
Countervailing Measures andtheTRIPs Agreement, aswellasallWTO provisions forspecial and
differential treatment fordeveloping countries. Further work should alsoaddress means of
increasing market access forenvironmentally-friendly products from developing countries
including thedevelopment ofenvironmentally-sound technologies forsuchproducts andtheiruse.
Onesuggestion made inthisregard istoexamine howbesttoallow developing countries to
benefit from differential schedules forcompliance withtrade-related environmental measures, such
astimelimited exceptions, orthedevelopment ofanenvironmental deminimis clause. Another is
toexplore themeans ofproviding additional technical assistance todeveloping countries.
109. Indiscussions ontheenvironmental benefits ofremoving trade restrictions anddistortions,
theenvironmental benefits thatareaccruing from implementation ofthecommitments agreed in
theUruguay Round negotiations havebeenwidely noted. Many consider thefocus offurther
work should betrade andtrade-related measures applied byMembers thatwillremain afterthe
Uruguay Round results arefullyimplemented. Measures citedbyoneormore Members inthe
CTE aretariff escalation andtariff peaks, production andexport subsidies, highinternal taxes
particularly ontropical products, export restrictions andexport taxes, theexport practices ofstate
trading enterprises, andvarious non-tariff barriers. Reference59hasbeenmade inparticular tothe
potential environmental benefits which could accrue from thereduction andremoval ofremaining
trade restrictions anddistortions affecting sectors andproducts inwhich developing countries have
aparticular export interest, suchastextiles andclothing, leather andleather products, footwear,
forest products, fishandfishproducts, minerals andmining products, agricultural products, other
natural resource-based products andprimary commodities. Many support theneedforfurther
empirical work andanalysis inthese areas. These effects could bepositive ornegative. Positive
effects, oropportunities, arenotalways easytoexploit andrequire expertise, technology and
resources which maynotalways beavailable todeveloping countries. Italsowasnoted thatthe
globalization oftheeconomy suggests theneedtolookfortrade liberalization across theboard.
110. Environmental benefits areexpected toaccrue inavariety ofways. Some consider they
accrue most directly through theremoval oftrade restrictions onenvironmentally-friendly goods
andenvironmental services; theywillaccrue alsothrough theremoval ofrestrictions onthe
transfer ofenvironmentally-sound technologies (discussion under Item8reflects different views on
thispoint); inaddition, trade restrictions anddistortions canleadtoaninefficient allocation of
resources, holdbackincome growth, particularly indeveloping countries, andartificially shift
resources intoactivities which place additional pressure ondomestic, environmentally sensitive
58Non-paper byIndia, 20June 1996.
59See,inter alia,Non-paper byIndia, 20June 1996.WT/CTE/W/40
Page26
resources; reducing orremoving them would helptocorrect this. Some others alsoconsider that
toensure direct andsubstantial environmental benefits, trade liberalization should be
complemented bymeasures toimprove market access, access toenvironmentally-sound
technologies, finance andcapacity building.
111. Theenvironmental effects ofsubsidies, inparticular intheagriculture sector, andoftariff
escalation were paidparticular attention intheCTE discussions.
112. Some havefocused ontheadverse environmental effects ofthesubsidization of
agricultural production andexports. These aredescribed asinvolving orarising from intensified
landuse,increased application ofagro-chemicals, theadoption ofintensive animal production
practices andovergrazing, thedegradation ofnatural resources, lossofnatural wildlife habitats
andbiodiversity, reduced agricultural diversity andtheexpansion ofagricultural production into
marginal andecologically sensitive areas. Agricultural assistance through output-related policies
inmany OECD countries wasshown tohaveimposed highenvironmental costs inthose countries
athighfinancial expense. Italsoimposed higheconomic andenvironmental costs onother
countries withacomparative advantage inagricultural production andtrade, particularly
developing countries. Empirical work bytheOECD, UNCTAD, andtheFAO wascitedinthis
regard60,andmany consider itimportant toextend thatfurther. Anumber ofdelegations consider
thatfurther reductions ofagricultural protection andsupport would represent a"win-win" situation
fortrade andenvironment.
113. Some others feelitisinappropriate fortheCTE tofocus narrowly ontheagricultural
sector. They alsoconsider thatitwould notbeappropriate fortheCTE toengage indiscussions
thatwould prejudge theagriculture negotiations. They feelthattheWTO Agreement on
Agriculture remains thebestsuited forum fortheconsideration ofagricultural liberalization, since
italready contains abuilt-in structure fordealing withsuchissues, andtheyexpress caution about
drawing generalized conclusions ontheenvironmental impact ofagricultural support programmes,
which theyfeelisacomplex issue. Further analysis isneeded totakeaccount ofdiffering
geographic andenvironmental conditions between countries, different levels ofsocio-economic
development, andother factors, andthisshould bedoneonacountry basis
case-by-case. Theenvironmental externalities associated withagriculture neednotonlybe
negative; agriculture hasadualenvironmental function anditcanhavepositive environmental
effects through conservation andrelated practices. Abandoning farming might leadto
environmental damage associated withsoilerosion orbiodiversity loss. Well-designed agricultural
support programmes, theyfeel,could havebeneficial effects ontheenvironment, aswellasonthe
linked issues offoodsecurity andsustainable development. Areference hasbeenmade inthis
regard toFAO work onSustainable Agriculture andRural Development. These Members noted
thatsustainable agriculture requires anintegrated approach combining environmental, social and
economic factors intoacomprehensive framework ofpolitical andeconomic decision-making.
They considered thatstrategies resulting from theunderstanding ofthese linkages should
correspond tothemultiplicity offunctions ofagriculture, including theprotection ofnatural
resources andthepreservation ofthelandscape.
114. Many point tothepotential economic andenvironmental benefits theyfeelwould accrue
from thereduction andremoval oftariff escalation byhelping toraisethevalue added by
producers incommodity-dependent countries, increase incomes inthose countries, andreduce
direct pressure onnatural resource exploitation. Some suggest thatonsimilar grounds benefits
could beexpected toaccrue alsofrom thereduction andremoval ofexport restrictions onprimary
products.
60OECD, TheEnvironmental Effects ofTrade ,Paris 1994; UNCTAD/COM/35, 25April 1995: "Internalization of
Environmental Damages inAgriculture"; FAO, 16thRegional Conference forEurope.WT/CTE/W/40
Page27
115. Oneproposal61focuses ontheneedforenvironmental policy tobuild upon prices that
reflect fullprivate costs ofproduction. Therefore, itsuggests thatthefirststeptothisendshould
betoidentify andeliminate those governmental policies responsible forthese price distortions.
Itproposes thattheCTE address initsfuture work theneedforfundamental, on-going reform in
theagricultural sector andidentify ways andmeans toreduce andeliminate trade restrictions and
distortions there. This, itissuggested, would beacontribution tofuture negotiations under the
Agreement onAgriculture.
116. Another proposal62notes thatthere isconsiderable scope topromote more sustainable
agricultural policies andpractices inthecontext oftheagenda built-in totheUruguay Round
results forthecontinuation ofthereform process inagriculture.
117. Oneproposal63suggests thatthere arevarious inter-related factors, including natural
conditions, andsocio-economic circumstances ineachcountry which cause environmental
problems, andtheCTE should advance empirical andtheoretical analysis. Agricultural trade
liberalization could cause environmental problems insome Members byintensifying pressure on
andthedegradation oftheirnatural resources ifeffective environmental policies were notinplace.
Thisproposal alsosuggested thatinmore general terms trade liberalisation without appropriate
environmental policies mayhavenegative effects ontheenvironment.
118. Another proposal64,which isbased onthepremise thatthere isnosimple orautomatic
linkbetween trade liberalization andenvironmental protection, notes withrespect tothelink
between pricing policies andenvironmental policies, thattheeffect oftrade liberalization onprices
cannot bepredicted withcertainty, andthatadjustment ofprices isnotapriori environmentally
efficient. Such environmental efficiency would depend toacertain extent bothonwider economic
factors inagricultural markets andtheconditions conducive tostructural adjustment inproducer
economies. Furthermore, market mechanisms could onlyleadtobothaneconomically and
ecologically optimal allocation ofproduction resources iffullinternalization ofenvironmental
costs were achieved. Thisisdifficult toachieve, andisafunction notonlyofprice levels but
alsoofpolitical will.
119. Inreaction, thedifficulties involved intheinternalization ofenvironmental externalities
havebeennoted bysome. Intheirview, animportant consideration isthatinternalization needs
totakeaccount ofandcoincide withdevelopment priorities. Other questions alsohavebeen
raised, suchaswhowould decide whatandwhen tointernalize, andwhether thedecision should
betaken based onscientific evidence andrelying oncost-benefit analysis.
120. Another proposal65suggests thatitisnotappropriate todraw thehasty conclusion thatthe
removal oftrade distorting agricultural measures willhaveenvironmental benefits, orthat
distorting measures necessarily havenegative environmental effects when helping tocorrect
market failures. Itistherefore proposed toundertake analytical andempirical studies, ona
case-by-case basis taking intoaccount country-specific conditions, todetermine therelationship
between agricultural trade andtheenvironment. Thisproposal alsosuggests thatparticular respect
61Communication from Argentina, WT/CTE/W/24, 31March 1996.
62Submission byAustralia, WT/CTE/W/36, 23July1996.
63Non-paper byJapan, 24June 1996.
64Non-paper bytheEuropean Community, 23July1996.
65Non-paper bytheRepublic ofKorea, 23July1996.WT/CTE/W/40
Page28
should begiven totheissues offoodself-sufficiency towards foodsecurity, particularly innet
foodimporting countries.
121. Another proposal66suggests thatinnegotiations onfurther trade liberalization, theWTO
should ensure thatenvironmental consequences areconsidered. Inthisrespect, theWTO should
besupportive ofefforts tointernalize environmental costs. Onewaytoproceed intheCTE may
betoidentify sectors where trade liberalization could beconducted inawaysoastoyield both
economic andenvironmental gains. Theenergy sector waspointed outasoneexample where
trade liberalization (interalia,thereduction ofsubsidies andother measures) mayresult insucha
double dividend. Further, thelinks between trade rules andenvironmental principles, in
particular thepolluter-pays principle (PPP) andtheprecautionary principle, should beexamined.
TheCTE should alsoexamine howtointegrate concerns related touseofthelife-cycle approach.
Itwassuggested thatthemultilateral trading system should offer scope forincentives fortheuse
ofenvironmentally friendly products, andthatthemultilateral trading system should not
encompass incentives forproduction anduseofenvironmentally-damaging products.
122. Some havequestioned andobjected tothisproposal, particularly inreference totheenergy
sector. Onespecific reaction isthatanyproposal regarding analysis ofincentives fortheuseof
environmentally-friendly products should takeaccount ofthecomplexities ofthelinks between
energy generation anduseandenvironmental quality. National decision making onenergy
choices includes suchvariables asefficiency inproduction, availability ofenergy sources,
economic costs forusers andsocial impacts onthelocalpopulation. Offering orwithdrawing
incentives toproducts, forexample energy, cannot beundertaken onaselective basis.
ITEM 7 Theissue ofexports ofdomestically prohibited goods
123. Thisissue covers products whose saleandusearebanned orseverely restricted
domestically onthegrounds thattheypresent adanger tohuman, animal, plant lifeorhealth or
theenvironment, butwhich nevertheless maybeexported. Itisofparticular concern tomany
developing andleast-developed countries. In1991, aGATT Working Group onDomestically
Prohibited Goods andother Hazardous Substances (DPGs) produced a"draft Decision onTrade in
Banned orSeverely Restricted Products andOther Hazardous Substances". Consensus toadopt
thedecision could notbereached.67Taking account oftheneednottoduplicate orimpede work
doneorunderway inother intergovernmental foratoimprove themonitoring andcontrol oftrade
inDPGs, theCTE hasexamined whatadditional contribution theWTO might make inthisarea.
124. Since theexamination ofthisissue bytheGATT Working Group onDPGs, anumber of
newinternational agreements andconventions dealing, interalia,withthemonitoring andcontrol
oftrade incertain DPGs haveentered intoforce andothers areunder negotiation. Particular
mention hasbeenmade inthisregard oftheBasel Convention ontheControl ofTransboundary
Movements ofHazardous Wastes andtheirDisposal, thepreparation under theAmended London
Guidelines ofaninternationally legally-binding instrument fortheapplication ofthePrior
Informed Consent (PIC) procedures forcertain hazardous chemicals ininternational trade, the
decision todevelop adraftProtocol onLiability andCompensation forDamage Resulting from
Transboundary Movements ofHazardous Wastes andtheirDisposal, andthedraftProtocol on
Bio-Safety. Multilateral rules onexports ofDPGs should continue tobedeveloped primarily
through environmental instruments suchasthese.
66Non-paper byNorway, 20June 1996.
67SeeReport bytheChairman oftheWorking Group onDomestically Prohibited Goods andOther Hazardous Substances,
L/6872, 2July1991.WT/CTE/W/40
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125. AdraftDecision onExports ofDomestically Prohibited Goods hasbeensubmitted tothe
CTE forconsideration.68Itdraws onelements ofthe1991 draftGATT Decision onthissubject,
including, interalia,thedefinition ofproduct coverage, theobligation ofexporting countries to
notify other WTO Members ofDPGs theyexport ifthese arenotalready being notified under
another international instrument, andtheneedtoensure thatmeasures taken forthepurpose ofthe
Decision areinconformity withWTO rules. ThedraftDecision includes provisions fortechnical
assistance tobeprovided toMembers inthisarea, forenquiry points tobeestablished, andit
encourages exporting Members toconsider whether themeasures theyapply toDPGs domestically
should alsobeapplied toexports.
