RESTRICTEDWORLD TRADE
ORGANIZATIONWT/CTE/M/18
10 August 1998
(98-3138)
Committee on Trade and Environment Original:  English
REPORT OF THE MEETING H ELD ON 23-24 JULY 1998
Note by the Secretariat
1. The Committee on Trade and Environment (CTE) met on 23-24 July 1998 under the
chairmanship of Ambassador C.M. See of Singapore.  The agenda in WTO/AIR/839 was adopted.
2. It was agreed that the Chairman would hold open-ended informal consultations to prepare the
1998 report of the CTE for adoption at the 26-28 October meeting.
Linkages between the multilateral environment and trade agendas
MEA Information Session
3. The observer of UNEP made a statement on the core environment principles and approaches
underlying the development of multilateral environmental agreements (MEAs) and the relationship
between MEAs and the WTO, which was circulated as WT/CTE/W/94.
4. In order to deepen the CTE's understanding of the linkages between the multilateral
environment and trade agendas, the Secretariats of several MEAs were invited to participate.
5. Representatives of the following Secretariats made presentations and prepared background
papers to contribute to the discussion:  the UN Framework Convention on Climate Change
(WT/CTE/W/74);  UNEP Chemicals on the Conv ention on the Prior Informed Consent (PIC)
Procedure for Certain Hazardous Chemicals and Pesticides in International Trade and the negotiations
for a global treaty on Persistent Organic Pollutants (POPs) (WT/CTE/W/91);  the UN Economic
Commission for Europe on the ECE POPs Protocol (WT/CTE/W/88);  the Basel Convention on the
Transboundary Movement of Hazardous Wastes and Their Disposal (WT/CTE/W/90);  theConvention on Biological Diversity (WT/CTE/W/92);  the International Tropical Timber
Organization (WT/CTE/W/89);  the Intergovernmen tal Forum on Forests (WT/CTE/W/84);  and the
International Commission on the Conserva tion of Atlantic Tunas (WT/CTE/W/87).
6. Members welcomed the contributions from UNEP and the MEA Secretariats and commented
on the trade-related aspects of the agreements set out in their background papers and presentations.
Items 1& 5: The relationship between the provisions of the multilateral trading system and trade
measures for environmental purposes, including those pursuant to multilateral
environmental agreements;  and The relationship between the dispute settlement
mechanisms in the multilateral trading system and those found in MEAs
7. The representative of Canada thanked UNEP for its statement at the MEA Information
Session, which was helpful to CTE work in terms of informing trade negotiators of the common
elements to MEAs.  The MEA Secretariat papers ha d also contributed to an understanding of how
core environmental principles and approaches had been applied to address particular environmentalWT/CTE/M/18
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concerns, and reinforced the need for domestic policy coordination in trade and environmental
negotiations.  Canada's views on Item 1 were based on the general framework outlined in June 1996
advocating that the WTO develop a "principles and criteria" approach to MEAs to guide international
negotiators contemplating the use of trade measures in an MEA.  Canada had proposed the following
qualifying principles for MEAs:  (i) the MEA was open to all countries;  (ii) the MEA reflected broad-based international support;  (iii)  the provisions specifically authorizing trade measures should be
drafted as precisely as possible;  (iv) trade with non-parties to the MEA was permitted on the same
basis as Parties when non-parties provide environmental protection equivalent to that required by the
MEA;  and (v) negotiators had explicitly considered the criteria developed by the WTO for the use of
MEA measures.  Canada had also suggested that  MEA negotiators use the following criteria in
determining the need for trade provisions:  (i) trad e measures were chosen only when effective and
when other alternative measures were considered to be ineffective in achieving the environmentalobjective, or had proven to be ineffective without accompanying trade measures;  (ii) trade measures
should not be more trade-restrictive than necessary to achieve the environmental objective concerned;
and (iii) the trade measures chosen should not constitute arbitrary or unjustifiable discrimination.
8. Since developing these principles and guidelines in 1996, Canada had used them domestically
in developing its negotiating positions for new MEAs. They had helped Canada to structure itsinterdepartmental debates and to develop a fairly consistent policy on the use of such trade measures,
bearing in mind that every MEA or regional envi ronmental agreement had a different negotiating
dynamic.  As Canada continued to gain experience in their application, it should be better able to
gauge the extent to which these principles and criteria helped to avert potential conflicts between
MEAs and WTO rules.  In considering the question of "accommodating" MEA trade measures withinthe WTO, the CTE should bear in mind the basic principle of good faith in international law; namely,
that a State should not ordinarily enter into an international agreement that was clearly inconsistent
with its existing obligations.  In Canada's experience, implementing good faith was largely a matter of
domestic policy coordination between ministries or agencies involved.  By sitting down together as
officials, commenting on drafts, and consulting with interested stakeholders, policy coordination canlargely avoid potential conflicts or inconsistencies. The MEA Information Session had reinforced the
need for trade officials to be involved in MEA negotiations just as the CTE, and other WTO bodies,
benefitted from the involvement of environment officials.  CTE work had made a significant
contribution to improved coordination at the national level.
9. Post-Singapore, the CTE had reflected further on the actual means that a formal
accommodation of MEA trade measures would take, integrating a principles and criteria approach.
The range of proposals presented, and summarized in a matrix, had been helpful in these reflections.The practical issue of how to accommodate MEA trade measures without passing judgement, through
application of some principles and criteria, arose in all possible scenarios. This “passing judgement”
aspect was not acceptable from an environmental policy perspective, given the implicit hierarchy of
international legal systems.  From a trade policy perspective, it was clear that WTO Members were
unlikely to renounce formally their WTO rights in  the context of any such obligation without some
form of “passing judgement”.  The spectrum of options ranged from the waiver, or explicit passing of
judgement by the WTO on MEAs, to a criteria-free formal amendment or understanding of
Article XX, which amounted to formal renouncing of WTO rights.  Any negotiation with respect to
Article XX ran the risk of a result more restrictive than the status quo , which provided, as expressed
in the 1996 Report of the CTE, considerable flexibility.  This status quo  continued to evolve through
WTO panels.  Concern from a trade law perspective was not that trade law will somehow be
undermined by MEAs, rather, that protectionist interests will use otherwise legitimate instruments
under MEAs to thwart trade, thereby bringing both trade law and MEAs into disrepute;  in the case of
the WTO for challenging ostensibly environmental measures, and for MEAs by being so abused.
10. Canada's felt that it was highly unlikely that the CTE, or the WTO itself, would be able to
agree to any formal accommodation in the medium-t erm. It was not simply a question of politicalWT/CTE/M/18
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will, but rather the difficulty in reaching a balanced and credible result acceptable to all.  Canada
asked whether a more practical “soft” approach should be taken in the development of a statement on
the interaction between MEAs and the WTO.  Such an interim solution should allow the CTE to
deliver a strong policy message in a relatively less time-intensive and polarized negotiating process.
Such a statement would build on the language in the 1996 Report of the CTE, recent developments inWTO jurisprudence, and improved awareness and understanding of the linkages between trade and
environment negotiations engendered by the CTE’s education and analysis phase post-Singapore.
MEA Information Sessions and UNEP's statement had been particularly helpful in this regard.  Such
an approach would not necessarily preclude work on a more formal approach at a later stage, but
would allow earlier and more balanced results within a credible timeframe.
11. Rather than the time-consuming and divisive search for a formal accommodation of MEAs,
Canada asked whether the CTE would be better advised to devote more attention, either in the CTE orthe TBT Committee, to the standards, labelling and other concerns that Members had identified at the
1998 Ministerial Conference as being their immediate trade and environment concerns.  Clearly, a
real but uncomfortable issue was non-product related process and production methods (PPMs), as
recognized, either explicitly or implicitly, in the statements at the Ministerial Conference. As Canada
had noted in the TBT Committee meeting of 1 July in the discussion of labelling of geneticallymodified organisms (GMOs), there was a need to address the policy challenge of labels concerning
how products were produced and not just their final characteristics.  Canadian traders increasingly
took a pragmatic approach to addressing these challenges.  Examples of this include the International
Trade Centre’s Eco-labelling and other environmental quality requirements in textiles and clothing ,
Colombia with respect to cut flowers, Brazil with respect to leather, and both Brazil and Canada with
respect to forest products.  These concrete examples reflected a pragmatic and constructive balance
between trade and environment objectives.  He asked whether the WTO could afford to ignore the
market realities that modern technology and consumer preferences had created.
12. While Item 5 was largely subsumed by Item 1, it was helpful to note some aspects separately.
The CTE needed to appreciate the different role that dispute settlement played in MEAs as opposed tothe WTO, a theme that had emerged from the MEA presentations.  While the dispute settlement
provisions in trade agreements had been used on numerous occasions, there were no instances where
similar MEA provisions had been used mainly because the WTO-type dispute settlement did not offer
the most appropriate approach to ensure MEA implementation.  Countries negotiating an MEA did
not seek to gain improved access to another's en vironment in exchange for access to their own
environment, but rather sought to address a common environmental problem through collective
action.  The impact of an MEA Party's failure to live up to its MEA obligations was often diffusedacross all Parties and hard to quantify and undermined the achievement of the common environmental
goal and the collective action agreed upon to achieve it.  As such, it would appear that MEA Parties
placed greater emphasis on the development of strong and effective compliance regimes than on
traditional dispute settlement.  Compliance regimes tended to be based on peer review mechanisms
that were non-adversarial and in which Parties worked cooperatively to seek solutions.  In contrast,dispute settlement mechanisms were generally adversarial, Party to Party actions, that concentrated on
the enforcement of obligations through third party arbitration.
13. MEA negotiators were coming to recognize that the objective of environmental protection
was better achieved through the cooperative and facilitative approaches of compliance regimes.  In
contrast to WTO dispute settlement procedures, compliance regimes were intended primarily tofacilitate full and timely compliance rather than to  adjudicate or apportion blame, and were aimed at
assisting Parties to identify and remedy non-compliance.  This facilitative approach encouraged
countries to enter into these agreements in that th ey may receive assistance to meet their obligations.
