RESTRICTEDWORLD TRADE
ORGANIZATIONWT/CTE/M/24
19 September 2000
(00-3715)
Committee on Trade and Environment
REPORT OF THE MEETING HELD ON 5-6 JULY 2000
Note by the Secretariat
1. The Committee on Trade and Environment (CTE) met on 5 and 6 July 2000 under the
Chairship of Ambassador Yolande Biké.  The agenda in WTO/AIR/1321 was adopted.
2. The Chairperson noted that the Secretariat had prepared a list of documents that had been
circulated in the CTE since 1995 in WT/CTE/INF/2.
LINKAGES BETWEEN THE MULTILATERAL ENVIRONMENT AND TRADE AGENDAS
MEA Information Session
3. To enhance the CTE's understanding of the linkages between the multilateral environment
and trade agendas, the CTE invited six Secretariats to participate in an Information Session on
Multilateral Environmental Agreements (MEAs) on 5 July 2000.  Representatives of the following
Secretariats made presentations and prepared the following background papers:  the Convention on
Biological Diversity (WT/CTE/W/149 and WT/CTE/W /136);  the Montreal Protocol on Substances
that Deplete the Ozone Layer (WT/CTE/W/142);  the UN Framework Convention on Climate Change
(WT/CTE/W/153);  and the International Commission on the Conservation of Atlantic Tunas
(WT/CTE/W/152).  The Commission for the Conservation of Antarctic Marine Living Resources
submitted a background paper (WT/CTE/W/148).  See Annex I on the MEA Information Session.
4. The observer of UNEP made a statement on the relationship between MEAs and the WTO,
circulated as WT/CTE/W/155.
5. The Chairperson noted the Secretariat papers on the Intergovernmental Forum on Forests
(WT/CTE/W/140);  and the Convention on International Trade in Endangered Species of Wild Fauna
and Flora and the draft Convention on Persistent Organic Pollutants (WT/CTE/W/151).
Items 1 & 5 The relationship between the provisions of the multilateral trading system and trade
measures for environmental purposes, including those pursuant to MEAs;  and the
relationship between dispute settlement mechanisms in the multilateral trading system
and those found in MEAs
6. The representative of Switzerland introduced his delegation's submission in WT/CTE/W/139,
which was intended to stimulate a constructive debate on this Item.  The relationship between the
rules and principles of the WTO and trade-relevant provisions in MEAs was one of the core issues of
the trade and environment debate.  It had been generally agreed that conflicts between the trade and
the environmental regimes were to be avoided.  To  do so, the relationship between the two regimes
must be clear.  CTE discussions on this issue had not advanced in order to reach agreement to clarify
this relationship.  The only conclusion that coul d be drawn was that WTO Members did not agree on
which rules and principles should govern the WTO-MEA relationship.  As long as WTO Members
did not clarify this relationship, there was potential for conflict for existing MEA trade measures and
future MEA provisions with trade effects.  The current ambiguity created legal  uncertainty and tendedWT/CTE/M/24
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to encourage unilateralism and impact negatively on MEA negotiations.  Clarification would help
MEA negotiators to find the best mechanisms to real ize their goals.  It had been stated that while
WTO Members had not been able to clarify this re lationship, the Appellate Body (AB) had done so in
the Shrimp-Turtle  decision, which had clarified a two-tiered analysis of an Article XX justification.
First, an assessment was made as to whether a measure qualified for provisional justification underArticle XX(a) to (j), then it was appraised whet her such a measure met the requirement of the
introductory clause of Article XX.  The AB had clarified that living natural resources, such as turtles,
could be “exhaustible natural resources” according to Article XX(g).  As this decision had not dealt
with measures established by an MEA, it said nothing about the WTO-MEA relationship, but only
clarified the conditions which national environment-related trade measures had to meet.  While it
could be argued that the easiest solution would be to leave the difficult questions to panels, such a
decision should be taken by WTO Members and not panels.  A panel decision involving the WTO-MEA relationship would be a decision in a specific case and would not necessarily clarify the general
WTO-MEA relationship.  This relationship was too important to delegate to the judiciary body.  The
participation of all countries in the solution of this  issue, including smaller countries that might not be
involved in a related panel, could be ensured only if WTO Members, not panels, took the decision.
7. The Swiss paper outlined general principles to be followed in a clarification of the WTO-
MEA relationship, namely mutual supportiveness and deference.  While the WTO and MEAs pursued
the same overall goals, namely the promotion of wellbeing and welfare, they were concerned with
different policy areas.  By each focusing on their own policy area, the trade and environmental
regimes were mutually supportive and complementary;  each framework should remain responsible
for the issues falling within its primary area of  competence and pay deference to the other's
competence.  This approach recognized that trade measures  could play an important role to promote
MEA and that MEAs were sometimes the most effe ctive means to achieve environmental objectives.
This approach also acknowledged that it was not necessary for MEA trade measures to be
unjustifiably discriminatory or protectionist to effectively protect the environment.  Mutual
supportiveness implied that, while the WTO should not assess the necessity of trade-related measuresin MEAs, it should be competent to assess whether specific measures as adopted or implemented by a
WTO Member constituted a means of arbitrary or unjustifiable discrimination between countries
where the same conditions prevailed, or a protectionist restriction on international trade.
8. The current WTO legal framework reflected the approach of mutual supportiveness and could
be sufficient to prevent conflicts between the WTO and MEAs;  amendment seemed to be
unnecessary.  Switzerland suggested that Members clarify the meaning of WTO rules and principles
concerning the WTO-MEA relationship by adopting, for example, an interpretative decision;  thiscould clarify that mutual supportiveness and deference governed the WTO-MEA relationship and
provide objective criteria for determining towards which MEAs deference should be paid.  Such
criteria might be, for example, that an MEA must be open to all countries and reflect broad-based
international support.  An interpretative decision would contribute to the clarification of the WTO-
MEA relationship, and underline the WTO’s commitment to environmental concerns.  As there wasgeneral agreement that the trade and the environment regimes were mutually supportive, this
agreement should be formalized to clarify the WTO-MEA relationship.  This would enable a "win-
win-win-win-win" outcome, whereby coherence, predictability, legal certainty, trade and environment
could gain.  The Swiss paper did not strive to formulate a concrete proposal for a perfect solution;
rather, it outlined a general approach on which to base a solution.  Once agreement had been reachedon this, discussion of a concrete proposal could begin.
9. The representative of Canada said that there was value in providing MEA negotiators with a
greater degree of guidance in their work, which should not be left to chance (i.e. a decision by a
country to challenge an MEA trade measure at the WTO).  Working out the WTO-MEA
accommodation should be pursued both in the WTO and UNEP (acting on behalf of MEAs andworking cooperatively with the WTO) to get true buy-in to rules defining the WTO-MEA
relationship.  The criteria in paragraph 10 of the Swiss paper were the same as the first threeWT/CTE/M/24
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principles in Canada's principles and criteria approach.  For an MEA trade measure to be considered
WTO-compatible, the MEA must be open to all countries, reflect broad-based international support,
and be precisely drafted.  These were legitimate, preliminary factors for a panel to consider in
determining whether an MEA trade measure were WTO-consistent.  Canada shared the Swiss view
that an appropriate factor to be considered by a WTO panel in assessing the WTO-consistency of aparticular MEA-based trade measure was whether that measure constituted arbitrary or unjustifiable
discrimination.  This meant that a given trade measure must allow for trade with a non-party on the
same basis as with a Party, when the non-party provided environmental protection equivalent to that
required by the MEA.  Other issues of interest in the Swiss paper included whether questions of
legitimacy, proportionality, and necessity should be treated in the same way;  and the role of
presumptions, shifting burdens of proof and other procedural techniques in giving effect to mutual
supportiveness and deference.  Canada's principle and criteria approach reflected this view in so far asit incorporated effectiveness and least trade-restrictive tests.
10. The WTO-MEA relationship was one of the most important items on the CTE's agenda and
was also one where the CTE can and should produce a result.  Canada echoed the EC's comment that
MEAs were increasingly moving into areas of broad regulation of international trade.  For this reason,
among others, it would be prudent, for both environmental and trade reasons, to set down a writtenunderstanding of the relationship between WTO obligations and MEA trade measures.  WTO
jurisprudence had developed considerably in recent years and had clarified and confirmed the
flexibility that WTO rules provided for environmental measures.  Nevertheless, legal uncertainty still
existed.  Much of the focus of the debate in the Biosafety Protocol negotiations had been on the
potential for a trade dispute between MEA Parties who were also WTO Members, and not on MEAParty/non-party disputes.  Canada's approach to clarifying the WTO-MEA relationship was
particularly relevant to the Party/non-party issue.  In previous discussions, Canada had advocated a
principles and criteria approach to MEAs and had proposed the following qualifying principles for an
MEA for WTO panels to consider:  (i) the MEA is open to all countries;  (ii) the MEA reflects broad-
based international support;  (iii) the provisions specifically authorizing trade measures should bedrafted as precisely as possible.  These three principles were also present in the Swiss paper.  Canada
also added the following criteria:  (iv) trade with non-parties is permitted on the same basis as trade
with Parties when non-parties had equivalent levels of environmental protection;  and (v) negotiators
have explicitly considered the criteria developed by the WTO for the use of trade measures in MEAs.
Canada also suggested several criteria for use by MEA negotiators:  (i) trade measures should only be
chosen when effective, when alternative measures are ineffective or have proven to be ineffective
without accompanying trade measures;  (ii) trade measures should not be more trade-restrictive thannecessary to achieve the environmental objective;  and (iii) trade measures should not constitute
arbitrary or unjustified discrimination.
11. In Canada's experience, the implementation of this approach was not always self-evident.  In
the case of a new MEA that was being negotiated, MEA negotiators would be expected to apply these
criteria in deciding on whether to include trade measures in the MEA.  They would also be expectedto explicitly record in the report of the negotiat ions that the criteria had been applied.  If the
negotiations were successful, the MEA would be concluded and enter into force.  If no trade disputes
arose, this would be the end of the story.  If a trade dispute arose with respect to the implementation
of the MEA, and a WTO Member challenged a measure introduced by another WTO Member
allegedly pursuant to the MEA, a number of scenarios were possible.  If a panel determined, onreview of the measure and the MEA, that the measure was not mandated by the MEA, the rest of
Canada's approach would not apply.  If the measure were mandated by the MEA, but the parties to the
WTO dispute were both MEA Parties, the rest of Canada's approach also would not apply.  If the
panel determined that the measure had been mandated by the MEA and the complaining party to the
dispute was not an MEA Party, Canada's principles and criteria approach would be relevant.  In thisevent, the panel would examine whether the qualifying principles had been met.  If one of the
principles had not been met, the measure in question would likely fall into the category of a unilateral
measure.  If the panel determined that the qualifying principles had been met, it would be able toWT/CTE/M/24
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attach some weight to that fact.  Elaboration wa s needed on this approach, upon which Canada had yet
to form a view.  Canada inquired as to whether it had the elements of these principles and criteria
right and whether elements should be added, deleted or modified;  for example, should they be
elaborated by defining "broad-based internati onal support".  Under Canada's approach, an MEA
negotiated in the OECD would not qualify.  Canada  asked whether there was a useful role for UNEP,
in cooperation with the WTO, to refine this approach;  what was meant by a measure mandated by an
MEA;  how amendments to an MEA would be treate d;  what was the impact on this approach of an
MEA provision that set out the relationship between the MEA to other international agreements, i.e. a
savings clause;  what should be the consequences if a panel determined that an MEA met the
qualifying principles:  a range of possible options could be envisaged;  and what form should be given
to the principles and criteria approach.  Canada had not yet finalized its proposal.  However, Canada
believed that it had a good idea to promote policy and institutional coherence.  Canada welcomed theopportunity to work with the CTE to develop these approaches further.
12. The representative of Hong Kong, China said that the Swiss paper provided a useful basis on
which to move discussions forward and made initial reflections on the Swiss paper.  The question that
came to mind was whether, at this moment, there was a crisis.  Some delegations had noted the need
for legal certainty and the need to clarify the WTO-MEA relationship.  However, Hong Kong, Chinadid not think there was a crisis situation.  As had been confirmed by the MEA Information Sessions,
MEA Secretariats did not envisage problems related to the WTO-MEA interface.  Thus, Members
should not create more problems than were intended to be solved.  On legal certainty, the issue of the
difference in membership between MEAs and the WTO necessarily pointed to the division of labour,
as set out in the Swiss paper.  Given differences in membership, was the intention to create differentlevels of WTO rights and obligations, especially with respect to MEA non-parties who were WTO
Members?  Acknowledging Canada's reference to the concept of equivalency for MEA non-parties,
Hong Kong, China was not as concerned about MEA non-parties as preserving WTO Members' rights
and obligation in light of the Swiss proposal;  this should be discussed further.  Switzerland and Japan
had noted that the WTO should give deference to a consensus by the international community;definition of the term "international community" was required.  Some MEAs consisted of only a few
members when compared to the 137 WTO Members and it was not clear how MEAs had been
negotiated and whether the international community had been involved.
13. On the Swiss paper, Hong Kong, China asked if there were any existing principles governing
the WTO-MEA relationship.  If so, there was no need for further discussion.  In paragraph 6,
Switzerland gave the example of the Shrimp-Turtle case to confirm an existing principle.  However,
Shrimp-Turtle was not a good example to substantiate its argument as it had not dealt with the WTO-MEA relationship, but with the relationship between a unilateral measure by a WTO Member and the
rights and obligations in Article XX.  The Swiss paper advocated an interpretation of the WTO-MEA
relationship and proposed that part of Article XX should not be handled by a panel or the Appellate
Body, but deferred to MEAs.  In legal terms, this was an amendment to Article XX, not an
interpretation per se .  Hong Kong, China was not against an amendment to Article XX, but the
implications should be considered.  Hong Kong, China asked if a specific measure were brought to a
WTO panel or the Appellate Body, should the WTO wait for the relevant MEA to determine if, for
example, under Article XX(b) the measure were necessary to protect human, animal plant life or
health, before the chapeau could be considered.  Or, vice versa?  Similar arguments had been
encountered in the Shrimp-Turtle case, but the issue of the division of labour, as foreseen in the Swisspaper, had not arisen as the Appellate Body had handled the case under Article XX.  If there were to
be a division of labour between the WTO and MEAs, it was critical to determine which agreement
came first.  Given that the Swiss proposal mainly dealt with the relationship between Article XX and
MEAs, how did this proposal relate to the challenges raised by the CBD Secretariat at the MEA
Information Session with respect to the TRIPS Agreement, or GATS and other WTO Agreements?Also, Article 13 of the DSU enabled a panel to seek information and to establish an expert group to
provide advice to the panel.  This might provide a possible mechanism to address the issues.WT/CTE/M/24
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14. The representative of India gave preliminary comments on the Swiss paper.  On the
importance of trade-related measures in MEAs, India recalled that only about 10 per cent of MEAs
contained trade measures and, thus, this issue should be put in perspective.  When an authoritative
interpretation or amendment of a WTO provision was suggested, it should be kept in mind that trade
measures were seldom the centre of environmental objectives.  Moreover, there was a near consensusin the CTE that trade measures were not the first best solution to environmental problems.  There was
evidence, at least in the Montreal Protocol and the CBD, to suggest that provisions relating to capacity
building, technical and financial assistance, and technology transfer were important components in an
MEA, in addition to trade measures.  Paragraph 4 noted that the WTO should not try to decide
whether an environmental goal pursued by an MEA were legitimate or whether a measure taken to
implement an MEA were necessary.  If the chos en way to implement an MEA was through trade
measures, among other things, India felt it was nece ssary to examine MEAs through trade principles,
although environmental principles may also be relevant.  However, the CTE's mandate could not
exceed WTO competence when examining trade measures.  India endorsed Hong Kong, China's
comments on paragraph 6 concerning the Appellate Body report on Shrimp-Turtle, which had not
enjoyed unanimity or consensus in the DSB, as illustrated by the comments of several Members at the
DSB;  the report had been adopted because of the principle of automaticity.  Although the Swiss paper
only referred to one aspect of Shrimp-Turtle, this case was more complex than an over simplification
of Article XX or the relationship between a trade measure and MEAs.  As stated by Hong Kong,
China, MEAs had not been at the centre of the di scussion in this case, although the Appellate Body
had suggested that MEAs might be one way for the US to implement the DSB recommendations.
15. To date, there had yet to be a legal challenge in the WTO concerning an MEA.  Thus, as
stated by Hong Kong, China, there was no crisis.  As to why there had yet to be a legal challenge, if
an MEA, such as the Montreal Protocol, CITES or the CBD, had been successfully negotiated, it
would be unlikely that such an MEA would be chal lenged in the WTO as the vast majority of WTO
Members were also Parties to those MEAs.  A central issue in this debate was non-product-related
production and processing methods (PPMs).  Yet, th e CTE avoided referring to this issue as such.
Instead, reference was made to MEAs in general as MEAs were like "motherhood and apple-pie";
MEAs were liked because they are multilateral.  However, if an MEA had over 100 WTO Members
that were also Parties to that MEA, there was little chance that a country with a small percentage of
world trade, who was not an MEA Party but a WT O Member, would bring a dispute to the WTO and
argue that its trade was being disrupted.  That w ould not happen.  If countries were members of both
an MEA and the WTO, it would also not happen;  so what was the issue?