126. Some consider thatwhile theWTO 'sroleshould belimited strictly inthisareato
supplementing theactivities ofother specialized international organizations, itnevertheless has
within itscompetence animportant contribution tomake byhelping tofillanygapswhich maybe
leftbyexisting mechanisms inthemonitoring orcontrol ofexports ofDPGs andbyhelping to
strengthen theregimes ofother international instruments whose provisions arenotlegally-binding
orwhich arevoluntary. Twogeneral areas ofpotential gapshavebeensuggested: DPGs not
covered byother international instruments, andDPGs exported byWTO Members which arenot
Parties tothose other international instruments. With regard tothisfirstarea, some consider that
special emphasis should beplaced onexports ofdomestically prohibited orseverely restricted
consumer goods, cosmetics, foodstuffs andcertain pharmaceutical products. Another viewisthat
hazardous wastes should notbedealtwithunder thisItemsince theyarealready fullycovered by
theBasel Convention.
127. Some consider thatmuch trade inDPGs isalready covered byexisting international
instruments andthatwithfurther improvements intheiroperation theissue ofexports ofDPGs
willprove tobeofdecreasing importance. They feelthattheidentification ofpotential gapsin
coverage ofDPGs, totheextent theyexist, istechnical work which liesoutside theWTO 's
competence andwhich could beundertaken better by,oronlyinconsultation with, other relevant
international organizations suchasUNEP andWHO. They havepointed totheinformation
contained inexisting notifications byMembers under theTBTandSPSAgreements about
technical regulations theyimpose onthesaleoruseofproducts onthedomestic market, andthey
havesuggested thatthismayprovide animportant source ofinformation onDPGs andhelp
resolve theperceived problem. They doubt there isafurther contribution which theWTO could
make inthisareathatwould fallwithin itscompetence ormandate, beyond ensuring thatWTO
rules donotconflict withtherules ofother multilateral instruments applied inthisarea.
128. Ensuring thetransparency oftrade inDPGs hasbeenfeltbysome tobeanareawhere the
WTO could contribute, butwithout duplicating existing transparency andnotification procedures
inother relevant international instruments69towhich priority should always begiven, norin
relevant WTO Agreements suchastheTBTandSPSAgreements. Some havesuggested that
countries exporting DPGs could berequired tonotify theproducts inquestion, andthattheycould
establish enquiry points toprovide, onrequest, information about whythedomestic saleoruseof
theproducts notified hasbeenbanned orseverely restricted. Another suggestion isthatWTO
Members maylimitexchange ofinformation inthisareatoregulatory actions relating toDPGs.
Some emphasize theimportance ofensuring thatoneMember 'snotification ofaDPG intheWTO
would notleadtoitsexports being treated differently byanimporting country from exports ofthe
same product from other countries orfrom domestically produced goods. Some others consider
68Proposal byNigeria, WT/CTE/W/32, 30May1996. SeealsoProposal byNigeria, WT/CTE/W/14, 27November
1995.
69Alistofother relevant international instruments wascompiled bytheSecretariat inWT/CTE/W/29, 14May1996.WT/CTE/W/40
Page30
thataDPG notification programme, including prohibited butalsoseverely restricted goods,
would create aserious administrative burden andtheimportant amount ofnotifications resulting
from suchaprogramme would eventually impair transparency. Onesuggestion istoconsider to
whatextent anenvironmental database, asexamined under Item4,could address theproblem, or
whether achapter dealing withDPG regulations could beincluded inTPRreports.
129. Oneissue examined waswhere theresponsibility fortaking adecision torestrict trade in
DPGs should lie:withtheexporting country, theimporting country, orjointly between thetwo?
Some feelthatareasonable degree oftheresponsibility forcontrolling trade should liewiththe
exporter, which should consider extending itsdomestic salesbansandrestrictions toexports or
engage inmandatory labelling ofDPGs. However, some express concern thatthiscould imply
endorsement ofaMember applying itsownhealth orenvironmental standards extra-
jurisdictionally. Another viewisthatthedecision torestrict trade inaproduct should lie
exclusively withtheimporting country, butthattheexporting country could beasked tocooperate
inensuring thedecision wasimplemented effectively.
130. Providing technical assistance tohelpMembers improve theircapacity totakeinformed
decisions about whether ornottoimport DPGs andtomonitor theirimports ofDPGs more
effectively hasbeenviewed asapotentially important partofthesolution toproblems inthisarea,
particularly overthelonger term. Ithasbeennoted thatthecustoms authorities ofdeveloping
countries often lackadequate product testing facilities andthattheabsence ofproduct standards
andregulations inthese countries addstotheproblem, forexample byenabling products tobe
marketed beyond theirexpiry dates. Ithasbeenrecalled thatChapter 19ofAgenda 21on
"Environmentally sound management oftoxic chemicals, including prevention ofillegal
international traffic intoxic anddangerous products" recommends, interalia,that
capacity-building fortrade inDPGs beconsolidated byassisting developing countries in
developing andstrengthening riskassessment capabilities inorder tomake informed decisions
about theirimports. OneviewisthattheWTO could cooperate inthisregard withother
organizations, suchastheAmended London Guidelines andtheBasel Convention, which could
provide thenecessary technical expertise. Another isthattechnical assistance ofthiskinddoes
notfallwithin theWTO 'scompetence ormandate.
131. Onesuggestion hasbeenmade thatcompensation andliability should beconsidered,
linked withadispute settlement provision, without being necessarily related tonotification and
transparency provisions. Therationale foracompensation andliability provision within the
framework ofaninstrument which would focus mainly ontransparency andnotification hasbeen
questioned byothers.
ITEM 8 Therelevant provisions oftheAgreement onTrade-Related Aspects ofIntellectual
Property Rights
132. Issues discussed under thisIteminclude therelationship oftheTRIPs Agreement tothe
following: theenvironment generally; thegeneration of,access toandtransfer of
environmentally-sound technology (EST); environmentally-unsound technologies; indigenous and
traditional knowledge; andcertain MEAs inparticular theUNFramework Convention on
Biological Diversity (CBD).
133. Recalling theCTE'sterms ofreference, oneviewisthatthisItemshould beapproached
from theperspective thatWTO rules should promote sustainable development, withspecial
consideration totheneeds ofdeveloping countries. Some feel,inthatregard, thattheTRIPs
Agreement lacks specific mechanisms toachieve theobjectives ofsustainable development andWT/CTE/W/40
Page31
environmental protection. Some others feelthateffective implementation oftheTRIPs Agreement
enhances theprotection oftheenvironment andencourages thetransfer ofEST.
134. TheroleoftheTRIPs Agreement inthegeneration of,access toandthetransfer ofEST
hasbeendescribed bysome astheneedtostrike abalance between therights andobligations of
IPRholders ontheonehandandIPRusers ontheother, andbetween promoting thegeneration of
ESTontheonehandandensuring access toitanditstransfer ontheother. Some believe that
suchabalance isbuiltintotheTRIPs Agreement, forexample inArticle 7,andthatthe
Agreement alsoauthorizes theuseofappropriate measures toprevent abuse ofIPRs toensure that
unreasonable restraints willnotbeplaced ontrade orontheinternational transfer oftechnology.
135. Some feelthattheutility ofESTcanbequestioned ifitisnotdisseminated andused
widely andthatadditional rules maybenecessary tolimitthediscretionary power ofowners of
technologies torestrict access toEST. Ithasbeensuggested inthatregard toreview those
provisions oftheTRIPs Agreement which dealwithpatents, compulsory licensing and
anti-competitive practices. Some consider, furthermore, thatIPRprotection increases thecostof
technology. Obtaining newtechnology atareasonable costisaconcern indeveloping countries,
particularly forsmall andmedium scale enterprises (SMEs). Insufficient access toESTcan
adversely affect developing countries 'competitiveness inexport markets aswellastheircapacity
toprotect theirenvironments. Reference hasbeenmade toAgenda 21,which regards access to
andtransfer ofESTonconcessional terms asessential forsustainable development. Attention has
alsobeendrawn totheimportance ofcapacity-building toallow recipients toidentify the
technologies most suitable totheirneeds. Some feelthatinthecaseofanti-competitive practices
orifaccess totechnologies isnotbeing provided within areasonable period byIPowners, such
technologies should bemade available through compulsory licensing. Regarding theconsequences
ofIPRprotection foraccess toandthetransfer ofESTnotinthepublic domain, ithasbeen
suggested thatthelackofadequate financial resources tofacilitate access totechnology isan
impediment intheimplementation ofenvironmental measures, including those mandated inMEAs.
136. Some others expressed theviewthatbyensuring, interalia,publication ofnewknowledge
andbyproviding R&D returns, effective IPRsystems promote innovation andtechnology transfer.
They noted thattechnology must existbefore itstransfer canbepromoted orthebenefits
associated withitscommercialization shared. They alsonoted thatconsistent rules regarding IP
actually facilitate technology transfer byproviding aplatform forcooperation among private and
public sector entities. Moreover, theexistence ofanIPregime isonlyoneofthefactors which
supports technology transfer; others areeconomic andpolitical stability inthecountry of
destination, thelevelofinfrastructure andavailability ofskilled labour, access tofinancial
resources, aswellasdomestic policies concerning investment, market access, services and
environmental regulation which playamore direct roleintechnology transfer.
137. Onecontribution,70focuses ontherelationship between IPRs andtheenvironment, in
particular theneedtoencourage theglobal useofESTs andproducts which areproduced with
them (EST&Ps) thatbenefit orprotect theenvironment. Itseeks toreconcile theTRIPs
Agreement withtheencouragement oftheglobal useofproprietary EST&Ps relating tothelimited
cases where these EST&Ps aremandated tobeusedunder anMEA orbynational authorities or
where standards orother environmental measures arelaiddown bymultilateral bodies. It
proposes thattheTRIPs Agreement reconcile thedevelopment orgeneration ofEST&Ps withthe
easyaccess toandwidedissemination ofthem on"fairandmost favourable conditions",
interpreted as"preferential andnon-commercial terms". Itsuggests thatthecompulsory licensing
provisions inArticle 31andthetermofprotection provision inArticle 33should beexamined in
suchawayastoensure thattheyencourage thetransfer ofEST&Ps. Italsosuggests thatan
70Non-paper byIndia, 20June 1996.WT/CTE/W/40
Page32
obligation beimposed onIPowners ofEST&Ps intheTRIPs Agreement totransfer such
technology andsellsuchproducts on"fairandmost favourable conditions" upon demand toany
interested party which hasanobligation toadopt these under thenational lawofanother country
orunder international law. Such IPowners should becompensated through afinancial mechanism
foranylosses incurred bythem incomplying withsuchanobligation.
138. Some consider there isnoneedtoundertake thekindofreconciliation proposed. The
experience ofcountries withTRIPs-consistent IPsystems doesnotindicate thataproblem exists
withthedissemination ofEST&Ps asaresult ofthese systems, butthat,rather, problems related
totransfer ofproprietary technology ortotrade inproducts based onsuchtechnologies tends to
occur asaresult ofimpediments toforeign investment andtrade insuchproducts. Noactual
problem withthetransfer ofproprietary technology orintrade inproducts based onsuch
technologies hasbeenestablished and,should anactual problem beidentified, thetruesource of
theproblem should beidentified rather thansimply presuming thatthesource liesintheTRIPs
Agreement.
139. Concerns havebeenexpressed bysome Members about thenegative effects ofsome
technologies ontheenvironment, inparticular theeffects ofbio-technologies which involve
genetically modified organisms whose effects areuncertain. Some havevoiced concern overthe
patenting ofmicro-organisms, genes, genetic materials andgenetically-engineered crops and
plants, which theyfeelraises ethical, moral andreligious problems, andoverthepatenting oflife
forms which mayleadtobiodiversity lossandsocreate environmental anddevelopment problems.
140. Theviewexpressed bysome others isthatArticles 27.2and27.3oftheTRIPs Agreement
areadequate toaddress realproblems inthisarea, should anyarise, andthatnational health and
safety standards aswellasMEAs canoffer additional protection. Also, itisnotwithin the
competence oftheWTO toseektoremedy ethical, moral andreligious problems.
141. Noting thatArticle 27.3(b) oftheTRIPs Agreement istobereviewed in1999, oneview
isthatadetailed discussion ofitsimplications intheareaoftrade andenvironment bepartofthe
review. Another viewisthattheCTE doesnothavearoletoplayinthisreview, given thatthe
TRIPs Council istheproper forum andhasthenecessary expertise forconducting areview of
specific TRIPs provisions, including Article 27.3(b) asspecified intheTRIPs Agreement.
142. With regard totraditional andindigenous knowledge, oneviewisthatthisknowledge has
beenthebasis formuch ofthedevelopment ofmodern agriculture andmedicine, yetthese
communities havetopayforpatented products thatarederived from theirknowledge and
innovation. Onesuggestion inthisregard isthattheTRIPs Agreement should exclude the
possibility ofpatenting processes andproducts derived from naturally occurring biological
resources, since itisdoubtful these canbeconsidered "novel" interms ofthecriteria for
patentability, butitshould accord recognition totraditional interests andrights holders. New
legislation andcodes ofconduct, including changes inthenotion oftrade secrets, maybeneeded
toensure thatcommunities which arethesource oftraditional knowledge receive benefits from its
exploitation. Ithasbeensuggested bythose sharing thisviewthatthereview ofArticle 27ofthe
TRIPs Agreement should takeaccount oftheresults ofnegotiations on"farmer rights" under the
FAO Global System forPlant Genetic Resources andother developments regarding protection of
traditional knowledge, bothintherealm oftheCBD andatthedomestic level.
143. Another viewisthatitisinappropriate toconsider amending theTRIPs Agreement
because traditional orindigenous knowledge isnotanIPandinvolves subject matter thatiswidely
known orinthepublic domain. Therefore, itcannot andshould notbedeemed tobeanIPR.
Pursuant tothisview, unrestricted andunpaid access toplant genetic resources forfoodand
agriculture needs tobemaintained foritistotheadvantage ofallcountries, andthatanopenWT/CTE/W/40
Page33
exchange ofsuchgenetic material leads tobetter research, improved knowledge, more productive
cropcultivars andmore andbetter food. Freemovement ofplant genetic resources forresearch
andbreeding facilitates geneconservation, including theimprovement ofcropgenebanks. Rather
thanseeking asolution inanIPRcontext, itwasproposed thatvoluntary agreements involving
firms, foreign governments andindigenous people could provide forbenefit-sharing and
technological cooperation toinformation providers which would represent aneffective means for
compensating traditional knowledge notsubject toIPprotection; suchprivate contractual
arrangements donotrequire multilateral disciplines andremove theneedforaninternational sui
generis system inthisarea.