MEAs, like the Montreal Protocol, the Basel Convention and the Climate Change Convention, placed
greater emphasis on the development of strong and effective non-compliance rather than disputesettlement regimes in order to reinforce the integrity of their core legal obligations.  The cooperativeWT/CTE/M/18
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and preventative nature of non-compliance mechanisms was more attuned to the nature of MEA goals
and obligations than approaches centred on claims for reparation, sanctions and reprisal.  In some
cases, environmental damage caused by human activity may be irreversible and, in other cases,
restoring the environment to an acceptable, if not its original state may be difficult to achieve. It was
also difficult to agree on how to assess monetary environmental damage and to establish causal linksbetween human activity and its transboundary effects.
14. Canada supported the development of strong and effective compliance regimes in MEAs and
believed several elements needed to be considered in developing such regimes, including identifying
potential non-compliance, determining non-compliance and its consequences, monitoring and
determining return to compliance and an automatic review procedure for future non-compliance.  The
objective of any compliance regime should be to correct non-compliance in a cooperative and
facilitative manner.  The nature of a compliance procedure needed to be tailored to the achievement ofthe particular environmental objective of each MEA.  Its operations should contribute to international
consensus, and should provide an incentive to Parties to make use of it.  The structure and scope of
compliance procedures should, therefore, not seek to reintroduce dispute settlement under a different
name, but to provide an effective tool for dispute avoidance and the resolution of questions pertaining
to the performance of an individual Party under the MEA.  It would be helpful if MEA Secretariats
with functioning non-compliance procedures could keep the CTE informed on their development and
operation, including measures taken to assist developing countries and economies in transition to
comply with their obligations.  In Canada's view, better MEA compliance mechanisms were more
appropriate than dispute settlement, per se , and would reduce the potential risk for disputes either
within MEAs or the undesirable bringing of MEA-related disputes to the WTO.
15. The representative of the European Communities said information provided by the
MEA Secretariats showed the trend toward the development of a more harmonious relationship
between MEAs and the WTO Agreements.  This was illustrated, for example, by the successful
negotiation of the PIC Convention.  Recent developments under the Basel Convention were also
encouraging, notably the adoption of Annexes VIII and IX at its fourth Conference of the Parties.Similarly, it was interesting to note that the Kyoto Protocol provisions laid the basis for exploring
synergies between trade liberalization and environmen tal protection in the field of climate change.  In
fact, the removal of trade distortions which were counter to the Climate Change Convention's
objectives was among the implementing policies and measures to be adopted by Annex I countries.
After having heard the MEA presentations, it was relevant to ask why the MEA issue had been so
divisive.  Although the general atmosphere in the CTE had improved, it was also clear that there had
been a certain geographical divide in the deliberations prior to Singapore.  This divide might still behaving an impact on the CTE's work on MEAs.  There was a sense that positions in the CTE were
determined by the perception that MEA trade provisions were detrimental to developing countries.  In
fact, several trade-related MEAs, including the Basel Convention, the PIC Convention and the
Biosafety Protocol were aimed at responding to the legitimate concerns of developing countries.
16. The EC felt Item 1 should remain a priority for the CTE.  There were expectations that the
CTE had to meet as the WTO's credibility was at stake.  He said that the CTE's inability to respond to
UNEP's questions at the MEA Information Session was collectively embarrassing.  The EC's position
on MEAs was well-known.  It was essential to devise effective mechanisms to develop a more
harmonious relationship between MEAs and WT O Agreements.  It would be important to
accommodate some trade measures adopted by MEA Parties;  this would not, in itself, be a majorrevolution, since WTO rules already provided considerable scope for accommodating the use of trade
measures necessary for environmental purposes.  This was confirmed by the interpretation given to
Article XX in dispute settlement practice.  At the March 1998 meeting, the EC had commented on
WT/CTE/W/53 concerning Article XX case law.  It would be necessary to address this matter again.
It would be useful to consider whether the A ppellate Body confirmed the criteria developed in
previous case law in the case currently pending before it.  Item 1 was broader than the MEA issue.WT/CTE/M/18
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For this reason, it might also be useful to enlarge the scope of the analysis to consider case law on
other WTO provisions, for example, some of th e Appellate Body's findings on Hormones might be
relevant to CTE work.  Elements, such as the precautionary principle, could be further explored.
Continuation of an informal dialogue with MEA Se cretariats was important not only in order to have
an overview of developments in international fora, but as a confidence building exercise.
17. The representative of Australia welcomed the participation of MEA Secretariats in the
Information Session;  such sessions had a valuable role to play in improving policy coordination on
trade and environment.  It was important to build on this information exchange to enhance
coordination on issues relevant to both WTO and MEAs.  Knowledge from experience gained was an
invaluable input to the future development of MEAs.  The MEA Information Session had highlighted
some key factors, including the diversity of aspects relevant to MEA policymaking, such as
environmental problems, conditions and objectives, and scientific and technical aspects forassessment and monitoring;  economic conditions, including trade, technological/production factors;
and the perspectives/priorities of the countries involved and their political, institutional/legal
environments.  This pointed to the importance of the participation in MEA formulation of officials
from different spheres and coordination of all these factors at the national level.  This diversity invited
a diversity of response, as illustrated by the variety of approaches in different MEAs.  Flexibility inMEAs was important to allow for this diversity, especially over time, i.e. through changes in
countries' abilities to deal with problems; or for consideration of restrictions on materials.  A holistic
approach should be taken, whereby MEA trade measures were viewed not in an isolated way, but as
one element which may be appropriate in some circumstances.  Transparency was another important
aspect of MEA policymaking.  The listing procedure in the Basel Convention had clarified the extentto which chemicals were covered, reducing uncertainties about possible future trade in recyclables.
18. Information facilitation had an important role in MEAs, and was at the centre of the
PIC Convention and the Biosafety Protocol;  it could assist countries to assess environmental risks
associated with trade in a way which focused resources on areas of real concern, whilst other areas of
activity were not caught up needlessly.  This may have an overall trade facilitating effect.  There weretwo levels for addressing MEA trade measures:  the overall interaction with trade;  and the design of
specific trade measures within MEAs.  As the majo rity of MEAs did not incorporate trade measures,
it was likely that the former was more significant for trade.  Australia asked the Secretariat to follow-
up on any quantitative estimates of the impact of MEA provisions on trade flows, whether from an
overall perspective, or in relation to specific trade measures.  As the Biosafety Protocol was an
example of an MEA which could have significant trad e impacts, the key issue would be to ensure that
importing Parties had sufficient information to focus their limited resources on areas of the greatestenvironmental risk, while not providing additional trade barriers (or pretexts for trade restrictions),
nor discouraging safe biotechnology research and development.  If the Protocol achieved this, it
would facilitate mutually supportive trade and environment policies.  Failure to do so may have costly
ramifications, including installed trade, which alone could outweigh the impact of a specific trade
measure taken in an MEA.  As Australia had said at the MEA Information Session, it was crucial tofully involve trade officials in these negotiations.
19. Australia recognized that WTO rules provided countries with the ability to protect their
environments.  WTO rules did not appear to have prevented the formulation and implementation of
appropriate multilateral measures to promote environmental protection, including where they
encompassed trade measures, as had been demonstrated by the absence of any challenge toMEA trade measures.  It could also be argued that WTO disciplines, particularly Article XX,
promoted the design of MEA trade measures in favour of clarity and transparency, simplicity, and
appropriateness to the relevant factors, including economic and trade aspects.
20. The representative of Japan thanked Canada for its statement, which her delegation would
examine.  Discussions on Items 1 and 5 had revealed that addressing the relationship between MEAWT/CTE/M/18
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trade measures and the WTO was a difficult issue.  The CTE should continue its effort to tackle this
interface to ensure multilateral approaches to address global environmental problems, while avoiding
the use of unilateral trade measures.  It would also facilitate mutual supportiveness of trade and
environment.  UNEP's presentation at the MEA Info rmation Session, particularly the questions posed,
provided elements of a way to approach this issue.  The CTE should respond to UNEP's questions,
specifically to clarify what it viewed as MEA trade measures which were WTO-compatible.
21. Developing a set of criteria for MEA trade measures was one possible solution.  Such criteria
could include:  (i) that the MEA had the clear objective of environmental protection;  (ii) that the
MEA had a universal nature in light of its objective,  including parties with relevant, significant trade
and economic interests;  (iii) that the MEA trade measures had been negotiated reflecting knowledge
of environmental experts as necessary measures for achieving its objective;  and (iv) that MEA Parties
had agreed to introduce MEA trade measures.  Japan's proposal on guidelines for MEAs(WT/CTE/W/31) was based on this idea and could be further developed by introducing the
differentiated approach.  Japan was aware that disc ussion of such criteria tended to provoke diverse
opinions and that unduly stringent criteria might have a chilling effect on MEA negotiations.  Given
that this may continue to be the case as long as the discussions remained abstract, discussion should
focus on concrete examples.  There had not been a WTO dispute concerning existing MEA trademeasures.  This fact provided the opportunity to analyse specific MEA trade measures, such as in
CITES, the Basel Convention, and the Montreal Protocol, to draw out a model of WTO-compatible
trade measures.  This process did not mean to judge individual trade measures in specific MEAs in the
CTE.  However, individual MEA measures could be used as a reference point.  It would be useful to
study a framework to provide predictability for MEA trade measures in terms of theirWTO-compatibility.  The OECD and UNEP reports which analysed trade measures in CITES, the
Basel Convention and the Montreal Protocol could be useful for the analysis.
22. The representative of New Zealand said her delegation's aim was to identify ways in which
the CTE could nurture the complementarities between trade and environmental objectives.  In 1998,
progress had been made under the market access cluster, by identifying the extent to which tradeliberalization and removing trade distorting policies contributed to a better environment.  The CTE
needed to look at the issues in terms of these complementarities, which should be addressed at every
level at which trade and environmental policies were formulated within states and in multilateral fora.