16. Concerns with respect to MEAs centered on th e definition of an MEA.  In this respect,
Switzerland had suggested some good, but incomplete, criteria.  India asked whether, according to the
Swiss proposal, it would be acceptable if the OECD negotiated an agreement, called it an MEA, and
decided to use trade measures against non-OECD memb ers.  It could be argued that this agreement
was broad-based, particularly as some developi ng countries were OECD members, although many
developing countries were not.  Such a situation would note be acceptable for India and was thereason why India had suggested that the definition of an MEA should include adequate geographical
representation and representation of countries at different development levels.  Otherwise, countries
with similar development levels could negotiate an agreement, call it an MEA and decide to include
trade measures against other countries whose development levels were different and, thus, the trade
and environment trade-offs were also different.  Thus, the issue centered on how to define an MEA,how to tackle the issue of non-product related PPMs, and whether to dilute the concepts of necessity
and proportionality in Article XX.  India felt there was sufficient jurisprudence on "necessity" in the
context of Article XX, which should not be diluted.  Some of the decisions made by panels and the
Appellate Body were leading in a particular direction.  In this present context, India asked what
developing countries could hope to gain from an interpretative decision or an amendment, particularlyif they did not consider there to be a real problem.  There had been some panel and Appellate Body
reports that India believed had gone beyond their mandate;  others believed that it was within their
mandate.  The question was whether it would be possible to bridge the gap on such thorny issues asWT/CTE/M/24
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non-product-related PPMs and the definition of an MEA.  Also, some countries with an interest in this
issue had lost interest in the debate as they considered that panels and the Appellate Body were doing
the job and it would not be necessary to undertake difficult, time-consuming negotiations, which
would require checks and balances.  India felt thes e issues were important and should be discussed
further, but that some of them were difficult to resolve given recent developments.
17. The representative of Japan agreed with Switzerland that while both MEAs and the WTO had
common goals of enhancing welfare, each had different areas of competence;  thus, some sort of
division of labour should be considered.  Substa ntial matters, such as whether trade measures were
necessary for environmental protection in MEAs, should be decided upon by MEAs, which had the
necessary expertise and competence.  The WTO should deal mainly with how trade measures adopted
by MEAs were applied and whether these measures were applied in a discriminatory or arbitrary
manner.  The WTO should focus on whether the application of trade measures met the criteria of thechapeau of Article XX.  The CTE should examine guidelines for criteria to identify what type of
application of trade measures was deemed to be arbitrary, discriminatory, or unjustified.  These
criteria could be agreed as guidelines or as an interpretative understanding by a General Council
decision.  To develop these further, Members could present examples of arbitrary or discriminatory
applications of trade measures in MEAs.  Examples could include applications of trade measureswithout consultation with the countries concerned, which were deemed to be arbitrary.  Issues to be
considered in the development of criteria included the treatment of trade measures pursuant to
regional organizations.  As Japan had stated at the WTO High Level Symposium on Trade and
Environment in March 1999, environmental issues s hould be tackled and resolved principally within
the framework of environmental policy.  Environmental concerns would not necessarily be solvedeffectively by the use of trade measures.  Therefore, efforts should ensure that appropriate
environmental measures were taken at the source of environmental problems, including through
technical and financial assistance.  However, if the international community recognized that trade
measures could play a role to complement envir onmental measures and were necessary, it would not
be desirable for the MEA or the WTO if the WTO prevented such decisions by the internationalcommunity from being implemented, as the WTO's goal was to achieve sustainable development
while preserving the environment.  Clarifying the relationship between MEA trade measures and
WTO rules would bring legal certainty and predictability with respect to trade and environment.
18. Canada's criteria needed to be clarified and made more concrete.  For example, Canada's use
of the term "effective" should be clarified, as did the term "necessary".  The meaning of arbitrary and
unjustifiable should also be clarified through examples of what would constitute such measures.  If
Canada's criteria were strictly applied, trade measures pursuant to regional fisheries organizationscould be questioned even though all the major countries in the region were participating.  These
criteria could affect the future introduction of trade measures to conserve fisheries resources.  Japan
recalled Canada's statement in July 1998 that dispute settlement in MEAs and the WTO were different
in nature.  In an MEA framework, Parties as a whole handled a violation of an agreement through
dialogue and cooperation.  This approach differed from that in the WTO, where the individualMembers concerned undertook dispute settlement through panels and the Appellate Body.  The
process of WTO dispute settlement had an aspect of confrontation, while MEA dispute settlement
attempted to solve a violation of an MEA through cooperation.  Although WTO Members' right to use
the DSM should not be denied, the focus should be on whether MEA trade measures were applied in
an arbitrary, discriminatory or protectionist manner.  If a WTO Member were considering bringing amatter to the WTO, it would be important to consider whether use of the DSM were suitable for the
matter given that the WTO's competence was in trade.  On India and Hong Kong, China's statements,
although there was no current conflict concerning the WTO-MEA relationship, there may in future be
problems, for example, with respect to the rela tionship between the CBD and the TRIPS Agreement
on benefit sharing.  If the CBD provisions were challenged in the TRIPS Agreement, the need toclarify the WTO-MEA relationship would be recognized.WT/CTE/M/24
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19. The representative of Iceland said that the relationship between MEAs and the WTO was
complex given that certain MEAs contained trade-related provisions to further certain environmental
objectives, while the WTO's raison d'être  was to remove trade restrictions.  In both instances, the
majority of governments, by being simultaneously MEA Parties and WTO Members, had recognized
MEA objectives and means.  The current WTO-MEA re lationship entailed a potential for conflict that
might lead to contradictory conclusions, with little benefit for either the multilateral trading regime or
the environment.  This legal confusion was already clear in the Tuna-Dolphin and Shrimp-Turtle
panels and the Shrimp-Turtle Appellate Body report.  This was not simply an interesting academic
question, but a real issue that could have serious effects on the environment and the socio-economic
development of developed and developing countries alike.  Absence of a clear international consensus
on the WTO-MEA relationship could encourage unilateral actions for obscure environmental
objectives outside the jurisdiction of the importing country.  Iceland had no simple solution to addressthis relationship, but shared Switzerland's concerns that clarification was so fundamental that it should
not be relegated to the judiciary body.  To be consistent with the approach of multilateralism, it should
be the membership itself that decided.  The CTE was mandated, inter alia , to address the relationship
between the provisions of the multilateral trading system and trade measures for environmental
purposes, including those pursuant to MEAs.  There was a need to reinvigorate the dialogue on thisissue to reflect all Members' concerns and guided by mutual supportiveness and deference, which
would contribute to making trade and environmental policies mutually supportive.
20. The representative of Korea said that, despite the fact that there had been no actual conflict
between WTO provisions and trade measures pursuant to MEAs and that only 20 out of 200 MEAs
included provisions affecting trade, analytical work to clarify this relationship should be continuedand preventive measures against legal inconsistencies should be explored.  At the Singapore
Ministerial Conference in 1996, Korea had proposed a "differentiated approach", such that trade
measures pursuant to MEAs be differentiated based on whether or not they were specifically
mandated by MEAs, and that the application of trade measures be differentiated based on whether
they were applied among MEA Parties or between an MEA Party and a non-party.  Korea’s approachwas similar to the Swiss proposal in that both und erlined that the domains of the WTO and MEAs be
respected, while remaining mutually supportive.  Korea supported Switzerland’s mutual
supportiveness approach.  Determination of whether a measure were environmentally harmful and
whether a counteraction were necessary should be left to MEAs, while the WTO should focus on
assessing whether a trade measure, designed to counteract this harmful effect, were arbitrarily
discriminatory.  This was warranted by the fact th at most MEAs already pinpointed the process and
production methods that had been collectively recognized as harmful and thus reprehensible.  Shouldthere be a dispute between MEA Parties, Parties should exhaust all measures provided for in the MEA
to solve the dispute before addressing the matter to  the WTO.  Korea agreed that an interpretative
decision would create greater legal certainty.  On possible objective criteria to define whether an
MEA had broad-based support, as noted in paragr aph 10 of the Swiss paper, Article 9 of the
WTO Agreement on decision making was a valuable reference.  Overall, Switzerland’s proposal wasbalanced and could help to achieve progress on this Item.  However, many questions were
unanswered, such as how areas for which no MEA existed could be dealt with;  how a conflict
between an MEA Party and a non-party could be addr essed;  and whether the DSB should be directly
referred to in such a case.  These questions required further discussion.
21. The representative of Australia welcomed the Swiss presentation of the concept of mutual
supportiveness and agreed with Switzerland about the importance of MEAs and the WTO being
mindful of their respective mandates and competencies.  However, Australia believed that current
WTO provisions provided a suitable framework for facilitating mutual supportiveness.  Both MEAs
and the WTO were vehicles for promoting shared objectives by the international community and
Australia supported efforts to enhance coordina tion between them, such as the regular MEA
Information Sessions in the CTE.  A striking fact that had emerged from these MEA Information
Sessions was the diversity of interactions between the WTO and MEAs.  However, it was not clear
that the Swiss approach took account of this diversity.  Existing rules may more appropriately cater toWT/CTE/M/24
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this diversity though promoting the goal of mutually supportive trade and environment policies.
MEAs varied in the extent to which they contained specific trade-related measures.  For example, the
Biosafety Protocol provided a framework for information exchange and cooperation between
importers and exporters to allow informed decision;  it was this decision making by individual
countries, rather than specific trade measures in the Protocol, that was most likely to raise potentialWTO issues.  In countries that were party to both agreements, appropriate domestic coordination
processes were critical to ensure that their rights and obligations under each were respected and both
trade and environmental factors were considered.  Existing WTO rules might have a positive role to
play to ensure this.  It would be unfortunate if coun tries sought to use the Biosafety Protocol to justify
measures that did not respect the decision-making processes, transparency requirements and
provisions on the appropriate level of protecti on in the SPS Agreement.  Caution was necessary
concerning proposals to amend WTO rules in relation to MEAs.
22. In contrast to the Biosafety Protocol, a range of other MEAs included specific trade-related
measures that had been agreed by the Parties to each of these agreements, for example CCAMLR's
catch documentation scheme for toothfish.  The process for the development and adoption of this
scheme was a model for how trade and environment issues could be constructively addressed.  This
scheme had been introduced in response to the threat that illegal, unregulated and unreported (IUU)fishing posed for the depletion of Patagonian toothfish.  IUU fishing, which reflected the high market
value of Patagonian Toothfish, continued to undermine the effectiveness of the conservation measures
adopted by CCAMLR.  The catch documentation scheme complemented these other measures
through the provision of information on the origins a nd the extent of the catch and trade in the species.
It had been developed through extensive internati onal negotiation and following efforts to gain the
cooperation of non-parties to conserve Patagonian Toothfish.  This type of cooperative, targeted,
transparent and non-discriminatory measure in CCAMLR should pose no conflict with WTO rules.
23. The representative of Mexico endorsed Hong Kong, China and India's statements and thanked
the MEA Secretariats for their presentations at the MEA Information Session, which had contributed
to Members' understanding of the issues.  As there had been no conflict to date between MEAs andthe WTO, it should be asked why this issue was being discussed.  Rather, CTE efforts should be
devoted to substantial matters of importance to al l Members.  Mexico made preliminary comments on
the Swiss paper.  On the proposed principles and criteria to guide MEA negotiators on the relevant
WTO rules, it was the sovereign right of every state to enunciate the criteria and principles it wished
its negotiators to use.  However, to transfer thes e criteria and principles to the WTO and make them
part of the WTO framework would be inappropriate.  WTO rules and MEA provisions did not raise
any contradiction or confusion.  WTO rules were clearly designed;  the WTO was responsible fortrade and MEAs were responsible for the environmen t.  The point of intersection between these two
legal frameworks was clear.  There were WTO provisions that recognized the establishment of
environmental policies provided that WTO rights and obligations were observed.  As there was no
conflict, but coexistence between the WTO and MEAs, there was no need to establish principles or
criteria to clarify the WTO-MEA relationship.  There were also principles to guide the DSB onconflicts with WTO rules.  As a result, Mexico considered it difficult to accept the Swiss proposal.
24. The representative of Argentina referred to the key element of the Swiss paper in paragraph 6,
where it was proposed that the necessity test in Article XX be exempted for trade measures taken
pursuant to an MEA.  This argument had merit in that it assumed that governments should
consistently deal with policy-making in both fora.  It would be unusual if a government considered a
measure necessary in an MEA, but unnecessary in the WTO.  However, trade measures were part of a
package of tools in MEAs that included financial and technology transfers and technical cooperation.
The issue was whether one of the tools in this package of measures, i.e. trade measures, should be
upgraded, if the other measures had not been applied, particularly for developing countries.  Would it
not be more logical to respect the balance of measures in the package of measures in an MEA?  Thefact that the WTO and MEAs should focus on their primary competence did not mean, however, that
the WTO could not adopt principles and rules that affected the environment.  In the CTE, ArgentinaWT/CTE/M/24
Page 9
and many others had been asking for the elimination of trade restrictions and distortions that were
environmentally harmful.  Thus, Argentina agreed that the WTO should take action for the sake of the
environment that was consistent with its mandate, which was to promote trade liberalization.
Argentina was open to explore formulas to enhance consistency and mutual supportiveness between
MEAs and the WTO, as suggested by Switzerland, and promote "win-win" opportunities arising from
complying with the CTE's mandate to identify and remove trade measures that had negative
environmental effects.  The first step for the WTO would be to remove environmentally harmful trade
restrictions and distortions, which was dealt with under Item 6.
25. The representative of the European Communitie s shared the Swiss analysis that the CTE
should continue to work on the WTO-MEA relationship.  There seemed to be doubt among some
Members as to whether this issue mattered.  The EC felt that some comments were reminiscent of the
Titanic, which was thought to be unsinkable and the risks minimal, just like the multilateral tradingsystem;  thus, it was not necessary to have sufficient lifeboats.  Similarly, the EC was not reassured
that although there had not yet been any conflict between MEAs and the WTO, a conflict could arise.
From the discussions in the MEA Information Session, it was clear that some MEAs that would soon
come into effect would apply to much trade of importance to developed and developing countries.
Other areas of MEA activity that were in the process of implementation would also have tradeconsequences.  Thus, it would be wrong to be complacent with respect to the WTO-MEA
relationship.  The EC noted that there were few panels related to the issues on the CTE agenda, yet the
EC sought to engage in a positive spirit on all Items.  Thus, if an item were important it might deserve
to be examined even if there had not yet been a dispute.  The trading system was not merely about the
avoidance of disputes.  The uncertainty that prevailed on the WTO-MEA relationship was makingmatters more difficult for governments in developing MEAs.  Concerning the Biosafety Protocol,
much time had been wasted arguing about this emerging framework of international public law and
WTO rules.  With other MEAs under negotiation, it would be wise to clarify the WTO-MEA
relationship so as not to waste more time on this issue.  Complacency was not the message that the
WTO should send to the outside world in this respect.
26. The EC agreed that this discussion was not solely about the GATT, but about WTO rules as a
whole, including GATS and TRIPS, which could have an impact on MEA negotiations.  This should
be borne in mind, although the EC had focused on the model of Article XX in determining how to
proceed.  All areas of WTO rule making should be covered.  The question of non-parties was also
important.  At the MEA Information Session, the Montre al Protocol Secretariat had said that although
it had been necessary to include some trade provisions for non-parties, it had not been possible to
consider the PPM-related aspects of these trade measures, as they could not be effectivelyimplemented.  The EC agreed with Hong Kong, China and others that MEA membership mattered
and should be discussed further as global MEAs were of universal importance.  Even with respect to
conventions dealing with toothfish in the Antarctic or  tuna in the Atlantic, these agreements contained
MEA-style provisions in the sense that the primary players, with a territorial responsibility to exploit
the resource, had participated, as could any interested country.
27. The representative of the United States agreed with Switzerland that challenges to trade
measures in widely-supported MEAs were unlikely and that current WTO rules, as they had been
interpreted, permitted the adoption and implementation of trade-related measures.  The US also
agreed that the WTO and MEAs should each focu s on their primary competency, while taking into
account the concerns of the other.  Trade measures could be a critical means of achievinginternationally agreed environmental objectives when carefully tailored and appropriately applied.