144. Inconsidering therelationship oftheTRIPs Agreement toMEAs containing IPR-related
provisions, some suggested taking acautious approach because solittleexperience inthe
implementation ofeither isavailable sofar.They feelitliesoutside theCTE'scompetence to
judge orinterpret provisions ofMEAs, andtheCTE should notprejudge orprejudice future MEA
discussions. Ithasbeensuggested thatinput from theprivate sector, thescientific community, or
NGOs should besought when relevant tofacilitate work inthisarea.
145. With aviewtoensuring theobjectives andprovisions ofMEAs andtheTRIPs Agreement
aremutually supportive, some suggested anexamination ofArticles 7and8oftheTRIPs
Agreement, particularly Article 8.1which grants Members theauthority tolimitR&D activities or
approval oftechnology ongrounds ofenvironmental protection. Inthatrespect attention hasbeen
drawn toChapter 34ofAgenda 21which states thattechnologies inthepublic domain should be
freely transferred tofurther MEA objectives andthemeans explored toencourage thetransfer of
privately-owned technologies protected byIPRs. Another suggestion istointerpret Article 27.2of
theTRIPs Agreement inawaythatisconducive toMEA objectives while notderogating from it.
Onequestion raised iswhether theterm"necessary" inArticle 27.2should beinterpreted inthe
same wayasithasbeeninGATT Article XX,orwhether itshould begiven abroader
interpretation inthecontext ofMEAs. Noting that,ononehand, some MEAs, suchasthe
Montreal Protocol either implicitly orexplicitly prohibit theuseofcertain types oftechnology in
favour ofalternative EST, andthat,ontheother hand, patent holders mayrefuse tolicense EST
onreasonable commercial terms, oneproposal71hasbeentoensure thatArticle 31(b) doesnot
hamper theactual transfer ofESTbyfavouring amonopolistic position forpatent holders of
alternative technology, andbyexamining whether, forthepurpose ofArticle 31(l), itwould be
appropriate tointerpret thealternative ESTtechnology inanMEA asan"important technical
advance ofconsiderable economic significance". Thisproposal explicitly mentions thatitdoesnot
intend tomodify theTRIPs Agreement assuch, buttointroduce suchIPR-related matter involving
anMEA andtheTRIPs Agreement totheCTE withaviewtoclarifying potential ambiguities, if
any. Another viewisthattheelements ofArticle 31oftheTRIPs Agreement adequately address
theissue ofremedying anti-competitive practises.
146. Therelationship between theTRIPs Agreement andtheCBD hasbeendiscussed. Some
consider theyhaveadifferent scope, subject matter andintent butthere isnoconflict or
inconsistency between theirobligations andobjectives. Byensuring adequate protection forthe
innovator, theTRIPs Agreement promotes theCBD'sobjective offurthering technology transfer
related tothecommercialization anduseofgenetic resources. Bysetting asanobjective the
equitable sharing ofthebenefits ofcommercialization orother usesofgenetic resources, theCBD
addresses IPRs indirectly andidentifies technology transfer asoneform ofbenefit sharing its
Parties should promote. TheCBD doesnotaddress specific IPRsystems ortheparticular
characteristics ofIPRs butitdoesprovide thatmechanisms usedtopromote technology transfer
should recognize andbeconsistent withadequate andeffective IPRprotection, which isthe
standard demanded bytheTRIPs Agreement. Bothagreements areviewed ashaving the
71Non-paper bytheRepublic ofKorea, 24July1996.WT/CTE/W/40
Page34
flexibility toachieve environmental objectives. TheTRIPs Agreement permits Members tocarry
outnational policies infavour ofsustainable development andtotakeadequate measures in
conformity withtheCBD. Accordingly, theydidnotseetheneedforfurther work inthisarea.
147. Some feelthere isaneedtoexamine possible inconsistencies between WTO provisions
andtheCBD inthefollowing areas: which agreement would prevail ifaconflict arose between
them, specifically between Parties andnon-parties; whatistherelation between theterms of
access togenetic resources under theCBD (which isbased ontheideaofmutually-agreed terms)
andtheMFN andnational treatment principles oftheTRIPs Agreement; andwhatarethe
possible consequences ofCBD Article 22which provides that"[t]he provisions ofthisConvention
shallnotaffect therights andobligations ofanyContracting Party deriving from anyexisting
international agreement, except where theexercise ofthose rights andobligations would cause a
serious damage orthreat tobiological diversity"?
148. Anumber ofmore specific questions havebeenraised: forexample, whatisthe
relationship between preferential access togenetic resources under Article 15oftheCBD and
GATT provisions suchasArticles IandXI,andwhatisthelinkbetween rights andobligations
under theSPSandTBTAgreements andacountry 'spolicies regarding bio-safety pursuant tothe
CBD? Noting Article 16.5oftheCBD provides thatIPRs should beimplemented inawaythatis
supportive ofanddoesnotruncounter totheobjectives oftheConvention, ithasbeenasked
whether Parties areentitled tousemeasures which limitorrestrict IPRprotection, orresort to
compulsory licensing, ongrounds thatthisisconsistent withtheCBD'sobjectives, especially asit
relates totechnology transfer. Arelated issue iswhether Article 16.1oftheCBD, which
provides fortransfer oftechnology relevant totheconservation andsustainable useofbiodiversity
ortechnology which usesgenetic resources inanenvironmentally-sound manner, andArticle 33
oftheTRIPs Agreement haveconsistent objectives.
149. Comparing therelevant provisions oftheCBD andthose oftheTRIPs Agreement, one
contribution72proposes various changes tothelatter inorder toaccommodate theformer: (i)in
order tobetter address biotechnological inventions, Article 29oftheTRIPs Agreement on
conditions onpatent applicants including fulldisclosure ofpatentable inventions should be
modified soastorequire aclear mention ofthebiological source material, theknown country of
origin andallknown information pertaining toknowledge andpractices oftheuseofbiological
source material byindigenous communities inthecountry oforigin. Thispartofthepatent would
beopentofullpublic scrutiny immediately afterfiling oftheapplication; (ii)toremedy thelack
ofprior informed consent mechanism intheTRIPs Agreement, aMaterial Transfer Agreement
withthecountry oforigin would benecessary where theinventor wishes tousebiological
material, andanInformation Transfer Agreement (ITA) where theinventor makes useof
indigenous ortraditional knowledge; and(iii)anobligation onpatent owners toexecute ITAs for
anytraditional orindigenous knowledge which isalready inthepublic domain orisapartofthe
recorded orotherwise publicly accessible knowledge systems. Itisalsoproposed thattheCTE
examine theprosandconsofevolving asystem forpatenting ofindigenous knowledge andlocal,
contemporary innovations oftraditional folk.
150. Some consider itcontradictory torecognize theimportance ofESTdevelopment while at
thesame timecalling forchanges intheTRIPs Agreement which would havetheeffect of
diminishing incentives todevelop anddisseminate EST, bothabsolutely andrelative toother
technologies. Onesuggestion isthatsolutions toproblems faced bydeveloping countries in
obtaining ESTshould notbesought intheTRIPs Agreement butthrough therelevant MEAs.
According tothisview, technical issues ofthissortwould require ataminimum fuller study in
72Non-paper byIndia, 19July1996.WT/CTE/W/40
Page35
more appropriate fora. Those expressing thisviewquestioned thevalue andfeasibility ofthe
proposal relating topatent information.
151. There havebeensuggestions forpossible areas ofcooperation between theTRIPs
Agreement andMEAs which contain IPR-related obligations. Oneisthatthose obligations should
benotified under theTRIPs Agreement soastofacilitate synergies withMEAs. Another isto
consider channelling relevant information ontheimplementation ofIPR-related commitments
contained inthese MEAs through theTRIPs Agreement 'snotification mechanisms. TheCTE
should bekeptinformed ofdevelopments inother forasuchastheCBD andInternational
Convention fortheProtection ofNewVarieties ofPlants, andofthedevelopments ofemerging
IPR-related concepts, suchasfarmer 'srights andplant breeder 'srights inrelevant international
organizations. Some support closer cooperation between theWTO Secretariat andother
international organizations inthisarea. Following arequest from theBiodiversity Convention 's
Secretariat toassist inthepreparation ofareport on"Biological Diversity andTrade-Related
Intellectual Property Rights: Synergies andRelationships", theCTE agreed toderestrict relevant
parts ofitsdocumentation.73
152. Oneproposal suggests74discussion continue onanumber ofissues raised bythe
relationship between theTRIPs Agreement andenvironmental objectives: (i)thegeneration,
access toandtransfer ofESTs; (ii)theprovision ofincentives fortheconservation and
sustainable useofbiological resources andtheequitable sharing ofthebenefits ofthisuse,
including inrelation totheknowledge, innovations andpractices ofindigenous andlocal
communities embodying traditional lifestyles; and(iii)thetreatment oftechnology thatmay
adversely affect theenvironment.
ITEM 9 Thework programme envisaged intheDecision onTrade inServices andthe
Environment
153. Pursuant totheMinisterial Decision onTrade inServices andtheEnvironment, the
Council forTrade inServices, atitsmeeting on1March 1995, adopted aDecision
"[a]cknowledging thatmeasures necessary toprotect theenvironment mayconflict withthe
provisions oftheAgreement; and[n]oting thatsince measures necessary toprotect the
environment typically haveastheirobjective theprotection ofhuman animal orplant lifeor
health, itisnotclear thatthere isaneedtoprovide formore thaniscontained inparagraph (b)of
Article XIV". Itdecided "[i]norder todetermine whether anymodification ofArticle XIVofthe
Agreement isrequired totakeaccount ofsuchmeasures (i.e.measures necessary toprotect the
environment), torequest theCTE toexamine andreport, withrecommendations ifany,onthe
relationship between services trade andtheenvironment including theissue ofsustainable
development. TheCTE shallalsoexamine therelevance ofintergovernmental agreements onthe
environment andtheirrelationship totheAgreement. TheCTE shallreport theresults ofitswork
atthefirstbiennial meeting oftheMinisterial Conference aftertheentry intoforce ofthe
Agreement Establishing theWorld Trade Organization".75
154. Discussions onthisItemhavebeenonlyexploratory. Oneviewisthatsimilar issues with
regard totrade andenvironment ariseintheareaoftrade andservices tothose thatariseinthe
73WT/CTE/W/8 (8June1995), WT/CTE/M/3 (18July1995), WT/CTE/W/22 (21February 1996), WT/CTE/M/8
(11April 1996).
74Non-paper byAustralia, 11September 1996.
75S/L/4, 4April 1995.WT/CTE/W/40
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areaoftrade ingoods, butthattheymight needtobeapproached differently inviewofthe
differences between theGATT andtheGATS provisions. Careful analysis isneeded to
distinguish environmental measures applied directly totrade inservices from environmental
measures applied toproducts associated withthattrade inorder toidentify whether theissues
raised should beaddressed inthecontext oftheGATS orofother WTO provisions. Inthis
regard, some areoftheviewthatservices, being intangible, arenotpolluting perse;
environmental considerations mayoccur onlywhen thedelivery ofservices isassociated with
trade ingoods. Those considerations arealready covered bytheWTO provisions relevant to
trade inproducts.
155. Given thatGATS Article XIV(b) contains thesame language asGATT Article XX(b), one
viewisthattheneedtomodify itshould beconsidered onlyafterprogress hasbeenmade on
Item1.Ithasbeennoted, however, thattheGATS isstillevolving andincludes concepts thatare
notcontained intheGATT sothatconclusions reached intheareaofgoods trade maynotapply
automatically toservices trade. Ithasbeennoted thatthere isnoanalog toGATT Article XX(g)
intheGATS. Asuggested approach istoidentify restrictive measures applied toservices trade,
consider whether these could bejustified byGATS provisions other thanArticle XIV(b), suchas
Article VI,VIIandXIV(c), andexamine whether Article XIV(b) isanadequate basis onwhich to
address environmental concerns. Onepotential problem raised inthiscontext isthatinvoking
Article XIV(b) afteraservice supplier hasinvested andestablished inadomestic market could
prove particularly disruptive andcostly ifthesupplier isobliged todisinvest. Before theCTE
conducts aseparate analysis ofthisissue, Members havebeenasked tobring toitsattention
evidence theymayhaveofmeasures which theyfeelmayneedtobeapplied forenvironmental
purposes toservices trade butwhich maynotbecovered bytheGATS provisions andinparticular
Article XIV(b).
156. Concerning therelationship ofrelevant MEAs totheGATS, itissuggested thatprogress
might bepossible independently ofprogress under Item1andthatafirststage would beto
identify possible points ofcontact between relevant MEAs andtheGATS. Theimportance of
taking account ofwork inother fora, suchastheNegotiating Group onMaritime Services aswell
astheInternational Civil Aviation Organization andtheInternational Maritime Organization is
emphasized. Analysis could focus ontherelationship oftheGATS provisions, suchasArticle VI,
totrade measures applied pursuant toMEAs dealing withservices trade, suchastheBasel
Convention, theLondon Convention onDumping andtheMontreal Protocol. Consideration
should alsobegiven towhether MEAs indicated thatparticular services sectors needspecial
environmental measures.
157. With regard totherelationship between services trade andtheenvironment, including the
issue ofsustainable development, onesuggestion isthatsectoral casestudies could beconducted,
taking account ofwork inother fora, toidentify theenvironmental impact oftheliberalization of
trade inservices (e.g.transport andtourism) andtheimpact thatcertain environmental legislation
might haveontrade liberalization (e.g.conditions applicable toservices suppliers inthefieldof
waste management). Oneviewisthatimproved market access forenvironmental services and
technology resulting from theGATS holdout"win-win" opportunities fortrade andthe
environment. Another viewisthattheCTE hasneither themandate northecapability toconduct
studies ontheenvironmental impact ofservice trade oritsliberalization.