To work towards a complementary relationship, Members should ensure a better understanding of the
issues underlying CTE discussions and effective coordination between trade and environment officials
in MEAs.  In New Zealand, close consultation exis ted between government departments, agencies,
and stakeholders on trade and environment issues through regular intra and interdepartmental andagency discussions, NGO briefings, and regular public information dissemination.  At the
international level, much could be done to stre ngthen the complementarities between MEA-mandated
actions and WTO rules.  Ensuring that MEAs contained effective mechanisms for dealing with
disputes was important to avoid the burden of resolving disputes concerning MEA-mandated
measures falling by default to the WTO.  This aspect should be given appropriate priority in MEAnegotiations.  Regular MEA Information Sessions in th e CTE played an important role in this regard.
New Zealand would consider additional proposals to enhance information exchange between the
WTO and MEAs.  It might be useful to consider a thematic approach to MEA Information Sessions,
focusing on specific issues, such as compliance or dispute settlement.  MEA Information Sessions
were not a substitute, but a complement to effective national coordination.  As most WTO Memberswere also Parties to key MEAs, a coherent approach should be taken by national officials in both fora.
23. In addition to these immediate, practical steps, reflection should continue on the framework
that underpinned the relationship between the WTO and MEAs.  Since the CTE had been established,
and in the lead up to the 1996 Singapore Ministerial, this issue had been extensively discussed;  the
1996 Report of the CTE set out the wide range of views and papers on ways to address this issue.New Zealand's paper (WT/CTE/W/20) argued for a differentiated approach based on the specificity ofWT/CTE/M/18
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the measure involved, and whether it was applied between Parties and non-parties.  New Zealand's
paper proposed an understanding to clarify the application of WTO provisions to MEA trade
measures.  It was widely accepted that there was considerable scope for countries to use trade
measures for environmental purposes in a WTO-consistent manner.  In the longer term, an
understanding, as suggested by New Zealand, would assist both environment and trade negotiators to
ensure their respective systems were compatible, and encourage greater cooperation.  Reflecting the
objective of making trade and environment policies mutually supportive, it would also be consistent
with the view that multi lateral cooperation was more effective than unilateral action when pursuing
global environmental objectives, as recognized in Principle 12 of the Rio Declaration .
24. In clarifying the relationship between MEAs and WTO rules, a balance must be achieved
between the obligations entered into by WTO Members and the global issue of environmental
protection.  In developing its pr oposal, New Zealand wanted to allow the use of trade measures in
defined circumstances to advance environmental objectives where these were necessary, whilst
ensuring that such measures were not used for protectionist purposes.  Any MEA trade measures
should be able to achieve international support and be considered the most effective way of achieving
the end goal.  There would also be clear benefits in making environmental measures subject to
vigorous scientific justification as, for example, was required for SPS measures.  In 1996 and to-date,there had been no agreement on what represented an acceptable approach to this issue.  While it was
not useful to return to a detailed discussion of specific proposals, evolving CTE work should reflect
on the common principles and considerations which underpinned several approaches, even if the
specific details of each proposal varied.  Evolving jurisprudence on GATT Article XX should also be
considered.  While it remained the case that there had not yet been a WTO dispute that specificallyrelated to MEA measures, the possibility of such a case in future should not be discounted.  There had
been an increase in the references to trade measures in existing MEAs and in those treaties still under
negotiation, which underlined the need to ensure that work continue at the national and international
level to development a better understanding and a more coordinated approach to avoid potential
conflicts.  New Zealand looked forward to exploring ways of progressing this issue.
25. The representative of Korea said, as set out in the 1996 Report of the CTE, multilateral
solutions based on international cooperation were the most effective way for governments to tackle
global transboundary environmental problems.  The WTO Shrimp-Turtle Panel Report reinforced
Korea's conviction that unilateral trade measures to address environmental problems enforced
extrajurisdictionally should be avoided.  To date, MEA trade measures had not caused any disputes
among MEA Parties, nor presented any legal complications to the WTO.  However, if MEA trade
measures were not specifically mandated, they had the potential to clash with WTO rules.  As such,Korea had proposed to analyse MEA trade measures in light of their specificity and whether they
applied to Parties or non-parties.  Since the Singapore Ministerial, the CTE had not devoted sufficient
time to exploring the methodology through which to further discussions.  The differentiated approach,
proposed by New Zealand and Korea, could be used as the basis for mutually supportive interaction
between trade and environment.  Although, in certain cases, trade measures were recognized aseffective to achieve MEA objectives, trade measures were not the only policy instruments they
employed.  A mixture of policies, such as technology transfer and capacity building, were
indispensable to ensure successful MEA implementation.  The Montreal Protocol owed much of its
success to a combination of policy instruments, in cluding addressing incremental costs through the
Multilateral Fund.  The Kyoto Protocol had introduced the concept of Joint Implementation and theClean Development Mechanism as incentives to facilitate implementation.  Effectiveness of the
intended measures should be reviewed not only in the MEA, but in the WTO.  Progress on Item 5 was
related to Item 1, and could not be expected for now given the stalemate under Item 1.  As indicated
in the 1996 Report of the CTE (para 178), if a dispute arose between WTO Members, Parties to an
MEA, over the use of trade measures they were applying between themselves pursuant to an MEA,they should consider trying to resolve it through MEA.  Article 3 of the WTO Dispute Settlement
Understanding could also be cited in this regard.WT/CTE/M/18
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26. The representative of Switzerland said the MEA Information Session had revealed that the
understanding of the links between environmental protection and WTO rules was improving, as
illustrated, for example, by the negotiation of the PIC Convention.  The format of MEA Information
Sessions could be improved to enhance coordination and information exchange between the CTE and
MEAs.  The links between WTO rules and MEA tr ade measures remained a priority issue for
Switzerland.  Switzerland had always shown a particular  interest in Item 1, as illustrated by the Swiss
proposal (20 May 1996) and regular statements on th is Item.  Environmental protection was a daily
concern for people and governments.  In order to deal with environmental problems whose scope
extended beyond national borders, states had concluded many MEAs.  Some of these MEAs
contained trade-related provisions which authorized or obliged Parties to adopt trade measures to
achieve given environmental objectives. It was not up to a trade forum, such as the CTE, to criticize
these provisions;  they existed and had been widely adopted and ratified by a large part of theinternational community.  The WTO should concentrate on avoiding that these trade measures, taken
in conformity with an MEA, were applied for protectionist purposes.
27. Article XX permitted WTO Members to take measures to protect the environment once
certain conditions, listed in its chapeau, were fulfilled.  The question on which to focus was not on
whether these MEA provisions were in conformity with WTO rules, but on how MEA Partiesimplemented these provisions.  It was at this stage that the risk of misuse of environmental objectives
pursued by MEAs became greater.  The Appellate Body shared this opinion, as illustrated in the
Gasoline Report:  "The chapeau [of Article XX] by its express terms addresses, not so much the
questioned measures or its specific contents as such, but rather the manner in which that measure is
applied." The purpose and objective of the chapeau, according to the Appellate Body, was to preventthe abuse of Article XX exceptions.  The more precise the obligations on MEA Parties, the lower the
risk of MEA objectives being circumvented for other purposes.  This was why Switzerland's proposal
for a "coherence clause" was restricted to specific trade provisions taken pursuant to MEAs.
28. The MEA Information Sessions had revealed that, although no disputes had been submitted to
the WTO dispute settlement mechanism with respect to the conformity of trade measures takenpursuant to MEAs, doubts remained in the mind of negotiators when they were considering if it were
necessary to introduce provisions to authorize Parties to take trade measures to meet MEA objectives.
These doubts should be addressed.  Switzerland had proposed to complement the Agreements in
Annex I of the WTO with a memorandum of understanding on trade measures taken pursuant to
MEAs.  Switzerland's proposal remained on the table and his delegation was prepared to discuss its
details.  To pursue work on this Item, it had been suggested to use a differentiated approach, through
which different types of MEA trade provisions would be identified, a distinction would then be drawnbetween the circumstances under which these provisions were applied and, in each case, possible
solutions would be sought.  Although this approach had interesting theoretical aspects, due to its
complexity, it would not help to solve the problem being examined under Item 1. Canada's
suggestions offered an interesting short term solu tion.  In the medium term, however, in keeping with
the EC's statement, Switzerland felt it was necess ary to develop a framework to define the status of
trade measures taken pursuant to MEAs.
29. The representative of Turkey said the quantity of the work and variety of views indicated how
sensitive and important this item was to CTE work.  MEAs were among the best instruments to
address global or transboundary environmental problems and there was complementarity, rather than
conflict, between trade and environmental objectives.  Due to the growing complexity ofenvironmental problems and the evolving nature of MEAs, enhanced coordination between trade and
environment communities at the national and international level, and between MEA Secretariats and
the WTO was the best way forward.  Turkey welcomed the MEA Information Sessions.  As the
universal character of an MEA grew through its scope and participation, it moved closer to the
essence underlying the WTO.  Therefore, another way to avoid potential conflicts and make MEAsand the WTO mutually supportive in resolving, international environmental problems was to improveWT/CTE/M/18
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participation in MEAs.  Trade measures in MEAs can be used, as a last resort, to address
environmental problems;  a balanced package of measures was necessary to achieve MEA objectives.
Considering the incentives and financial means that sustainable trade provided for environmental
protection, especially for developing countries, trade opportunities should be expanded.
30. As interpreted by WTO panels, Article XX provided limited and conditional exceptions from
WTO obligations.  MEA trade measures should be least trade restrictive, non-discriminatory and
proportional;  they should also meet the effectiveness and necessity criteria set out in Article XX.
