WORLD TRADE WT/CTE/W/57
28August 1997
ORGANIZATION(97-3502)
Original: English Committee onTrade andEnvironment
THE MONTREAL PROTOCOL AND TRADE MEASURES
Communication from theSecretariat fortheVienna Convention for
theProtection oftheOzone Layer andtheMontreal Protocol
onSubstances thatDeplete theOzone Layer
I. INTRODUCTION
1. Thethinlayer ofozone inthestratosphere, located between 10and50kilometres above the
Earth, absorbs allbutasmall fraction oftheharmful ultraviolet radiation (UV-B) emanating fromthe
sunandprotects alllifeonearth.
2. Intheearly 1970s, scientists discovered thatemissions ofsome chemicals could deplete the
ozone inthislayer. Theresult would bemore UV-B radiation reaching theEarth'ssurface andan
increase inskincancer andcataracts, reduced plant andanimal productivity, worse airquality and
damage toplastics.
3. Observations oftheatmosphere since thenhaveproved thatozone wasbeing depleted atthe
rateofabout 5percentevery decade overmiddle andhigher latitudes oftheEarth andan"ozone hole"
appearedannuallyovertheAntarctic.Scientistshavelinkedthesephenomenatotheincreasingemissions
ofman-madeozone-depletingsubstances(ODS).Themostcommonofthesearethechlorofluorocarbons
(CFCs) andhalons usedinrefrigeration, air-conditioning, fire-fighting, metal-cleaning, foam-blowing,
etc.These chemicals wereregarded as"wonder" chemicals inviewoftheirversatility, suitability for
useinmany industries, safety characteristics andrelative cheapness.
II. THE VIENNA CONVENTION AND THE MONTREAL PROTOCOL
4. Alarmed bythese discoveries, theUnited Nations Environment Programme (UNEP) initiated
scientific assessments in1976 and,ascertainty grew, started inter-governmental negotiations totake
action toprotect theozone layer. Asaresult, theGovernments oftheworld agreed firstontheVienna
Convention fortheProtection oftheOzone Layer in1985, andthenontheMontreal Protocol on
Substances thatDeplete theOzone Layer in1987.
5. TheViennaConventionlaiddownageneralcommitmenttoprotecttheozonelayer.TheMontreal
Protocol, which hasbeenstrengthened three times subsequently, obliges allParties tophase outODS
according toaspecified timetable. Developing countries aregiven agrace-period forphasing out.
In1990, theindustrialized countries agreed tomeettheincremental costsofdeveloping countries and
topromote thetransfer ofthealternative substances andtechnologies.WT/CTE/W/57
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III. SOME FEATURES OFTHE MONTREAL PROTOCOL
A. Precautionary Principle
6. When theUNEP started negotiations amongst Governments toprotect theozone layer inthe
early 1980s, nooneknew theactual extent ofozone layer depletion, theexact reason foritsdepletion
ortheprocess ofsuchdepletion. What forced Governments toactwasthe"precautionary principle".
Many Governments realized thattheozone layer isessential forsurvival oflifeonearth, thatthe
consensus ofscientists isthatCFCs destroy theozone layer andthatifGovernments waitforatotally
irrefutable proof, theozone layer would bedestroyed tosuchanextent astocause severe adverse
consequences. Thanks totheozone agreements, thisprinciple hasbecome afundamental tenet for
action since 1987.
B. Specified, Time-Bound Action
7. Theagreementsmandatedcontrolmeasuresontheozone-depletingchemicalsbyeverysignatory
tothose agreements inaccordance withaspecific timetable. Thisisthefirstinstance ofGovernments
having agreed tocontrols andtheeventual phase outofversatile, profitable and"wonder" chemicals
without being certain thattheywere thecause oftheproblem orthatalternatives tothese chemicals
were available. ThisboldstepbyGovernments sentaclear signal toindustry thatozone-depleting
chemicals hadnofuture. Industry tookthecueandquickly developed alternatives. This"technology
forcing" broke thebackoftheusual arguments advanced byindustry foritsinaction, namely that:
"there arenoalternatives andthebenefits ofthesechemicals outweigh thedamage totheenvironment".