158. Ithasbeensuggested thatparticular attention should bepaidtoensuring thatGATS
Article XXVIII(c)(ii) measures areapplied onanational treatment basis toallow allservices
suppliers access toanduseofpublic environmental services. Further analysis isalsosuggested on
thetrade effect ofenvironmental subsidies andhowthismight bereflected infuture GATS
disciplines.WT/CTE/W/40
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ITEM 10 Input totherelevant bodies inrespect ofappropriate arrangements forrelations
withintergovernmental andnon-governmental organizations referred toin
Article VoftheWTO
159. ThisItemwasdiscussed ininformal consultations under boththeSub-Committee onTrade
andEnvironment oftheWTO Preparatory Committee andtheCTE, aswellasonanumber of
occasions ininformal andformal meetings oftheCTE.
160. Pending adecision bytheGeneral Council onconditions andcriteria forobserver status
forintergovernmental organizations (IGOs), theCTE extended observer status onanadhocbasis
tofourteen IGOs.76Theprocedures were confirmed bytheGeneral Council atitsmeeting on
18July1996.77TheWTO Secretariat wasrequested tokeeptheCTE informed about work on
trade andenvironment underway inother intergovernmental organizations, including relevant
MEA bodies.
161. There hasbeensupport forcontinuing toimprove thetransparency ofthework ofthe
WTO intheareaoftrade andenvironment andincreasing public access toinformation through
timely derestriction oftheCTE'sworking documents andtherecords ofitsformal discussions,
while emphasizing theimportance attached toeachMember respecting fullytheconfidential nature
ofWTO documentation thatisrestricted initsdistribution. Itisrecognized thatthere isaneedto
respond topublic interest inthisarea, toprovide aclear ideaofwhatisbeing discussed inthe
WTO andhowthose discussions areprogressing, andtobuild public support forthecontribution
thattheWTO canmake tobetter environmental protection andthepromotion ofsustainable
development. Atitsmeeting on18July1996, theGeneral Council adopted aDecision on
"Procedures fortheCirculation andDerestriction ofWTO documents".78
162. Different views havebeenexpressed about theinvolvement ofnon-governmental
organizations (NGOs) inthework oftheCTE79.
163. OneviewisthatNGOs could playaconstructive rolebyproviding information and
technical expertise onenvironmental matters, andtheirpresence atformal CTE meetings would be
arecognition ofthepublic interest thatexists inthisareaoftheWTO 'swork andwould helpto
make thatwork more broadly available tothepublic. Untransparent proceedings, itisfeltby
some, perpetuated asecretive image oftheWTO anddiminished public confidence inandsupport
forWTO work. Thisleads tomisunderstanding andsuspicion ofthedeliberative processes ofthe
trading system. Asuggestion hasbeenmade toinvite representatives ofspecialized NGOs witha
direct interest intrade andtheenvironment tomake contributions toCTE meetings.
164. Asecond viewisthatitwould notbeappropriate toallow NGOs toparticipate inthe
proceedings oftheCTE. Many feelthatprimary responsibility fortaking account ofthemany
76TheUnited Nations (UN), theUnited Nations Conference onTrade andDevelopment (UNCTAD), theWorld Bank,
theInternational Monetary Fund (IMF), theUnited Nations Environment Program (UNEP), United Nations Development
Program (UNDP), Commission forSustainable Development (CSD), theFood andAgriculture Organization (FAO), the
International Trade Centre (ITC), theOrganization forEconomic Cooperation andDevelopment (OECD), andtheEuropean
FreeTrade Association (EFTA), theUNIndustrial Development Organization (UNIDO), theWorld Customs Organization
(WCO) andtheInternational Organization forStandardization (ISO).
77Decision on"Observer status forinternational intergovernmental organizations intheWTO". WT/L/161/Rev.1.
78WT/L/160, 22July1996.
79TheSecretariatprovidedinformationonarrangement sinplaceinotherinter-gover nment alorganizationsforconsul tations
withnon-governmental organizations (PC/SCTE/W/2).WT/CTE/W/40
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different elements ofpublic interest which arebrought tobearontrade policy-making, and
consequently forrelations withNGOs, liesatthenational level. Arrangements intheWTO
cannot substitute forthis. Furthermore, some feelthatsucharrangements would unnecessarily
complicate theconsultative process withNGOs atthenational level, andthattheWTO 's
deliberations could becompromised ifpublic interest groups were allowed toparticipate directly
initswork. Also, practical difficulties havebeenforeseen ininvolving NGOs directly inCTE
meetings.
165. Atitsmeeting of18July1996, theGeneral Council adopted aDecision on"Guidelines
forarrangements onrelations withnon-governmental organizations".80
III.CONCLUSIONS AND RECOMMENDATIONS
166. TheWTO Committee onTrade andEnvironment (CTE) hasinitiated work onallItems of
itswork programme setoutintheMarrakesh Ministerial Decision onTrade andEnvironment.
TheCTE'sdiscussions were enriched bythework undertaken previously bytheGATT Group on
Environmental Measures andInternational Trade andintheWTO Preparatory Committee.
Discussions havedemonstrated thecomprehensive andcomplex nature oftheissues covered by
theMinisterial work programme, which reflects theWTO 'sinterest inbuilding aconstructive
relationship between trade andenvironmental concerns.
167. TheCTE'sdiscussions havebeenguided bytheconsideration contained intheMinisterial
Decision thatthere should notbenorneedbeanypolicy contradiction between upholding and
safeguarding anopen, equitable andnon-discriminatory multilateral trading system ontheone
handandacting fortheprotection oftheenvironment ontheother. These twoareas ofpolicy-
making arebothimportant andtheyshould bemutually supportive inorder topromote sustainable
development. Discussions havedemonstrated thatthemultilateral trading system hasthecapacity
tofurther integrate environmental considerations andenhance itscontribution tothepromotion of
sustainable development without undermining itsopen, equitable andnon-discriminatory character;
implementation oftheresults oftheUruguay Round negotiations would represent already a
significant contribution inthatregard.
168. TheCTE'sdiscussions havebeenguided alsobytheconsideration thatthecompetence of
themultilateral trading system islimited totrade policies andthose trade-related aspects of
environmental policies which mayresult insignificant trade effects foritsMembers. Itis
recognized thatachieving theindividual aswellasthejointobjectives ofWTO Member
governments intheareas oftrade, environment andsustainable development requires a
coordinated approach thatdraws oninterdisciplinary expertise. Inthatregard, policy coordination
between trade andenvironment officials atthenational levelhasanimportant roletoplay. Work
intheCTE ishelping tobetter equip trade officials tomake theircontribution inthisarea.
169. WTO Member governments arecommitted nottointroduce WTO-inconsistent or
protectionist trade restrictions orcountervailing measures inanattempt tooffset anyrealor
perceived adverse domestic economic orcompetitiveness effects ofapplying environmental
policies; notonlywould thisundermine theopen, equitable andnon-discriminatory nature ofthe
multilateral trading system, itwould alsoprove counterproductive tomeeting environmental
objectives andpromoting sustainable development. Equally, andbearing inmind thefactthat
governments havetherighttoestablish theirnational environmental standards inaccordance with
theirrespective environmental anddevelopmental conditions, needs andpriorities, WTO Members
notethatitwould beinappropriate forthem torelax theirexisting national environmental
80WT/L/162, 23July1996.WT/CTE/W/40
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standards ortheirenforcement inorder topromote theirtrade. TheCTE notes thestatement in
the1995 Report onTrade andEnvironment totheOECD Council atMinisterial Level thatthere
hasbeennoevidence ofasystematic relationship between existing environmental policies and
competitiveness impacts, norofcountries deliberately resorting tolowenvironmental standards to
gaincompetitive advantages. TheCTE welcomes similar policy statements made inother
inter-governmental fora.
ITEM 1 Therelationship between theprovisions ofthemultilateral trading system and
trade measures forenvironmental purposes, including those pursuant to
multilateral environmental agreements
ITEM 5 Therelationship between thedispute settlement mechanisms inthemultilateral
trading system andthose found inmultilateral environmental agreements
170. These twoItems haveproved tobeclosely linked. TheCTE hasdiscussed them together
anddrawn conclusions andrecommendations onthem jointly.
171. TheCTE notes thatgovernments haveendorsed intheresults ofthe1992 U.N.
Conference onEnvironment andDevelopment theircommitment toPrinciple 12ofthe
RioDeclaration that"Unilateral actions todealwithenvironmental challenges outside the
jurisdiction oftheimporting country should beavoided. Environmental measures addressing
transboundary orglobal problems should, asfaraspossible, bebased onaninternational
consensus." There isaclear complementarity between thisapproach andthework oftheWTO in
seeking cooperative multilateral solutions totrade concerns. TheCTE endorses andsupports
multilateral solutions based oninternational cooperation andconsensus asthebestandmost
effective wayforgovernments totackle environmental problems ofatransboundary orglobal
nature. WTO Agreements andmultilateral environmental agreements (MEAs) arerepresentative
ofefforts oftheinternational community topursue shared goals, andinthedevelopment ofa
mutually supportive relationship between them duerespect must beafforded toboth.
172. Therelationship between theprovisions ofthemultilateral trading system andtrade
measures forenvironmental purposes taken pursuant tomultilateral environmental agreements is
multifaceted. Finding therightbalance todescribe andaddress thisrelationship intheCTE has
proved tobeaverydemanding task,particularly given thevarying nature oftheissues involved in
eachMEA.
173. Adequate international cooperation provisions, including among them financial and
technological transfers andcapacity building, aspartofapolicy package inMEAs areimportant
andcanbeindispensable elements tofacilitate theability ofgovernments, particularly of
developing countries, tobecome Parties toanMEA andprovide resources andassistance tohelp
them tackle theenvironmental problems which theMEA isseeking toresolve andthusto
implement theprovisions oftheMEA effectively, inkeeping withtheprinciple ofcommon but
differentiated responsibility. Trade measures based onspecifically agreed-upon provisions can
alsobeneeded incertain cases toachieve theenvironmental objectives ofanMEA, particularly
where trade isrelated directly tothesource ofanenvironmental problem. They haveplayed an
important roleinsome MEAs inthepast,andtheymaybeneeded toplayasimilarly important
roleincertain cases inthefuture.
174. TheCTE recognizes thattheevolving relationship between MEAs andthemultilateral
trading system iscomplex andthatdifferent questions mayemerge. Inthisrespect, thefollowing
points havebeennoted inthecourse ofdiscussions intheCTE:WT/CTE/W/40
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(i) Trade measures havebeenincluded inarelatively small number ofMEAs. There
isnoclear indication forthetimebeing ofwhen orhowtheymaybeneeded or
usedinthefuture. Uptonow, there hasbeennoGATT orWTO dispute
concerning trade measures applied pursuant toanMEA.
(ii) Arange ofprovisions intheWTO canaccommodate theuseoftrade-related
measures needed forenvironmental purposes, including measures taken pursuant
toMEAs. Thatincludes thedefined scope provided bytherelevant criteria ofthe
"General Exceptions" provisions ofGATT Article XX. Thisaccommodation is
valuable anditisimportant thatitbepreserved byall.
(iii) Inthecontext oftheconsideration oftheinclusion ofspecifically agreed-upon
trade provisions inMEAs, mutual respect should bepaidtotechnical andpolicy
expertise inboththetrade andenvironment areas.
(iv) Inpractice, incases where there isaconsensus among Parties toanMEA toapply
among themselves specifically mandated trade measures, disputes between them
overtheuseofsuchmeasures areunlikely tooccur intheWTO.
(v) Inthenegotiation ofafuture MEA, particular careshould betaken overhowtrade
measures maybeconsidered forapplication tonon-parties.
(vi) Policy coordination between trade andenvironment policy officials atthenational
levelplays animportant roleinensuring thatWTO Members areabletorespect
thecommitments theyhavemade intheseparate foraoftheWTO andMEAs and
inreducing thepossibility oflegalinconsistencies arising.
175. Inorder toenhance understanding oftherelationship between trade andenvironmental
policies, co-operation between theWTO andrelevant MEAs institutions isvaluable andshould be
encouraged. TheCTE recommends thattheWTO Secretariat continue toplayaconstructive role
through itscooperative efforts withtheSecretariats ofMEAs andprovide information toWTO
Members ontrade-related work inMEAs. Asnoted intheCTE'sconclusions under Item10of
itswork programme, observer status forrelevant MEAs inWTO bodies, asappropriate, canplay
apositive roleincreating clearer appreciation ofthemutually supportive roleoftrade and
environmental policies. Requests from theappropriate bodies ofMEAs forobserver status should
beconsidered inthislight. TheCTE should alsoconsider extending invitations toappropriate
MEA institutions toattend relevant discussions oftheCTE.
176. Asdescribed inSection IIofthisReport, views differed onwhether anymodifications to
theprovisions ofthemultilateral trading system arerequired under thisItemofthework
programme. Thismatter should bekeptunder review andfurther work under thisItemshould be
carried outdrawing onthework undertaken todate.
177. TheCTE notes thatboththeWTO andMEA dispute settlement mechanisms emphasize
theavoidance ofdisputes, including through parties seeking mutually satisfactory solutions.
178. TheCTE recognizes thatWTO Members havenotresorted toWTO dispute settlement
withaviewtoundermining theobligations theyaccepted bybecoming Parties toanMEA, andthe
CTE considers thatthiswillremain thecase. While WTO Members havetherighttobring
disputes totheWTO dispute settlement mechanism, ifadispute arises between WTO Members,
Parties toanMEA, overtheuseoftrade measures theyareapplying between themselves pursuant
totheMEA, theyshould consider trying toresolve itthrough thedispute settlement mechanismsWT/CTE/W/40
Page41
available under theMEA. Improved compliance mechanisms anddispute settlement mechanisms
available inMEAs would encourage resolution ofanysuchdisputes within theMEA.
179. TheCTE recognizes thebenefit ofhaving allrelevant expertise available toWTO panels
incases involving trade-related environmental measures, including trade measures taken pursuant
toMEAs. Article 13andAppendix 4oftheDSU provide themeans forapanel toseek
information andtechnical advice from anyindividual orbody which itdeems appropriate andto
consult experts, including byestablishing expert review groups.