Unilateral action and extrajurisdictional use of trade measures should be avoided to minimize
WTO inconsistency.  However, not all MEA trade measures raised consistency issues, and when they
did, their effects were not to the same extent.  An analysis of the effects and effectiveness of trade
measures used to achieve MEA objectives would be useful.  As set out in WT/CTE/W/53, measures
should be examined and interpreted under Article XX.  The "specificity" concept needed to be furtherexamined.  Given that disputes encountered so far had resulted from unilateral actions, avoiding the
use of trade measures which had not been multilaterally agreed would avoid potential disputes.
31. The representative of Norway said that the main task under this Item was to clarify how
two sets of legal commitments (WTO rules and MEAs) were complementary so that conflicts were
prevented.  Problems related to MEA non-parties which were WTO Members.  BetweenMEA Parties, an MEA had lex specialis  and could be assumed to prevail over the WTO.  At the
September 1997 meeting, several Members had recognized that the CTE was faced primarily with
two options:  (i) rely on evolving jurisprudence (the status quo );  or (ii) devise solutions to
accommodate MEA trade measures in the WTO.  During the years that the CTE had discussed
Items 1&5, developments had taken place on the environmental side.  MEAs, as a means to solveglobal/transboundary environmental problems, had increased in number and importance as illustrated
in the two MEA Information Sessions which been held in the CTE.  The development of MEAs as an
effective way of solving global environmental problems would likely reduce the resort to unilateral
and extrajurisdictional measures.  To a certain extent, MEAs also applied the precautionary principle,
for example in the Montreal Protocol.  A number of WTO panels, including that on importprohibitions of certain shrimp and shrimp products (part VII, WT/DS58/R), attached importance to
whether international cooperation had been sought before a trade restrictive measure was used.
Negotiation of an MEA or action to solve a global or transboundary environmental problem was, in
the view of that panel, a possible way to avoid threatening the trading system (para. 55).  Norway
reiterated its suggestion at the September 1997 meeting that some issues be examined more in depth
than others in the search for a possible accommodation, such as, inter alia , the relationship between
MEA Parties and non-parties, non-product related production and process methods (PPMs),specificity of trade measures, and participation a nd openness of MEAs.  Factual, analytical papers,
based on the minutes of CTE meetings, would facilitate discussion of such issues.
32. The representative of Argentina said there had been a positive dialogue at the
MEA Information Session.  UNEP's statement had raised several challenges.  It was interesting that
UNEP had noted that MEAs contained packages of measures to address environmental problemswhich were only effective when applied as a whole, for example in order to eliminate the production
of, and trade in an environmentally damaging product.  It was necessary for such a package of
measures to promote access to technology, which made  it possible to produce substitutes.  During the
CTE's analysis, Argentina had maintained that it was necessary to examine packages of measures
contained in MEAs.  The questions posed by UNEP were interesting;  it would be difficult for theCTE to reply to all these questions, but it might attempt to respond to some.  For example, UNEP had
asked when trade measures were considered to be consistent with WTO rules.  This question had been
discussed in the CTE for the past few years wi thout any response.  Progress could be made by
defining the measures which were clearly WTO-incompatible.  Concerning the issue of environmental
principles, particularly the precautionary principle, the Appellate Body Report on Hormones wasrelevant.  Any decision linked to a problem between Members states led to obligations for that caseWT/CTE/M/18
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and those Parties.  Nevertheless, the Appellate Body's finding that the precautionary principle was
contained in Article 5.7 of the SPS Agreement, but that this principle may go beyond the provisions of
that Article was of importance.  This posed a challenge to avoid the use of the precautionary principle
as a justification for protectionism. The application of the precautionary principle in accordance with
the SPS Agreement ought to be provisional in order to obtain information to assess risk.  As suggestedby the EC, future discussion of this issue in the CTE would be useful.
33. The representative of the European Communities said the methodology of the differentiated
approach, proposed by New Zealand and Korea, was useful.  Proposals by others, such as the EC,
were also based on differentiated situations in MEAs.  The 1996 Report of the CTE was also based on
the distinction between MEA Parties and non-parties, and the specificity of trade measures.  The
parameters suggested by this approach had been used in a general way throughout CTE work.
Doubts, however, remained in terms of the substantive criteria which had been proposed for each ofthe situations identified on the basis of the differentiated approach.
34. The representative of Egypt said that although Agenda 21  set out several positive measures to
assist developing countries to meet the goals of sustainable development, not much concrete progress
had been made in this regard.  The WTO would have to address its relationship with MEAs.  It might
be difficult to address the range of positive measures in the WTO;  however, promoting technologytransfer and improving market access were within WTO competence and should be addressed.
35. The representative of the United States expressed his delegation's appreciation for the
MEA presentations at the Information Session.  If there was one frustration, it was that this session
had tried to do too much in one day and it had not been possible to do justice to the quality of
expertise available to the CTE.  This was an aspect that should be considered in organizing futuresessions with MEAs.  He noted that new aspects had been raised at this meeting, for example by
Canada.  He highlighted the importance of coordination, an area in which progress remained to be
made.  Although participation from environmental agencies in the CTE was increasing, improvements
could be made in this regard.  Much more needed to be done on the MEA side of the equation.  The
PIC Convention negotiations had been successful in bringing trade expertise to bear on the process;trade experts had not been brought in as watchdogs, but called upon to help make that agreement as
functional as possible.  However, if one looked at other negotiations, this was the exception rather
than the rule.  For example, in the Biosafety negotiations, which had potentially enormous trade
effects, there were only a few trade experts involved.  The US referred to the EC's comment on the
number of instances in which trade measures were sought by developing countries in MEAs, such as
the PIC and Basel Conventions.  A vocabulary gap remained between trade and environment officials,
such as with the use of the term "positive measures".  It was important to use terms which weremeaningful to both trade and environment officials.  When this term had first been used at UNCTAD,
it was in a non-MEA context, in reference to the suggestion that, as governments were taking
measures to improve their environment, positive measures could be used to help them achieve this
objective.  Unfortunately, this term had then been used in the context of MEAs.
36. Commenting on WT/CTE/W/84, he said that the Intergovernmental Forum on Forests (IFF)
did not have a mandate to formulate trade agreements.  The IFF was an ad hoc , time-limited body,
whose purpose was to formulate recommendations on a range of forest issues, including trade issues,
for consideration by the Commission on Sustainable Development.  It was hoped that the IFF would
address and clarify some issues related to trade and environment in the forest sector.  These issues had
been clearly identified in the IFF terms of reference and included trade measures left pending, such astariff and non-tariff barriers in relation to sustainable forest management, certification issues where
relevant and improved market access.  The list in WT/CTE/W/84 gave the misleading impression that
the other items listed in Section V were part of the IFF's trade agenda.  While these may be important
forest issues in other contexts, the IFF had not agreed to address them in relation to trade.WT/CTE/M/18
Page 11
37. The representative of Brazil referred to the EC's comment on the perception among
developing countries that MEA trade measures were detrimental to them;  this was not Brazil's
perspective.  Trade measures had a role to play in environmental protection.  However, they had
different effects in developing countries.  In this regard, she cited the ban amendment of the Basel
Convention as an example.  Whilst the ban on tr ansboundary movements of hazardous wastes was
useful in the context of some developing countries, it could be detrimental to others which had some
technological capacity to manage waste.  The fact that this specific measure was the result of a
consensus-based multilateral process made it easier from the Brazilian perspective.  Concerning
Argentina's comments on UNEP's request to determine when measures in MEAs were
WTO-consistent, she enquired as to whether a start to such a discussion could be made by stating that
the answer would not be legal, but subjective.  If  the MEA measure were the outcome of a consensus-
based multilateral effort, then it should be considered WTO-consistent as it was part of a specificcontext, and was probably contained in a package of measures necessary to address a specific case.
She welcomed the dialogue with MEA Secretariats at the Information Session.  The CTE had
facilitated greater awareness in Brazil of the relationship between trade and environment.  Brazil
would circulate its statement at the MEA Informa tion Session on the International Commission for the
Conservation of Atlantic Tunas (WT/CTE/W/95).
38. The representative of India said the MEA Information Session had been informative.  It was
clear that MEAs developed a package of measures, which sometimes included trade measures, to
achieve their objectives.  India shared Turkey's view on the usefulness of these trade measures and
agreed with Brazil that these measures could have different effects in developing countries.  Several
questions had been raised by the MEA presenta tions, for instance with respect to the Montreal
Protocol.  India welcomed the efforts made in th e Montreal Protocol to make available technology
under fair and most favourable terms, and looked  forward to further work on Decisions IX/14 and
IX/5.  Whilst technical assistance on the closure of some ozone depleting substance (ODS) producing
units in developing countries was available under the Montreal Protocol, slow progress on technology
transfer was impeding environmental progress.  I ndia was interested in developments in the Kyoto
Protocol.  As greenhouse gas emissions were a global pollution problem, the reversal of this
environmental problem was appropriately addressed through such an MEA.  The reversal of local or
regional environmental problems, however, were best addressed locally or regionally. As affirmed in
the 1996 Report of the CTE, trade liberalization accompanied by appropriate domestic environmental
policies was the ideal solution.  On the use of the term "positive measures", India supported Egypt's
suggestion to address technology transfer and market access issues in this context.  On the relevant
trade principles for the environment and vice versa , he recalled India's contribution under Item 2 (23
July 1996).  The CTE had discussed these principles, including the precautionary principle.
Following the Appellate Body Report on Hormones, the CTE should consider the precautionary
principle, particularly to ensure it was not used for protectionist purposes.
39. The Chairman said that in order to enhance the dialogue at MEA Information Sessions, either
more time could be devoted to these sessions, or the number of MEA participants could be reduced.
Item 7: The issue of the export of domestically prohibited goods
40. The representative of the European Communities said WT/CTE/W/73 contained an
exhaustive treatment of the product coverage of international instruments which addressed
domestically prohibited goods (DPGs), as well as possible formats for DPG notifications in the WTO.