C. InStepWith Science
8. Thewaythese agreements dealtwithuncertainty isunique. Theagreements followed aslow,
step-by-step approach andenabled theGovernments toprogress instepwiththeadvice ofscientists
andtechnologists. What started asageneral intent in1985, withtheVienna Convention, progressed
toapartial phase-out ofsome substances in1987 withtheMontreal Protocol, totalphaseout ofeven
more substances in1990 withtheLondon Amendment andadramatic acceleration ofphase-out and
theinclusionofcontrolmeasuresforanewchemical,methylbromide,in1992,instepwiththediscovery
oftheAntarctic ozone holein1985, further confirmations oftheozone depletion andtheemergence
ofviable alternatives toozone-depleting chemicals inlateryears.
D. International Cooperative Action
9. Onenotable feature oftheproblem ofozone depletion isthatitssolution requires international
cooperative action. Ozone-depleting substances arelong-lived anddestroy ozone catalytically. The
impacts arefeltwherever theemissions aremade andinwhatever quantities. While 85percentof
theconsumption ofODSisbydeveloped countries, phase-out ofODSbythese countries alone would
havebeenoflittleuse.Theincrease inconsumption indeveloping countries, with80percentofthe
world 'spopulation andrising population andeconomic growth rateswhich would haveledtoarapid
increase intheconsumption ofODS-containing products (refrigerators etc),would havenullified the
efforts oftheindustrialized countries. Hence, itwasessential tosecure thecooperation ofallcountries.
E. Common butDifferentiated Responsibility
10. Apath-setting feature oftheMontreal Protocol isthewayinwhich itaccommodates theneeds
ofdeveloping countries. Itwasrecognized thatdeveloping countries maynotbeabletoachieve the
objectives oftheMontreal Protocol asfastasdeveloped countries, owing totheir lackofskilled
manpower, technologies andresources. Itwasalsoexplicitly recognized thatdeveloping countriesWT/CTE/W/57
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hadarighttodevelop theireconomies without hindrance, thattheyhadnotcontributed significantly
totheproblem, thatODS phase-out bydeveloping countries might hinder theirdevelopment andthat
theworld-community ought tomeet the"incremental" costs ofODS phase-out bycontributing the
necessary resources. Itwasalsorecognized that,inview ofthefixed timeschedules, developing
countries needed prompt action toensure thetransfer ofenvironmentally-sound ODS-free technologies
forthephaseout.
F. Fund With aDifference
11. TheMultilateral Ozone Fund, established in1991asaconsequence oftheLondon Amendment,
isaunique instrument infinancing. TheFund meets, onagrant orconcessional basisasappropriate,
alltheincremental costs approved bytheParties, thecosts ofcountry studies, technical cooperation,
information exchange andthecosts ofitssecretariat. (Sofartheincremental costs havebeengiven
asgrants.) Itisadministered byacommittee offourteen, divided equally between developed and
developing countries. Every country hasonevote, unlike insome other financial institutions where
countries aregiven votes proportional totheircontribution. Onlydeveloped countries anddeveloping
countries withahighODSconsumption (accounting forlessthan1percentofthetotalcontributions)
contribute totheFund. Thechairmanship andvice-chairmanship ofthecommittee rotate between
developed anddeveloping countries. Thecommittee isresponsible, under theoverall guidance ofthe
Meeting oftheParties, forpolicies, budgets, disbursement ofresources, criteria fortheeligibility of
projects andreview ofperformance.
12. Fourinternational organizations -UNEP, United Nations Development Programme (UNDP),
UnitedNationsIndustrialDevelopmentOrganization(UNIDO)andtheWorldBankaretheimplementing
agencies oftheFund. They aresubject tothecontrol oftheExecutive Committee.