ITEM 2 Therelationship between environmental policies relevant totrade and
environmental measures withsignificant trade effects andtheprovisions
ofthemultilateral trading system
180. Anumber oftrade-related environmental policies andmeasures notcovered elsewhere in
thework programme havebeendiscussed inapreliminary wayunder thisItem. Further
examination andanalysis ofthese policies andmeasures intheCTE willberequired, including
analysis oftheireffects ontrade.
181. There hasalsobeensome discussion oftheusebygovernments atthenational levelof
environmental reviews oftrade agreements, andoftherelationship andcompatibility ofgeneral
trade andenvironmental policy-making principles. Noconclusions havebeendrawn sofaron
either ofthese issues. Further work willberequired onthisItemintheCTE.
ITEM 3(A) Therelationship between theprovisions ofthemultilateral trading system and
charges andtaxes forenvironmental purposes
182. Scope exists under WTO provisions forMember governments toapply environmental
charges andtaxes. TheCTE hasundertaken sofarapreliminary examination ofsome ofthese
issues under thisItem. Further work onthisItemisneeded.
ITEM 3(B) Therelationship between theprovisions ofthemultilateral trading system and
requirements forenvironmental purposes relating toproducts, including standards
andtechnical regulations, packaging, labelling andrecycling
183. Themajor partoftheCTE'swork sofarunder thisItemhasinvolved examination and
analysis ofvoluntary eco-labelling schemes/programmes, including those based onlifecycle
approaches, andtheirrelationship toWTO provisions andtotheAgreement onTechnical Barriers
toTrade (TBT) inparticular. Well-designed eco-labelling schemes/programmes canbeeffective
instruments ofenvironmental policy toencourage thedevelopment ofanenvironmentally-
conscious consumer public. TheCTE noted thatChapter IVofAgenda 21encouraged the
expansion ofenvironmental labelling andother environmentally-related product information
programmes designed toassist consumers inmaking informed purchasing decisions. TheCTE
alsonoted thateco-labelling schemes/programmes haveraised, incertain cases, significant
concerns about theirpossible trade effects.
184. Increased transparency canhelpdealwithtrade concerns regarding eco-labelling
schemes/programmes while itcanalsohelptomeetenvironmental objectives byproviding
accurate andcomprehensive information toconsumers. TheCTE feltthatanimportant starting
point forWTO Members toaddress some ofthetrade concerns raised overeco-labelling
schemes/programmes isbydiscussing howtoensure adequate transparency intheirpreparation,WT/CTE/W/40
Page42
adoption andapplication, including affording opportunities forparticipation intheirpreparation by
interested parties from other countries. Thetransparency provisions contained intheTBT
Agreement, including theCode ofGood Practice forstandardizing bodies contained inAnnex 3of
theAgreement provide areference point tothefurther work oftheCTE inenhancing
transparency ofeco-labelling schemes/programmes.
185. Asstated above, theCTE'sdiscussion oneco-labelling hasfocused primarily onvoluntary
eco-labelling schemes/programmes andinparticular onthetransparency ofsuch
schemes/programmes. Without prejudice totheviews ofWTO Members concerning thecoverage
andapplication oftheTBTAgreement tocertain aspects ofsuchvoluntary eco-labelling
schemes/programmes andcriteria, i.e.those aspects concerning non-product-related PPMs, and
therefore totheobligations ofMembers under thisAgreement regarding those aspects, theCTE
stresses theimportance ofWTO Members following theprovisions oftheTBTAgreement andits
Code ofGood Practice, including those ontransparency. Inthiscontext, theCTE underlines the
particular importance ofensuring fairaccess offoreign producers toeco-labelling
schemes/programmes.
186. TheCTE willconduct further work onallissues contained under thisItem, including with
respect todeveloping countries andleastdeveloped countries. Such further work could involve
cooperation withtheCommittee onTBTandtakeintoaccount thework ofother international
fora, forinstance UNEP, UNCTAD, OECD, ITCandISO,asappropriate.
ITEM 4 Theprovisions ofthemultilateral trading system withrespect tothetransparency
oftrade measures usedforenvironmental purposes andenvironmental measures
andrequirements which havesignificant trade effects
187. WTO transparency provisions andmechanisms arenotanendinthemselves. However,
theyfulfil animportant roleinensuring theproper functioning ofthemultilateral trading system,
inhelping toprevent unnecessary trade restriction anddistortion from occurring, inproviding
information about market opportunities andinhelping toavoid trade disputes from arising. They
canalsoprovide avaluable firststepinensuring thattrade andenvironment polices aredeveloped
andimplemented inamutually supportive way. TheCTE considers transparency tobean
important aspect ofallItems ofitswork programme where therelationship ofWTO provisions to
specific trade-related environmental measures isreceiving attention.
188. TheCTE recognizes thattrade-related environmental measures should notberequired to
meetmore onerous transparency requirements thanother measures thataffect trade.
189. TheCTE concludes thatnomodifications toWTO rules arerequired toensure adequate
transparency forexisting trade-related environmental measures. Nevertheless, theCTE should
keepunder review theadequacy ofexisting transparency provisions withrespect totrade-related
environmental measures, including theresults ofthework oftheWorking Group onNotification
Obligations andProcedures andwhether theCommittees andCouncils dedicated toindividual
WTO Agreements consider there isanyneedtoreview thetransparency provisions ofthose
Agreements inparticular instances andwhether compliance withtheprovisions isviewed as
satisfactory.
190. TheCTE notes thatsome WTO Members aredealing withsome notifications differently,
bothinterms oftheirunderstanding ofwhich types ofenvironmental measures require
notification, andunder which WTO provisions. Such asituation needs tobeimproved through
jointefforts byMembers toclarify theunderstanding ofthenotification requirements concerned.WT/CTE/W/40
Page43
191. TheCTE suggests thatMembers consider requests foradditional information onmeasures
notified under theWTO, ormore generally supply information toMembers, especially developing
country Members, about market opportunities created byenvironmental measures.
192. Inthemeantime, theCTE recommends thattheWTO Secretariat compile from theCentral
Registry ofNotifications allnotifications oftrade-related environmental measures andcollate these
inasingle database which canbeaccessed byWTO Members. Thedatabase could contain
information where available foreachnotified measure: itsnature/title; objective(s); product
coverage; relevant WTO provisions andMEA provisions; andadescription ofhowitoperates.
Thisdatabase should bekeptupdated.
193. TheCTE welcomes theefforts ofother inter-governmental organizations, inparticular the
UNCTAD andITC, tocollect anddisseminate additional information ontheuseoftrade-related
environmental measures, andrecommends theWTO Secretariat cooperate withthose organizations
toensure duplication isavoided.
194. Thepossibility ofinformation ontrade-related environmental measures being made
available voluntarily byMembers intheirTrade Policy Reviews andoftheSecretariat including
suchinformation initsTPRReports wasnoted asapossible issue tobeexplored inconsultation
withtheTPRBody.
ITEM 6 Theeffect ofenvironmental measures onmarket access, especially inrelation to
developing countries, inparticular totheleastdeveloped among them, and
environmental benefits ofremoving trade restrictions anddistortions
195. Itisunder thisItemthattheCTE hasdiscussed howtheWTO cancontribute tomaking
international trade andenvironmental policies mutually supportive through trade liberalization and
appropriate development andenvironmental policies determined atthenational levelforthe
promotion ofsustainable development.
196. TheCTE acknowledges thatanopen, equitable andnon-discriminatory multilateral trading
system andenvironmental protection areessential topromote sustainable development andthat
there isaclose linkage between poverty andenvironmental degradation. Emphasis hasbeen
placed ontheimportance ofcooperation intheessential taskofalleviating anderadicating poverty
inorder toachieve sustainable development andtheimportant rolethatincreased trade andmarket
access opportunities canmake inthisregard. Itwasnoted thatmany countries remain marginal
participants inworld trade. Inthisrespect, theCTE could contribute totheidentification oftrade
policy actions which canenhance theparticipation inworld trade ofdeveloping countries, andin
particular theleastdeveloped among them, andpromote environmental protection intheinterest of
sustainable development.
197. Thepossible effects ofenvironmental measures onmarket access, especially inrelation to
developing countries, inparticular totheleastdeveloped among them, havebeendiscussed.
There isconcern thatenvironmental measures andrequirements mayadversely affect the
competitiveness andmarket access opportunities ofsmall andmedium-sized enterprises especially
indeveloping countries. Theenvironmental benefits oftrade liberalization, including theremoval
oftrade restrictions anddistortions, hasbeenaddressed atbothageneral andsectoral levelandin
relation tospecific trade restrictions. TheCTE emphasizes theimportance ofmarket access
opportunities inassisting developing countries obtain theresources toimplement adequate
developmental andenvironmental policies determined atthenational level, diversify their
economies andprovide income-generating activities forthepoor. Consequently, improving
market access opportunities andpreservation oftheopen, equitable andnon-discriminatory natureWT/CTE/W/40
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ofthemultilateral trading system isessential forsupporting countries intheirefforts toensure
sustainable management oftheirresources. Ithasbeenrecognized thattrade liberalization
including theelimination oftrade restrictions anddistortions canyield developmental and
environmental benefits byfacilitating amore efficient allocation anduseofresources. Atthe
same time, however, theCTE underlines thatimplementing appropriate environmental policies
determined atthenational levelaspartofsustainable development strategies isneeded inorder to
ensure thatthese benefits arerealized andthattrade-induced growth willbesustainable. From
thisperspective, ithasbeenrecognized thattheprompt andfullimplementation ofthe
commitments made intheUruguay Round willconstitute animportant contribution inthisregard.
198. Discussions havetaken place onwhether andhowtheremoval oftrade restrictions and
distortions, inparticular hightariffs, tariff escalation, export restrictions, subsidies andnon-tariff
measures, hasthepotential toyield benefits forboththemultilateral trading system andthe
environment. Uptonowdiscussions havebeencentred ontheagriculture sector, andaproposal
ontheenergy sector hasbeentabled. Nevertheless, theCommittee agrees thatitshould broaden
anddeepen itsanalysis alsotoother sectors, suchastropical andnatural resource-based products,
textiles andclothing, fisheries, forest products, environmental services andnon-ferrous metals.
Further work onthisItemshould bebased onanalytical work andempirical evidence andshould
takeintoaccount different country-specific natural andsocio-economic conditions andthe
specificity ofthesectors andmeasures involved.
199. Further work should alsofocus ontheenvironmental benefits thatmayarisefrom
enhancing existing market access opportunities fordeveloping countries, andinparticular theleast
developed among them, andthecontribution thatimproved market access opportunities could
make inassisting developing countries inimplementing adequate environmental policies
determined atthenational level. Inthiscontext, particular attention should bedevoted tothe
environmental benefits ofinitiatives thatcould enhance thetrade performance ofcountries which
remain onlymarginal participants inworld trade, including lowincome commodity-dependent
countries. Environmentally-friendly products from developing countries should alsobeconsidered
inthisregard. Thiswork should takeparticular account oftheneeds ofsmall andmedium-sized
enterprises. Further work isneeded toensure thattheimplementation ofenvironmental measures
doesnotresult indisguised restrictions ontrade, particularly those thathaveadverse effects on
existing market access opportunities ofdeveloping countries.
ITEM 7 Theissue oftheexport ofdomestically prohibited goods
200. TheCTE recognizes thatserious concerns havebeenexpressed bysome developing and
least-developed country Members about theexport tothem ofproducts whose domestic saleoruse
isbanned orseverely restricted because theyposeathreat tohuman, animal orplant lifeorhealth
ortheenvironment. These Members consider thattheydonothavesufficient timely information
about thecharacteristics ofthese products northetechnical ortechnological capacity tomake
informed decisions about importing them.
201. Atthesame time, progress continues tobemade inother inter-governmental organizations
inaddressing problems created bytrade inpotentially hazardous orharmful products. TheCTE
recommends thatWTO Members alsoconsider participating intheactivities ofother organizations
which havetherelevant expertise forproviding technical assistance inthisfield.
202. TheCTE needs tocontinue toconcentrate onwhatcontribution could bemade inthisarea
bytheWTO, bearing inmind theneedforthiswork neither toduplicate nortodeflect attention
from thework ofother specialized inter-governmental fora.WT/CTE/W/40
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203. Inthemeantime, theCTE: (a)recommends thattheWTO Secretariat determine what
information isalready available intheWTO ontrade-related environmental measures which relate
totrade indomestically prohibited goods, including onrestrictions orbansondomestic salesor
useofproducts which areormaybeexported; (b)encourages WTO Members tosubmit tothe
Secretariat anyadditional information theyhavewhich theyfeelcould helpitindrawing upa
comprehensive picture ofthesituation throughout theWTO system.
204. Thisdatabase canassist thefurther work oftheCTE inthisarea, aswellaspotentially
provide valuable information toindividual WTO Members. Theinformation should beinstalled in
thedatabase oftrade-related environmental measures referred tounder Item4.
205. TheCTE recognizes theimportant rolethattechnical assistance andtransfer of
technology, onmutually agreed terms andconditions, related todomestically-prohibited goods
where trade isallowed bytheinternational community canplayinthisfield, bothintackling
environmental problems attheirsource andinhelping toavoid unnecessary additional trade
restrictions ontheproducts involved. WTO Members should beencouraged toprovide technical
assistance toother Members, especially developing country Members, particularly the
least-developed among them, either bilaterally orthrough appropriate inter-governmental
organizations, toassist these countries instrengthening theirtechnical capacity tomonitor and,
where necessary, control imports ofdomestically prohibited goods.
ITEM 8 Therelevant provisions oftheAgreement onTrade-related Aspects ofIntellectual
Property Rights
206. TheCTE hasdiscussed awidevariety ofissues related tothegeneration, access toand
transfer ofenvironmentally sound technology andproducts (EST&Ps), including intherelevant
provisions ofsome MEAs, asrelated totheTRIPs Agreement. TheCTE recalls thereference in
thepreamble totheTRIPs Agreement totheneedtopromote theeffective andadequate protection
ofintellectual property rights andtheobjectives oftheTRIPs Agreement thattheprotection and
enforcement ofintellectual property rights should contribute tothepromotion oftechnological
innovation andtothetransfer anddissemination oftechnology, tothemutual advantage of
producers andusers oftechnological knowledge andinamanner conducive tosocial and
economic welfare andtoabalance ofrights andobligations.