The EC was willing to endorse the idea put forward by many developing countries according to whichthe WTO could re-establish a DPG notification system.  However, lack of a precise definition of
DPGs would compromise such a notification procedure.  The EC requested the Secretariat to contact
the relevant international instruments in this re spect.  He noted that the format in Annex B of
WT/CTE/W/73 could have wider repercussions on customs' practices.WT/CTE/M/18
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41. The representative of Egypt said WT/CTE/W/73 was informative with respect to other fora's
work on DPGs.  Egypt supported the format for DPG notifications used from 1983 to 1990.
42. The representative of the United States said WT/CTE/W/73 illustrated the wealth of activity
in various international organizations which had the relevant expertise to deal with DPGs.  Any
frustrations concerning the discussion of DPGs may stem from the fact that the WTO was not as wellplaced as other organizations to deal with this issue.  For example, the PIC Convention negotiations
had required considerable chemical expertise.  While the CTE should consider the contribution it
could make to other fora's work, their expertise went beyond that of the CTE in this area.
Item 8: The relevant provisions of the Agreement on Trade-Related Aspects of Intellectual
Property Rights
43. The representative of the United States than ked India for providing its written comments in
advance of the meeting and reserved the possibility to provide further written comments.  On
WT/CTE/W/82, he commented that while pointing to the role that patent protection played in
encouraging the development of environmentally-fri endly products, this paper called for a reduction
in patent protection for such products.  A reduction of patent protection would reduce the quality and
quantity of products available.  Without such protection, he enquired as to who would invest time and
money in inventing and developing environmentally sound technologies (ESTs). Another way to viewthe issue was to ask whether increasing patent protection should be considered for such products to
spur their development.  India's paper asserted that patents restricted competition, causing restricted
output and higher prices, which was not the case.  One need only look at those countries that had
strong patent protection or were strengthening protec tion to see that the variety of goods available was
steadily increasing with, in most cases, decreases in prices.  In economies where copying rather than
innovation was the rule, as patent protection was weak or lacking, goods involving recent
technological developments were fewer and more ex pensive.  India's own experience with software,
which was protected under India's copyright law, should indicate that protection of intellectual
property rights (IPRs) had a positive effect on a country's domestic market and export income.
44. Paragraph 6 of WT/CTE/W/82 had not mentioned the factors most directly affecting
technology transfer and trade (e.g., a country's foreign investment climate, import laws and
regulations, marketing approval procedures, market conditions, transportation and distribution
infrastructure, etc.), because these factors "could not have uniformly contributed toward" the
non-availability of environmentally-friendly products.  These factors need not operate "uniformly" in
the countries to which India refered to be primary influences on technology transfer and trade in
products.  Any related "problems" could not be addressed without analysing the effect of each of these
factors, all of which were under the control of the country complaining of the hypothetical problem.India had asked that other countries, without any evidence that a problem existed or any serious
analysis of all of the factors that might account for the problem, agree to weaken their patent laws or
otherwise take responsibility for problems that had not  been shown to exist.  Paragraph 7 asserted that
problems may occur in MEA implementation because of a novel concept refered to as "virtual
standards", where there were various substitute products available, but the market gravitated towardsone of them.  However, evidence had not been presented that such standards were more than
hypothetical.  MEA standards were negotiated and, during the negotiation, a country had an
opportunity to point out if there were only one product that would meet a standard under
consideration, allowing the negotiators to agree on a standard that could be satisfied by a variety of
products or technologies.
45. On WT/CTE/W/85, the US commented that India's argument that Article 29 of the TRIPS
Agreement must be amended so that India could implement its obligations under the Convention on
Biological Diversity (CBD) was groundless.  Nowher e in the CBD were Parties required to demand
that patent applicants disclose the country of origin for biological source materials.  The question ofWT/CTE/M/18
Page 13
prior informed consent, although a goal of the CBD, was unrelated to the patent process, particularly
as research in this area was not always the subject of a patent application, and would not be relevant
to the TRIPS Agreement.  India proposed to design a sui generis  intellectual property (IP) system for
local, contemporary innovations, but had not made a case that this was necessary.  Contemporary
innovations, whether made by individuals with traditional lifestyles or university researchers, may bepatentable if they were new, useful and contained an inventive step.  India had not demonstrated what
its concerns were with regard to this subject matter and why a sui generis IP regime was required to
address non-patentable local practices.  India sugge sted that the negotiation of the TRIPS Agreement
had been concluded before the CBD, and, thus, the TRIPS Agreement needed to be reviewed in light
of Article 16.5 of the CBD.  India relied on the claim that the Uruguay Round ended in December
1991 as "very few changes were allowed" in the negotiated text after that date.  The negotiations had
not concluded until December 1993, and significant changes to the Dunkel text, including the TRIPSAgreement, had been made.  Having concluded the CBD in June 1992, it was reasonable to assume
that Members were aware of the CBD in fo rming their positions on the TRIPS Agreement.
46.  The representative of Japan made a preliminary statement on this Item.  Japan was studying
the issues which had been raised under this Item, such as the dissemination of environmentally sound
technology and products (EST&Ps) and TRIPS-related issues.  The importance of technology transferand capacity building had been noted in the 1996 Report of the CTE (paragraph 173).  Japan was
examining whether EST&Ps could be transferred on more concessional terms.  One idea could be to
analyse whether concrete problems existed in this respect.  EST&P dissemination was important for
environmental protection.  Some Members considered that in order to promote technological
innovation, IP protection was also important.  The CTE's task was to seek a balanced solution.
47. The representative of the European Commun ities commented that IPRs and the respect of
patent protection was controversial.  Critics of patent protection had not taken into account that the
immediate beneficiaries of such protection would be people themselves, as well as the environment,
biodiversity and sustainable development.  An efficient IP system provided incentives for research
and development and, thus, for new EST generation;  it attracted investment by providing protectionfor the results.  It also promoted EST transfer as right holders were more willing to voluntarily
transfer ESTs.  Such a system helped local producers to safeguard investments, vis-à-vis usurpation
by a third policy and, thus, helped develop the domestic economy and the resources for financing
environmental protection.  An efficient IP system di d not call into question national laws to monitor
the application of research or the use and commercialization of its results for environmental purposes,
such as for CFCs;  patents were granted, but in many countries laws prohibited their use.
48. Patent protection was not an obstacle to access to traditional knowledge for many reasons.
Inventions, not discoveries, were patentable.  Novelty and inventive steps were preconditions for
patent protection.  For example, in the case of a patent claim for a pesticide of neem leaves, this
precondition would be destroyed in the case of indigenous production.  However, it was correct that
indigenous knowledge may be the foundation upon whic h a novel patentable product or process was
developed, for example by local producers and, for some reasons, the existing patent system could notsafeguard their interests.  In this case, acknowledgement of, and compensation for the invention could
be achieved on a contractual basis amongst interested parties, governments, research institutes,
inventors, and indigenous communities outside the IP system to safeguard benefits.  Benefit sharing
comprised more than a decision about who should be the legitimate right holder.  A contractual
approach allowed for flexible solutions which took into account each case.  One example was benefitsharing in the use of genetic material from the smokebush which involved agreements between the
Australian government, the National Council Institute in the US, and Australian pharmaceutical and
research consortia, covering issues such as royalties, research funding, research and technology
acquisition, access and commercial development of a product derived from Australian flora, as well as
marketing licenses.  The condition for such a solution was a domestic structure in the country ofWT/CTE/M/18
Page 14
origin of the genetic resource.  It would be useful  if Members, along with the CBD, could contribute
practical examples to illustrate the compatibility between TRIPS and biodiversity conservation.
49. The representative of Colombia felt that th e relationship between the environment and the
TRIPS Agreement was important.  The CTE should analyse issues such as EST transfer;  what
happened when an MEA mandated the use of a product subject to patent protection;  protection ofliving organisms;  and protection of indigenous peop les' knowledge.  The latter two issues should be
seen in the context of the CBD, which set out that  states have a sovereign right to exploit their
resources through domestic environmental policies and the obligation not to engage in activities
which cause harm to third parties.  Concerning access to genetic resources, the Andean Group,
including Colombia, had passed Decision 391 of the Cartegena Agreement, submitted to the CTE at a
previous meeting.  To ensure that activities within a country's jurisdiction did not cause harm to third
parties, the TRIPS Agreement should help to guarantee that national legislation adopted in accordancewith national environmental policies and based on MEAs was respected by third parties.  The TRIPS
Agreement had an important role to play in this re spect.  For inventions linked to living organisms,
the TRIPS Agreement should require that patent applications indicate the origins of the samples and
reference to whether living organisms had been extracted in accordance with the norms of the country
of origin.  If indigenous knowledge were involved, there should be a certificate of compliance withthe existing standards in the country of origin.  For example, if a patent were sought in a
WTO Member for an invention connected to a living organism, or which involved traditional
knowledge, compliance with domestic requirements shou ld be indicated in the patent application for
access to these resources in the country of origin.  These requirements may refer, inter alia , to the
need for prior informed consent through an access contract to exploit genetic resources.  If the
patentee had not complied with these provisions, then the patent should not be granted.  It was up to
the CBD and each country to define access to genetic resources and protection for indigenous
knowledge in its territory.  Such a process would guarantee, through the TRIPS Agreement, that these
regulations would be respected by WTO Members.
50. The representative of Norway recalled his delegation's emphasis on the importance of
ensuring consistency when developing and implementing MEAs, and on maintaining the flexibility
provided for in the TRIPS Agreement on IPR legisl ation relating to living materials.  IPRs were
intended to encourage creativity and innovation, however, their extension to living materials,
including plants and animals, was controversial.  Difficult issues had been raised in this context.
Living organisms were qualitatively different from products which had traditionally been given IPR
protection.  Ethical considerations were involved  and possible links between IPRs and biodiversity
loss as IPRs might encourage genetic uniformity had not been explored.  Criteria for what constitutedan inventive step vis-à-vis a discovery were unclear.  The contrast between IPR regimes for the
modern industrial sector and the lack of protection for traditional knowledge was seen by some
countries as representing unequitable benefit sharing.  Increased polarization between providers of
genetic material and the sectors benefiting from IPR protection, particularly for agricultural genetic
resources, was unfortunate.  Such polarization could make it more difficult to agree on commonstrategies to conserve and sustainably manage biodiversity.  Thus, the CTE should move towards a
situation where different international agreements were implemented in mutually supportive ways.