However, wholly apart from the unlikelihood of a ch allenge to a trade measure contained in a widely
supported MEA, the US believed that trade measures in MEAs were broadly accommodated by WTO
rules.  The US was therefore not convinced that there was a need to further clarify WTO rules to
safeguard environmental protection measures taken under an MEA.WT/CTE/M/24
Page 10
28. The representative of Norway said that the MEA Information Sessions revealed that trade
measures were in some cases necessary to achieve environmental objectives.  The multilateral trade
regime should contribute to sustainable development and coexist in a mutually supportive way with
other international legal instruments.  Norway welcomed the decisions at the last COP of the CBD,
including the invitation to the WTO to acknowledge the relevant CBD provisions and to take intoaccount the interrelatedness of the CBD and the TRIPS Agreement.  Norway expressed its support for
the application by the CBD Secretariat and UNEP for observer status in the TRIPS Council and the
Agriculture Committee.  Norway underlined the im portance of the relationship between the CBD and
the TRIPS Agreement concerning the issue of fair and equitable benefit sharing arising from the use
of genetic resources, including the question of disclosure of the origin of the genetic resources used in
products for which patents were applied.  Many felt that the current TRIPS Agreement prevented
effective CBD implementation.  While compatibility between the TRIPS Agreement and the CBDshould be ensured, this relationship should not be seen in isolation from the general debate on the
WTO-MEAs.  The CTE should ensure that what was achieved in one multilateral forum would not be
undermined in another and that MEA negotiations were not delayed due to a lack of clarity with
respect to their relationship to WTO rules;  this situation had been seen in the Biosafety Protocol and
POPs Convention negotiations.  During the ten-year  trade and environment agenda of the WTO, the
WTO-MEA relationship had been one of the main issues, even if there had been no de facto  and clear
relationship at the outset, the debate had created one.  Clarification of this relationship was necessary
and could possibly be made in relation to Article XX or through guidelines.
29. Bearing in the mind the differences of views on the need to clarify the WTO-MEA
relationship, Norway welcomed the Swiss paper.  Before discussing a possible interpretativeunderstanding, the CTE should focus on premises or principles governing this relationship.  As stated
by Norway at the CTE's June 1999 meeting, examples of such principles could be:  that there should
be no hierarchy between the WTO and MEAs;  that the WTO and MEAs should be mutually
supportive;  that the most effective way to solve global and transboundary environmental problems
was through international cooperation and multilateral rules;  unilateral measures should as far aspossible be avoided;  in certain cases it seemed necessary to adopt measures, including trade
measures, to achieve MEA objectives;  multilateral environmental policies should continue to be
drawn up within MEAs and not in the WTO;  and conflicts between MEA Parties in relation to the
implementation of that MEA should be solved within the MEA.  On Canada's statement, the WTO
should take care when considering the development of any criteria for negotiators of other
international instruments.  Norway believed that there was no hierarchy between the WTO and
MEAs.  The criteria approach, however, could easily become a hierarchy.  Thus, it would be mostuseful to consider general principles.
30. The representative of Brazil shared Hong Kong, China and India's views that it was not
necessary to clarify the scope of the WTO with re spect to its relationship with MEAs given the fact
there had not been any conflict.  Thus, it could be inferred that there was a mutual recognition
between MEAs and the WTO that a conflict did not exist.  Even though this did not mean that a futureconflict could not arise, as pointed out by the EC a nd others, it should be kept in mind that most WTO
Members were also MEA Parties.  Brazil felt that there was a mutual understanding that the WTO and
MEAs had different areas of competence.  Furthe rmore, as noted by Argentina, trade was only one
element of a package of measures used in MEAs, and only approximately 10 per cent of
over 200 MEAs applied trade-related measures.  Brazil asked whether, given that the recent BiosafetyProtocol negotiations had been successfully concluded, it was necessary to continue to debate the
WTO-MEA relationship.  Brazil encouraged inform al initiatives, such as by UNEP, to exchange
views on trade-related measures in MEAs and their WTO-compatibility.  If there were an attempt to
formalize a clarification of the WTO-MEA relationship, it may prove difficult, if not impossible, and
would take a lot of time and money to bridge the different perspectives of Members.
31. The representative of New Zealand said that the discussion had helped to crystallize the issues
concerning the WTO-MEA relationship.  Although there had eventually been agreement, negotiationWT/CTE/M/24
Page 11
of the Biosafety Protocol had been difficult.  Many of the concerns expressed by Switzerland on
mutual supportiveness and deference had been considered at length during these negotiations.  The
preambular language of the Protocol  explicitly referred to precisely the point of the Swiss paper on
mutual supportiveness and deference.  The subsequent preambular paragraph unambiguously noted
that the Protocol should not be interpreted as implying a change in the rights and obligations of aParty under any existing international agreements.  As noted by Australia, the WTO already provided
a mechanism for mutual supportiveness and defere nce with respect to the WTO-MEA relationship
through the regular MEA Information Sessions in the CTE.  New Zealand noted the difficulty in the
Swiss approach with regard to mutual deference and asked how it would be possible to convince
WTO Members that were not parties to a particular MEA that "mutual support and deference" should
apply between these two sets of agreements.  This fundamental issue should be discussed.  In legal
terms, an interpretation of Article XX would be treated as an effective amendment, which would notbe helpful.  MEAs were highly dynamic and those involved in MEAs were finding inventive solutions
to complex problems;  it was this element of flexibility in MEAs that made them so appealing.
Codification of the relationship through an interpretation of Article XX, as proposed by the Swiss, ran
the risk of stifling dynamism and innovation in international environmental law.  On paragraph 10 of
the Swiss paper, New Zealand was not sure that determining the proportionality of a measure toachieve an environmental goal should be decided exclusively by an MEA.  In many cases, such
measures may be trade-related and, thus, subject to WTO obligations.  It was not clear how the Swiss
approach helped to "outline the principles governing the relationship between the WTO and MEAs".
New Zealand would comment further on Canada 's principles and criteria approach.
32. The representative of Hungary said that th e Swiss paper gave impetus to an in-depth
discussion of the WTO-MEA relationship.  The MEA Information Sessions, as well as the
information collected by the Secretariat in the Matrix, WT/CTE/W/144, showed that only a few
MEAs used trade measures.  Nevertheless, like Sw itzerland and many others, Hungary felt that the
potential conflict between the WTO and MEAs merited focussed discussion.  Hungary shared
Switzerland's view that trade and environment regime s could and should be mutually supportive.  The
WTO should focus on trade-related issues and not engage in setting environmental standards.  MEAs
should not set trade rules and should use trade measures only when it was demonstrated that they were
necessary to achieve environmental objectives, and only in a way that did not constitute a means of
arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a
disguised trade restriction.  There were global environmental problems that can best be solved through
the use of trade measures.  However, as noted by Argentina, trade measures were only one instrument
in a package of measures in MEAs.  Hungary shared the Swiss view that in order to clarify the WTO-MEA relationship, there was no need to reopen or amend Article XX, or to include a new article in the
WTO Agreement to deal with this issue.  Hungary viewed favourably the Swiss suggestion to clarify
this relationship in the form of an interpretative decision.  If it were decided to proceed along the lines
suggested by Switzerland, there were two key issu es such a decision should address to minimize
protectionist abuse.  A decision should contain ob jective criteria for determining which MEAs would
be covered.  The criteria in paragraph 10 of the Swiss paper and those raised by Canada were worth
examining, and could be supplemented by others.  India had put forth two additional valid criteria.  A
decision should make clear that MEA trade measures should be necessary to achieve an
environmental objective, the least trade restrictive available and not constitute a means of arbitrary or
unjustifiable discrimination or a disguised restriction on international trade.  Members should discussthe questions raised, particularly by Hong Kong, China.  Hungary would co mment later on the Swiss
paper and Canada's principles and criteria approach.
33. The representative of Malaysia sought clarification from Switzerland as to whether it was
suggesting that two Members who were both MEA Parties could proceed with a trade measure
without having to satisfy the chapeau of Article XX.  She inquired as to what would happen if one ofthe two Members decided to pursue its case in the WTO on the grounds that its rights had been
violated, and whether it was suggested that the DSB should not examine whether the measure at issue
met the necessity test under Article XX;  whether the WTO should limit itself to other aspects, such asWT/CTE/M/24
Page 12
whether the measure was arbitrary or unjustified discrimination;  and what if the measure at issue had
not been justified in the first instance.  The rights and obligations of countries that were parties to both
the WTO and MEAs could not be ignored.  In comp lying with one, consistency with the other should
be considered, without being in conflict with each other.  As Brazil had said, Members should not
reach the point of resolving conflicts at a high cost in terms of time and money.  Malaysia soughtclarification on whether there was a potential contradiction between paragraphs 4 and 5 of the Swiss
paper as to the focus of the WTO and MEAs on their areas of competence, while not excluding the
possibility of the WTO or MEAs examining each other's areas.  Current WTO provisions provided a
suitable framework for mutual coexistence between MEAs and the WTO.
34. The representative of Pakistan supported comments by Hong Kong, China, India, Mexico,
and Brazil, and shared New Zealand's point that an interpretative decision would lead to a legal
amendment to the WTO Agreement.  Pakistan did not envisage any place for this type of decision.On the possibility of a future WTO-MEA conflict, it was necessary to take matters as they came.
Hong Kong, China's comment that there was no crisis at present was valid.
35. The representative of Switzerland thanked Members for their comments, which had
stimulated debate and indicated that this issue required discussion.  Several Members had argued that
since only 10 per cent of MEAs included trade measures, there was no conflict between the WTO andMEAs as there was no crisis and, hence, no need for clarification.  These arguments were not
persuasive.  It was not relevant how many MEAs included trade provisions;  it was enough that
several important MEAs included trade provisions which bore a potential for conflict.  During the
Montreal Protocol's presentation at the MEA Inform ation Session, it had been made clear that there
was a substantial risk that Parties to the Protocol, which were not all Parties of subsequentamendments, might bring a dispute to the WTO over a trade measure provided for in an amendment.
The Montreal Protocol Secretariat had also noted the need to clarify the WTO-MEA relationship.
Several Members had mentioned that the potential for conflict related not only to existing MEAs, but
also to future MEAs, and that clarification was necessary especially to facilitate the negotiation of
future MEAs.  Reference to the Shrimp Turtle case in the Swiss paper had not been intended toindicate that this case had resolved the WTO-MEA issue;  it outlined a way of interpreting WTO rules
such that the terms "exhaustible natural resources"  and "necessary to protect human health" in Article
XX would accommodate the Swiss approach.  Thus, WTO panels had not clarified the WTO-MEA
relationship and it should be Members that did so, not panels.  Switzerland agreed that trade measures
were "only one tool in the package of instruments used in MEAs";  that technical and financial
assistance, technical cooperation and capacity building were also important;  and that trade measures
should be a last resort.  However, while there was no problem with technical assistance and WTOrules, there was a potential for conflict with MEA trade measures.  An important element of the Swiss
proposal was that the WTO should be competen t to check whether MEA trade measures were
arbitrary, discriminatory or protectionist.  However, MEA negotiators would already have decided
whether these measures were necessary;  the WTO should not duplicate this work.
36. Switzerland noted the agreement that the WTO and MEAs should be mutually supportive and
that the starting point for the discussions should be their compatibility.  India's criteria that MEAs
should represent all continents and levels of development were valid;  an MEA negotiated only by
some countries would not constitute a broad-based MEA.  As to whether the Swiss principles should
be different depending on whether a dispute involved MEA Parties or MEA Parties/non-parties,
Switzerland felt that the rules should be the same, but this needed reflection.  There were differentvalid forms to clarify the WTO-MEA relationship.  As suggested by Canada and Norway, this issue
need not be resolved at this stage;  the focus should be on the content of the relationship.
Item 7 The issue of the export of domestically prohibited goods
37. The representative of Bangladesh presented his delegation's paper on trade in domestically
prohibited goods (DPGs), WT/CTE/W/131, which de scribed Bangladesh's experience and set outWT/CTE/M/24
Page 13
recommendations to build on work on DPGs.  Several MEAs helped to control trade in DPGs and
contributed to reducing risks to human, animal and plant life and health with respect to hazardous
wastes, narcotic drugs and psychotropic substances, chemicals and organic substances, and persistent
organic pollutants.  When addressing DPG trade, a country's sovereignty to take decisions to restrict
or ban imports of goods injurious to human health and the environment should be kept in mind.  Atthe same time, restrictive measures should be based on scientific principles, in accordance with WTO
provisions, particularly the SPS Agreement.  It was necessary to strike a balance to ensure that
measures did not become unnecessary trade barriers.  Governments had a role to play by accepting
responsibility so that commercial interests did not override the wellbeing of other countries.  Human
welfare and equity demanded that goods scientifically categorized as harmful to humans and the
environment were not traded.  Importing, exporting and transit countries should commit themselves to
minimizing the possible damage caused by DPG trade.  Bangladesh's paper identified possibleredressal measures.  As a first step, the CTE should revive and strengthen the existing 1982 DPG
notification system, which to be effective should in clude DPGs whose export had been prohibited and
those that continued to be exported.  Bangladesh requested the Secretariat to update previous papers
on DPGs, focusing on the export of domestically prohibited consumer products in cooperation with
relevant MEAs, such as the Basel, PIC and draft POPs Conventions, WHO, UNEP, and UNCTAD.
NGOs working on trade, environment and health could also help to generate support for action in this
area.  There was a need for capacity building, technical cooperation and enhanced information sharing
on DPGs among developing and developed countrie s, and amongst developing countries on illicit
DPG trade.  The export of DPGs should also be  a priority for the UNEP-UNCTAD Capacity Building
Task Force on Trade, Environment and Development.
38. The representative of Egypt believed that Bangladesh's paper touched on fundamental issues
related to DPG trade and highlighted Bangladesh's experience.  Egypt supported the need for technical
assistance for developing countries to build capacity to deal with DPGs.  It was also important to seek
international cooperation to take the necessary measures to control DPGs globally, which could help
governments to detect disguised practices by some companies.  The second recommendation inBangladesh's paper assumed that the DPG problem could be addressed through appropriate domestic
health and environmental standards and regulations to manage DPG imports;  Bangladesh thus called
for technical assistance in this area.  However, Egypt felt that technical assistance was required not
only to formulate domestic regulations, but also to render domestic regulations effective.  Technical
assistance should also be consecrated to develop the human and institutional capacities of the
competent authorities to detect imports of DPGs, and to define how to deal with trade in DPGs.
Egypt would provide detailed comments after the pa per had been further considered in capital.
39. The representative of India said that his delegation attached importance to the export of DPGs
and supported the points made in Bangladesh's paper.  Bangladesh had also made concrete
recommendations upon which to progress DPG work.  I ndia felt that the CTE was competent to act
upon Bangladesh's recommendations, which mainly dealt with transparency and technical assistance.
40. The representative of Hong Kong, China said his delegation was sympathetic to Bangladesh's
recommendations on DPGs.  He asked how the 1982  DPG Decision was administered in the WTO;
whether its enforcement should be pursued under that administering body;  and, after the entry into
force of the WTO, whether there were other notification requirements relevant to DPGs.
41. The representative of Japan said his delegation was sympathetic to the concerns raised in
Bangladesh's paper.  A discussion of the concrete types of problems faced by developing countries
would be useful.  As a result, concrete results could be considered, as well as the type of technical
assistance.  Given that there were other international organizations and agreements that already dealt
with many DPGs, the Secretariat could prepare an update of work on DPGs.
42. The representative of Switzerland made preliminary comments on Bangladesh's paper.  It was
interesting to note that while DPGs may cause problems to the domestic environment and economy,WT/CTE/M/24
Page 14
as well as involve risks to human health, they may also serve other functions, such as health or food
security.  Switzerland was interested in more info rmation on how DPGs had been addressed at the
UNCTAD Regional Workshops, including the specific situation in developing countries.  It was worth
investigating why there had been no DPG notifications to the GATT/WTO since 1990.  According to
preliminary information, Swiss industry had established a Code of Conduct that required notificationto the importing countries of DPGs and chemicals severely restricted for certain uses in Switzerland.
Switzerland had prohibited not only the use, but also the production of many dangerous chemicals,
such as DDT.  Switzerland had also signed the PIC Convention, which should be ratified by
Parliament this year, and hoped that other industrialized countries would do likewise.  MEAs, such as
the PIC, Basel and draft POPs Conventions and the Montreal Protocol were the best place for solving
most problems involving DPGs.  However, it would also be necessary to clarify the WTO-MEA
relationship.  There may be situations involving DPGs  that were not covered by existing international
agreements.  The Secretariat could prepare, in cooperation with other international organizations, a
study on the export of domestically prohibited consumer products relying on previous papers.  To
avoid duplication, the focus should be on DPGs not yet covered by other instruments.  Switzerland
would contribute constructively to effective solutions in this area.
43. The representative of Norway said that Bangladesh's paper provided useful input to the
discussion on trade in DPGs.  Bangladesh suggested the revival of the DPG notification system
established by the GATT in 1984, and that this system should apply to consumer products not covered
by other international instruments;  Norway was symp athetic to this proposal.  Norway referred to the
Secretariat's Note, WT/CTE/W/73, which provided information on product coverage and notification
requirements of other international instruments.  This Note could be updated to better understand theproducts to be covered by the notification system proposed by Bangladesh.  In 1991, the GATT
Working Group on DPGs had failed to agree on the product coverage of the notification system.
Without clearly defined product coverage, the notification system would provide non-uniform
information.  Norway felt this issue should be ad dressed, but, in the meantime, the DPG notification
system of 1984 could be revived as suggested by Bangladesh.
44. The representative of Pakistan endorsed Bangladesh's approach and thanked Egypt for raising
concerns about specific DPGs.  Bangladesh's recommendations were modest and were within the
CTE's competence;  the recommendations sought transparency in terms of notifications and concrete
steps towards technical assistance concerning control of trade in DPGs.