207. TheCTE noted thestatement inParagraph 34.7ofAgenda 21that"...access toand
transfer ofenvironmentally-sound technology areessential requirements forsustainable
development." TheCTE alsonoted thattheTRIPs Agreement hasanessential roleinfacilitating
suchaccess andtransfer. Positive measures, suchasaccess toandtransfer oftechnology both
according totheterms andconditions stipulated inthecovered MEAs andwithout prejudice tothe
requirements oftheTRIPs Agreement canbeeffective instruments toassist developing countries
tomeetmultilaterally-agreed targets insome MEAs andinkeeping withtheprinciple ofcommon
butdifferentiated responsibilities intheRioDeclaration.
208. Further work isrequired tohelpdevelop acommon appreciation oftherelationship ofthe
relevant provisions oftheTRIPs Agreement totheprotection oftheenvironment andthe
promotion ofsustainable development, andwhether andhow, incomparison toother factors, these
provisions relate, inparticular, tothefollowing issues: (a)facilitating thegeneration ofEST&Ps;
(b)facilitating theaccess toandtransfer anddissemination ofEST&Ps; (c)environmentally-
unsound technologies andproducts; and(d)thecreation ofincentives fortheconservation of
biological diversity, thesustainable useofitscomponents, andthefairandequitable sharing of
thebenefits arising outoftheutilization ofgenetic resources including theprotection ofWT/CTE/W/40
Page46
knowledge, innovations andpractices ofindigenous andlocalcommunities embodying traditional
lifestyles relevant totheconservation andsustainable useofbiodiversity.
209. Some issues areunder consideration bytheParties totheConvention onBiological
Diversity whoarealsolooking atthesynergies andrelationship between itsobjectives andthe
TRIPs Agreement. Information hasbeenshared bytheCTE regarding itswork inresponse to
requests bytheSecretariat oftheConvention onBiodiversity. Theexchange ofinformation
between theCTE andtheConvention onBiodiversity might bepursued further, asappropriate.
ITEM 9 Thework programme envisaged intheDecision onTrade inServices andthe
Environment
210. TheGATS isanewagreement which isstillevolving andincludes concepts which arenot
contained intheGATT. Preliminary discussion intheCTE todateonthisItemhasnotledtothe
identification ofanymeasures thatMembers feelmayneedtobeapplied forenvironmental
purposes toservices trade which would notbecovered adequately byGATS provisions, in
particular Article XIV(b). Aninvitation bytheCTE toMembers tosubmit anyfurther
information inthisregard remains open.
211. Further work intheCTE onthisItemisnecessary before itcould beinaposition todraw
anyconclusions ontherelationship between services trade andtheenvironment, oronthe
relevance ofinter-governmental agreements ontheenvironment andtheirrelationship totheGATS
inthecontext ofsustainable development.
ITEM 10 Input totherelevant bodies inrespect ofappropriate arrangements forrelations
withintergovernmental andnon-governmental organizations referred toin
Article VoftheWTO
212. Itisrecognized intheCTE thatthere isaneedtorespond topublic interest inWTO
activities intheareaoftrade andenvironment andtobuild support forthecontribution thatcanbe
made through theWTO towards mutually supportive trade andenvironment policies andthe
promotion ofsustainable development.
213. TheCTE considers thatcloser consultation andcooperation withNGOs canalsobemet
constructively through appropriate processes atthenational levelwhere primary responsibility lies
fortaking intoaccount thedifferent elements ofpublic interest which arebrought tobearontrade
policy-making.
214. IntheDecisions oftheGeneral Council of18July1996 on"Procedures forthecirculation
andderestriction ofWTO documents" andon"Guidelines forarrangements onrelations with
non-governmental organizations", WTO Members haveagreed toimprove public access toWTO
documentation andtodevelop communication withNGOs.
215. Theadoption ofWTO procedures forthederestriction ofdocumentation willprovide
public access totheCTE'sworking documents andtherecords ofitsmeetings. Inthisregard, it
isnoted thattheDecision onProcedures fortheCirculation andDerestriction ofWTO
Documents, interalia,affords WTO bodies substantial freedom tomake theirdocuments available
tothepublic inorder toincrease transparency. TheCTE hastaken decisions already toderestrict
anumber oftheworking documents prepared foritbytheSecretariat. Itrecommends thatall
remaining working documents prepared during these firsttwoyears ofitsoperations beWT/CTE/W/40
Page47
derestricted. TheCTE encourages allMembers thathavesubmitted papers andnon-papers that
havenotalready beenderestricted toagree thatthese bederestricted along withthisReport.
216. TheWTO Secretariat haslaidthefoundations forproviding timely public access tothe
proceedings oftheCTE through issuing periodically itsTrade andEnvironment Bulletin andfor
enhancing itscontacts withNGOs concerned withmatters related tothose oftheCTE, interalia
through theorganization ofinformal meetings withNGOs. TheCTE recommends thatthe
Secretariat continue itsinteraction withNGOs which willcontribute totheaccuracy andrichness
ofthepublic debate ontrade andenvironment.
217. Following theDecision oftheGeneral Council of18July1996 on"Guidelines for
observer status forinternational intergovernmental organizations intheWTO", theCTE has
agreed toextend observer status onapermanent basis tothose intergovernmental organizations
which previously participated asobservers onanadhocbasis atCTE meetings. TheCTE has
extended observer status toallthose intergovernmental organizations which havesorequested, and
thepossibility exists onthebasis oftheGeneral Council 'sDecision toconsider future requests
from other relevant intergovernmental organizations, including MEAs. Observer status ofrelevant
MEAs inWTO bodies, asappropriate, canplayapositive roleincreating clearer appreciation of
themutually supportive roleoftrade andenvironmental policies. Requests from theappropriate
bodies ofMEAs forobserver status should beconsidered inthislight.
218. TheCTE willcontinue tokeepthese issues under review.
Future oftheCTE
219. Work intheWTO oncontributing tobuild aconstructive policy relationship between
trade, environment andsustainable development needs tocontinue. Therefore, theCTE
recommends thatitcontinue towork, reporting totheGeneral Council, withthemandate and
terms ofreference contained intheMinisterial Decision onTrade andEnvironment ofApril 1994.
Itsrules ofprocedure shallbeadopted byconsensus.ANNEX I
Trade andEnvironment
Decision of14April 19941
Ministers ,meeting ontheoccasion ofsigning theFinal Actembodying theresults ofthe
Uruguay Round ofMultilateral Trade Negotiations atMarrakesh on15April 1994,
Recalling thepreamble oftheAgreement establishing theWorld Trade Organization (WTO), which
states thatmembers '"relations inthefieldoftrade andeconomic endeavour should beconducted
withaviewtoraising standards ofliving, ensuring fullemployment andalarge andsteadily
growing volume ofrealincome andeffective demand, andexpanding theproduction ofandtrade in
goods andservices, while allowing fortheoptimal useoftheworld 'sresources inaccordance with
theobjective ofsustainable development, seeking bothtoprotect andpreserve theenvironment and
toenhance themeans fordoing soinamanner consistent withtheirrespective needs andconcerns at
different levels ofeconomic development,"
Noting:
— theRioDeclaration onEnvironment andDevelopment, Agenda 21,anditsfollow-up in
GATT, asreflected inthestatement oftheChairman oftheCouncil ofRepresentatives tothe
CONTRACTING PARTIES attheir48thSession inDecember 1992, aswellasthework of
theGroup onEnvironmental Measures andInternational Trade, theCommittee onTrade and
Development, andtheCouncil ofRepresentatives;
— thework programme envisaged intheDecision onTrade inServices andtheEnvironment;
and
— therelevant provisions oftheAgreement onTrade-Related Aspects ofIntellectual Property
Rights,
Considering thatthere should notbe,norneedbe,anypolicy contradiction between upholding and
safeguarding anopen, non-discriminatory andequitable multilateral trading system ontheonehand,
andacting fortheprotection oftheenvironment, andthepromotion ofsustainable development on
theother,
Desiring tocoordinate thepolicies inthefieldoftrade andenvironment, andthiswithout exceeding
thecompetence ofthemultilateral trading system, which islimited totrade policies andthose trade-
related aspects ofenvironmental policies which mayresult insignificant trade effects forits
members,
Decide:
— todirect thefirstmeeting oftheGeneral Council oftheWTO toestablish aCommittee on
Trade andEnvironment opentoallmembers oftheWTO toreport tothefirstbiennial meeting of
theMinisterial Conference aftertheentry intoforce oftheWTO when thework andterms of
reference oftheCommittee willbereviewed, inthelightofrecommendations oftheCommittee,
— thattheTNC Decision of15December 1993 which reads, inpart,asfollows:
1Source: MTN/TNC/45(MIN).-2-
"(a) toidentify therelationship between trade measures andenvironmental measures, in
order topromote sustainable development;
(b) tomake appropriate recommendations onwhether anymodifications ofthe
provisions ofthemultilateral trading system arerequired, compatible withtheopen,
equitable andnon-discriminatory nature ofthesystem, asregards, inparticular:
— theneedforrules toenhance positive interaction between trade and
environmental measures, forthepromotion ofsustainable development, with
special consideration totheneeds ofdeveloping countries, inparticular those
oftheleastdeveloped among them; and
— theavoidance ofprotectionist trade measures, andtheadherence toeffective
multilateral disciplines toensure responsiveness ofthemultilateral trading
system toenvironmental objectives setforth inAgenda 21andtheRio
Declaration, inparticular Principle 12;and
— surveillance oftrade measures usedforenvironmental purposes, oftrade-
related aspects ofenvironmental measures which havesignificant trade
effects, andofeffective implementation ofthemultilateral disciplines
governing those measures;"
constitutes, along withthepreambular language above, theterms ofreference ofthe
Committee onTrade andEnvironment,
— that,within these terms ofreference, andwiththeaimofmaking international trade and
environmental policies mutually supportive, theCommittee willinitially address thefollowing
matters, inrelation towhich anyrelevant issue mayberaised:
— therelationship between theprovisions ofthemultilateral trading system andtrade
measures forenvironmental purposes, including those pursuant tomultilateral
environmental agreements;
— therelationship between environmental policies relevant totrade andenvironmental
measures withsignificant trade effects andtheprovisions ofthemultilateral trading
system;
— therelationship between theprovisions ofthemultilateral trading system and:
(a) charges andtaxes forenvironmental purposes;
(b) requirements forenvironmental purposes relating toproducts, including
standards andtechnical regulations, packaging, labelling andrecycling;
— theprovisions ofthemultilateral trading system withrespect tothetransparency of
trade measures usedforenvironmental purposes andenvironmental measures and
requirements which havesignificant trade effects;
— therelationship between thedispute settlement mechanisms inthemultilateral trading
system andthose found inmultilateral environmental agreements;-3-
— theeffect ofenvironmental measures onmarket access, especially inrelation to
developing countries, inparticular totheleastdeveloped among them, and
environmental benefits ofremoving trade restrictions anddistortions;
— theissue ofexports ofdomestically prohibited goods;
— thattheCommittee onTrade andEnvironment willconsider thework programme envisaged
intheDecision onTrade inServices andtheEnvironment andtherelevant provisions ofthe
Agreement onTrade-Related Aspects ofIntellectual Property Rights asanintegral partofitswork,
within theabove terms ofreference;
— that,pending thefirstmeeting oftheGeneral Council oftheWTO, thework ofthe
Committee onTrade andEnvironment should becarried outbyaSub-Committee ofthePreparatory
Committee oftheWorld Trade Organization (PCWTO), opentoallmembers ofthePCWTO;
— toinvite theSub-Committee ofthePreparatory Committee, andtheCommittee onTrade and
Environment when itisestablished, toprovide input totherelevant bodies inrespect ofappropriate
arrangements forrelations withintergovernmental andnon-governmental organizations referred toin
Article VoftheWTO.ANNEX II
RESTRICTED
WORLD TRADE WT/CTE/W/17
12December 1995
ORGANIZATION(95-4039)
Committee onTrade andEnvironment
SUMMARY OFACTIVITIES OFTHE
COMMITTEE ONTRADE AND ENVIRONMENT(1995)
PRESENTED BYTHE CHAIRMAN OFTHE COMMITTEE1
1. Asdirected bytheMinisterial Decision onTrade andEnvironment, theCommittee onTrade
andEnvironment (hereinafter "Committee") wasestablished bytheGeneral Council atitsfirst
meeting on31January 1995. Atthatmeeting, theGeneral Council alsoagreed tothenomination of
Ambassador J.Sánchez Arnau (Argentina) astheChairman oftheCommittee.
2. Thefirstmeeting oftheCommittee washeldon16February 1995 (WT/CTE/M/1). The
Committee adopted aschedule ofmeetings andprogramme ofwork for1995 (Annex 1).The
Committee agreed thatmeetings would beorganized suchthat,oncediscussion oftheitem(s)
constituting thefocus ofthemeeting hadbeencompleted, delegations could address, iftheywished,
theitem(s) thatwere discussed attheprevious meeting. Delegations could submit papers onanyof
theitems atanytimewhich would bediscussed attheappropriate timeaccording totheagreed
schedule ofwork.
3. Other formal meetings oftheCommittee were heldon6April, 21June, 12September and
26-27 October 1995 (WT/CTE/M/2 to5);theitems discussed atthese meetings were asperthe
work programme decided atthemeeting of16February 1995. With regard toitemtenofthework
programme, i.e.appropriate arrangements forrelations withnon-governmental organizations, the
Committee decided topostpone thediscussions pending results ofdiscussions intheGeneral
Council.
