Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee on a Europe-Asia cooperation strategy in the field of environment` (98/C 129/11)

On 14 October 1997 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for External Relations, Trade and Development Policy, which was responsible for preparing the Committee's work on this matter, adopted its opinion on 10 February 1998. The rapporteur was Mr Koopman.

At its 352nd plenary session (meeting of 25 February 1998), the Economic and Social Committee adopted the following opinion by 92 votes in favour, six against and five abstentions.

1. Background

1.1. State of the environment

1.1.1. In its communication the Commission presents a gloomy picture of the environmental degradation the countries of South Asia, East Asia and South- East Asia are facing ().

1.1.2. Water pollution is seen as Asia's most pressing environmental problem, accounting for substantial mortality and morbidity rates, especially among children. In large areas shortages of freshwater occur. Singapore already experiences chronic water scarcity (), while India is heading that way.

Air pollution is also creating severe health problems. Emissions of particulate matter and SO2 in Asian cities are among the highest in the world. Asia's share of world greenhouse gases' emissions amounted to 20 % in 1985 and is expected to rise to 25-30 % by the year 2000 ().

1.1.3. Waste management poses severe problems as well and will continue to present major health hazards to the (poor) population and to add to the bill of a future clean-up as economic growth and the rate of urbanization are expected to remain high.

Soil degradation is significant in the whole of Asia, largely due to farmers seeking to maintain food self-sufficiency.

Deforestation has reached such proportions that traditional exporters, such as the Philippines and Thailand have virtually exhausted their forests. India, which has been self-sufficient in the past has become a major importer. And, finally the loss of biodiversity has to be mentioned.

Biodiversity is seriously threatened in the forests of Sri Lanka, eastern Himalayas and (southern) India. The communication mentions that nearly three-quarters of the natural habitat in the region has been lost or irreversibly degraded.

1.2. Causes

1.2.1. The communication pinpoints three causes for this state of the environment: the lack of institutional capacity to cope with (environmental) problems, Asia's large and growing population and the pace of industrialization and urbanization in its wake.

Of its population of 2,8 billion, over half the world's population, 700 million live in absolute poverty, with a largest concentration in South Asia.

The population is expected to grow by almost two per cent per annum and double this figure in the big cities, which continue to attract the bulk of industrial development.

1.3. Existing EU-Asia environmental cooperation

1.3.1. At the level of the Community a number of agreements have been concluded with Asian countries. The Commission estimates its commitments in 1994 to amount to 130 MECU. 40 % of its funds were allocated to tropical forests, 30 % to land resources and about 8 % to both freshwater and institutional strengthening. Biodiversity, the urban environment and pollution control attracted together about 5 % of the available funds.

1.3.2. The EU supports a number of programmes for which particular channels and instruments are used. Mention may be made of: programmes under S& T cooperation (science and technology), the EU-China environmental management cooperation programme, economic cooperation through the European Business Information Centres (EBIC) which have been set up with local chambers of commerce and business associations of Member States, and through a technical window which is exclusively representing the environment (Regional Institute of Environmental Technology-RIET), the Asia-Invest Programme, the European Community Investment Partners' scheme (ECIP) in pursuance of foreign direct investment, the Community's scheme for Generalized Tariff Preferences (GSP) and finally the lending operations of the EIB which at present focus on energy and transport.

1.3.3. Mention should also be made of various initiatives aimed at fostering better relations and partnerships between the EU and groups of Asian nations. In 1996 the Commission presented its communication: creating a new dynamic in EU-ASEAN relations. () In the joint declaration of the 12th ASEAN -EU ministerial meeting of February 1997, reference is made to the decision to establish an informal working group on the environment. At the same venue, a day later, the first foreign ministers' meeting of ASEM () took place. In its conclusion reference was made to the progress made to establish the Asia-Europe environmental technology centre in Thailand, to which the heads of state had decided in their meeting in March 1996.

1.3.4. Member States of the EU maintain numerous bilateral environmental relations with Asian nations.

The following flows may be distinguished: public development aid, commercial promotion schemes, resources of major operators seeking to commercially enter environmental markets together with local partners and loans provided by European private banks.

The total flow of resources and programmes of individual Member States is not known, as there do not exist mechanisms to record such activities.

2. The communication's Europe-Asia environment cooperation strategy

2.1. The communication aims at enhancing: 'the efficiency and the impact of the overall cooperation between Europe and Asia in the field of the environment.` It proposes key measures which should serve as a reference for cooperation and pleads for voluntary coordination between all European actors in order to increase the impact of the resources that flow from Europe to Asia. The strategy covers 17 (developing) countries: The members and candidate members of ASEAN minus Brunei and Singapore (), the (8) South Asian countries and China.