45. The representative of New Zealand said that DPGs was an important issue on the CTE's
agenda and appreciated the concrete recommendations in Bangladesh's paper.  As identified by
Bangladesh, there was ongoing work in other international organizations, such as UNEP and the draftPOPs Convention.  New Zealand adhered to the principles outlined in Bangladesh's paper that there
should be strengthened cooperation amongst the relevant organizations on DPGs to ensure there was
an effective system to deal with this area.  As a first step, it would be useful for the Secretariat to
update developments in the DPG area.  As noted by Egypt, technical assistance was important and
required further thought.  Information on the specific needs of developing countries was needed and itwould be useful to consider the technical assistance already provided by the WTO and others in the
DPG area.  New Zealand was favourable to Bangladesh's recommendations;  concrete work on DPGs
would complement discussions on market access issues.
46. The representative of the European Communities said that his delegation was sympathetic to
Bangladesh's concerns.  The EC noted the sense of cooperation and activism on this Item and made
the link to the discussions under Items 1&5, where the EC hoped a similar spirit would prevail.  On
the case of soaps containing mercury raised by Egypt, as evidence was assembled on trade in these
products, it was clear that there was some illegal activity in several EC Member States.  Soaps
containing mercury that had been banned in the EC had been found in neighbouring countries.  Some
of these products had been produced in Europe, while others had been produced elsewhere butpresented as European production.  Even in the EC, a heavily regulated market with a high degree ofWT/CTE/M/24
Page 15
governmental resources for consumer protection, products that the EC wished to prohibit,
nevertheless found their way onto the shelves.  This was relevant to the practical implementations of
some of Bangladesh's recommendations.  As illustrated by the experience with DPG regulation in
select developing countries, not all DPGs were "bad" from the perspective of importing countries;
countries had different views on the utility of certain products.  For example, Uganda was reported ashaving noted in the UNCTAD Workshop in Cuba that used clothing was a DPG;  it was not in the
EC's view.  On the experience of Costa Rica, as Egypt had noted, the development of capacity in
domestic regulatory authorities to prevent certain products from reaching the market was the first-best
solution to the problem of marketing products contrary to consumer interests.  Given that each
country should assume responsibility for regulating its imports in the least-trade restrictive way
possible, how far would it be appropriate to establish more constraining systems in the exporting
countries?  In principle, if the exporting regime were based on prior informed consent, this should notbe trade restrictive.  In practice, trying to impose controls on exports of non-hazardous wastes even
when administered in highly resourced, bureaucratic networks led to delays and costs in both the
importing and exporting economies.  This issue was not only a North-South issue, but also occurred
between countries with different regulatory frameworks for the products at issue.  It was important to
be aware of the costs implied in establishing cont rols in this area.  It would be useful for the
Secretariat's paper on DPGs to include a description of the UN Consolidated List.
47. The representative of Egypt thanked the EC for the additional information on the issue of
soaps containing mercury.  Egypt hoped that the CTE's debate could lead to more intensive
international cooperation, assistance and coordination to develop a mechanism to control trade in
DPGs globally and to help government authorities to detect disguised practices by companies in thisrespect.  The DGP issue was more of a problem for developing countries than developed countries.
With all the health, safety and environmental regulations in place in many developed countries, Egypt
felt that DPGs could not easily enter developed countries, but that it was not difficult for them to enter
developing countries given the lack of resources to monitor these movements.
48. The representative of the United States said his delegation was reviewing Bangladesh's paper
and was interested in the Secretariat's response to Members' questions, including on which WTO
Body administered the 1982 DPG Decision.  To the extent that there was a systemic problem with
respect to notifications in this case and elsewhere in the WTO, it should be addressed as such.
49. The representative of Thailand said that his delegation placed a high priority on the DPG
issue and endorsed Bangladesh's recommendations in its paper.
50. The representative of Brazil shared the views expressed in Bangladesh's paper.  Brazil was
interested in recycling certain types of wastes, as the recycling industry was profitable.  When the
Secretariat updated the DPG study, it should keep in mind that DPGs covered a wide range of
different products as noted by the EC.  It would be  difficult for the Secretariat to provide information
on the possible effects of DPGs on human health and the environment.
51. The representative of Canada said that his delegation was interested to note that the DPG
issue had been revived, given that other international instruments had been negotiated to deal with the
more serious DPG issues.  This issue was being dealt with in several MEAs, including the Basel, PIC
and draft POPs Conventions and the Montreal Prot ocol.  Countries may not be notifying pursuant to
the 1982 DPG Decision as they considered that thei r membership in MEAs was sufficient.  In order
not to duplicate work under way in environmental instruments in this area, the CTE should focus on
gaps in the coverage of MEAs and other international organizations.  This issue should be examinedwith renewed vigour to determine what could usefully be accomplished.
52. The observer of UNCTAD said that UNCTAD was implementing a project, funded by the
United Kingdom, on capacity building on trade and environment involving ten developing countries.
Workshops had been held in November 1999 in the Philippines and in May 2000 in Cuba, at whichWT/CTE/M/24
Page 16
the issue of DPGs had been discussed, focusing on identifying gaps in the coverage of DPGs by
international instruments.  Bangladesh had taken the initiative to carry this issue forward based on the
paper it had contributed to the Cuba Workshop.  UNCTAD would be pleased to provide the country
contributions to these Workshops for the DPG study .  On the example of used clothing, if these
products were contaminated with substances listed  in the Basel Convention, then used clothing was
within the Basel definition of hazardous wastes.  Identifying gaps in the coverage of international
instruments was complex;  the country studies prepared for the UNCTAD Workshops were a first step
to identifying specific concerns in this area.  Discussion at the Workshops had focused on
domestically prohibited consumer products, as set out in Bangladesh's paper.  UNCTAD and UNEP
had circulated a paper, WT/CTE/W/138, on the Capacity Building Task Force on Trade, Environment
and Development, according to which Bangladesh could submit the proposal set out in its paper.
53. The representative of Bangladesh thanked Members for their support of the proposals in his
delegation's paper.  As a first step, he reiterated Bangladesh's request for the Secretariat to update
information on the gaps in coverage of domestically prohibited consumer goods.
54. The representative of the Secretariat said that WT/CTE/W/43 contained information on the
DPG notification system established in the GATT  in 1982 (BISD29S/19).  Fifty notifications had
been made under this system from 1983 to 1990;  it remained in force, although no notifications hadbeen received since 1990.  A main reason this system was no longer being used was that it had
become a one-time procedure, whereby countries noti fied that they did not export DPGs.  On the
extent to which other WTO notification mechanisms provided information on DPGs, as set out in
WT/CTE/W/43, the TBT, SPS, quantitative restrictions and other WTO notifications systems may be
relevant.  The coverage of DPGs in other international instruments was addressed in WT/CTE/W/73.On technical assistance related to DPGs, the WTO's regional seminars on trade and environment
included this issue;  proposals were welcome for further technical assistance.
55. It was agreed that the Secretariat would prepare an update of previous papers on the export of
DPGs, focusing on the gaps in coverage of other international instruments and the extent to which
these instruments addressed domestically prohibited consumer goods.
Item 8 The relevant provisions of the Agreement on Trade-Related Aspects of Intellectual
Property Rights
56. The representative of India introduced his delegation's paper on India's national experience
with the protection of biodiversity and traditiona l knowledge in WT/CTE/W/156-IP/C/W/198.  India's
position on the relationship between the TRIPS Agreement and the Convention on Biological
Diversity (CBD) had been reflected in its previous papers, WT/CTE/W/65 and WT/CTE/W/85.  Indiawas one of the twelve mega-biodiversity countries of the world, with 7-8 per cent of global species,
and India was also rich in coded and informal tr aditional and indigenous knowledge.  India was a
Party to the CBD, which entered into force on 29 December 1993.  India had introduced the
Biodiversity Bill 2000 in Parliament to address the basic concerns of and access to collection and use
of biological resources by foreigners and benefit sharing arising from this access.  This legislationprovided for a national authority to grant approvals for access subject to conditions to ensure equitable
benefit sharing, pursuant to the CBD.  India's pa per touched on the relationship between biodiversity
and the TRIPS Agreement, particularly with respect to patents.  There had been cases of biopiracy of
India's traditional knowledge.  The most well known case was turmeric, for which a patent had been
granted in the US, but consequently revoked.  Since then patents had also been obtained in othercountries on the hypoglycaemic properties of karela, and brinjal.  The issue was foreign obtention of
patents based on Indian biological material.  In this respect, the view existed that the
TRIPS Agreement aided the exploitation of biodiversity by privatizing biodiversity expressed in life
forms and traditional knowledge.  There had also been a recent case where the European Patent Office
had revoked a patent on neem as a fungicide in May 2000.  India's paper made the point thatprohibitive amounts of time and money had been involved in having patents reexamined and revokedWT/CTE/M/24
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in foreign patent offices in developed countries.  Hence, the need for an internally accepted solution to
such biopiracy.  Whilst domestic legislation was important, the problem of biopiracy could not be
resolved solely by domestic legislation.  There was also a need for international action.
57. While the CBD recognized the sovereign rights of states over their biological resources, the
TRIPS Agreement treated intellectual property rights (IPRs) as a private right.  India had proposedthat patent applicants should be required to disclose the source of origin of the biological material in
an invention under the TRIPS Agreement, and should be required to obtain the prior informed consent
of the country of origin of that biological material.  If these requirements were put in place, domestic
institutional mechanisms in the country concerned would be able to ensure benefit sharing arising
from the commercial use of patent holders with ow ners of traditional knowledge, i.e. indigenous
communities.  Protection of traditional knowledge, innovations and practices associated with
biological resources did not appe ar to fall within conventional legal systems of IPR protection.
Conventional IPRs were inadequate to protect trad itional knowledge as they were based on protection
of individual property rights, whereas traditional knowledge was largely collectively owned.  The
difficulty was that traditional knowledge had been developed over a period of time and may not have
been codified in texts or retained in oral traditions.  Thus, the conditions of novelty and innovative
steps for grant of a patent had not been satisfied as this knowledge had been in the public domain forgenerations.  Communities also held knowledge in parallel with other communities.  India felt that the
development of an appropriate form of protection for the knowledge of local communities was of
interest to countries that were rich in biodiversity and traditional knowledge.
58. Documentation could prevent biopiracy;  India was putting in place Community Biodiversity
Registers.  Following the patenting of brinjal, an ex ercise had been initiated in India to prepare easily
accessible computerized databases of documented traditional knowledge of prior art in the public
domain, i.e. Traditional Knowledge Digital Libraries.   If available in patent offices throughout the
world, such digital databases would help to prevent biopiracy.  Documentation of traditional
knowledge was only one way of recognizing knowledge holders;  it would not allow benefit sharing
arising from the use of such knowledge unless it were backed by a mechanism to protect thisknowledge.  Thus, documentation was necessary, but not sufficient for the protection of traditional
knowledge.  India had made efforts regarding registration and innovation patent systems by inventors,
for example through the Honeybee Database Network, which was one of the largest databases on
grassroots innovations.  On the development of a sui generis  system for biological resources, in
contrast to that provided for plant variety protection in the TRIPS Agreement, India said that
documentation and registration were important, but that owners of traditional knowledge did not have
the capacity to benefit from ownership.  Thus, as part of its 1999-2000 budget, India had proposed a
National Innovation Foundation to build a national register of innovations.
59. On WT/CTE/W/125, it was interesting to learn that of the 112 countries adhering to the FAO
International Undertaking on Plant Genetic Resource s (IUPGR), only 44 were UPOV Parties.  Out of
these, only 12 adhered to the 1991 model.  Thus, a majority of those who had chosen UPOV appeared
to prefer the 1978 model (paragraphs 4 and 11).  UPOV did not appear to be fully informed aboutvarious other existing and emerging models that were based on precepts other than those in UPOV or
patent systems (paragraph 10).  India drew attention to a recent paper by Carlos Correa, "Options for
the Implementation of Farmers' Rights at the National Level" for the Instituto Agronomico per
l'Oltremare, Italy.  It was interesting that FAO and UPOV observed that UPOV and IUPGR were not
incompatible and could co-exist in a sui generis system (paragraph 13).  Paragraph 19 did not fully
reflect the relevant CBD provisions.  The CBD also called on Parties to take legal, administrative or
policy measures regarding access to biological resources and technology transfer that made use of
these resources.  The CBD provisions, read with Articles 7, 8, 27.2 and 27.3(b) of the
TRIPS Agreement, provided a model for access and protection laws.  Article 27.2 was also relevant to
paragraph 21.  The study of only 18 out of 137 countries was not a relevant sample to determinenational practices on plant variety protection models adopted by WTO Members.  India drew attention
to Section IV of WT/CTE/W/125, which illustrated that:  (a) derivatives of genetic resources andWT/CTE/M/24
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other intangible elements were becoming an integral part of sui generis protection systems,
particularly in developing countries;  and (b) prior informed consent of patent applications for use of
genetic resources and traditional knowledge was being introduced in national laws.
60. The representative of Thailand thanked the FAO for its paper and welcomed the revision of
the Undertaking.  Thailand noted that the Undertaking recognized the importance of farmers' and
plant breeders' rights, unlike UPOV 1991.  The sovereign right of countries over their resources and
the rights of indigenous communities and farmers must be protected.  The TRIPS Agreement should
recognize the concept of equitable benefit sharing.  Article 27.3(b) must remain open for Members to
choose a patent system.  Thailand understood that the Undertaking would become a legally binding
instrument linked to the FAO and the CBD and felt that consideration of the reinforcement
mechanism should be addressed when implementing the Undertaking.
61. The representative of Peru said that India's paper had made an important contribution to the
discussion.  Many developing countries had defined this position in international fora, such as WIPO
and FAO.  India had analysed ways in which to provide protection through IPRs for genetic resources
and traditional knowledge by using existing and sui generis  systems.  Peru appreciated the reference
to India's concrete problems with respect to biopir acy.  Peru agreed that traditional knowledge could
not be covered by conventional IP.  In some instances, it would be necessary to establish sui generis
regimes or adjust existing regimes to accommodate the protection of traditional knowledge.
62. The representative of Brazil thanked India for its valuable paper.  It was well known that
traditional knowledge could make a significant contribution to several industrial sectors, particularly
the pharmaceutical sector, where traditional knowledge may play a key role in the pre-scanning phase
to identify the active substance of medicines.  If such active substances were to be developedsynthetically, it would take years and probably millions of dollars in research in laboratories.  Like
India, Brazil was discussing draft laws on access to  genetic resources, which included issues such as
benefit sharing and the protection of traditional knowledge to implement the CBD.  Brazil agreed with
India that it would be less cost-effective to establish benefit sharing schemes in the patent system,
either nationally or internationally, than to us e resources in expensive judicial processes for the
revocation of patents that included illegal genetic resources.  India had noted its experience with
biopiracy in the cases of neem, basmati and turmeric and introduced a relevant argument to
implement the CBD in this respect.  The main count ries that had suffered from biopiracy were the
biodiversity-rich countries, most of whom were developing countries.  Biopiracy may turn out to be
less cost-effective for biopirates than establishing benefit sharing schemes in the patent system.
Brazil agreed with India that the conventional legal systems of IPR protection did not necessarily
provide adequate scope for protection for traditional knowledge.  Some countries had mentioned thepossibility of using the existing IPR system to protect traditional knowledge. To the extent that this
may be feasible, countries should not rule out this possibility, although it may be worthwhile to carry
out this discussion in other organizations, such  as WIPO, where there was enough expertise and
resources to establish technical cooperation in this area.  India had provided a useful contribution
regarding the documentation of traditional knowledge.  India's rich experience, as set out in its paper,
provided a concrete basis for discussion on the different possibilities to protect traditional knowledge.
Whether documentation may facilitate biopiracy, as referred to in India's paper, was debatable.  Brazil
agreed with India that the establishment of databases had the benefit of providing documentation for
patent offices to check against patent requests that were filed without the consent of the community.
63. Brazil agreed with India on the need to go beyond the national level to provide adequate
protection for traditional knowledge in addition to that provided by conventional IPR regimes.  India
had mentioned the possibility of exploring options, such as the so-called “petty patents” and
sui generis  systems, which may be useful, but not sufficient to protect traditional knowledge
adequately.  In previous debates, some countries had mentioned that the status quo already provided
for different means of protecting such knowledge.  For instance, companies could establishinter partes contracts with traditional or indigenous communities.  Such contractual modalities ofWT/CTE/M/24
Page 19
protection, however, were not easily enforceable and were subject to the direct negotiations between
the parties involved.  There was no way to ensu re that the prior consent obtained from these
communities would be an informed one, or that benefit sharing between a company and a community
would be fair and equitable.  Several countries were establishing national legislation, which would
help to regulate the different elements in the relationship between IP and access to genetic resources.The most efficient way to protect traditional knowledge under the IP system would be to establish
minimum standards of protection at the multilateral level.  Some countries might argue that the fact
that the relatively low numbers of existing national legislation made it difficult to establish an
internationally recognized regime to secure benefits arising out of the use of traditional knowledge.  It
should be recalled, however, that the greatest majority of countries who negotiated the minimum
standards of IPRs in the TRIPS Agreement had not incorporated such minimum standards at the
national level when the TRIPS Agreement had been concluded.  In fact, even after the entry into forceof the TRIPS Agreement, several WTO Members had not yet incorporated protection in some areas of
their patent legislation, and they were still protected by the transitional period established in Article
65.4 of the TRIPS Agreement.  The absence of protection at the national level had not deterred WTO
Members from negotiating and establishing one of the most ambitious international treaties on IPRs.