4. AttheOctober meeting, thestocktaking exercise wascompleted. Asaresult ofthis
exercise, theCommittee decided onitswork programme through toMay1996 (Annex 2).2
5. Thework oftheCommittee wasassisted bydocuments prepared bytheSecretariat
(WT/CTE/W/1, 3to10,12)anddocuments submitted bydelegations (WT/CTE/W/2 and11);
Annex 3liststhetopics covered bythese documents.3
6. Thediscussions intheCommittee meetings were wideranging andthere wasaveryhigh
levelofparticipation byWTO Members. Forty governments areobservers totheCommittee. The
Committee extended observer status tothose intergovernmental organizations (IGOs) which hadhad
observer status intheSub-Committee onTrade andEnvironment, pending agreement bytheGeneral
Council ontheconditions andcriteria forIGOobserver status. These IGOs were: theUnited
1Thissummary issubmitted bytheChairman oftheCommittee onTrade andEnvironment onhisownresponsibility.
2Thedates ofthemeetings in1996 aregoing tobereviewed atthemeeting oftheCommittee onTrade andEnvironment
on14-15 December 1995.
3TheCommittee 'swork alsotookintoconsideration several background documents prepared fortheEMIT Group and
theWTO Preparatory Committee 'sSub-Committee onTrade andEnvironment.WT/CTE/W/17
Page2
Nations (UN), theUnited Nations Conference onTrade andDevelopment (UNCTAD), theWorld
Bank, theInternational Monetary Fund (IMF), theUnited Nations Environment Program (UNEP),
United Nations Development Program (UNDP), Commission forSustainable Development (CSD),
theFood andAgriculture Organization (FAO), theInternational Trade Centre (ITC), the
Organization forEconomic Cooperation andDevelopment (OECD), andtheEuropean FreeTrade
Association (EFTA).
7. TheCommittee noted thattheSecretariat hadreceived several requests forinformation and
advice from MEAs. There wasnoWTO procedure which would permit ittoadequately reply to
suchrequests andtheestablishment ofnewprocedures wentbeyond theCommittee 'smandate and
wasofinterest totheWTO ingeneral. Forthisreason, theChairman hadreferred thismatter tothe
Chairman oftheGeneral Council whowould beconsulting ontheissue.
8. Following adecision taken atthemeeting oftheCommittee onTechnical Barriers toTrade
(CTBT) on20October 1995, theCommittee agreed toconvene jointinformal meetings on
eco-labelling withtheCTBT. Itwasagreed thattheChairman would consult informally onthe
possibility ofholding ajointmeeting oftheCommittee andtheCTBT possibly around thetimeof
theDecember orFebruary meeting oftheCommittee.WT/CTE/W/17
Page3
Annex 1
Atitsmeeting on16February 1995, theCommittee onTrade andEnvironment adopted the
following schedule ofmeetings andprogramme ofwork:
6-7April: -Item4:"theprovisions ofthemultilateral trading system withrespect tothe
transparency oftrade measures usedforenvironmental purposes andenvironmental
measures andrequirements which havesignificant trade effects"
-Item5:"therelationship between thedispute settlement mechanisms inthe
multilateral trading system andthose found inmultilateral environmental
agreements"
-Item10:"appropriate arrangements forrelations withnon-governmental
organizations referred toinArticle VoftheWTO andtransparency of
documentation"
21-22 June: -Item8:"TRIPs"
-Item9:"Services"
-Item2:"therelationship between environmental policies relevant totrade and
environmental measures withsignificant trade effects andtheprovisions ofthe
multilateral trading system"
early
September: -Item6:"theeffect ofenvironmental measures onmarket access, especially in
relation todeveloping countries, inparticular totheleastdeveloped among them,
andenvironmental benefits ofremoving trade restrictions anddistortions"
late
October: -Item1:"therelationship between theprovisions ofthemultilateral trading system
andtrade measures forenvironmental purposes, including those pursuant to
multilateral environmental agreements"
-Item3:"therelationship between theprovisions ofthemultilateral trading system
and:
(a)charges andtaxes forenvironmental purposes
(b)requirements forenvironmental purposes relating toproducts, including
standards andtechnical regulations, packaging, labelling andrecycling
-Stocktaking andplanning program ofwork for1995/1996WT/CTE/W/17
Page4
Annex 2
TheCommittee onTrade andEnvironment
Theinformal consultations made evident thefollowing points:
Thatthestocktaking ismore aprocess-related exercise thanasubstance-related analysis and,
therefore, theresult ofthisexercise hastobeadetailed work programme toadvance theCTE
mandate, i.e.toproduce areport:
a) identifying therelationship between trade measures andenvironmental measures in
order topromote sustainable development;
(b) making recommendations onwhether anymodifications toWTO provisions are
required, compatible withtheopen, equitable andnon-discriminatory nature ofthe
system; and
(c) complying withthemandate oftheMinisterial Decision onTrade inServices and
Environment.
Inorder toestablish amore focused butwellbalanced work programme, theChairman
submits thefollowing proposals:
(a) tokeepallitems onouragenda, buttomove, whenever possible, from the
discussion ofagenda items totheanalysis ofthose issues identified during thedebate
asthecoreofeachitemand,tothatend,toorganize ourfuture work programme on
thebasis oftheproposal submitted below;
(b) tocontinue theprocess ofanalysis ofthese issues untilMay1996, when anew
review ofthework programme willtakeplace;
(c) thelistofissues identified nexttoeachitemisnotnecessarily exhaustive. Once the
discussion oftheidentified issues iscarried outbytheCommittee, Members would
befreetoraiseother related issues under eachagenda itematthesame meeting;
(d) Aspartofthework programme:
(i) jointinformal meetings oftheCTE andtheCTBT areenvisaged, subject to
theagreement oftheCTBT, toanalyse theapplicability ofthe
TBTAgreement toeco-labelling andthepossible needforfurther disciplines
foreco-labelling;
(ii) allother issues identified inthetablebelow anditems intheagenda would
bediscussed inthePlenary butinformal open-ended meetings, backtoback
tothePlenary, would beconvened when adetailed analysis ofatopic is
necessary orapaper onaspecific issue issubmitted fordiscussion;
(iii) some fewstudies/reports tobeprepared bytheSecretariat havebeen
suggested inaddition tothose already incourse. TheSecretariat is
encouraged tocontinue tocooperate closely with, andtotakefulladvantage
ofavailable andforthcoming studies in,UNCTAD, UNEP andother
intergovernmental institutions.WT/CTE/W/17
Page5
TheCommittee onTrade andEnvironment
Itemonthe
Work ProgrammeIssues Studies When tobe
discussed
Item one: "The relationship
between theprovisions of
themultilateral trading
system andtrade measures
forenvironmental purposes,
including those pursuant to
multilateral environmental
agreements"-ensuring the
compatibility oftrade
measures taken
pursuant toMEAs and
theWTO
-adequacy ofWTO
transparency
mechanisms
concerning trade
measures included in
relevant MEAs
-seeitem526/27 October 95
early February 96
(7/8February 96)
26/27 October 95
early February 96
(7/8February 96)
Item three: "The
relationship between the
provisions ofthemultilateral
trading system and:
(a) charges andtaxes for
environmental
purposes-environmental taxes
which could be
adjusted attheborder
andtheir WTO-
consistency-gather information on
national environmental
taxes forthestudy26/27 October 95
early February 96
(7/8February 96)
(b) requirements for
environmental
purposes relating to
products, including
standards andtechnical
regulations, packaging,
labelling and
recycling"-applicability ofthe
TBT Agreement to
eco-labelling
-adequacy, from
boththetrade and
environmental
perspectives, ofWTO
rules regarding eco-
labelling andpossible
need forfurther
disciplines and
transparencyJoint Informal
Meetings ofthe
CTE +CTBT*
*Report totheCTE once work iscompleted.WT/CTE/W/17
Page6
Itemonthe
Work ProgrammeIssues Studies When tobe
discussed
Item three (b)cont'd -adequacy, from
boththetrade and
environmental
perspectives, ofWTO
rules regarding
packaging, handling,
andother
environmental
regulations,
requirements and
standards, including
thepossible need for
further disciplines and
transparency26/27 October 95
early February 96
(7/8February 96)
Item four: "The provisions
ofthemultilateral trading
system withrespect tothe
transparency oftrade
measures used for
environmental purposes and
environmental measures and
requirements which have
significant trade effects"-examination ofthe
proposal thatMembers
should establish
environmental enquiry
points
-seeitems 1and314/15 December 95
-itemtobe
revisited in
May 96,inorder
todetermine
whether andwhere
further gaps in
transparency
existed
Item five: "The relationship
between thedispute
settlement mechanisms in
themultilateral trading
system andthose found in
multilateral environmental
agreements"-seeitem 1
-environmental
expertise intrade
dispute settlement
-trade expertise in
environmental dispute
settlementearly February 96
(7/8February 95)
Item six: "The effect of
environmental measures on
market access, especially in
relation todeveloping
countries, inparticular to
theleast developed among
them, andenvironmental
benefits ofremoving trade
restrictions anddistortions"-theeffect of
environmental
measures onmarket
access
-theenvironmental
benefits ofremoving
trade restrictions and
distortions, including
tariff escalation,
subsidies, state
trading, excessively
hightariffs-environmental
measures onmarket
access andsetting up
ofamechanism to
survey environmental
measuresmidMarch 96
(13/14 March 96)
midMarch 96
(13/14 March 96)WT/CTE/W/17
Page7
Itemonthe
Work ProgrammeIssues Studies When tobe
discussed
Item seven: "The issue of
exports ofdomestically
prohibited goods"-DPGs, andwhether
there isaneed fora
DPG Agreement14/15 December 95
Item eight: "Trade-Related
Aspects ofIntellectual
Property Rights andthe
environment"-therelationship of
theTRIPs Agreement
toaccess toand
transfer oftechnology
andthedevelopment
ofenvironmentally-
sound technology
-therelationship
between theTRIPs
Agreement andMEAs
which contain IPR-
related obligations-analytical paper on
factors affecting
transfer of
environmentally-sound
technologyendApril 96
(17/18 April 96)
endApril 96
(17/18 April 96)
Item nine: "Services and
theenvironment"-sufficiency of
Article XIVofGATS
-possible points of
contact between
relevant MEAs and
GATSearly February 96
(7/8February 96)
early February 96
(7/8February 96)
Item two: "The relationship
between environmental
policies relevant totrade and
environmental measures
withsignificant trade effects
andtheprovisions ofthe
multilateral trading system"May 96
(21/22 May 96)
Item ten: "Appropriate
arrangements forrelations
withnon-governmental
organizations referred toin
Article VoftheWTO and
transparency of
documentation"intheCTE**
**Once adecision isadopted bytheGeneral Council.WT/CTE/W/17
Page8
Annex 3
WT/CTE/W/1 Environmental benefits ofremoving trade restrictions and
distortions (background paper prepared bytheSecretariat
foritem 6)
WT/CTE/W/2 Submission byChile onrelationship between dispute
settlement inWTO andinmultilateral environmental
agreements, withspecial reference toConvention onthe
LawoftheSeawhich incertain parts emphasises the
provisions oftheGeneral Agreement onTariffs andTrade
(including dispute settlement)
WT/CTE/W/3 Report submitted bytheSecretariat onitsown
responsibility totheSecretariat oftheCommission on
Sustainable Development forthemeeting oftheThird
Session oftheCommission on11-28 April 1995
WT/CTE/W/4 Approaches totherelationship between theprovisions of
themultilateral trading system andtrade measures pursuant
tomultilateral environmental agreements (background
paper prepared bytheSecretariat foritem 1)
WT/CTE/W/5 Provisions ofthemultilateral trading system withrespect
tothetransparency oftrade measures used for
environmental purposes andenvironmental measures and
requirements which have significant trade effects
(background paper prepared bytheSecretariat foritem 4)
WT/CTE/W/6 Adescription ofinternational agreements andinstruments
dealing withtrade indomestically prohibited goods and
other hazardous substances (background paper prepared by
theSecretariat foritem 7)
WT/CTE/W/7 Secretariat 'snoteontheresults ofthethird session ofthe
Commission onSustainable Development
WT/CTE/W/8 Environment andTRIPs (background paper prepared by
theSecretariat foritem 8)
WT/CTE/W/9 Environment andservices (background paper prepared by
theSecretariat foritem 9)
WT/CTE/W/10 Negotiating history ofthecoverage oftheAgreement on
Technical Barriers toTrade withregard tolabelling
requirements, voluntary standards, andprocesses and
production methods unrelated toproduct characteristics
(background paper prepared bytheSecretariat foritem 3)
WT/CTE/W/11 Communication from thedelegations ofNigeria and
Senegal regarding theissue ofdomestically prohibited
goodsWT/CTE/W/17
Page9
WT/CTE/W/12 Trade measures forenvironmental purposes taken pursuant
tomultilateral environmental agreements: recent
developments (note prepared bytheSecretariat)ANNEX III
RESTRICTED
WORLD TRADE WT/CTE/W/33
4June1996
ORGANIZATION(96-2090)
Committee onTrade andEnvironment
RESULTS OFTHE STOCKTAKING EXERCISE
Adopted atthe28-29 May1996 meeting
I. Theinformal consultations onthestocktaking permitted thefollowing consensus tobe
reached:
1. According totheresults ofthefirststocktaking inOctober 1995, theCTE hascompleted
twofullrounds ofanalysis ofeachindividual Itemoftheagenda (Items 2and4willberevisited
during theMaysession). TheSecretariat hassubmitted anumber ofbackground andanalytical
documents andtheCommittee hasbenefitted from thediscussion ofanumber ofItems onitsagenda
inother intergovernmental fora(UNEP, UNCTAD, CSD). Ontheissue of"eco-labelling" ajoint
informal meeting wasorganized withtheCTBT andtheopportunity wasgiven to
managers/practitioners ofnational/regional eco-labelling schemes/programmes topresent their
experience tobothCommittees.
2. Inpreparing fortheSingapore Ministerial Conference, theCTE hasheldageneral debate on
allItems ofitsagenda. Some agenda Items havebeendisaggregated, some specific issues and
problems havebeenidentified. Thegeneral debate clarified andpromoted understanding ofsome
issues andalsopermitted theidentification ofdivergences ofview. Insome cases more analytical
work isrequired. Asaresult ofthisprocess, theCTE isnowinaposition tocentre itsattention on
specific issues, including issues covered byproposals submitted ortobesubmitted byMembers,
keeping inmind theneedforabalanced andfocused approach tothewhole agenda.