2.2. The communication lists four major reasons for launching this new strategy.

First of all it notes that (many) environmental problems are not limited to national borders, such as the effects of emissions of greenhouse gases, depletion of the ozone layer and the loss of biodiversity.

In the second place, poverty is directly influencing environmental degradation as viable sustainable alternatives for their use of the environment are not (sufficiently) available to the poor. Thirdly, the present level of environmental degradation and the continuing pressures on the environment begin to threaten economic development in these regions. And because of the global nature of the economies, their effects will also be felt in Europe (). Finally Asia's efforts to address their environmental problems provides opportunities for European business to make contributions to meeting these challenges, to mutual benefit.

2.3. The Commission's strategy and proposals are based on three pillars.

It calls for the mobilization of the private sector. This is not only necessary in order to attract sufficient funds - it mentions the need for 34 billion ECU a year by the year 2000, but also because a market driven approach 'could improve resource efficiency`.

Secondly, more emphasis should be placed on urban and industry related issues, pollution prevention and cleaner technologies as these problems rank among the most pressing to be solved, instead of the priority given to natural environment related issues.

The Commission furthermore believes in the prevalence of 'win-win` opportunities by taking off from European strengths such as: environment management capacity building, equipment and technologies to reduce and prevent pollution and innovation and research and development.

2.4. The Commission proposes to focus the cooperation on the three key areas of activities it has mentioned as European strengths and presents for each of these practical guidelines.

It suggests to pursue the environmental dialogue on the basis of strategies which have to be developed for each of the listed countries.

It pleads for synergy with Member States' programmes and calls for the allocation of sufficient resources.

2.5. The communication concludes with mentioning four criteria on the basis of which EU cooperation activities will be selected.

These are: mutual interest, complementarity with Member States' activities, synergy with multilateral agencies and sustainability.

3. General comments

3.1. The Committee welcomes this well-written communication and agrees with the basic principles upon which its proposals rest. It presents the problems, the need for action and the strategy for cooperation in a compact but compelling manner. Its logic is so convincing that one is almost tempted to overlook and underestimate the formidable obstacles and impasses which will lie ahead in the process and have to be overcome before culminating in the reaping of the fruits of the executed projects. These huge problems may also be illustrated by the deliberations and the commitments made at the Kyoto conference on climate change which was held in December 1997.

The Committee wishes to state once more in this context its strong commitment towards sustainability at all policy levels.

The growth pause which these countries have experienced in 1997 should provide an opportunity to integrate environmental protection and sustainable development criteria more fully into the new economic direction which these countries are going to have to take. EU cooperation and experience can play a major part in this strategy.

3.2. We understand that the reason for not addressing these obstacles is not because the Commission is not aware of them, or minimizes their importance, but because it believes the Community at large, Commission, governments of Member States and social partners in the broadest sense should first get their act together and reach agreement on the framework it proposes. Once the strategic level is defined by Europe, including agreement on the question in what fields we are strong, and thereafter also by Asia, the next stage will be to formulate objectives on the basis of which programmes and projects will be designed. In these stages attention is to be given to address these hindrances.

3.3. This is also why the Commission has not yet thought fit to informally consult other international agencies or individual Asian countries before it finalized this communication. The ESC can follow this line of reasoning, but wishes to observe that the logic also contains elements of a circular argument. For, agreement on this framework may be facilitated by a better understanding of its implications, of which, because of all the sensitivities involved, an inkling of the reactions of Asian countries towards the proposed cooperation approach would seem to be an obvious parameter.

3.4. The communication does not provide an insight into its follow-up. How does the Commission intend to proceed once the Council has reached agreement? The Committee urges the Commission to indicate in what manner it thinks to engage in these discussions with its Asian partners as well as the international organizations () which are also working in this field, as this will help them to formulate a position on the strategy.

3.5. The communication rightly mentions the need for more coordination of programmes and projects which are being carried out in the Member States for reasons of avoidance of duplication, putting in tune and possible synergies. Given the direct causal relationship between the protection of the environment and the fight against poverty, relevant programmes under the aegis of development cooperation should be incorporated in such schemes (). For, the Committee realizes that the poor are hardest hit by the environmental degradation and least able to defend themselves against or escape from the incidence of pollution. It must be admitted however that it is often, even at the national level, difficult to achieve the required coordination as different agencies are accustomed to follow their own patterns (networks, methodology) of cooperation. Moreover coordination may be seen to be interfering with own interests (). Therefore it will be necessary to develop mechanisms, such as the creation of expert groups, which will be conducive to fostering coordination and which will make visible the rewards such schemes may yield to the participants.