G. Legal Non-Compliance Procedure
13. Article 11oftheVienna Convention laysdown thelegalprocedure forsolving disputes. In
caseofadispute between them, Parties mayseekasolution bynegotiation ormediation byanother
Party. Fordisputes notsolved ineither ofthese twoways, theParty maychoose, while ratifying the
Vienna Convention orMontreal Protocol, either arbitration inaccordance withtheprocedures adopted
byaConference ofParties totheVienna Convention, orarbitration bytheInternational Court ofJustice.
Iftheyhave notchosen oneofthese twooptions, thematter willbeconsidered byaconciliation
commission, which willgiveafinalandrecommendatory award. Thefirstmeeting oftheConference
ofParties totheVienna Convention laiddown theprocedure forarbitration.
H. Other Non-Compliance Procedures oftheProtocol
14. ThewaytheMontreal Protocol, andthedecisions bytheMeetings oftheParties totheProtocol,
treatnon-compliance withtheProtocol hasestablished another precedent. Under thelegalprocedures,
non-compliance byaParty istreated asalegalissuewhich hastobesettled between aParty aggrieved
bythenon-compliance andtheParty notincompliance. IntheMontreal Protocol, however, itwas
recognized thatthewhole world isanaggrieved Party inthecaseofnon-compliance byanyParty,
since non-compliance isbadfortheozone layer. While theusual legalprocesses were included in
thetreaties, theMontreal Protocol alsoprovided foraseparate non-compliance procedure through an
Implementation Committee setupbytheParties. Non-compliance byParties canbeconsidered either
through acomplaint byaParty orthrough areport oftheSecretariat. Interestingly, aParty mayitself
come before ameeting oftheParties andadmit present orpotential non-compliance. Thefirststep
inthecaseofnon-compliance istoidentify thereasons fornon-compliance andtoassist theParty
concerned tocomply. More severe steps arecontemplated onlyinthecaseofpersistent andwilful
non-compliance.WT/CTE/W/57
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I. Accomplishments toDate
15. Theyear1997 marks thetenth anniversary oftheMontreal Protocol. TheProtocol hasso
farbeenaresounding success. Bytheendof1995, theindustrialized countries hadalmost totally phased
outtheirconsumption, ofabout amillion tonnes, ofmany ODS. Contributions totheMultilateral
Ozone Fund during thefirsttwotriennials amounted to87percentofallpledges. Areplenishment
of$466million hasbeenagreed for1997-1999. TheFundhasfinanced projects indeveloping countries
tophase outmore thanathirdoftheircurrent consumption ahead oftheyear1999, when theirgrace
period forCFCs ends. Measurements byscientists haverecorded areduction inODSintheatmosphere.
They predict thattheozone layer willstarttorecover inafewyears andwillhavefullyrecovered
bythemiddle ofthetwenty-first century, iftheProtocol continues itsvigorous operation.
16. Thisbright picture ofimplementation oftheProtocol ismarred byafewclouds, however,
which make itnecessary fortheParties nottobecomplacent buttorenew theircommitment onthe
occasion ofthetenth anniversary oftheProtocol in1997.
J. Illegal Trade: aConcern
17. Millions ofpieces ofequipment andvehicles withCFCs stillremain inservice. Thishasgiven
risetoanewproblem ofCFC smuggling. Bytheendof1996, theproduction andconsumption of
CFCs, halons, carbon tetrachloride andmethyl chloroform hasceased inalldeveloped countries, except
forafewapproved essential uses. Themaintenance ofCFC-based equipment isnotoneoftheapproved
uses. Alternatives areavailable, though perhaps slightly costlier. Inspiteofstringent controls by
developed country Governments, CFCs fromother countries continue toleak,forservicing purposes,
intodeveloped countries through smuggling. Itissaidthattheprofits insuchillegal trade areeven
greater thantheprofits from cocaine smuggling. While theproblem isnotofmajor proportions at
themoment andisbound todecline infuture, oncethecontrols areinoperation indeveloping countries,
there isnodoubt thatitwillneedtobecontrolled. TheNinth Meeting oftheParties in1997 will
consider further steps inthisregard.