3. Anumber ofproposals havebeensubmitted totheCommittee either orally orasformal or
informal documents andadditional proposals areanticipated.
4. Thus, thenextstage oftheCTE activities inpreparation forSingapore needs tobedevoted
tothepreparation oftheFinal Report tobesubmitted totheMinisterial Conference including the
identification ofpossible agreed conclusions andrecommendations inthelightoftheCTE mandate.
II. Tothatendthefollowing work programme, tobedeveloped inthelightoftheCTE terms of
reference contained intheMinisterial Declaration ofMarrakesh, isadopted bytheCommittee1:
1TheCTE isawaiting theadoption ofadecision bytheGeneral Council onthematter referred toinItem10.WT/CTE/W/33
Page2
Date Meeting Items/Issues Objective
28,29May CTE formal
2and4
6and8
1+5and7Toadopt theoutcome ofthestocktaking.
Tocomplete second review.
Torevisit andtodiscuss proposals
submitted onthese Items.
Presentation ofnewproposals.
30May CTE informal 1+5and7 Clarification andanalysis ofnewproposals.
20June CTE formal 1+5
2/3/4/6/7/8Possible presentation ofnewproposals on
these Items. Clarifications, comments and
reactions.
21June CTE informal same Discussion ofproposals.
30June TheSecretariat starts preparing thefirst
draftoftheFinal Report:
Introduction +Chapters 1and2
3-24July Informal
consultations2same Startoftheprocess ofinformal
consultations tobuild upconsensus on
individual issues.
24July CTE formal 2/9/BTA/
packaging(a)Items/issues revisited inviewof
possible presentation ofproposals onthem.
(b)Chairman 'sreport onresults of
informal consultations onspecific
issues/Items/proposals.
24-25 July CTE informal31+5
2/3/4/6/7/8Discussion ofspecific
issues/Items/proposals.
30July TheSecretariat submits thefirstdraftof
Final Report totheChairman forreview
andclearance.
31July Distribution ofthefirstdraftoftheFinal
Report (introduction +Chapters 1and2).
11Sept CTE formal AllItems Statements onanyissue.
11/12/13
SeptCTE informal same Discussion ofproposals onanyItem/issue.
2Allinterested delegations willhave theopportunity tobeconsulted onallissues under consideration.
3Discussions ofissues under Item3(b)relevant tothework oftheCTBT would takeplace inajointformal/informal meeting
withtheCTBT.WT/CTE/W/33
Page3
Date Meeting Items/Issues Objective
16Septto
23OctInformal
consultations2AllItems (a)Continuation ofconsultations onspecific
Items/issues/proposals. Thework is
oriented towards building aconsensus on
possible conclusions andrecommendations.
(b)Consultations onthedraftFinal Report.
10Oct Secretariat completes draftFinal Report to
thelargest possible extent. Review and
clearance bytheChairman.
15Oct Distribution ofthedraftFinal Report
(introduction +Chapters 1and2+
Chapter 3)
24-25 Oct CTE formal (a)Report bytheChairman oninformal
consultations on:
(i) allItems/issues/proposals
(ii) draftFinal Report
(b)Final discussion on
proposals/conclusions/recommendations
(c)Adoption oftheFinal Report.
III. TheFinal Report tobeproduced bytheCommittee needs toinvolve thefollowing broad
components:
1. Anintroductory section briefly sketching theCTE'sestablishment, describing itsmandate
andpointing toprevious GATT work (particularly intheEMIT Group) andoutlining itswork
programme.
2. Three chapters covering eachindividual agenda Item:
(a) Thefirstone,describing theproblems/issues under eachagenda Itemandtheir
background, andmaking reference todocuments submitted bytheSecretariat, witha
short reference totheircontent.
(b) Thesecond would betheanalytical component, drawing onthediscussions at
Committee meetings, describing theproposals anddocuments submitted by
delegations andthedebate which followed theirsubmission.
(c) Thethirdchapter would include theconclusions andrecommendations ifany.
TheFinal Report hastobecomprehensive, balanced among Items/issues and,atthesame
time, among thedifferent "schools ofthought"/perceptions onspecific issues. Theanalytical
component willbethemost substantial partofthereport andwillneedtobecarefully structured.
Atthesame time, amajor effort hastobemade tokeepthereport rather short.ANNEX IV
Listofdocuments andnon-papers prepared onItems ofthework programme
Item1:Therelationship between theprovisions ofthemultilateral trading system andtrade
measures forenvironmental purposes, including those pursuant tomultilateral environmental
agreements
WT/CTE/W/4 +Corr. Note bytheSecretariat onApproaches totheRelationship between
theProvisions oftheMultilateral Trading System andTrade
Measures Pursuant toMultilateral Environmental Agreements
WT/CTE/W/12 Note bytheSecretariat onTrade Measures forEnvironmental
Purposes taken pursuant toMultilateral Environmental
Agreements: Recent Developments
WT/CTE/W/15 +Corr. Note bytheSecretariat onTrade Measures forEnvironmental
Purposes taken pursuant toMultilateral Environmental
Agreements: Recent Developments -FAO Code ofConduct for
Responsible Fisheries
WT/CTE/W/18 Note bytheSecretariat ontheConvention onBiological Diversity:
Recent Developments
WT/CTE/W/19 Note bytheSecretariat onTrade Measures forEnvironmental
Purposes taken pursuant toMultilateral Environmental
Agreements: Recent Developments -Seventh Meeting ofthe
Parties totheMontreal Protocol
WT/CTE/W/20 Submission byNewZealand onItem1
WT/CTE/W/31 Submission byJapan onItem1
WT/CTE/W/39 Submission byASEAN onItem1
Non-paper (19February 1996) Submission bytheEuropean Community onItem1
Non-paper (20May1996) Submission bySwitzerland onItem1
Non-paper (12June1996) Submission byKorea onItem1
Non-paper (23July1996) Submission byHong Kong onItem1
Non-paper (23July1996) Submission byIndia onItems 1and5
Non-paper (11Sept. 1996) Submission bytheUnited States onMultilateral Environmental
Agreements
Item2:Therelationship between environmental policies relevant totrade andenvironmental
measures withsignificant trade effects andtheprovisions ofthemultilateral trading system
WT/CTE/W/16 Note bytheSecretariat ontheNegotiating History ofFootnote 61
oftheAgreement onSubsidies andCountervailing Measures-2-
WT/CTE/W/37 Submission bytheUnited States onEnvironmental Review of
Trade Agreements attheNational Level
Non-paper (23July1996) Submission byIndia onItem2
Non-paper (11Sept. 1996) Submission bytheUnited States: Draft Decision on
Environmental Reviews ofTrade Agreements attheNational Level
Item3:Therelationship between theprovisions ofthemultilateral trading system and:
(a)charges andtaxes forenvironmental purposes; and(b)requirements forenvironmental
purposes relating toproducts, including standards andtechnical regulations, packaging,
labelling andrecycling
WT/CTE/W/10-G/TBT/W/11 Note bytheSecretariat ontheNegotiating History ofthe
Agreement onTechnical Barriers toTrade withRegard to
Labelling Requirements, Voluntary Standards, andProcess and
Production Methods unrelated toProduct Characteristics
WT/CTE/W/21-G/TBT/W/21 Submission byCanada onElements ofaPossible Understanding to
theTBTAgreement onEco-labelling
WT/CTE/W/23-G/TBT/W/23 Eco-labelling Programmes. Information provided byCanada,
Chile, theCzech Republic, theEuropean Community, Norway and
theUnited States attheinformal jointmeeting oftheCommittees
onTrade andEnvironment andTechnical Barriers toTrade heldon
27February 1996 regarding theirnational andregional
eco-labelling programmes
WT/CTE/W/27; G/TBT/W/29 Proposal bytheUnited States onFurther Work onTransparency of
Eco-labelling
WT/CTE/W/38-G/TBT/W/30 Proposal byCanada onaDraft Decision onEco-labelling
Programmes
Non-paper (18June1996) Submission bytheArab Republic ofEgypt
Non-paper (23July1996) Submission bytheEuropean Community onEco-labelling
Programmes
Non-paper (23July1996) Submission byIndia onItem3
Non-paper (11Sept. 1996) Submission bytheUnited States: Draft Decision onTransparency
inEco-labelling Programmes
Item4:Theprovisions ofthemultilateral trading system withrespect tothetransparency oftrade
measures usedforenvironmental purposes andenvironmental measures andrequirements which
havesignificant trade effects
WT/CTE/W/5 Note bytheSecretariat onItem4-3-
WT/CTE/W/28 Note bytheSecretariat onItem4
WT/CTE/W/34 Note bytheSecretariat ontheWTO Central Registry of
Notifications
Non-paper (28May1996) Submission byHong Kong onTransparency: AProposal onan
Environmental Database
Item5:Therelationship between thedispute settlement mechanisms inthemultilateral trading
system andthose found inmultilateral environmental agreements
WT/CTE/W/2 Communication from Chile onItem5
Item6:Theeffect ofenvironmental measures onmarket access, especially inrelation to
developing countries, inparticular totheleastdeveloped among them, andenvironmental benefits
ofremoving trade restrictions anddistortions
WT/CTE/W/1 Note bytheSecretariat ontheEnvironmental Benefits ofRemoving
Trade Restrictions andDistortions
WT/CTE/W/24 +Corr. Submission byArgentina onTheEnvironmental Benefits of
Removing Trade Restrictions andDistortions, including tariff
escalation, subsidies, statetrading, andexcessively hightariffs
WT/CTE/W/25 Note bytheSecretariat onTariff escalation
WT/CTE/W/26 Note bytheSecretariat onTheeffects ofenvironmental measures
onmarket access, especially inrelation todeveloping countries, in
particular totheleastdeveloped among them
WT/CTE/W/35 Contribution bytheUnited States onTrade Liberalization andthe
Environment
WT/CTE/W/36 Submission byAustralia onTrade Liberalization, theEnvironment
andSustainable Development (replaces thenon-paper submitted on
21May1996)
Non-paper (20June1996) Submission byIndia onItem6
Non-paper (20June1996) Submission byNorway onMarket Access andEnvironmental
Effects ofRemoving Trade Restrictions andDistortions
Non-paper (28June1996) Preliminary views ofJapan onItem6
Non-paper (23July1996) Submission bytheEuropean Community onItem6
Non-paper (24July1996) Submission byKorea onItem6-4-
Item7:Theissue ofexports ofdomestically prohibited goods
WT/CTE/W/6 Note bytheSecretariat onAdescription ofinternational
agreements andinstruments dealing withtrade indomestically
prohibited goods andother hazardous substances
WT/CTE/W/11 Communication from Nigeria andSenegal under Item7
WT/CTE/W/14 Proposal byNigeria onDomestically Prohibited Goods
WT/CTE/W/29 Note bytheSecretariat onDomestically Prohibited Goods: An
assessment oftheproduct coverage inspecific international
instruments
WT/CTE/W/32 Proposal byNigeria onDomestically Prohibited Goods
Item8:Trade-Related Aspects ofIntellectual Property Rights andtheenvironment
WT/CTE/W/8 Note bytheSecretariat onEnvironment andTRIPs
WT/CTE/W/22 Note bytheSecretariat onFactors affecting transfer of
environmentally-sound technology
Non-paper (20June1996) Submission byIndia onTheRelationship oftheTRIPs Agreement
tothedevelopment, access andtransfer ofenvironmentally-sound
technologies andproducts (revises thenon-paper submitted on
2April 1996)
Non-paper (23July1996) Submission byIndia onTheRelationship between theTRIPs
Agreement andtheConvention onBiodiversity
Non-paper (23July1996) Submission byKorea onConsideration ofrelevant provisions of
theAgreement onTRIPs
Non-paper (11Sept. 1996) Submission byAustralia ontheTRIPs Agreement
Item9:Thework programme envisaged intheDecision onTrade andServices andthe
Environment
WT/CTE/W/9 Note bytheSecretariat onServices andtheEnvironment
Non-paper (23July1996) Submission byIndia onServices andtheEnvironment
General
WT/CTE/W/3 Report submitted bytheSecretariat onitsownresponsibility tothe
Secretariat oftheCommission onSustainable Development atits
Third Session, 11-28 April 1995-5-
WT/CTE/W/7 Note bytheSecretariat onUNCED Follow-up: Results ofthe
Third Session oftheCommission onSustainable Development,
11-28 April 1995
WT/CTE/W/13 Draft Rules ofProcedure fortheMeetings oftheCommittee on
Trade andEnvironment
WT/CTE/W/17 Summary ofactivities oftheCommittee onTrade andEnvironment
(1995) presented bytheChairman oftheCommittee
WT/CTE/W/30 +Corr. Note bytheSecretariat onUNCED Follow-up: Results ofthe
Fourth Session oftheCommission onSustainable Development,
18April -3May1996
WT/CTE/W/33 Results oftheStocktaking Exercise adopted atthe28-29 May1996
CTE meeting
Non-paper (11Sept. 1996) Submission byNigeria: Preliminary comments onthedraftof
Sections IandIIoftheCTE Report totheMinisterial ConferenceANNEX V
Matrix fortheKorean Approach
Trade measures Discipline Criteria Notification
Procedural Substantive
Between
PartiesSpecific
MeasuresA
Qualified
CodificationNotification
subject to
reviewLeast
inconsistency AllParties of
anMEA
Non-specific
measuresB Least trade
restrictiveness
,necessity
Parties to
non-PartiesSpecific
measuresC Non-binding
guidelines
forMEA
negotiatorMEAGATT Art.20
or
WTO Art.9Party; Notif,
Non-Party;
Counter-notif.
Non-specific
measuresD
No
accommo-
dation-GATT Art.20
or
WTO Art.9
Unilateralism Unilateral
measuresE Imposer; Notif.
Imposed;
Counter-notif.