3.6. It has to be recognized that the seventeen countries which have been selected for the strategy are very different in nature. They do not belong to one particular partnership, nor do they entertain a common relationship with the EU. Although the communication correctly mentions the need for specific environment strategies for each Asian partner, it would be most unfortunate, if the EU would have to negotiate the cooperation strategy with each of the countries individually. It is true that ASEM is covering South-East and East Asia, but no such relationship exists as of yet with South Asia (). Perhaps ESCAP could become an important forum for the dialogue with Asia as it is fulfilling a respected role in environmental cooperation.

3.7. Although awareness of the ill effects of environmental degradation in a number of Asian countries on health and economic development is growing, an integral vision on sustainable development is often lacking. The institutional capacity to cope with these problems needs to be strengthened urgently in order to become more effective, also because of the relatively weak position of the newly created national environmental departments (). The Committee therefore fully agrees with the communication on the significance of the development of the environmental management capacity. It also agrees with the Commission that the Member States of the EU could make a vital contribution in this area ().

3.8. The Committee notes with pleasure the emphasis the communication places on the role of the private sector in meeting Asia's environmental challenges. It firmly believes that the social partners should be part of the strategy and their participation should be actively sought. Indeed, a wealth of literature supports the thesis that a larger involvement of private business and greater reliance on market-based solutions, conditioned and supported by an «enabling» environment, good governance (capacity building) are the most efficient vehicles for generating sustained development ().

3.9. The Committee also notes with approval the chairman's statement of the Asia-Europe meeting in Bangkok of March 1996, which seems to endorse such an approach as well. It would like to observe however that this element of the strategy needs to be elaborated, in order to create transparent mechanisms for the private sector to play its role effectively.

3.10. It is for this reason that we hope that UNICE will raise this subject at the Europe Asia Business Forum which will precede ASEM II.

3.11. The Committee also endorses the third pillar of the Commission's strategy of strengthening environmental R& D. Indeed, technological development is one of Europe's strengths and could play a major role in the cooperation strategy to the mutual benefit of all the countries involved.

3.12. And finally the Committee agrees with the proposed shift of environmental priorities towards urban and industry related problems. It is indeed necessary, given the urgency of these issues, to increase the budget lines for technology transfer, urban environment and pollution control for which at present less than 10 % of the EU-funds for environmental projects are allocated notwithstanding the importance of continuing to contribute to the preservation of the natural habitat.

4. Specific comments

4.1. The Committee is of the opinion that the position of the SMEs in Asia deserves special attention. In many developing countries SMEs have a large participation in exports. In India for instance SMEs account for 90 % of the export of textiles and leather (products). These companies may need assistance to comply with high environmental standards that could prevail for their customers in overseas markets. There is evidence that SMEs make a relatively large contribution to industrial pollution, although there is a (great) potential for improving environmental management through better housekeeping practices provided the appropriate supporting infrastructure is in place ().

4.2. The Committee notes the decision taken by the heads of state of ASEM to establish an Asia-Europe Environmental Technology Centre in Thailand. It wishes to signal however the existence of the Regional Institute for Environmental Technology (RIET) in Singapore which was established by the Community and Singapore jointly in 1993. As the communication rightly observes, RIET became, in its three years of operation, a centre of excellence in the transfer and exchange of environmental know-how and services between Europe and Asia.

The Committee thinks it would be beneficial for both the European and Asian ASEM partners if complementarity were to be pursued between this new environmental institute and RIET. As RIET is more business oriented, promoting best practices and business in environment, the new institute may be more involved in societal environmental issues, especially by providing views on policy, the institutional framework and institutional capacity in environmental management. The institute could also stimulate strategic thinking on environmental issues and to serve as a forum for consultation and dialogue.

4.3. The communication asserts that foreign firms are setting up production facilities in certain Asian countries in order to benefit from less stringent environmental measures. The Committee would like to observe that this is fortunately not taking place on a significant scale ().

The Committee would obviously be even more opposed towards a migration of foreign firms if this were to be induced by a lowering of environmental standards in Asian countries. In this connection the Committee calls on the Commission, in the framework of multilateral negotiation rounds, such as the OECD negotiations on a multilateral agreement on investment (MAI) and the WTO, actively to support the 'non-lowering domestic standards` approach. These phenomena illustrate precisely the need to encourage the Asian nations to improve their environmental performance and the relevance and timeliness of the proposed strategy.

4.4. The Committee would finally like to recommend that all parts of budget lines dealing with environmental aspects and cooperation for Asia are grouped together under a kind of Framework Programme comparable to the one for research and technological development referred to under Article 130i of the Treaty or the newly proposed Framework Programme for energy. Such an administrative rearrangement of budget lines would greatly increase the transparency of the environmental effort of the EU. Improved transparency will also provide the policy maker with a better insight into possible relationships between the various programmes that are being considered and with a simple tool to enhance the desired coordination and synergy of approved schemes.