The TRIPS Agreement and the CBD should be mutually supportive and the implementation of bothshould promote sustainable development.  India's contribution moved the discussions forward.  Brazil
requested the Secretariat to circulate the relevant Decisions from the COP of the CBD, particularly
Decisions V/16 and 26, as a joint CTE-TRIPS Council document.
64. The representative of Japan made preliminary comments on India's paper.  Providing a legal
framework through domestic legislation to prot ect biodiversity resources and documentation of
traditional knowledge may be an effective response  to the request of India's indigenous communities.
Protection may differ between countries, given the various kinds of traditional knowledge in the
world.  Japan shared India's view on the nature of traditional knowledge as being different from other
forms of IP, which were subject to conventional systems of protection provided by the TRIPS
Agreement.  These differences underlined the reality that the TRIPS Agreement was not theappropriate forum to provide protection for traditional knowledge.  India's paper clearly explained the
differences, such as that traditional knowledge was developed over time and may not be codified in
text, but be retained in oral traditions over generations.  The collective nature of traditional knowledge
was different from that relating to patent and copyright, which was concerned with private property
rights.  The unique nature of traditional knowledge may require an international approach other than
the TRIPS Agreement.  Japan felt that India's proposal that patent applications should be required to
disclose the source of origin of the material used in an innovation may be an effective solution that the
international community could provide to complement India's domestic efforts.  However, it remained
to be determined if the international community c ould accept this proposal, particularly with respect
to establishing a legal framework for protection.  Voluntary disclosure of information may be
expected, but there was no reasonable justification to require patent applicants to disclose the source
of origin.  This issue required examination in other international organizations with expertise.
65. The representative of the United States said that, upon an initial reading, the US found
particularly interesting India's information on how it had dealt with these issues domestically.  On
India's reference to so-called "biopiracy", the US noted that, while there were often disputes about
whether something were patentable, India's examples had been successfully addressed.  The US was
not sure that it accepted the notion that there was a phenomenon that can be termed "biopiracy".  TheUS would review India's paper and looked forw ard to further discussion at future meetings.
66. The representative of the European Communities said that India's paper gave "real world"
insight into the administrative complexities of dealing with traditional knowledge within a country's
jurisdiction.  Issues raised in respect of CBD implementation and the TRIPS Agreement were being
reviewed in the TRIPS Council.  In this respect, the CTE did not have the same degree of expertise to
deal with this issue as the TRIPS Council.  On su ggestions for prior informed consent and compulsory
notification of geographical origin, the EC recognized that biopiracy existed in theory and in practice.WT/CTE/M/24
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The fact that patent offices had been called upon to revoke patents that had initially been granted
suggested that biopirates also existed.  In the field of patentability of biotechnology inventions, the
relevant EU Directive included prior informed consent and notification of geographical origin.  The
scope of these concepts was limited.  Prior informed consent was limited to inventions based on
biological material of human origin.  Geographical  origin of inventions based on biological material
of plant or animal origin was to be notified where known.  The concepts that were being explored in
India's domestic debate were similar to those under consideration in the EU.  On the section in India's
paper on the 1999 Patent Bill, the EC asked how I ndia viewed the grounds for rejection of a patent
application as relating to the TRIPS Agreement.  Like the EC, would India see this as relating to the
national discretion left to WTO Members under Article 27.2 of the TRIPS Agreement to provide for
exclusion from patentability in cases where countries consider such exclusions necessary to protect
ordre publique  or morality?  In the field of traditional knowledge and access to genetic resources,
India's paper and WT/CTE/W/125 illustrated that there was much work under way at the national
level that required more international cooperation and assistance.  This work was consistent with the
TRIPS Agreement and the CBD.  At the MEA Information Session, the CBD Secretariat had said that
there was also encouraging work being undertaken  at the international level in this respect.
67. The representative of Canada acknowledged the valuable contribution of India's paper on this
complex issue and congratulated India on being able to proceed with legislation in this area.  Canada
was examining the effectiveness of its current IP protection regimes in this context, but had yet to
come to firm conclusions.  Canada remained conc erned about how to identify traditional knowledge
holders and whether they possessed the right with in their larger communities to authorize use of
traditional knowledge and to receive benefits arising from its use.  Canada had encountered reluctancefrom indigenous peoples to permit the documentation of their knowledge and innovations, which had
been the basis for India's approach.  This pointed to the importance of dealing with this issue
primarily in the national context, as India was undertaking.  Discussion was under way in several
international fora, including the CBD Working Group on Traditional Knowledge.  Canada welcomed
the issue being raised in the CTE and expected further discussion in the TRIPS Council.  The mostappropriate forum for dialogue on this issue was WIPO, which had engaged indigenous peoples
directly in its activities, and where the primary expertise in this field resided.
68. The representative of Norway was impressed by the practical, "real world" approach to this
issue in India's paper.  Norway w ould comment further at a later stage.
69. The representative of Switzerland made preliminary comments on India's paper.  Some
Members, who had argued that there was no pr oblem with the WTO-MEA relationship, seemed to
take another position on this Item.  Coherence was important between different fora and within thesame forum.  India had noted that countries were free to deny patents on life forms, except on
microorganisms and microbiological and non-biological processes.  While this was correct, it must be
underlined that countries were not allowed to deny any protection to life forms but that they must
protect plant varieties at least by a sui generis  system.  Switzerland agreed that traditional knowledge
did not seem to fall easily in the conventional system of IPR protection.  As noted by India, theconditions of novelty and an innovative step necessary to grant patents and the fact that communities
often held knowledge in parallel presented diffic ulties for recognizing informal knowledge as a
conventional IPR.  Another difference between trad itional knowledge and conventional IPRs was that
conventional IP protection was limited in time.  Switzerland asked what would be the case for
traditional knowledge that had not been docum ented.  Switzerland questioned the TRIPS-
compatibility of rejecting or revoking patent ap plications because of non-disclosure or wrongful
disclosure of the source of origin of biological resources or knowledge in the patent application.
70. The representative of Cuba supported the approach in India's paper and felt that the
TRIPS Agreement should be reviewed and perhaps amended to enable greater protection of traditional
knowledge and to encourage technology transfer.  Cuba was currently in the process of adoptinglegislation on plant variety protection jointly with legislation on biodiversity and access to geneticWT/CTE/M/24
Page 21
resources.  Criteria for access to genetic resources had been agreed upon and would help Cuba to
avoid the possible harmful effects of the automatic application of the TRIPS Agreement.  Cuba would
provide further details on its legislation at a later stage.
71. The representative of Malaysia said that the issues raised in India's paper were practical and
worth consideration, particularly the need for a system to protect traditional knowledge and
international action to complement domestic legislation.  The TRIPS Agreement gave protection
under geographical indications to goods originating in a territory, region or locality that were
attributable to that geographical origin.  There may be justification for a system to protect traditional
knowledge that was indigenous to a community.  Th ere was also value in considering some of the
systems of protection raised in India's paper where protection can be given through some sui generis
system or a multilateral register of traditional knowledge so that they can be recognized and accorded
protection.  It would be useful to further pursue these processes in order to put in place an efficientbenefit sharing system.  Discussions in WIPO a nd the CBD would contribute to discussions in the
TRIPS Council and the CTE.  Malaysia felt that WT/CTE/W/125 had contributed to the CTE's
understanding of issues concerning Article 27.3(b).
72. The representative of Hong Kong, China said that this was an area in which his delegation
had substantive interests and in which domestic debate was occurring.  Hong Kong, China welcomed
India's paper and looked forward to further CTE discussion on this issue.
73. The observer of FAO noted the paper the FAO had provided to clarify the negotiations on the
International Undertaking on Plant Genetic Resources in WT/CTE/W/146.  The FAO drew attention
to the Report of the FAO Conference in November 1999, where it had been confirmed that
negotiations to revise the Undertaking would procee d on the basis that the Undertaking would take the
form of a legally binding instrument closely linke d to the FAO and the CBD.  Under negotiation was
the range of options for the legal status of the revised Undertaking, including the relative advantages
of a stand-alone instrument or a protocol to the CBD.  There was a continuous dialogue between the
FAO and the CBD on these possible options;  the COP of the CBD had been regularly informed of
progress in the negotiations to revise the Undertaking and had given its support in Decisions II/15 andIII/11.  The FAO would update the CTE of developments in these negotiations.
74. The observer of the CBD said that, as noted in its presentation at the MEA Information
Session, the COP of the CBD had welcomed discussion of this issue in the CTE.  It was reassuring to
note that the observations made in the CTE resembled the dialogue in the CBD.  He recalled the
conclusion at the last COP on the importance of sui generis  systems for the protection of traditional
knowledge and the equitable sharing of benefits arising from its use.  He also recalled that the COP
had invited the WTO to acknowledge the relevant CBD provisions;  to take into account that theywere interrelated with the provisions of the TRIPS Agreement; and to further explore this relationship.
The CBD presentation had highlighted that this issue was central to CBD work.  In preparation for the
next COP meeting, the main issues were:  (i) the role of IPRs and prior informed consent;  (ii) IP and
traditional knowledge related to genetic resources;  and (iii) IPRs and access and benefit sharing
agreements.  The COP had requested that Parties and other relevant organizations submit informationto the CBD Secretariat on these issues by 31 December 2000.  This information would be used by the
CBD Secretariat to prepare a background document on the subject for the Panel of Experts on Access
and Benefit Sharing.  This panel planned to meet in March/April 2001 to discuss recommendations
for consideration by an open-ended Working Group on Access and Benefit Sharing in October 2001
in Germany.  This Working Group would work on guidelines or recommendations to be consideredby the COP in April 2002 in The Netherlands.  This process was dependent on information being
submitted to the CBD.  In this regard, CTE deliberations were germane to CBD work; cooperation
with FAO and WIPO was also important to CBD implementation.
75. The observer of WIPO, commenting on UPOV, said there were currently 46 members of the
UPOV Convention, of which 14 had ratified the 1991 Act.  Nine members had changed their laws, butWT/CTE/M/24
Page 22
had not yet ratified the 1991 Act.  To date, thus, there were 23 members that conformed to the 1991
Act, half the UPOV members.  However, there were 111 countries in the process of implementing
plant variety protection in the form of sui generis  systems based on UPOV, of which the legislation of
86 conformed to the 1991 Act.  An example wa s the 16 members of l'Organisation Africaine de
Propriété Intellectuelle (OAPI), where the revised version of the Bangui Agreement had not yetentered into force.  It would be interesting to have information from India on other forms of
sui generis  systems.  Work was being undertaken in UPOV and WIPO on these issues, and they
would be pleased to work with the WTO.
76. The observer of UNCTAD said that UNCTAD would convene an Intergovernmental Expert
Meeting on Systems and National Experiences for the Protection of Traditional Knowledge in Geneva
on 30 October to 1 November 2000 in cooperation with WIPO, the CBD and the WTO.  Information
exchange in this area was also taking place in the UNCTAD Workshops sponsored by the UK.
77. The representative of India thanked Members for their comments to which India would react
later.  In response to Switzerland, India stressed that documentation was necessary, but not sufficient
to protect traditional knowledge.  If it were not for the fact that the healing properties of turmeric had
been transcribed in ancient Indian scriptures, the patent may not have been revoked.  India had been
fortunate to be able to document turmeric's healing properties, and thus to convince the US patentoffice that turmeric was in the public domain.  The situation was complex if oral knowledge had to be
relied on.  This issue should be dealt with in a pragmatic manner.  Work in WIPO and UNCTAD was
important, but it would be necessary for the WTO to find solutions to these issues.
Other Items
Item 2 The relationship between environmental policies relevant to trade and environmental
measures with significant trade effects and the provision of the multilateral trading
system
78. The representative of the European Communities presented a Communication of the
European Commission on the precautionary princi ple, adopted on 2 February 2000, WT/CTE/W/147-
G/TBT/W/137.1  The objective of this Communication, addressed to the Council and the European
Parliament, was to contribute to the debate on the application of the precautionary principle in
international fora.  The EC hoped this paper wo uld help to build a common understanding of how to
manage risks in situations where there was scientific uncertainty and indications of potential adverse
effects on the environment and/or health and to dispel fears that the precautionary principle might be
used in an arbitrary way or as disguised trade protectionism.  Recourse to the precautionary principlehad been increasingly in the spotlight, stimulating public debate on the circumstances in which
precautionary action was necessary.  Given that precaution was implicit in many national approaches
to policy making in many fields, this principle as such was not a new idea.  The most recent
application of this principle at the international level was the Cartagena Protocol on Biosafety, which
should further consolidate this principle internationally.  There was a need to clarify the use of theprecautionary principle in the WTO.  Invocation of the principle was not a basis to justify arbitrary
measures and measures based on the precautionary principle had to comply with general WTO
principles on risk management, including proportionality, non-discrimination, cost effectiveness and
transparency.  Clarification would improve domestic policymaking and reduce the degree of
international friction around risk management and precaution.  It was often said that the EC's conceptof precaution conflicted with science-based risk assessment and that precaution was not sound
science.  Decisions based on precaution were always informed and reviewed based on science.  It had
been stated that the EC was emphasizing precaution to restrict trade.  It was clear that precaution
based measures involved a range of governmental actions, some of them trade-related and that, in
exceptional cases, precaution-based decisions in Europe, as elsewhere, had involved trade bans.  For
                                                     
1 This document was also issued in the SPS Committee as G/SPS/GEN/168, 14 March 2000.WT/CTE/M/24
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this to take place, as set out in the EC's paper, ther e had to be an explicit, prior judgement that such a
measure was appropriate and proportional to the risks.  Precaution was not going to lead to measures
that were more restrictive of international economic cooperation, as precaution was not about setting
standards or defining the level of risk, which were domestic judgements.  Precaution was used to take
decisions on how to achieve a given level of protection.  Uncertainty of the possible adverse effectshad to exist before precaution was involved.  Involvement of precaution in policy making will not
lead to more restrictive environmental measures.
79. The representative of Japan said that, in Japan, risk assessments were conducted for health
and environment-related issues based on the latest scientific information, and appropriate measures
were applied accordingly.  If there were insufficient  scientific evidence or rational reasons to consider
factors, such as damage to health and the environment, appropriate measures could be taken.  On the
precautionary principle for food safety, however, there was no international consensus, including on
the relationship between the precautionary principle and the SPS Agreement.  In general, Japan felt
that the EC's approach was useful to prevent the precautionary principle from being used in an
arbitrary or unjustified manner.  However, several issues, such as the definition of this principle and
the relationship between risk assessment and risk management were still not clear.  Discussions in
other fora, including UNEP and CODEX, should be carefully watched to clarify this principle beforeit was dealt with in the WTO and the CTE.  Japan commented on the five conditions of application of
the precautionary principle in the EC's paper.  On point 5 on scientific developments, which
mentioned Article 5.7 of the SPS Agreement, it was necessary to ensure that the measure was
provisional, taken only when scientific evidence was insufficient, and reviewed in light of scientific
progress.  Examination of proportionality in point 1, and overall costs and benefits in point 4 werealso important.  On point 2, non-discrimination should include the concept in the chapeau of
Article XX so that measures should be applied on and not discriminate between domestic and
imported goods where the same conditions prevail.  Risk assessment, as the EC pointed out, should
not be confined to quantifiable assessment, but include unquantifiable assessment.  Also, as stated in
the Appellate Body decision on Hormones, when scientists could not reach a conclusion, a minorityopinion by highly respected scientists as well as a majority opinion should be considered.  The EC
also raised the point that various measures could be taken based on the precautionary principle, and
Japan believed that providing information on risks to consumers was important.  However, this may
not be sufficient.  On reversing the burden of proof, the EC's paper stated that, in some cases,
measures should be examined on a case-by-case basis, considering the hazard level.  Clarification was
needed as to when the burden of proof could be reversed and to what degree proof was needed.
80. The representative of Canada said that his delegation was interested in advancing discussion
on precaution internationally in the CTE and other fora.  There had also been discussion in the SPS
Committee in this respect, as well as in the OECD Joint Working Party on Trade and Environment.
Canada had provided comments on UNEP's draft paper on the precautionary principle.  Canada shared
some common ground with the EC on several issues ra ised in its paper, but noted that Canada had
concerns with respect to some of the concepts and terms, which could benefit from clarification anddebate.  Canada would provide the EC with commen ts on its paper and would work with the EC and
the international community to develop a comprehensive and coherent understanding of this issue.