IV. WHAT IFTHERE WERE NOPROTOCOL?
18. What would havehappened ifthere were noMontreal Protocol? Scientists estimate that,if
CFCs continued tobeemitted asfreely asin1980, theozone layer could bereduced byabout 4to
5percentperdecade. Each 1percentreduction inozone islikely toresult ina2percentincrease
intheincidence ofnon-melanoma skincancer. Theincidence ofblindness andmelanoma -themost
deadly formofskincancer -mayalsorise.Human immune systems could beadversely affected, while
plant productivity, andhence foodsecurity, could fall. Without theMontreal Protocol, continuing
useofCFCs andother ozone-destructive compounds would have tripled thepresent stratospheric
abundance ofchlorine andbromine bythemiddle ofthenextcentury, leading toverymuch greater
ozone depletion.
19. Even withfullinternational compliance withtheexisting agreements, chlorine andbromine
concentrations areexpected tocontinue increasing inthestratosphere untiltheturnofthecentury.
Peakglobal ozone losses areexpected tooccur during thenext10years, when another 3-4percent
oftheozone willbedestroyed, before theratesofdecline leveloffandstarttodiminish. Theozone
layer isonlyexpected toreturn tonormal pre-ozone-hole levels bythemiddle ofthenextcentury.WT/CTE/W/57
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V. TRADE MEASURES
20. ThetrademeasuresoftheProtocolaresofarexclusivelydirectedtonon-Parties.Thesemeasures
areasfollows:
(a) Control oftrade inODS withnon-Parties
(i) Annex Asubstances:
- Import from non-Parties banned from January 1990.
- Export banned from January 1993.
(ii) Annex Bsubstances:
- Import andexport banned from August 1993 fornon-Parties tothe
London Amendment.
(iii) Annex C-Group II-HBFCs:
- Import andexport banned from June 1995 fornon-Parties tothe
Copenhagen Amendment.
(iv) Annex CGroup I(HCFCs), Annex E(methyl bromide) norestrictions asyet.
(b) Control ofTrade inODS products withnon-Parties
- Import ofproducts (listed inAnnex D)containing Annex Asubstances
banned from May1992.
- Fifth Meeting oftheParties decided thatitisnotfeasible tobanor
restrict trade inproducts made with, butnotcontaining, Annex A
substances.
- Products containing Annex BandAnnex C,Group II,substances not
tobelisted.
VI. NEW TRADE MEASURES UNDER CONTEMPLATION
21. Inorder tocurbillegal trade inozone-depleting substances between Parties, theParties are
considering anamendment totheProtocol toincorporate alicensing system fortrade between Parties
asfollows:
(a) EachParty tointroduce alicensing system fortheimport orexport ofneworrecycled
substances;
(b) Each Party toreport totheSecretariat thedetails oftheirsystem;
(c) Parties tobantrade insubstances withother Parties whohavenotestablished such
asystem. Alsounder consideration isabanontheexport ofrecycled substances by
non-complying Parties. Thisisintended toprevent theexport ofnewsubstances under
theguise ofrecycled substances, tradeinwhich isexempt fromcontrol measures; andWT/CTE/W/57
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(d) TheNinth Meeting oftheParties, tobeheldon15-17 September 1997, willdecide
onthese measures.
22. Another issueofconcern istheincreasing export ofneworusedCFC-containing equipment,
suchasrefrigerators andairconditioners, todeveloping countries atlowprices. Theincrease ofsuch
equipment indeveloping countries willincrease theirdemand forCFCs andwillmake itdifficult for
themtoimplement thecontrol measures oftheProtocol. TheNinth Meeting ofParties totheProtocol
willconsider requesting allParties tocontrol suchexports.