The TRIPS Agreement should be implemented in a manner which was consistent with the CBD, and
vice versa.   Also, the 1999 TRIPS review should adequately explore relevant links to MEAs.
51. The representative of Australia said that a major aspect of this Item was the relationship
between the knowledge, innovations and practices of indigenous and local communities and the
promotion of environmental objectives, particularly under the CBD.  The starting point for analysing
this issue was an understanding of how existing IP  systems may be used to protect the knowledge,
innovations and practices of indigenous and local communities, and through this provide incentives
for biodiversity conservation and promote the fair and equitable sharing of benefits arising from theuse of genetic resources.  The TRIPS Agreement set out minimum standards for IPR protection andWT/CTE/M/18
Page 15
left WTO Members at liberty to adapt and extend the IP system.  It also allowed Members to develop
supplementary forms of IP protection to meet the po licy goals in CBD Article 8(j) in accordance with
their own domestic policy settings.  Work was necessary to improve the practical understanding of the
potential of existing IP rights to increase the benefits that can accrue to indigenous and local
communities. Thus, Australia welcomed the WIPO programme on IPRs, which was a practicalinitiative which Australia had supported, including through hosting its first fact-finding mission.  This
work would provide a basis for future discussions on the possible role of IPRs in relation to
CBD objectives and the interests of indigenous and local communities.  If international cooperation in
this area were to lead to beneficial outcomes, work should proceed with a full understanding of the
IP system and the principles embodied in TRIPS, and with the relevant IP expertise.
52. Better use and greater understanding of the possibilities of the existing IP system had the
potential to achieve outcomes consistent with the aims of both the CBD and the TRIPS Agreement.International cooperation, at a practical level, should include a review of each of these possibilities.
Australia outlined the following illustrative list of issues, noting that not all would be relevant for all
countries:  practicalities of licensing and contract law in relation to traditional knowledge and genetic
resources owned by or under the custodianship of indigenous and local communities;  use of trade
mark law (including collective and certification marks), and geographic indications, to facilitatemarket recognition and fair trade in goods related to indigenous and local traditions;  similar use of
unfair competition and consumer protection law; us e of the law of confidentiality and undisclosed
information to protect indigenous and local knowledge;   use of patent information systems to monitor
and assess technological developments making use of traditional knowledge and genetic resources,
and recourse to existing legal processes to resolve any concerns relating to patent applications orgranted patents;  collective administration of copyright, and exploration of the application of existing
copyright principles to a wider range of beneficiaries and subject-matter;  use of industrial design
protection, utility models, petty patents, and similar forms of protection, where available, which may
be applicable to relevant innovations and original designs drawing on traditional cultures or
knowledge;  and recognition of new plant variet ies developed by indigenous and local communities.
53. This kind of practically-oriented work, exploring the benefits of the existing IP framework,
can proceed immediately, at grassroots, national and international levels, and would help promote
informed international dialogue.  At the internat ional level, the CTE should recognize the relevant
work already being undertaken, such as in WIPO to  identify new approaches to IP systems by new
beneficiaries such as holders of indigenous knowledge and innovations, taking into account the
interests of such groups which had hitherto had little or incomplete exposure to the IP system.
Potential benefits for indigenous and local communities may include promoting understanding of therange of uses of existing IP systems by indigenous people and local communities (as well as any
related small and medium enterprises), and investigation of the use of existing norms to protect a
range of indigenous works.  The options for practically providing for protection of indigenous
knowledge and biodiversity could emerge from such work.  For example, there was scope to train
indigenous communities in licensing agreements to negotiate mutually agreeable terms for the use of
their knowledge or genetic resources.  Training could also be provided in patent principles to assist
communities to identify their own patentable techno logies and to consider the legal implications of
patent applications derived from existing indigenous knowledge.  A recent case on the medicinal uses
of turmeric had demonstrated how established patent principles can be used to invalidate a patent
claiming material already recognized as traditional knowledge and commonly used in India.
54. WIPO envisaged the creation of a traditional and indigenous knowledge database which may
be used to encourage the recognition, protection and compensation of knowledge of farmers and
traditional communities.  This database would provide a practical mechanism to safeguard and
document traditional knowledge, thus facilitating searches of the prior art base and easily
demonstrating the extent to which claimed subject matter was in the public domain.  It wouldfacilitate procedures in relation to patents, the validity of which was called into question, such as inWT/CTE/M/18
Page 16
the turmeric case.  Geographical indications, and collective and certification trade marks, represented
potential tools for the protection of regionally-based traditions.  Australia was exploring the use of
collective or certification trade marks.  Once a more concrete sense of the possibilities of the IP
system had been developed and applied, greater insights would be gained into how existing systems
may be adapted, and what further steps were needed to deal with subject matter that was not readilydealt with by the existing system.  One example was WIPO's work on new forms of protection for
expressions of folklore.
55. The representative of India, responding to remarks on WT/CTE/W/82, said that with respect
to specifically mandated technology required pursuant to an MEA, the market available for such
technology would be manifold as compared to ordi nary patents.  This was logical.  On the US
comment that experience had shown technology tran sfer occurred in countries with strong patent
regimes, India would like to have empirical evidence in this respect.  An open investment regime, for
example, could result in technology being transferred along with the right holder in the form of capital
equity and investment.  On the US comment that this was a hypothetical issue, India had presented a
practical problem experienced by at least three countries with respect to at least one technology being
phased-out under an MEA.  Future MEAs could have similar obligations.  To ensure the mutual
supportiveness of environmental conservation and the WTO, such issues should be analysed.  Japan'ssuggestion to examine empirical evidence was also a way forward.
56. Concerning the US comment on WT/CTE/W/85 that the CBD did not mention prior informed
consent, India said that, as the CBD had an obligation to share benefits, this paper suggested that prior
informed consent was the way in which to do so.  Australia's proposal was also relevant in this regard.
The idea was to ensure mutual compatibility between the CBD and the TRIPS Agreement.  Indiareiterated that substantive changes had not been  made to the TRIPS Agreement prior to the CBD's
conclusion.  India had doubts about the EC's comm ent that acknowledgement or compensation for
biodiversity use could be achieved outside the IP  system.  Both the CBD and WIPO had started work
to examine possible solutions in this area.  Unless rights holders had the obligation to state the source
of origin, India asked how indigenous communities would be aware of how their traditionalknowledge was used, or be able to pursue benefit sharing.  The CBD could forward to the WTO ideas
on the compatibility of the TRIPS Agreement and the CBD.  The CTE should also share proposals
with the CBD.
57. The representative of Canada recalled that his delegation's intervention at the September 1997
meeting had focused on the CBD, as the MEA that dealt most extensively with the interface between
IPRs and environmental protection.  Canada had said that many of the possible IP issues related to the
CBD's goals could be addressed through existing instruments and remedies under TRIPS, WIPO and
domestic legislation.  Canada had also noted the following issues:  the complexity of indigenous
knowledge issues;  Canada's support for the CBD clearing-house mechanism to share national
experiences;  Canadian experiences with traditional knowledge in respect to forests;  identification of
issues related to agricultural biodiversity and trade liberalization;  the importance of IPRs, and TBT
and SPS considerations, in negotiating the Biosafety Protocol;  and the need to enhance informationexchange between the CBD Secretariat and the WTO.  Canada welcomed recent developments in this
area.  WIPO had initiated a research programme to  investigate the issue of indigenous knowledge and
local knowledge, including for genetic plant resources.
58. The Conference of the Parties to the CBD, at its fourth meeting in May 1998, had decided to
establish an open-ended ad hoc  working group on Article 8(j), which dealt with traditional
knowledge, innovations and practices.  Australia and Colombia's comments merited further
consideration.  Canada had raised the potential conflict between some proposals in the Biosafety
Protocol and WTO disciplines in the SPS Committee meeting of June 1998.  This was a concrete
example of where sound domestic policy coordination was required to avoid potential conflicts
between the WTO and an MEA.  The issue of "farmers' rights" had arisen in the FAO discussions inWT/CTE/M/18
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June 1998 on the International Undertaking on Plant Genetic Resources, which could have
implications for IPR application.  Whilst Canada was willing to recognize the contribution of farmers
and the need to protect, consistent with national legislation and international agreements, their ability
to keep, use, exchange, share and market seeds and other plant materials, this was not a basis for
recognition of an international form of farmers' rights.
59. The representative of Korea agreed that access to, and transfer of ESTs was essential for
environmental protection and promoting sustainable development.  The TRIPS Agreement should
play a positive role in facilitating access and transfer, whilst protecting IPRs.  Korea had taken note of
the issues raised with respect to technology transfer  being left to the discretion of the patent holder
once substitute technology was protected by patents after the restriction on the original technology
under an MEA.  Korea supported Japan's suggestion to analyse concrete cases to enrich the CTE's
understanding and focus the discussion.  Korea was willing to make a contribution in this regard.  Toensure consistency between the CBD and the TRIPS Agreement, it was necessary for the WTO and
CBD Secretariats to exchange information a nd explore an appropriate mechanism to ensure
consistency between these two agreements, whilst b earing in mind the review of Article 27 of the
TRIPS Agreement.  Korea welcomed the CBD decision to set up an ad hoc working group to explore
the positive interface between the need for the protection of indigenous and traditional knowledge andthe TRIPS Agreement.  CTE work on this issue was necessary in view of CBD developments.