81. The representative of Australia made preliminary comments on the EC's paper.  Australia
welcomed the EC's emphasis on the importance of scientific risk assessment.  Australia saw no
conflict between science-based decision-making and the exercise of what the EC had referred to as the"precautionary principle", a concept that Australia considered was more correctly described as the
precautionary approach.  Precaution was inherent in Australian regulatory frameworks to protect the
environment and human health.  WTO rules clearly catered for reasonable use of precaution in
science-based decision-making, as reflected in the SPS Agreement.  Noting the EC's comments on the
misuse of the precautionary approach, Australia registered concern that it would not want to see thisapproach misused to weaken the scientific basis of risk assessment and management or to justify trade
protectionism.  The EC's paper appeared to be stating that exercise of the precautionary approach inWT/CTE/M/24
Page 24
risk management was a political decision;  Australia was not sure what this meant.  It was necessary
to avoid confusing the right of a country to set its appropriate level of protection, and the issue of the
measures that were adopted to ensure that a country achieved the level of protection it had determined
to be appropriate when faced with certain risks, including in the face of scientific uncertainty.  Risk
assessment and risk management were part of a decision-making continuum, with science-basedanalysis as a key element throughout.  At the very least, an attempt at a risk assessment was important
to determine whether there was scientific certainty.
82. The representative of the United States said that his delegation appreciated the EC's
recognition that the concept of precaution was not new;  precaution had been a long-standing and
essential element of the US regulatory system in health and safety matters, particularly for foods,
drugs, and chemicals.  In the food safety area, the US government's use of precaution dated to 1906,
when the Food, Drug, and Cosmetics Act had first been enacted.  The concept of precaution was alsoreflected in various international fora.  The US had doubts concerning claims that the Cartagena
Protocol had broken new ground on the concept of precaution.  For example, a precautionary
approach to fisheries management had been a key component in the 1995 UN Agreement on
Straddling and Highly Migratory Fish Stocks, and had been prominently included in the FAO Code of
Conduct for Responsible Fisheries.  Precaution was reflected in several ways in the SPS Agreement.Through its long-standing experience with precaution, the US had learnt that its use was context-
specific.  This was why there was no single internationally agreed definition of the so-called
precautionary principle.  It was impossible to conclude that there was such a principle in customary
international law.  The US noted that the EC's paper was similar to its Communication on the
Precautionary Principle to the SPS Committee in March 2000.  On the EC's paper, the US agreed onthe importance of striving for the highest level of consumer protection, and on the important role that
precaution can play in achieving these goals;  and on the need for non-discriminatory, science-based
applications of precaution to protect people and the environment, and to ensure that decision-making
procedures were transparent and inclusive.  However, the US was concerned about the EC's assertion
that actions should be taken based on a so-called "precautionary principle" without defining what itbelieved this principle was.  The US had submitted to the EC written comments on its paper and
looked forward to deepening its understanding of th e EC's views through its responses.  The US noted
that although precaution was not a new concept, discussions had been made more difficult by the fact
that there had been unfortunate occasions when this term had been used to justify trade protectionism.
83. The representative of Switzerland said that his delegation would comment on the EC's paper
at the next meeting.
84. The representative of Argentina said that her delegation would comment on the EC's paper at
the next meeting.
85. The representative of Hong Kong, China recalled  that the EC had submitted a similar paper to
the SPS Committee on which his delegation had commented.  Hong Kong, China did not agree that
precaution was already a principle of international law.  In this respect, the Appellate Body had noted
in paragraph 123 of the Hormones report, WT/DS26/AB /R, that "whether the precautionary principle
has been widely accepted by Members as a principle of general or customary international law
appears less than clear".  In paragraph 124, the Appellate Body had stated that "the principle has not
been written into the SPS Agreement as a ground for justifying SPS measures that are otherwise
inconsistent with the obligations of Members set ou t in particular provisions of that Agreement."
Thus, it was premature to conclude, as in Section 4 of the EC's paper, that this concept was a principleof international law.  In this respect, Hong Kong , China agreed with the US observations.  As raised
by Australia on Section 5.2.1 of the EC's paper, the notion of political decision raised doubts about its
compatibility with the objective and science-based approach in the SPS Agreement and risked being
captured by interest groups for protectionist purposes.  On reversing the burden of proof, as noted in
Section 6.4 of the EC's paper, Hong Kong, Ch ina was not sure how this was compatible with
Article 5.1 of the SPS Agreement;  clarification by the EC would be appreciated.WT/CTE/M/24
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86. The representative of the European Comm unities thanked Members for their comments;
precaution merited further discussion at an early stage.  Consolidation of domestic and international
legal principles was a dynamic process.  Where there were instruments of international public law that
defined certain rights or principles, there could be a single expression of a right or principle or several
similar expressions.  It was more complex when a principle of international law emerged bysuccessive stages, as with the precautionary principle.  Thus, it was not possible to use the absence of
a single formulation of a principle as a criterion to judge whether it existed in international law.  The
precautionary principle existed in international law.  There were four issues to which science was
relevant to precaution:  hazard identification, assessment and management of risk and, a prior decision
as to the level of risk a society was willing to accept.  The level of protection was inevitably a political
decision, as it involved trade-offs between social goods and costs.  Thereafter, science was relevant to
identify hazards, and assess and manage the consequent risks.  Where science did not provide all thenecessary information, the precautionary principle was used to draw policy conclusions from science-
based assessments.  Reference to the burden of proof in the EC's paper was to the cost allocation
principle, and was not connected with WTO dispute settlement.  The term referred to who paid for the
scientific assessment following policy decisions based on the precautionary principle.  These were
domestic political decisions in which the burden to undertake scientific study could be placed on theproduct manufacturer or the government.  In this case, the EC felt that the burden of proof was on
those wishing to overcome a negative regulatory decision on the marketing of a product.
87. The observer of UNEP said that UNEP was revising its paper on the precautionary principle
based on comments from Governments.  UNEP also introduced its work on integrated assessments in
WT/CTE/W/157, for which UNEP had established a Working Group of several internationalorganizations and agencies, including the WT O, UNCTAD, OECD, the EC and collaborating
institutions to prepare a manual on integrated assessment of trade related policies by early 2001.
UNEP offered to present at the October meeting, subject to Members' interest, its work on assessment
of the sectoral impacts of trade liberalization in Asia, Africa and Latin America.  The institutions
undertaking these assessments could be invited, on behalf of UNEP, to present their experiences.
Item 3(b) The relationship between the provisions of the multilateral trading system and the
requirements for environmental purposes relating to products, including standards
and technical regulations, packaging, labelling and recycling
88. The representative of the European Communities said that WT/CTE/W/150 should also be
circulated in the TBT Committee.  An important factor was that if a large number of smaller eco-
labelling schemes were developed, their positive envi ronmental impact may be more limited than if a
single scheme achieved a critical mass and influenced consumers.  This made it desirable to develop
common views on the best practice for labelling schemes.   The EC inquired as to the scope of the
term "stakeholders".  In terms of transparency, the inclusion of foreign producers was important.
89. The representative of Canada said that eco-labelling and certification continued to be
important issues for her delegation.  Canada would comment on WT/CTE/W/150 at the next meeting.
90. The representative of the Secretariat said that the term "stakeholders" in Table 6 of
WT/CTE/W/150 was from a study by the US Environmental Protection Agency on eco-labelling
schemes world-wide, which defined "stakeholders" to include domestic and foreign manufacturers,
academia, consumer and environmental groups and the general public.
Item 4 The provisions of the multilateral tradin g system with respect to the transparency of
trade measures used for environmental purposes and environmental measures and
requirements which have significant trade effects
91. The Chairperson noted that the Environmental Database for 1999, which compiled the
environment-related WTO notifications, had been circulated as WT/CTE/W/143.WT/CTE/M/24
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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
Sectoral analysis
Energy
92. The representative of the Czech Republic informed Members about the joint UN/Economic
Commission for Europe (ECE)/OECD Workshop on  Enhancing the Environment by Reforming
Energy Prices in Prühonice, Czech Republic from 14-16 June 2000 with 120 participants from 26
countries and eight international organizations.  The Workshop reviewed implementation strategiesfor energy-related economic instruments in OECD  and non-OECD members of the ECE, including
the removal of environmentally-harmful subsidies;  the introduction of new environmental taxes;
potential tax shifts, where revenues from subsidy removal and/or new environmental taxes were used
to reduce distorting taxes;  and impacts on the demand for relevant products/activities.  Topics
discussed included trends in energy production and consumption in Europe and related environmentalimpacts;  energy, taxation policy and green tax reform;  and removing/restructuring distorting energy
subsidies.  The seminar had adopted recommendations to ECE Governments on enhancing the
environment by reforming energy prices.  Documentation was available at:  http://www.env.cebin.cz.
93. The representative of the European Communities said that there was a debate in some
developed countries, particularly in North America, on the effects of the price of oil.  One of the
distortions that gave rise to distorted trade patterns and environmentally-unfriendly levels of oil
consumption was the failure of energy prices to internalize the costs of discharging carbon into the
atmosphere.  Thus, there was an opportunity to discuss the environmental benefits of higher energy
prices, as opposed to arguing that prices should be reduced.
Fisheries
94. The representative of the United States introduced her delegation's paper on environmentally-
harmful and trade-distorting fisheries subsidies, WT/CTE/W/154, a topic that had been much
discussed in the CTE.  As the US had noted on many occasions, the depleted state of the world's
fisheries had become a major environmental issue.  The US was concerned not only about this sector's
environmental sustainability, but also its economic viability.  One of the contributing causes of
overfishing was overcapacity;  there were too many boats chasing too few fish.  A main cause of thisovercapacity was government programmes that reinforced tendencies to over-fish and over-invest by
reducing fixed and variable costs;  enhancing revenues and incomes;  and mitigating risks.  According
to economic theory, subsidies were harmful as they distorted the efficient allocation of resources since
they interfered with price and interest rate signals provided by the market as to where the most
profitable business opportunities were found.  If not for these subsidies, producers would makedifferent decisions about what and how much to produce based on where the best profit opportunities
arose, not on government decisions as to where resources should be directed.  In practice, with
reduced costs and risks, as well as enhanced prices, vessel owners would tend to pursue harvests to an
unsustainable degree.  In fisheries that had been exploited to their maximum sustainable yield, the
additional effort and capital further dissipated rents, led to further resource erosion and generallyresulted in an unsustainable level of economic activity.  These subsidies, therefore, led to a situation
where market forces were ignored and environmental damage ensued as fish stocks became depleted
and, eventually, commercially extinct.  Since fish and fish products were heavily traded with
approximately 40 per cent of global harvest sold in foreign markets, the effects of the subsidies were
felt not only within the subsidizing coastal state but also in its international markets.
95. Given the above parameters and as a result of ongoing international work in the FAO, APEC
and the OECD, as well as US internal studies, the US had prepared this paper to provide examples ofWT/CTE/M/24
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subsidies it considered to be environmentally harmful and trade distorting.  These categories of
subsidies reduced fixed and variable costs and/or support income and prices.  They tended to promote
excessive levels of fishing effort and harvesting capacity, as well as distort prices and trade.  The
paper included an illustrative list of programmes falling into these categories.  The US understood that
there would be instances where some of these programmes may be beneficial, and thus discussion ofeach category and the categorization itself was necessary.  Excluded from the list were, among others,
government programmes that facilitated resource management and the transition to sustainable
fisheries.  Discussion was necessary on governme nt programmes that benefitted conservation, on
artisanal fisheries and the role of the fisheries sector in developing and least-developed countries.
96. The representative of New Zealand said that the US paper highlighted a range of financial
transfers to the fisheries sector that had sign ificant negative impacts on trade, environment and
sustainable development.  The US contribution was useful in terms of deepening the CTE's analysis.New Zealand had put forward a paper in March 2000, WT/CTE/W/134, that had also highlighted a
range of areas of financial transfers, a number of which had a demonstrated negative effect on trade,
environment and sustainable development.  There had been a lot of work on this issue recently,
particularly in the OECD for its study on government financial transfers in OECD countries in the
fisheries sector, which would be published in September.  This study would further highlight theproblems faced in this area.  New Zealand noted that the CTE had agreed at the March meeting that
the Secretariat should update work in this sector.  It  would be useful to have an in-depth discussion of
this issue at the October meeting, after the Secretariat's paper had been circulated.  New Zealand
encouraged Members to submit contributions in this area.
97. The representative of Peru said that the US paper had valuably contributed to the debate on
the harmful effects of fisheries subsidies, which was a subject of concern for Peru.  Peru had been
making an effort to sustainably manage its fisheries resources.  Members of the Standing Committee
of the South Pacific, namely Chile, Colombia, Ecuador and Peru, had negotiated a Framework
Agreement for the Conservation of Fishery Resources on the High Seas of the South-Eastern Pacific
Ocean, which was about to come into effect and would be open to participation from other countries.The categories of subsidies in the US paper were illustrative and should be discussed further.  Peru
reserved the right to comment on the US pape r after it had been examined in capital.
98. The representative of Norway said that the US paper moved discussions on fisheries subsidies
and "win-win" scenarios a step further.  Definitions and classifications of fisheries subsidies should be
developed in the FAO.  The US paper categorized fisheries subsidies and listed examples, rather than
definitions and classifications.  Norway would comm ent further after the paper had been examined in
capital.  On the list of environmentally-harmful and trade-distorting subsidies in the US paper,Norway questioned the inclusion of government funded, commercially applicable research and
development.  In Norway, R&D was being carried out, for example, to develop side products to better
use raw materials, which was important for sustainable development.  Government funding was
necessary to ensure this type of R&D, which had a high risk of failure, was carried out.  This funding,
however, should only be considered in conjunction with funding from the fisheries industry.  Norway
looked forward to a constructive debate on fisheries subsidies.
99. The representative of Argentina made preliminary comments on the US paper.  The list of
subsidies in the US paper would facilitate the analysis, particularly as it was illustrative, and not
exhaustive.  Argentina would have liked the document to have reflected consideration of subsidies for
artisanal fisheries, as the effects were different from subsidies to the industry in general, and subsidiesthat were implicit in preferential fishing agreem ents.  Some countries negotiated agreements for
preferential market access of their fisheries products.  The country that offered access to its market so
that its fleet could have the right to fish in the waters of a developing country gave up a tariff through
foregone revenue;  the country that granted access to its fishing area, usually a developing country,
charged a fee that was normally inferior to that which normally would have been charged in exchange
for improving its exports.  However, less inco me would be received to control this country'sWT/CTE/M/24
Page 28
Exclusive Economic Zone (EEZ), which could have  negative environmental impacts.  It would be
interesting to discuss this issue, which had been  referred to in paragraph 24.1 of the US paper as
government-funded foreign access payments.  On Japan's question as to whether a problem existed,
Argentina felt it was clear there was a problem of fisheries overexploitation.  There were also
problems concerning the lack of fisheries management, which were complicated by the fact thatfisheries resources moved in and out of national jurisdictions;  concerning difficulties in developing
countries to control their domestic jurisdiction due, in  large part, to a lack of financial resources;  and
concerning subsidies that distorted the costs and risks in this sector.  Although fisheries management
was not within the WTO's purview, the WTO could work to remove fisheries subsidies that were in its
remit.  Argentina asked Japan whether it could deny there was a causal relation between subsidies and
fisheries overexploitation.  The response would be a first step to determine if there was a problem.  In
Argentina's view, there was definitely a causal relationship between an economic stimulus given bygovernments to the fishing industry and overexploitation.  It was necessary to evaluate how serious
this causal relationship was, and then to assess ho w to eliminate the types of subsidies that caused
overexploitation.  Argentina would comment further on the US paper at the next meeting.
100. The representative of Japan said that, upon review  of the fisheries discussion in the CTE, two
questions had been raised, but had yet to be answered.  First, what was the problem?  Japan was not
aware of any actual example in which fisheries subsidies had played a major role in causing fisheries
overexploitation.  Japan had repeatedly asked those Members that advocated eliminating fisheries
subsidies to provide concrete examples of cases in which fisheries subsidies caused overexploitation.
The World Bank paper by Milazzo, which had been cited in this respect, set out concepts and theories,
but not concrete examples.  The only document that provided case studies, as stated by New Zealand,
was the recent OECD study on the impact of government transfers on fisheries sustainability.
However, the OECD study's conclusion set out nine key findings, including that "the effects of
transfers on resource sustainability is difficult to determine as there are many influences on fish stock
health that are difficult to disentangle."  The second question concerned the relationship of
environmentally-harmful and trade-distorting fisheries subsidies with the SCM Agreement.  If certainfisheries subsidies were trade distorting, Japan asked why the SCM Agreement did not address them,
as it was supposed to cover all trade-distorting subsidies, except for agricultural subsidies.
101. Japan made preliminary comments on the US paper.  The US distinguished between effects of
subsidies and fisheries management.  In paragraph 9, the US categorized fisheries management into
three categories and described how the negative effect of fisheries subsidies can be minimized
depending on the type of fisheries management systems.  Although it did not necessarily agree with
this categorization, Japan appreciated the fact th at the US mentioned the relationship between the
effects of subsidies and fisheries management systems.  The US paper clarified that certain
government expenditures should be exempted, such as those for management, research and
enforcement.  Japan understood that the US did not wish to eliminate all fisheries subsidies, just those
that contributed to overexploitation of fisheries resources.  Thus, certain fisheries subsidies were
necessary for fisheries management.  Japan recalled that, at the FAO Sub-Committee on FisheriesTrade in March 2000, there had been consensus that at least the government expenditures for research
and enforcement were necessary.  The US paper did not describe what the problem was.  Reference to
the FAO Plan of Action was not neutral;  the FAO Plan of Action set out that FAO Members should
address all factors contributing to fisheries overexploitation and overcapacity, including subsidies.