Brussels, 25 February 1998.

The President of the Economic and Social Committee

Tom JENKINS

() According to the usual EU-classification: South Asia: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. East Asia: China, (Hong Kong), Korea, Macao, Taiwan and Japan. South-East Asia: The Association of South East Asian Nations (ASEAN) consisting of: Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam + candidate members: Cambodia, Laos and Myanmar.

() Less than 1 000 cubic metres per person per year. Such limited availability begins to hamper economic development and health.

() Of which Nepal and Bhutan consume less than 20 kg of oil equivalent per capita per year in contrast to China, Thailand, Malaysia and Singapore consuming more than 600 kg, compared with 4 000 kg for Europe and 8 000 for USA.

() COM(96) 314 final of 3.7.1996. In paragraph 3.1.4 mention is made of a number of areas in the field of the environment in which (more) cooperation is desired.

() Asia and EU Meeting. The first meeting of heads of states of ten Asian countries (ASEAN + China, Korea and Japan) and of the EU and its Member States took place in March 1996. The second meeting will be held in London in April 1998.

() These two countries have been excluded from the proposed strategy because their level of economic development far exceeds that of the other countries.

() The effects of faltering financial markets in a number of Asian countries, precipitating steep declines of their bourses last October on the stock exchanges in the 'western world` are a case in point.

() E.g.: ESCAP (UN's Economic and Social Commission for Asia and the Pacific), World Bank and UNCTAD.

() At the level of the Commission this responsibility (for Asian countries) rests with Directorate General I (F) and I B ( C).

() The success of the EU- interservice group on China proves that cooperation can be beneficial to the realization of the goals of the individual departments.

() Although the South Asian Agreement on Regional Co-operation (SAARC) may fulfil that function.

() The growth of environmental management capacity in industry is positively influenced by trade (with more developed countries) considerations. Management capacity may also increase through investments made by foreign firms. An example is the introduction of toxic waste management in the Philippines. Foreign firms desiring to set up production facilities ultimately may decide to take care of Toxic and Hazardous Waste themselves in the absence of government action because they could not 'afford` to be accused of being lax with respect to toxic waste on their premises.

() Mention should be made of the implementation of ISO 14000 series (environmental management systems) by developing countries which will help companies to better control the environmental impact of their activities. In many Asian countries a proactive approach has been taken. At the regional level, mention may be made of the establishment of a technical working group under the ASEAN Consultative Committee for Standards and Quality.

() For instance: The World Bank, The State in a changing world, 1997, part. pp. 163-165, United Nations, State of the environment in Asia and the Pacific, 1995, chapter 19, Social Economic Council (Netherlands), The role of the private sector in international cooperation (in Dutch), 1997.

() See also footnote 5, p. 51, and for instance: Unctad. TD/B/COM 1/EM.4/2 of 18 August 1997 (points 55-61).

() COM(96) 54 final of 28.2.1996, p. 5 and COM(96) 314 final of 3.7.1996. In paragraph 3.1.4 mention is made of a number of areas in the field of the environment in which (more) cooperation is desired.

APPENDIX to the opinion of the Economic and Social Committee

The following amendment attracted more than 25 % of the votes cast, but was rejected during the course of the deliberations:

Point 4.3

Replace the first two paragraphs with the following:

'The Committee notes with concern the Commission's assertion that foreign firms are setting up production facilities in certain Asian countries in order to benefit from less stringent environmental measures.

Promoting environmental standards to protect public health and encouraging sustainable development must be a permanent and major focus of the EU's cooperation strategy with the Asian countries. To this end, the Committee also calls on the Commission, to engage in a process leading to mutually accepted international standards and to defend vigorously in the framework of multilateral negotiations (OECD and possibly WTO), the principle of mutual recognition of basic environmental protection standards as well as the concept of non-lowering domestic standards.

The implementation of environmental standards is also linked with the political situation in each country. In this regard, the existence of real democratic transparency, of freedom of action for NGOs and of effective supervisory procedures are essential guarantees of the effectiveness of national and international standards. The possibility of deterrent sanctions and fair victim-compensation rules should also be explored.`

Reason

It is tempting to exploit less developed laws. Moreover, in some countries compensation arrangements for the victims of accidents are far less costly. We should not minimize this problem, as the report appears to do. We should not forget the Bhopal disaster in India and its tragic consequences for thousands of victims, who after years of legal proceedings have received only minimal compensation.

It is essential to promote universal basic standards and to improve national laws in line with experience and developing knowledge. Unless account is taken of the environmental dimension in trade and investment, the door will remain open to possible dumping in violation of fair competition. (Dumping contravenes WTO principles.)

Result of the vote

For: 41, against: 46, abstentions: 7.