60. The representative of Malaysia, on behalf of ASEAN, reiterated ASEAN's commitment to the
harmonious implementation of the CBD and the TRIPS Agreement.  At the MEA Information
Session, the CBD had noted the desire of CBD Parties to explore with the CTE several aspects related
to the relationship between these two agreements, for example access to genetic resources.  ASEANrecalled its statement at the June 1995 meeting of the CTE, setting out, inter alia , that, whilst the
WTO would create greater disciplines and a more conducive environment in the conduct and
development of trade, it also had a responsibility to contribute to the promotion of sustainable
development.  ASEAN felt the TRIPS Agreement contained the necessary prerequisites for the
development and transfer of technology while addr essing the environment;  implementation of the
TRIPS Agreement was paramount for sustainable development.  Notwithstanding this, and in
preparation for the 1999 review of the TRIPS Agreement, the CTE could examine:  (i) how to more
precisely interpret the scientific and practical definitions of terms such as "plants", "animals", "mico-
organisms", "biological processes", "plant varieties" and an "effective sui generis  system" in the
context of TRIPS Article 27.3(b);  (ii) the implementation of TRIPS Article 66.2, which called upon
developed country Members to provide incentives to enterprises and institutions in their territories to
promote technology transfer to LDCs;  (iii) an a ssessment as to whether the economic incentives for
biodiversity conservation and sustainable use allowed for in the TRIPS Agreement were sufficient;
and (iv) the compatibility of CBD and WTO provisions.
61. The representative of the United States said that Members' contributions of case studies on the
TRIPS Agreement and technology transfer should, c onsistent with the 1996 Report of the CTE, also
take into account other factors impacting on technology transfer, such as investment climate,regulatory regimes, etc.  It did not make sense to raise examples which only focused on one aspect of
a multidimensional issue.  The US would examine ASEAN's suggestions for further work;  some of
the issues raised were so technical that the TRIPS Council might be better placed to address them.  He
said that not only had significant, substantive ch anges been made to the TRIPS Agreement following
the Dunkel Draft, some had been at India's request, i.e. on whether dispute settlement would allow the
possibility of non-violation complaints which bore directly on the balance of obligations.  The US
supported the suggestion to forward CTE papers to the CBD in addition to the minutes of the
meetings at which these papers had been discussed, to permit a full picture of the discussions.
62. The representative of India responded that the non-violation amendment to the
TRIPS Agreement was a horizontal issue which reflected that the implications of the commitmentsWT/CTE/M/18
Page 18
undertaken had not been fully known.  Thus, it had been desirable to keep non-violation complaints
out of the discussion. India's view was that there had not been any amendment to the TRIPS
Agreement after the Dunkel Draft on the substantive issues of protection.  Whenever the CTE
forwarded information to MEAs which were discussing  similar issues, this information should reflect
the substance of the discussions, as well as include relevant papers.
63. The Chairman said he would explore with the Secretariat the current practice of exchanging
information with the CBD in order to address th e requests for enhanced cooperation between the CBD
and the WTO on issues of mutual relevance.
64. The observer of the World Intellectual Property Organization said that the objective of WIPO
was to promote IP protection throughout the world.  As the specialized UN agency responsible for
IP protection, WIPO was equipped to provide technical information on trade-related and
environmental aspects of IPRs.  In 1998-99, WIPO was taking an exploratory approach to emergingIP issues related to trade and environment, sp ecifically in its work programme on "Biological
Diversity and Biotechnology" to explore the role of IP in the conservation, use and dissemination of
biodiversity and the use of IPRs in EST transfer under MEAs.  Debates on IP aspects of
biotechnological inventions provided an example of this increasing connection.  Although, WIPO had
dealt with IPRs in relation to biotechnological inventions as an issue primarily related to technologytransfer, recent debates indicated an increasing interest in the possible linkages between IP aspects of
biotechnology and the conservation and use of biodiversity and the sharing of benefits arising from
such use.  WIPO's research will include:  the convening of a Working Group to study IP aspects of
biotechnology and the implementation of the CBD;  two regional seminars on the patenting of
biotechnology;  participation in relevant international bodies, including the CBD and the BiosafetyProtocol;  on-site documentation projects of traditional knowledge relevant to the preservation,
conservation and sustainable use of biodiversity, in cooperation with UNEP;  and a study on the
impact of IP on technology transfer under MEAs.
65. The IP system was designed to reward innovation and encourage technology transfer.  Strong
IP protection acted as an incentive for investment in the research and development of ESTs andincreased technology transfer.  IP protection gave confidence to technology owners to invest directly
in other countries through wholly owned subsidiari es, joint ventures and licensing agreements with
other companies.  At times, the existence of IPRs might increase prices and restrict competition.  The
balance between these impacts on technology transfer under MEAs will differ from industry to
industry and from country to country..  WIPO's study  on the impact of IPRs on MEAs will look at
technology transfer under 9 relevant MEAs, coveri ng a range of technologies and different regions
and countries.  The study's conclusions and solutions will aim to ensure that the IP system continuedto support the objectives of sustainable developm ent.  WIPO invited contributions from governments,
industry representatives, NGOs and MEA Secretariats to share their experiences in this field.
Other Items
Item 3(b): The relationship between the provisions of the multilateral trading system and
requirements for environmental purposes relating to products, including standards
and technical regulations, packaging, labelling and recycling
66. The representative of Canada said that during the Trade Policy Review (TPR) of India in
April 1998, Canada had asked India questions on its Eco-Mark Type I eco-labelling programme,
mentioned in paragraph 82 of the Secretariat Report.  India had not, understandably, provided answersto the questions at the time, given the need to consult relevant officials in capital.  Canada had also
made reference to the case study of the Eco-Mark in the ESCAP publication, Trade Effects of
Eco-Labelling, described in WT/CTE/W/79, and discussed at the March 1998 meeting of the CTE.
The CTE had benefitted from the national experiences of Canada's forestry national experience paperWT/CTE/M/18
Page 19
(WT/CTE/W/81-G/TBT/W/61), Colombia's paper on cut flowers (WT/CTE/W/76-G/TBT/W/60), and
Brazil's statements on leather and forest product labels.  In 1998, developing country Members had
outlined their experiences in the design, development and implementation of eco-labels, in contrast to
1996, when contributions had been made largely by developed countries.  India’s responses to
Canada's questions would be helpful in further appreciating developing country concerns.  Inparticular, Canada welcomed India's comments on the statement in the Secretariat’s TPR Report that
“according to the authorities, it (the Eco-Mark) has yet to be successful”.  Canada also would
appreciate comments on the use of process and production criteria in the development of specific
product criteria, and an outline of the criteria development and approval process used by India’s Eco-
Mark.  Canada encouraged further experience sharing on eco-labelling by other developed and
developing country Members to enhance an und erstanding of the various approaches used.
67. The representative of India said it was correct that the Indian Eco Mark had not been
successful, despite having been in existence for eight years.  The informed consumer choice which
was the basis for such voluntary eco-labels had not led consumers to eco-labelled products.  One
product thus far had obtained an Eco Mark, but even  that product was no longer selling with the
eco-label as there was a perception amongst the poorer, predominant section of the Indian society that
any such label increased the product's price.  India would provide details on criteria development andcriteria in the approval process.  This informati on could also be obtained from the Bureau of Indian
Standards (BIS), which was a party to the Eco-Ma rk's development.  The BIS was India's enquiry
point under the TBT Agreement, so questions could also be addressed to them in this manner.
68. The representative of Canada thanked India for its response.  Whilst Canada understood that
responses could be obtained through the BIS, it would be helpful in the context of the CTE or in the
follow-up to the TPR of India that those questions be responded to in written form.
69. The representative of India said that his delegation would respond to Canada's questions at the
next meeting of the CTE which addressed Item 3(b).
70.  The representative of Malaysia, on behalf of ASEAN, recalled ASEAN's statement at the
March 1998 meeting on the Dutch initiative to label all forestry products.  ASEAN expressed its
concern that this was not trade-neutral and asked the EC to up-date the CTE in this regard.
71. The representative of Canada said his dele gation shared ASEAN's concerns and would also
appreciate an up-date by the EC on the Dutch initiative.  Canada was considering raising this issue at
the TBT Committee meeting in September.
72. The representative of the European Communitie s said that the Netherlands had transmitted
the text of the draft law on labelling to the Commission, which would proceed to check its
compatibility with internal standards and give an op inion in this regard as soon as possible.  The EC
brought Members' attention to the information note on the EC Web Site on eco-labelling, which had
been revised, extended, and up-dated at a new address:  http://europa.eu.int/ecolabel.
Item 6: The effect of environmental measures on market access, especially in relation to
developing countries, in particular to  the least developed among them, and
environmental benefits of removing trade restrictions and distortions
73. The Chairman noted some recent developments of interest under Item 6. The Council on
Services had met on 23 July 1998 to address, inter alia , the environmental services sector as part of
the information exchange on services sectors.  The background note on environmental services,
prepared by the Services Division for that mee ting, S/C/W/46, was useful in the context of the
CTE's discussions, as it built on the sectoral analysis of the environmental benefits of liberalization ofenvironmental services in WT/CTE/W/67/Add.1.  On 20-22 July 1998, UNCTAD had held an ExpertWT/CTE/M/18
Page 20
Meeting on Strengthening Capacities in Developing Countries to Develop their Environmental
Services Sector;  copies of the document prepared for that meeting, were available from the
UNCTAD Secretariat.  The UNCTAD Secretariat had made available copies of the agreed
conclusions of that meeting and would circulate the Chairman's summary for the information of
CTE Members as WT/CTE/W/96.  Lastly, the OECD had recently published a study, Improving the
Environment Through Reducing Subsidies , which collected and synthesized available OECD work on
support measures and their environmental effects.
74. The representative of the European Communities said his delegation's comments at the
March 1998 meeting on the Secretariat's document on the environmental benefits of removing trade
restrictions and distortions (WT/CTE/W/67) had been circulated as unrestricted in WT/CTE/W/83.