The US paper did not illustrate why the SCM Agreement could not be used to address this problem.Japan raised concerns about the list of "bad" subsidies in the US paper, given the OECD study's
conclusion that possible negative effects of some kinds of transfers could be reduced or minimized
when transfer and resource management policies were coherent.  In other words, if fisheries
management were adequate, it was not necessary to be concerned about the negative effects of
subsidies.  Rather than listing "bad " subsidies, the list should be of subsidies that could become "bad"
with inadequate fisheries management.  Noting the generic approach in the US paper to categorizing
fisheries subsidies, Japan said it was necessary to take a decision as to whether a subsidy were "good"
or "bad" on a case-by-case basis.  Japan felt that a paper on fisheries subsidies should outline theWT/CTE/M/24
Page 29
general theory, followed by specific examples of concrete cases in which these subsidies caused
overexploitation;  should set out that the SCM Agreement could not be used;  should list subsidies that
could become "bad" under inadequate fisheries management;  and should stipulate that fisheries
subsidies must be judged on a case-by-case basis depending on their effect on fisheries resources.
102. On Argentina's comments on the capacity of developing countries to manage fisheries
resources, Japan noted that developing countries that  were negotiating agreements for fishing in their
EEZ with developed countries had the option of deny ing access to their EEZ.  If developing countries
were confident in their fisheries management, they could benefit from such agreements in return for
access fees.  Japan understood that Argentina had agreements with several countries on access to
fisheries resources.  In response to other comments that the burden of proof was on Japan to
demonstrate that there was no causal relationship between subsidies and global exploitation of
fisheries resources, Japan recalled that toward the Seattle Ministerial Conference, there had been adiscussion of fisheries subsidies in which Japan had raised the possible negative effects of trade on
fisheries sustainability.  It had been pointed out at that time that there were no negative effects.  Thus,
if Japan had to demonstrate that there was no link between subsidies and fisheries overexploitation,
others should demonstrate that there were no negative effects of trade on fisheries sustainability.  As
to whether subsidy elimination were a solution to overexploitation, Japan said that, as part of acomprehensive approach to overexploitation, if certain subsidies were found to impact negatively on
sustainability, their elimination would be part of the solution.  Japan asked which part of the OECD
study's conclusions supported New Zealand's view s and CTE discussion, and requested Members to
provide "real world" examples of the negative effects of subsidies on the exploitation of fisheries
resources.  It was correct that financial incentives may cause increased catches, but any impact ofsubsidies should be considered in terms of fisheries management.  For example, subsidies for vessel
construction were said to have negative effects, however, if a country had limited access management
systems, these subsidies may not necessarily be negative.  If a country had a requirement that
construction of new vessels must entail the scrapping of old vessels, and that the new vessel capacity
must be smaller, such a subsidy contributed to fisheries sustainability.  Without considering fisheriesmanagement, it was not possible to determine if fisheries subsidies were "good" or "bad".
103. The representative of Chile appreciated the list of categories of environmentally harmful and
trade distorting fisheries subsidies in the US paper.  Fisheries subsidies that generated surplus fishing
capacity and contributed to fisheries overexploitation should be eliminated.  Fisheries subsidies also
affected straddling and highly migratory fishing stocks that were not normally in the territorial
jurisdiction of the subsidizing country.  Subsidized fishing fleets operating at the limits of a country's
EEZ directly contributed to reducing the biomass and obliged affected countries to adopt conservationmeasures.  Many of the countries that subsidized fisheries were developed countries with a supposed
environmental concern to conserve natural resources.  Although these countries had adopted
environmental stances in several international environmental fora, they did not recognize the
advantages of eliminating environmentally-harmful and trade-distorting subsidies in the CTE.  Chile
had an increasing commitment to environmental protection and felt it was essential to protect itsmarine species given the wealth and diversity of fisheries resources resulting from Chile's
geographical location and the importance of the fishing sector in the Chilean economy.  The Chilean
fisheries law set out the conservation and sustainable use of fisheries resources.  In 2000, Colombia,
Ecuador, Peru and Chile had adopted a Framework Agreement for the Conservation of Fishery
Resources on the High Seas of the South-East ern Pacific Ocean.  Chile welcomed contributions
supporting an objective debate on the benefits of eliminating trade-distorting and environmentally-
harmful fishing subsidies.  Chile also noted Japan's absence in the APEC fisheries study.
104. The representative of Korea made preliminary comments on the US paper.  Although sharing
concern about the depletion of fisheries resources, Korea was not yet convinced that fisheries
subsidies were closely linked to depletion and should be singled out.  Korea noted the US observationin paragraph 16 that “the adverse effects have not yet been carefully assessed by non-government
experts, internal organizations, or in WTO disput es.”  Korea drew attention to the OECD report,WT/CTE/M/24
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AGR/FI(99)3/REV3, "The Impact on Fisheries Resour ce Sustainability of Government Financial
Transfers”, which noted that “while some cases showed that overfishing had contributed to resource
sustainability problems, few demonstrated the linkage between these problems and government
financial transfers."  Korea recalled that th e FAO Plan of Action addressed marine resource
conservation and related aspects, including th e relationship between subsidies, trade and
sustainability.  Given that the toolbox to deal with fisheries contained many elements, such as
management, illegal trade and subsidies, Korea aske d which tool was the most important to fix the
problem of overexploitation.  While not intending to block discussions, Korea felt that this issue
should be left to the FAO and the WTO Subsidies Committee.  It could be decided whether to address
this issue in the CTE after receiving the FAO results.  Regardless of its basic position, Korea felt that
the US paper showed some progress, as it ex cluded government programmes for fisheries
management, science, enforcement, and most publicly financed port and leading facilities from the listof possible environmentally-harmful subsidies.  Some fisheries subsidies played a positive role in the
formation of fisheries resources and creation of employment on islands and in fishing villages, while
not damaging fisheries resources.  Fisheries support should be treated according to the specific
situation of each country.  It was not necessary to debate who had the burden of proof, which should
be left to competent organizations, such as F AO and OECD.  If environmentally-harmful subsidies
were also trade distorting, discussion could be advanced in the SCM Committee.
105. The representative of Canada supported the efforts by the US to refine the CTE's
understanding of the different types of fisheries subsidies by drawing on research and presenting the
issues in a factual manner.  The US paper complemented research in other organizations, such as
FAO, APEC and OECD.  Canada asked how the US had developed the categories of subsidies, and
was interested in obtaining an expanded description of the programmes listed in the paper to better
understand why certain programmes had been excluded and what certain descriptions meant.  For
example, Canada wondered how to interpret "incons istent with market terms and customary business
practices" in paragraph 23.  On the harmful effects of subsidies to open access fisheries, regulated
open access fisheries and rights based fisheries set out in paragraph 9, Canada was interested in theresearch behind these conclusions that the US or other Members could provide.
106. The representative of Australia believed that there was a clear role for the WTO, particularly
the CTE, to complement efforts in other fora to  address subsidies that contributed adversely to
sustainable fisheries.  Subsidies that affected the fisheries sector also raised development and
environment issues, as trade in fish products was a significant source of foreign exchange for many
developing countries.  The lead-up to a future trade round should be used constructively to undertake
preparatory analysis of this issue.  Australia noted the points in the US paper on the interactionsbetween fisheries management and subsidies.  There was a need for actions to improve the
effectiveness of sustainable fisheries management practices and to eliminate subsidies that contributed
to overcapacity and overfishing.  The CTE should be able to accept this basic point and not debate the
respective roles of fisheries management and subsidy reform in addressing the serious problems
affecting many fisheries.  Australia also found useful the points in the US paper on spillover effectsassociated with subsidies and the attempt to categorize various types of subsidies that were
environmentally harmful and trade distorting.  This analysis provided a basis for  further discussion.
107. The representative of the European Communities said his delegation favoured debate that
required different perspectives and looked forward to a dynamic dialogue on this and other sectors.
The forthcoming multilaterally-generated papers in the OECD and FAO would prove to be a valuablebasis for an objective dialogue.  Certain points in the US paper seemed to move away from the
balanced description that was emerging in the FAO and the OECD.  There was a danger that if the
CTE moved away from balanced descriptions, it would not be possible to advance the discussions.
108. The representative of Iceland said that fisher ies subsidies harmed the environment, distorted
trade and undermined sustainable development in developed and the developing countries alike.
While this fact was increasingly recognized, there had been a lack of concrete analyses to identifyWT/CTE/M/24
Page 31
precisely the perverse subsidies responsible for generating overcapacity and overfishing.  To stimulate
debate, Iceland had proposed at the February meeting that the Secretariat update the fisheries section
of WT/CTE/W/67, focusing on salient issues to enhance the CTE's knowledge of the nature, extent
and implications of fisheries subsidies.  The US paper added an important dimension to the analysis
by identifying categories of fisheries subsidies that offered a framework to identify perverse subsidies.While these categories were generally useful, more time was needed to consider them.  As an initial
response, it was important that these categories clearly distinguished between government financial
transfers in general and perverse subsidies in particular, i.e. subsidies that clearly contributed to
overcapacity.  Identifying different types of subsidies was the first step to analyse in detail these
subsidies and their effects.  As the second step, the CTE should clarify the trade-distorting effects of
different types of subsidies.  It would be valuable  to see figures, based on Members' notifications, for
these categories.  The Secretariat should consider this when updating work on fisheries.
109. The representative of Hong Kong, China recall ed his delegation's support of New Zealand's
paper, WT/CTE/W/134, particularly on the merits of the "win-win" situation for removing fisheries
subsidies.  Hong Kong, China recalled the request for the Secretariat to prepare an update of previous
work on fisheries subsidies for the October meeting.
110. The representative of New Zealand, responding to Japan, said that his delegation would not
quote selectively from the OECD study, whose conc lusions resulted from a balanced, negotiation
process.  The OECD study contained factual information on government transfers in this sector, about
which Members could draw their own conclusions.  As to whether there was a problem, New Zealand
said that when financial incentives were created to exploit fisheries resources, which FAO had
repeatedly said were in a state of crisis, there were significant negative effects.  Several Members hadnoted these negative effects in terms of the environmental consequences on fisheries resources.  As
reflected in the US paper, it was necessary to cons ider the trade-distorting effects of these subsidies
and the difficulties thereby created for a number of countries, including developing countries.  Some
responses to calls for action in this area in the CTE, as noted by Argentina, had focused on the fact
that subsidies were only part of a larger problem and thus management issues should be addressed;New Zealand did not agree that unless all aspects relating to overexploitation could be dealt with at
the same time, there was no point in dealing with the problem in a piecemeal manner.  As Argentina
had noted, this approach failed to take account of the CTE and WTO mandates, which focused on
trade-related aspects.  Considering all the factors, fisheries subsidies were an obvious focus for the
CTE;  seeking to ignore subsidies would harm the WTO's credibility on trade and environment.
Members should prepare for a detailed discussion at the October meeting.
111. The observer of FAO recalled the update on FAO fisheries-related activities for the
implementation of the International Plan of Ac tion for the Management of Fishing Capacity in
WT/CTE/W/135 and the FAO Plan of Action in WT/CTE/W/126.  Several activities were ongoing in
the FAO in this area:  (i) a set of technical guidelines for the management of fishing capacity to be
published in 2000;  (ii) a study identifying factors that contributed to fisheries overcapacity and
unsustainability;  and (iii) an analysis of fisheries subsidies.  It should be noted that subsidies wereone of several factors being identified as responsib le for overcapacity.  FAO work would be reviewed
by an expert consultation in Rome in December 2000, the findings of which would be submitted to
the 24
th session of the FAO Committee on Fisheries in 2001 and circulated widely.
112. The representative of the United States thanked Members for their comments on her
delegation's paper, which had moved the debate forward.  The US appreciated Japan's participation in
the OECD process and hoped that Japan could partic ipate in the current APEC study on this subject.
On Japan's call for concrete examples, the US said that fisheries off the New England coast of the US
were in dire straits, which was the result of misguided government programmes put in place in the
1970's to encourage the building of vessels and investment in the fisheries sector.  As a result, there
had been an expansion of capacity and a collapse in these fish stocks.  The US was in the process oftaking steps to bring these stocks to sustainability, which the US hoped was still possible.  The USWT/CTE/M/24
Page 32
had undertaken an analysis of its own programmes and the US Congress had mandated a study on
federal investments in the fisheries sector.  Copies of this study were available at the US mission to
the WTO.  The US would address Members' comments at the October meeting.
113. The representative of the Secretariat said that, as agreed at the February meeting, an update of
work on fisheries subsidies was being prepared for the October meeting in cooperation with other
organizations, such as FAO, OECD, and APEC.  Memb ers were invited to contribute to this study.
Observer status for intergovernmental organizations
114. The Chairperson recalled the request from the Organization of Petroleum Exporting Countries
(OPEC) for observer status in the CTE, which had been circulated to Members.
115. The representative of Indonesia said that experience illustrated the close link between oil
trade and environmental protection.  Trade in crude oil and other oil products may cause certain
countries to enforce environmental protection measures in the form of restriction of new exploration
and levying additional domestic taxes on oil consumption, including carbon taxes.  Granting OPEC
observer status in the CTE would be mutually beneficial for both organizations.
116. The representatives of Venezuela and Nigeria supported OPEC's request given its active role
in world energy markets and the international environmental debate.
117. The representative of the United States said that, before taking a decision on OPEC's request,
the CTE would benefit from further information on OPEC's interest in CTE work.  The US hoped that
on this basis it would be possible to move forward the deliberations on this request.
118. The Chairperson requested the Secretariat to as k OPEC to provide further information on its
interest in the CTE's work so that this matter could be decided upon at the October meeting.
Chairperson's concluding remarks
119. The Chairperson recalled that the next meeting will be held on 24-25 October, with an MEA
Information Session on 24 October.  The MEA In formation Sessions served to contribute to
increasing the understanding of developments in the multilateral environmental agenda.  Dr. KlausTöpfer, the Executive Director of UNEP, had been invited to participate at the October MEA
Information Session;  it was also hoped that the Director-General would participate.  The Chairperson
said that it was her intention this year to maintain the constructive dialogue in the CTE and to
encourage the active participation of developing countries, particularly African countries.  The
Chairperson encouraged Members' contributions with a view to deepening analysis and advancing the
debate on all Items of the work programme.  In order for Members to adopt the report of the CTE's
work this year at the October meeting, a draft of the report would be circulated in advance.WT/CTE/M/24
Page 33
ANNEX
MEA INFORMATION SESSION
5 JULY 2000
A. THE CONVENTION ON BIOLOGICAL DIVERSITY (CBD)
1. The CBD Secretariat highlighted the process of negotiations, key elements and work
programme of the Cartagena Protocol on Biosaf ety, adopted on 29 January 2000 by the Conference of
the Parties (COP) to the CBD;  and the 5th meeting of the COP in May 2000, focusing on the decisions
related to agricultural biodiversity (Decision V/5);  and intellectual property (Decision V/26).  These
decisions were set out in the CBD Secretariat's background paper, WT/CTE/W/149.2  On Decisions
V/16 and V/26, the COP had reaffirmed the importance of sui generis  systems for the protection of
the traditional knowledge of indigenous and local communities and the equitable sharing of benefits
arising from its use.  The COP also had requested the Executive Secretary of the CBD to transmit
these decisions and its findings to the WTO and WI PO Secretariats.  In Decision V/26, the COP had
invited the WTO to acknowledge the relevant provision of the CBD, to take into account the fact that
they were interrelated with the provisions of the TRIPS Agreement, and to further explore thisinterrelationship.  The COP had renewed its request to the Executive Secretary of the CBD to apply
for observer status in the TRIPS Council and the Agriculture Committee.  The CBD highlighted the
importance of CTE work on "win-win" situations, such as subsidies, which impacted negatively on
biodiversity;  progress on these issues in the WTO would impact positively on CBD work.
2. The objective of the Cartegena Protocol, circulated in WT/CTE/W/136, was to contribute to
ensuring an adequate level of protection in the field of safe transfer, handling and use of living
modified organisms (LMOs) resulting from modern  biotechnology that may have adverse effects on
the conservation and sustainable use of biological diversity, taking into account risks to human health
and focusing on transboundary movements.  To ensure these objectives, the Protocol put in place an
information exchange process, whereby importing countries were provided with the necessaryinformation and capacity to make informed decisions about the potential effects of a LMO on their
environment and taking into account risks to human health, a similar approach to that used for
hazardous chemicals, particularly in the Rotter dam Convention on Prior Informed Consent and the
Basel Convention.  The key element in the Protocol was the Advanced Informed Agreement (AIA)
procedure;  the way decisions were made, including risk assessment and the incorporation of socio-
economic considerations in the decision-making process were also important elements.  The Protocol
contained provisions on capacity building in developing countries and countries with economies intransition;  on information sharing, including a Bi osafety Clearinghouse Mechanism;  and on labelling
once the permission had been granted for the transboundary movement of the LMO.
