- **6 Natural Resources and Environmental Goods and Services (EGS) in the Multilateral System**

Ideally, implementing the logic of figure 1 which identifies EPPs and GEMs, would be done following a detailed analysis of the environmental footprint of a product, of how it was produced and consumed. This would tell us if the product was compatible with a green-growth strategy.<sup>27</sup> But such an analysis on a large scale is still largely beyond our capabilities, even though voluntary labeling is informative and has the potential to influence consumption choices. In any event, negotiations in the multilateral system about policies to protect the environment have, so far, been acrimonious.<sup>28</sup>

# **6.1 Natural Resources**

Article XX (paragraph (g)) of the GATT allows exceptions to treaty obligations for measures "relating to the conservation of exhaustible natural resources", understood to include renewable resources that may be depleted (e.g. the conservation of species and also clean air). Several international treaties related to resource conservation have included trade provisions. These have ranged from bans (e.g. for endangered species), to recommendations to help protection of the wildlife habitat to diversification of renewable resources (timber).<sup>29</sup> These trade restrictions have rarely been applied most of the time because these treaties were not designed in a way to solve the free-rider problem associated with common-pool resources since, in the process, the punisher would have been punished.<sup>30</sup> 27Brenton et al. (2009) survey results from carbon-accounting and carbon-labeling studies. They show that it is especially difficult to generalize for agricultural products in which many low-income countries have a comparative advantage (e.g. when delivered to the consumer, roses grown in Kenya emit about 20% of CO2 emissions compared to those grown in Holland). For the US, Weber and Peters (2009) show that while carbon accounting is important for a handful of energy- intensive activities (refineries, coke & gas, iron & steel, non-ferrous metals, chemicals, building materials (cement), pulp and paper)-- which account for between 60% and 90% of total emissions in the US-- carrying out a carbon footprint analysis would be very challenging and highly contestable if it were to be implemented.

28 At the launch of the Doha Round, dubbed the Round for the LDCs and for the environment, WTO members were explicitly mandated to address fisheries subsidies (art. 28) and to reduce trade barriers on Environmental Goods and Services (EGS) (art.31).

29These include the Convention on International Trade in Endangered Species (CITES), the International Tropical Timber Agreement (IITA), and the Convention on Biological diversity (CBD). For CITES, trade enters as a ban for endangered species while for CBD, trade can help preserve conservation but it can also be a threat for biodiversity. For the IITA, trade is to help manage diversification of timber forests. Barrett (2003, chp. 6) notes that about one in seven Multilateral Environment Agreements includes trade restrictions. Some enter directly to achieve the treaties objectives (plant or animal preservation, prevention of involuntary imports of hazardous wastes. Others enter for strategic reasons, for example to bring cooperation or participation (Montreal Protocol on CFCs or the International Commission for the Conservation of Tuna). In the case of the North Pacific Fur Seal Treaty, trade restrictions were to deter entry. In some cases, trade enters informally to discourage free-riding (e.g. parties to the International Whaling Convention were urged, but not required to ban imports from nonparties).

30 A well-publicized case is whaling where the International Commission on Whaling (ICW) banned commercial whaling in 1986. Iceland appealed to the IWC to be allowed limited whaling for ‘scientific purposes’. When the US threatened to ban imports of fish from Iceland, at the next IWC meeting, Iceland’s representative threatened to oust US forces from a NATO base in Iceland. Then Iceland got its way.

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