75. The representative of Brazil said her delegation had circulated, in WT/CTE/W/93, a set of
principles on environmental protection and sustaina ble development which Brazilian industry was to
observe in its activities.  The importance of these principles stemmed from the fact that they were a
voluntary initiative of the Brazilian National Confederation of Industry illustrating Brazilian industry's
level of commitment to environmental and social matters.
Agriculture
76. The representative of Norway recalled that at the March 1998 meeting, countries which had
suggested that trade liberalization could lead to adverse environmental effects were invited to
contribute their national experience.  As Norway was working on a paper, focusing on the agricultural
sector, to be presented at the October meeting, he gave some preliminary reflections on these issues.
Allocative efficiency and welfare maximization should be core issues in economic policy and provide
a basis for the multilateral trading system.  Trade liberalization was not an end in itself, but could be ameans to improve efficiency and increase welfare.  However, market-based mechanisms could not
lead to optimal resource allocation if prices did not fully reflect a product's costs and benefits.
Welfare could not be maximized if society's preferences for public goods were not fully taken into
account.  In the environmental area, such public goods included the agricultural landscape,
biodiversity and viability of rural areas.
77. External costs and benefits of agricultural production were taken into account through the
following principles.  The polluter pays principle (PPP) related to negative production externalities
and was widely accepted;  it stated that the costs of a negative externality (such as pollution) should
be born by its originator, and eventually reflected in a product's price.  The  provider gets principle
(PGP) dealt with positive production externalities, according to which providers of goods or services
demanded by a society should be paid.  The PGP was,  thus, closely related to the provisions of public
goods, for which a functioning did not exist.  Through the application of these two principles,environmental benefits contributed by agriculture and demanded by the society could be recognized
and developed, and the environmentally harmful impact of this sector could be reduced to a minimum.
Agricultural trade liberalization affected the application of these principles in the following ways. The
application of the PPP increased the costs of agriculture production, compared to countries that failed
to apply this principle.  Compensation for this co st disadvantage, thus, should be allowed.  The PGP
implied public payment or compensation to providers of a public environmental good.  A degree of
support coupled to agricultural production was the most efficient way of satisfying the demand for
such public goods, to the extent that they were joint products of agricultural production.  These issues
were discussed in detail in the paper on non-trade concerns presented by Norway to the Committee on
Agriculture.  In Norway's view, the WTO must allow countries to apply the PPP and the PGP toprotect the environment and maximize welfare.  Trade liberalization would likely have adverse
environmental effects if it formally, or in effect restricted the application of these policy principles.WT/CTE/M/18
Page 21
78. Norway commented on the view of some Members that agricultural trade liberalization would
generally be environmentally beneficial based on the hypothesis that environmental problems were
less pronounced in countries with low agricultural support levels, compared to countries with high
levels of support.  In this respect, Norway had compared its agricultural sectors with selected low-
support countries, and the OECD average.  Based on OECD and FAO data, Norway had a
consumption of pesticides per hectare of arable land that was less than half of the OECD average and
one fifth of selected low-support countries.  Norway's consumption of fertilizer was below the OECD
average.  The livestock density, which may be a useful proxy indicator for water pollution, appeared
to be far higher in selected low-support countries compared to Norway.  Although these figures may
have been subjected to some methodological shortc omings, they did not support the hypothesis that a
potential shift in production from high-support countries, like Norway, to low-support countries,
would result in an overall reduction in environmental degradation.  Such a shift could also have anegative bearing on biodiversity both in countries where agriculture was contracting and where it was
expanding.  The extent of agricultural environmen tal problems varied according to natural conditions,
farming methods, and national legislation and policy measures.  Norway believed that there was not a
clear relationship between environmental degradation and the level of support in different countries.
79. The representative of Argentina thanked Norway for its statement and for its paper circulated
in the Committee on Agriculture.  Argentina had also circulated a paper in the Committee on
Agriculture, which would also be circulated in the CTE as WT/CTE/W/97.  Argentina's paper referred
to market and policy failures which did not permit prices to reflect the full cost of production. If prices
were distorted through policies, such as subsidies, which had an effect on production and exports,
international prices were so distorted that they could not even reflect the private marginal cost ofproduction.  Thus, it was not possible to internalize the environmental costs of production with such
distorted prices in place.  Argentina was not arguing that free trade was a guarantee of environmental
protection, but that if prices did not reflect the private cost of production due to distorted policies,
such as subsidies, then it was not possible to move towards reflecting the full production costs.  This
entailed costs for developing countries, which could not off-set domestic policies which distortedprices, such as subsidies, that were implemented by developed countries.  Removing subsidies was
necessary as a first step to get the prices right, i.e. to reflect the private cost of production and then to
internalize the full cost of production.  This argument had been repeated since Principle 16 of the
Rio Declaration  had been agreed in 1992.  Basically, it was not possible to build on distorted prices.
80. The representative of Japan appreciated the EC's comments in WT/CTE/W/83.  Japan would
also comment at a later stage.  Japan shared the EC's view that trade liberalization may need to be
accompanied by environmental and resource management policies.  Trade liberalization should not beundertaken without questioning whether environmental policies had been properly introduced.
WT/CTE/W/67 would have been more comprehensive if it had addressed the positive environmental
externalities associated with agriculture.  More attention should be given to this aspect and Japan
intended to make a contribution at the next meeting in this regard.
Environmental services
81. The representative of the United States said UNCTAD's Expert Meeting on Environmental
Services on 20-22 July had recognized the positive contribution that further trade liberalization in
environmental services could make to environmental protection.  It had also recognized that further
trade liberalization could contribute to improving living conditions, particularly for the poorest
members of the population.  This meeting had encouraged the WTO to pursue further liberalization inenvironmental services in the forthcoming GATS negotiations in recognition of the fact that
liberalization in this sector could provide "win-w in" situations.  Governments were invited to take
steps, including through IPR protection, to improve their capacity to absorb ESTs and adapt them to
local conditions.  The US felt that the UNCTAD meeting had been useful and commended its
documents and conclusions for Members' consideration.WT/CTE/M/18
Page 22
Forestry
82. The representative of Canada said that the presentations at the MEA Information Session by
the International Tropical Timber Organization (ITTO) and the Intergovernmental Forum on Forests
(IFF) had been helpful in demonstrating direct link ages between international forestry processes and
WTO work.  Certification, standards and labelling was an area where both organizations wouldwelcome input from the relevant WTO bodies.  The Canadian forestry national experience paper
(WT/CTE/W/81-G/TBT/W/61) made extensive reference to the Intergovernmental Panel on Forests
in this regard.  Canada's paper would also be circulated as a contribution to the IFF meeting in August
in Geneva, to contribute to improved understanding of the issues and policy considerations involved
in both the trade and forestry forums.  Canada shared the view expressed by the ITTO and IFF that
standards, certification and labelling schemes must not discriminate between tropical and temperate
wood and wood products;  this was an issue where developed and developing country producers had a
common interest in contributing to an informed and balanced discussion.  As there was a potential for
trade discrimination, there was a clear role for WTO Members to clarify or strengthen existing
disciplines, so that standards, certification and labelling approaches furthered sustainable forest
management objectives while being trade-neutral.  There was also a need for governments, in both the
trade and forest forums, to provide policy guidance on these issues.
83. As Canada's paper demonstrated, an experience similar to that of Colombia with cut flowers,
the issues involved were broader than earlier discussion of Type I single mark eco-labelling.  CTE
discussions must be similarly broadened, and Canada felt it would be helpful to invite the IFF to brief
the CTE, in both oral and written form, of their discussions on these issues at the next meeting of the
CTE.  Canada noted with interest the EC's reference, at the MEA Information Session, to the fact thataccess to its GSP scheme for forest products was conditional on ITTO adherence.  Canada welcomed
clarification on whether this conditionality was with respect to access to the GSP itself, or was GSP
plus.  Canada welcomed further discussion of th ese issues in either the CTE or the TBT Committee.
84. The representative of Malaysia, on behalf of ASEAN, said his delegation would also
appreciate clarification from the EC regarding its GSP scheme for forest products.
85. The representative of the European Communities said the GSP scheme of the EC did not
contain an element of conditionality.  There was an element of additionality, whereby products from
sustainably managed forests could have additional preferences under the GSP scheme.
86. It was agreed to invite the Intergovernmental Forum on Forests to the 26-28 October meeting
of the CTE to brief Members on discussions in the IFF.
Item 9: The work programme envisaged in the Decision on Trade in Services and the
Environment
87. The representative of Japan made a preliminary statement under this Item.  He welcomed the
document which had been prepared for the Council for Trade in Services regarding environmental
services (S/C/46) and asked Members to review it in the context of CTE work on the relationship
between services and the environment.  This was a sector where liberalization would lead to enhanced
environmental protection and quality of life.  As Japan had said in the Council for Trade in Services,further liberalization of environmental services should be promoted.  Analysis could be undertaken on
several issues, such as whether foreign access providers in this sector faced barriers to trade in
services, and with respect to government procurement.  The CTE could also explore specific services
sectors, such as transport and financial services under Item 9.
88. The Chairman said that, in light of the discussion, CTE Members may wish to consult S/C/46
and suggested that copies be made available at the October meeting of the CTE.WT/CTE/M/18
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Other Matters
89. The representative of the European Communitie s informed the CTE that his delegation had
submitted a communication on a high level meeting on trade and environment to the WTO General
Council at its meeting on 15-16 July 1998.  This communication (WT/L/273), represented the
follow-up to the EC's proposal at the 19-20 March 1998 meeting of the CTE, at which the EC had
suggested that strengthening the dialogue between top level trade and environment policymakers
would foster the process by which the CTE discussions became relevant to broader WTO
decision-making.  Since then, the EC's idea had gain ed increasing support.  The EC's communication
was drafted partly in response to calls for it to set out its ideas in greater details.  His delegation hoped
that this communication would be discussed by the General Council after the summer recess.
90. The CTE expressed its appreciation for the contributions of Mr. Andrew Griffith (Canada)
and Mr. Gary Sampson (WTO Secretariat) to the work on trade and environment.
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