3. Risk assessment must be carried out in a scientifically sound and transparent manner and take
into account expert advice and guidelines developed by relevant international organizations.  For
LMOs intended for introduction into the environment, there was a 270-day time limit on the decision-making process of the party of import.  For LMOs intended for use as food, feed or processing (FFPs),
otherwise known as commodities arising from biotechnology, a simplified AIA procedure was set out
in Article 11.  If an exporter applied for permission to import a commodity, Article 11 provided for
the decision of the importing party prime facie  to be based on domestic regulations;  in the absence of
domestic regulations, the party of import may rely on the principles of the Protocol to assist indecision-making.  The Articles dealing with AIA explicitly recognized that the precautionary
approach may be a valid basis upon which to take decisions.  Paragraph 7 of Article 11 provided a
definition of the precautionary approach in this context.
                                                     
2 See the COP V Decisions in WT/CTE/W/158, at >www.biodiv.org<, as well as the Handbook of the
CBD  by the CBD Secretariat.WT/CTE/M/24
Page 34
4. A critical provision in Article 18 was paragraph 2(a), which provided that commodities or
LMO FFPs must clearly identify that they may c ontain LMOs and were not intended for intentional
introduction into the environment, as well as a cont act point for further information.  Development of
this provision was set out in paragraph 2, such that requirements for this purpose, including
specifications of their identity and any unique identification, were to be taken by the Parties no laterthan two years after its entry into force.  The Protocol also established key institutions for its
implementation, the Intergovernmental Committee for the Cartegena Protocol (ICCP) with a mandate
to prepare for the first meeting of the Parties;  a nd a Secretariat, which was the CBD Secretariat.  An
important aspect of the Convention was the Biosafety Clearinghouse Mechanisms, the central mode to
facilitate information exchange.  National focal points and competent national authorities had a
central role in taking decisions on LMOs covered by the Protocol.  The financial mechanism of the
Protocol and the CBD was the Global Environment Facility (GEF).  Annex II of WT/CTE/W/139
listed the signatories to the Protocol, which will remain open for signature until 4 June 2001, and will
enter into force after the deposit of the 50
th instrument of ratification.  The ICCP's work plan, adopted
by the COP V as Decision V/1 and reproduced in Annex III of WT/CTE/W/139, was based on the
assumption that the Protocol would enter into forc e around the next COP meeting in April 2002.  The
first meeting of the ICCP was planned for 11-15 December 2000 in Montpellier, with a secondmeeting in December 2001;  and an expert meeting will consider the modalities for establishing the
Biosafety Clearinghouse Mechanism in September 2000.
5. On the challenges ahead, there was a need to develop the technological capabilities of
developing countries and countries with economies in transition;  information exchange would only
be effective if the recipient understood the information provided and could make informed decisionsbased on this information and its own knowledge an d capacities.  This issue would be addressed by
the ICCP.  Legal drafting skills to implement the Protocol will be critical, requiring the
implementation of detailed legislation for some of the procedures.  The AIA procedure also required
development, as anticipated in Article 10 of the Protocol.  The Biosafety Clearinghouse Mechanism
will have to be established and the relationship with  the multilateral trade regime was a critical issue
given the Protocol's broad scope.  It was generally understood that the Protocol provided clarity to the
application of the precautionary approach with respect to the transboundary movement of LMOs.
Questions
On the relationship between the CBD and the WTO .
6. The CBD background paper highlighted several challenges with respect to the
Cartagena Protocol on Biosafety and the Decisions taken by COP V, including issues related tointellectual property rights, particularly the importance of  sui generis  systems for the implementation
of the CBD.  The CBD was following closely the TR IPS review of Article 27.3(b), and "win-win"
opportunities concerning the removal of trade-distorting and environmentally-harmful subsidies in the
forestry, fisheries and agricultural sectors, which was part of the WTO's ongoing work.
On the development of model legislation to implement the CBD provisions on traditional knowledge.
7. This issue was receiving attention in the CBD.  In October 1999, the panel of experts on
access and benefit sharing had recommended that guidelines should be developed.  The ad hoc
Working Group on Access and Benefit Sharing will consider this issue in detail.  An open-ended
meeting on Article 8(j) to address the issue of model legislation for implementation of the provisionson traditional knowledge was planned for early 2002 in advance of the 6
th meeting of CBD Parties.
On technical assistance in the CBD.
8. This was an important aspect in the CBD and the Cartagena Protocol.  Article 22 of the
Protocol dealt with this issue.  Technical assistance was critical to effective implementation of theWT/CTE/M/24
Page 35
Protocol.  Many developed country exporters felt that it was necessary to build capacity in developing
countries.  The work of the ICCP was focused on mobilizing resources and meeting the needs of
developing countries.  A first step would be to make an assessment of these needs.  The GEF already
provided resources for assessment of biotechnological needs and capacities and there was a proposal
to expand the pilot project that was being implemented in 18 countries to a larger group of countries.
On incentives to encourage participation in the CBD.
9. The CBD had a different approach to incentives in that the process was participatory and
included all Parties.  It had been less of a struggl e for the CBD to include those countries with few
resources as often these countries had significant biological diversity.  These countries therefore
understand the issues to be important.  The focus of the CBD included identifying needs through
information exchange, and providing resources through the financial mechanism.
On cooperation between WTO, CBD, UPOV, WIPO and FAO.
10. The CBD dealt with a broad range of topics in a complex area;  cooperation was critical for
effective CBD implementation.  The CBD Secretariat wa s coordinating its approach to the issues dealt
with under the CBD to progress work and to avoid duplicating other international organizations' work.
B. THE MONTREAL PROTOCOL ON SUBSTANCES THAT DEPLETE THE OZONE  LAYER
11. The presentation of the Montreal Protocol Secretariat was based on its background paper,
WT/CTE/W/142.  There had been four amendments to the Montreal Protocol that, in essence, had
each contributed a further Protocol, each of which had to be ratified.  The latest was the Beijing
Amendment of December 1999.  There were, thus, different non-parties for the different provisionsintroduced in each of the amendments.  All Parties had a timetable for the phase-out of controlled
substances, with annual reports made to the Secretariat so that the Parties could verify
implementation.  There was a non-compliance procedure.  Developing countries had been given a
ten-year grace period for implementation.  There was a Multilateral Fund with contributions from
developed countries to assist developing countries to introduce alternate, ozone friendly technologies.There were provisions for transfer of alternate technology and for control of trade with non-parties.
12. As set out in WT/CTE/W/142, there were three categories of controls:  on substances;  on
products containing those substances;  and on products that may be made with those substances but
not contain them.  On the latter category, it had been decided that given difficulties in verification,
there would not be control measures.  To date, the compliance procedures in the Vienna Convention
had not been used.  Under the Montreal Protocol, there was an Implementation Committee consisting
of Parties to consider cases of non-compliance that were brought to its attention by the Secretariat orby a Party, including the non-complying Party itself.  Assistance to implement was the first way to
deal with non-compliance, followed by a warning and, in the worst case, suspension of some of the
Articles of the Protocol.  So far, the Committee had considered the situation of non-compliance
of 11 countries, including the Russian Federation.  Assistance had been recommended and the GEF
was assisting these countries to comply.
13. Trade measures in the Protocol had been effective in preventing CFC capacity to be
transferred to non-parties.  To date, there had been no problems arising between the Montreal Protocol
and the WTO.  The Montreal and Beijing Amendments had imposed trade restrictions on certain
chemicals.  There were many non-parties to these amendments and there was a theoretical possibility
that some non-parties to these Amendments may bring a dispute to the WTO.  Another problemconcerned the phase-out of used products that cont ain CFCs.  At the request of several developing
countries, the dumping of these products in developing countries had been raised.  Action by
developing countries to stop the import of such products could be a source of dispute.  The WTO and
UNEP should identify potential problems such as these and take the necessary action.WT/CTE/M/24
Page 36
Questions
On the implementation of technology transfer in the Montreal Protocol.
14. The provisions in the Montreal Protocol only facilitated but did not ensure technology
transfer.  This was not completely satisfactory from the perspective of developing countries.  Duringthe negotiations of the Protocol it had been argued that governments did not have the authority to
compel private companies to transfer technologies.  Thus, the final language had been only to
"promote" the transfer of technologies.  Nevertheless, considerable technology transfer was taking
place.  This was evidenced by the 2,500 projects being implemented in developing countries with
funding from the Multilateral Fund.  In certain instances, namely in India and South Korea, there had
been concern over conditions imposed on the tran sfer of technology to manufacture HCFCs, for
which these countries had developed their own technologies.
On the use of economic instruments in the Montreal Protocol.
15. Economic instruments were important in the context of the Montreal Protocol.  Many
countries were using economic instruments to implement the Protocol.  Singapore and the US were
examples of Parties that had put in place taxes and tradeable permits to implement the Protocol.
C. T
HE UN F RAMEWORK CONVENTION ON CLIMATE CHANGE (UNFCCC)
16. The presentation of the UNFCCC Secretariat was based on its background paper,
WT/CTE/W/153.  The 1997 Kyoto Protocol required Annex I (developed) Parties to reduce by 2008-
2012 their collective greenhouse gas (GHG) emissions to five per cent below 1990 levels.  There was
a shift in emphasis to more specific targets and the means to achieve them, which had correspondingimpacts on national policies.  There was an emerging distinction between the specific targets of
Annex I (developed) Parties to reduce emissions to below 1990 levels by five per cent as well as other
commitments, including policies and measures to facilitate the technology transfer and resource flows
to developing country Parties to enable them  to meet their commitments.  Negotiations were
emphasizing that supportive measures for developing countries should be met through existinginstitutions, such as the GEF, which was the financial mechanism for the UNFCCC.  Experience with
national communications indicated that countries were adopting a mix of market-based and regulatory
policy instruments to meet their commitments.  Some Parties felt that a significant portion of these
measures should be taken within the country;  others  considered that measures could be taken in other
countries to be cost-effective.  The latter perspective took into account that climate change was a
global problem and it did not matter where the emissions arose as long as the concentration of the
total emissions in the atmosphere were reduced.
17. As set out in paragraphs 4-6 of WT/CTE/W/153, the Protocol contained several
implementation mechanisms.  There was a Clean Development Mechanism, whereby Annex I
governments and private companies may obtain certified emissions reductions (CERs) by
participating in projects in developing countries that reduced GHG emissions and satisfied local
development needs.  There was also provision for Annex I governments or private companies to shareEmission Reduction Units for projects implemente d jointly in that country for which emissions
reduction costs were lowest.  There was also emissions trading through the purchase of parts of
assigned amounts by Annex I governments and companies with high marginal abatement costs from
those with lower costs.  These three mechanisms could be put toward the Annex I Parties' Protocol
obligations during the 2008-2012 compliance period.  The nature, scope and linkages between thesemechanisms were under negotiation.  The role of the private sector was important in the
implementation of the Protocol and the potential interaction with the WTO.  The compliance system
would be addressed at the 6
th COP in November 2000.  For some countries, the key issue was to
provide for and ensure that Parties met their reduction commitments.  For others, deterrence was
stressed such that non-complying Parties would be penalized.WT/CTE/M/24
Page 37
Questions and comments
18. The comment was made that the implications to the global economy of implementing
UNFCCC commitments were huge, and that the trade-related implications for the WTO were
correspondingly huge, such as border tax adjustment, emissions trading, WTO standards andrequirements, and recognition of environmentally sound subsidies.
On the structure of compliance and the prospect for the use of trade sanctions in the UNFCCC.
19. There were several areas of potential interaction between the WTO and the UNFCCC,
relating to the way in which the Protocol was implemented.  The range of approaches proposed by
Parties included that a compliance system was not necessary as Parties would fulfill their
commitments in good faith;  it was necessary to m onitor compliance to ensure that Parties met their
commitments to reduce emissions;  and it was necessary to put in place deterrence mechanisms, such
as penalties for non-compliance.  At this stage, there were no proposals to include trade sanctions.
On the relationship between the precautionary approach and the UNFCCC.
20. The precautionary approach was a central feature of the UNFCCC and the Kyoto Protocol.
On the  benefits to developed country Parties from Certified Emissions Reductions (CERs).
21. Discussions indicated that for the moment CERs could be used to offset Parties' commitments
under the Protocol.  There was discussion about whether a developed country Party that invested
funds and generated credits could sell these credits and whether these credits could be generated onlyby developed countries investing in developing countries, or whether the credits could also be
generated by developed countries in their own country.
On whether the UNFCCC assumed th at climate change is anthropogenic.
22. While the state of science was important for the scientific mandate of the
Intergovernmental Panel on Climate Change, the targets set out in the UNFCCC sought to control
anthropogenic emissions arising from economic activity.
D. T
HE INTERNATIONAL COMMISSION FOR THE CONSERVATION OF ATLANTIC TUNAS (ICCAT)
23. The presentation by the ICCAT Secretariat was based on its background paper,
WT/CTE/W/152.  The Commission had recommended numerous regulatory measures for various
tuna species since 1972.  In recent years, bluefin tuna and swordfish had attracted attention from the
international community and there had been increasing fishing of these species.  As a result, tuna andswordfish stocks had been found to be below the level of maximum sustainable yield and it had been
necessary to take further measures to combat this problem.  In order to address catches by non-
contracting parties, entities and fishing entities, which were undermining the effectiveness of ICCAT's
stock management programme, the Commission had adop ted several measures in recent years, as set
out in paragraphs 4-5 of WT/CTE/W/152.  ICCAT encouraged the voluntary cooperation of non-contracting parties, entities or fishing entities, and recourse to trade measures was only considered
after all other possible means had been attempted.
Questions
On flags of convenience vessels and illegal, unregulated and unreported (IUU) fishing activities.
24. ICCAT was mainly a research organization, which based its actions on statistics collected on
who was doing what and where.  The issue of flags of convenience was one of the greatest problemsWT/CTE/M/24
Page 38
at present.  The meeting on IUU fishing in Australia in 1999 had been important in this respect.  To
control overfishing of bluefin tuna, the Bluefin Tuna Statistical Document Program and the trade
measures were important.
On the main factors causing the depletion of bluefin tuna and swordfish.
25. The reason fishing continued for bluefin tuna was because the price for this species was very
high.  When the price of a species that was already overfished continued to increase, if trade measures
were not taken, it would be difficult to act to conserve this species.
E. THE COMMISSION FOR THE CONSERVATION OF ANTARCTIC MARINE LIVING RESOURCES
(CCAMLR)
26. The background paper submitted by CCAMLR has been circulated in WT/CTE/W/148.
Comments
27. It was pointed out that the CCAMLR Catch Do cumentation Scheme for toothfish provided an
excellent example of the appropriate and WTO-consistent use of trade measures in an MEA.  This
scheme reflected the need for information on the capture of and trade in toothfish to complement
other efforts to conserve the species.  This scheme had been developed through a process of extensiveinternational cooperation and negotiation.  Its application was non-discriminatory and CCAMLR was
open to, and encouraged accession by all interested parties.  It was hoped that CCAMLR would keep
the CTE informed of progress in implementing the Catch Documentation Scheme.WT/CTE/M/24
Page 39
LIST OF PARTICIPANTS
Previous paper
July 2000 paper
Mr. Sam Johnston WT/CTE/W/116
Programme Officer WT/CTE/W/136
Convention on Biological Diversity (CBD) Secretariat WT/CTE/W/149
World Trade Centre, 413 St. Jacques Street, Office 630
Montreal, Quebec, Canada M2Y 1N9
Tel:  (1 514) 288-2220/287-7007;  Fax:  (1 514) 288-6588
E-mail:  sam.johnston@biodiv.orghttp://www.biodiv.org/
Mr. K. M. Sarma WT/CTE/W/115
Executive Secretary WT/CTE/W/142
Ozone Secretariat of the Montreal Protocol, UNEPP.O. Box 30552, Nairobi, Kenya
Tel:  (254 2) 623 885;  Fax:  (254 2) 623 913
E-mail:  madhava.sarma@unep.org
http://www.unep.org/ozone
Mr. Mukul Sanwal WT/CTE/W/123Deputy Coordinator WT/CTE/W/153
UN Framework Convention on Climate Change (UNFCCC) Secretariat
Martin-Luther-King Strasse 8
53175 Bonn, GermanyTel:  (49 228) 815-1429/815-1000;  Fax:  (49 228) 815-1999
E-mail:  msanwal@unfccc.de
http://www.unfccc.org/
Dr. Adolfo Ribeiro Lima WT/CTE/W/87
Executive Secretary WT/CTE/W/152
International Commission for the Conservation
of Atlantic Tunas (ICCAT) Secretariat
Calle Corazon de Maria No. 8 (6th fl.)
28002 Madrid, Spain
Tel:  (34 91) 416-5600;  Fax:  (34 91) 415-2612
E-mail:  papa.kebe@iccat.eshttp://www.iccat.es/
Mr. Esteban de Salas WT/CTE/W/113
Executive Secretary WT/CTE/W/148
Commission for the Conservation of Antarctic
Marine Living Resources (CCAMLAR) Secretariat
P.O. Box 213
North Hobart, Tasmania 7002, Australia
Tel:  (61 3) 6231-0366;  Fax:  (61 3) 6234-9965
E-mail:  ccamlr@ccamlr.orghttp://www.ccamlr.org/
__________