VII. SOME ASPECTS OFTRADE MEASURES INTHE MONTREAL PROTOCOL
A. Near-Universal Consensus
23. TheMontreal Protocol isbased onanear-universal consensus of162countries, representing
allregions, therichandpoorandtheconsumers andproducers. Non-Parties totheProtocol atthe
moment number only25,withacombined population of122million, ascompared tothepopulation
oftheworld ofmore than5billion.
B. Coordination Between theOzone andWorld Trade Organization (WTO) Secretariat
24. TheWTO Secretariat isinformed regularly ofallthepotential andactual trademeasures. The
representatives oftheGATT/WTO Secretariat usually haveattended alltheimportant meetings ofthe
Protocol. TheProtocol Secretariat hasthebenefit ofinformal advice from theWTO Secretariat.
C. Need ForResponsiveness bytheWTO
25. Itmustbestated, however, thatithasnotbeenpossible toobtain aformal opinion from the
WTO onanycontemplated trade measures intheProtocol withreasonable notice. In1995, atthe
suggestion oftheOpen-ended Working Group oftheProtocol, theProtocol Secretariat approached
theWTO Secretariat forclarification astowhether certain proposals were consistent withGATT.
Thereply oftheWTO Secretariat wasnotvery definite, since theissues involved were under
consideration bytheWTO Committee onTrade andEnvironment. Unless theWTO isinaposition
torespond quickly toqueries, theParties totheProtocol maynotbeabletoconsult theWTO before
taking trade measures considered bythem tobeessential.
D. Harmonious Interpretation Necessary
26. Themembership oftheProtocol ismuch wider thanthatoftheWTO. Since thesame
GovernmentswhicharenegotiatingandtakingdecisionsintheProtocolareWTOMembers,harmonious
interpretation oftheprovisions oftheGATT/WTO andtheProtocol isessential toavoid dislocations.
E. Trade Measures AreNotNegative
27. InsomeofthepublicationsoftheWTOandUNCTAD,trademeasuresareconsidered"negative"
andthefinancial mechanism oftheProtocol isseenas"positive". Thisperception oftrade measures
isnotgenerally shared byParties totheProtocol. Thefinancial mechanism isintended tocompensate
fortheincremental costs ofimplementing time-bound control measures andnottocompensate any
alleged lossduetothetrademeasures. Thetrademeasures arenotpunitive. Theyareactually positive,
inthattheyenable theParties toimplement thecontrol measures more easily thanwould otherwise
bepossible. Furthermore, many ofthesuggestions tocontrol tradebetween Parties haveactually been
made bysmall developing countries.WT/CTE/W/57
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VIII. NEED FOR TRADE MEASURES
28. Trademeasuresarenotpunitivemeasuresagainstnon-Parties.Unrestrictedtradeisanunderlying
cause oftheproblem ofozone depletion, inthatthegreater thevolumes oftrade, theheavier theuse
ofODS andthemore rapid theratesofdepletion. TheODS aresomewhat akintonarcotics inthis
respect. Trade withnon-Parties would definitely leadtoincreased production andconsumption and
could alsoleadtothediversion ofproduction facilities tonon-Parties.
29. Some ofthetrade measures arealsoamatter ofcommon sense forParties. Since theyare
phasing outODS, theyobviously cannot encourage theimport ofthese substances orequipment using
these substances intotheircountries, astheywillthenbeunable tomaintain theequipment.
30. Itissometimes argued that,instead ofusing trade measures, theProtocol could useeconomic
measures bytaking intoaccount theexternalities ofthecostofozone depletion inthepriceofproducts
using ODS. Unfortunately, theseexternalities willnotbeviewed inthesamewaybydifferent countries,
since impacts differ fromcountry tocountry. Inaddition, thetimetaken forsuchaneconomic process
toyield results would beverylongand,inthemeantime, there would beirretrievable losses tothe
environment.