Trade , Environment and Development

1. UNCTAD Trade , Environment and Development Trade and Environment in the Multilateral Trading System Module 2

2. A number of GATT/WTO provisions are relevant for environment-related trade issues Key questions for developing countries are how WTO rights and obligations affect their ability to achieve sustainable development and to protect their trade interests against unnecessary adverse trade effects of environmental policies The WTO work programme adopted at Doha (November 2001) includes negotiations on certain trade and environment issues Background TrainforTrade: Trade, Environment and Development

3. Assist beneficiary developing countries in Enhancing their awareness and understanding of relevant GATT/WTO provisions Examining specific trade and environment issues that are being discussed (or will be negotiated) in the WTO Participating effectively in WTO negotiations and discussions on trade and environment Stimulating policy-making and coordination on trade and environment at the national level Objectives of this module TrainforTrade: Trade, Environment and Development

4. Recent developments Environment-related provisions within the GATT/WTO framework The mandate and work of the CTE Specific trade and environment issues discussed within the WTO Cases brought before the Dispute Settlement Mechanism (DSM) Issues for discussion Structure of this presentation TrainforTrade: Trade, Environment and Development

5. Recent developments TrainforTrade 2000: Trade, Environment and Development

6. Environment is not a new issue in the WTO The objectives of sustainable development and environmental protection are stated in the preamble to the Agreement establishing the WTO During the Uruguay Round (UR) of Multilateral Trade Negotiations, environment-related provisions were included in several UR Agreements Not a new issue TrainforTrade: Trade, Environment and Development

7. During the Uruguay Round (UR) of Multilateral Trade Negotiations, environment-related provisions were included in several UR Agreements Agriculture TBT SPS TRIPS Subsidies and countervailing measures Services The UR round agreements TrainforTrade: Trade, Environment and Development

8. Established in 1995 in accordance with the UR Ministerial Decision on Trade and Environment Mandate: To identify the relationship between trade measures and environmental measures in order to promote sustainable development To make appropriate recommendations on whether any modifications of the provisions of the MTS are required The CTE covers all areas of the MTS including goods, services and intellectual property Committee on Trade and Environment TrainforTrade: Trade, Environment and Development

9. Several trade-related environmental disputes have been brought to GATT/WTO Some have noted that panels and the appellate body have become more conscious of the environmental dimension of their arguments Also concern about the implications of the development of case law (legal activism) Legal decisions arrived at under dispute settlement mechanisms will not necessarily take account of the same considerations currently discussed in the balanced agenda of the CTE and may not reflect the wishes of all member States Dispute settlement TrainforTrade: Trade, Environment and Development

10. Ministers agreed to negotiations on certain trade and environment issues Ministers also decided to continue the work on all issues of the CTE This should include the identification of any need to clarify relevant WTO rules The Committee shall report to the Fifth Session of the Ministerial Conference, and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations 4th Ministerial Conference in Doha TrainforTrade: Trade, Environment and Development

11. Paragraph 6 Strengthening of the commitment to the objective of sustainable development, as stated in the Preamble to the Marrakesh Agreement The aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of sustainable development can and must be mutually supportive Ministerial Declaration [1] http://www-chil.wto-ministerial.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm TrainforTrade: Trade, Environment and Development

12. Ministers take note of the efforts by Members to conduct national environmental assessments of trade policies on a voluntary basis Ministers welcome the WTO´s continued cooperation with UNEP and other inter-governmental environmental organizations Cooperation between the WTO and relevant international environmental and developmental organizations Paragraph 6… [2] TrainforTrade: Trade, Environment and Development

13. The relationship between existing WTO rules and specific trade obligations set out in MEAs The negotiations shall: be limited in scope to the applicability of such existing WTO rules as among parties to the MEA in question not prejudice the WTO rights of any Member that is not a party to the MEA in question Procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the granting of observer status Negotiations on certain issues [1] TrainforTrade: Trade, Environment and Development

14. The reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services Fisheries subsidies form part of the negotiations provided for in paragraph 28 (Trade Rules) Negotiations on certain issues [2] TrainforTrade: Trade, Environment and Development

15. In pursuing work on all items on its agenda within its current terms of reference, the CTE shall give particular attention to: The effect of environmental measures on market access, especially in relation to developing countries, in particular the LDCs, Situations, in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development  The relevant provisions of the TRIPS Agreement Labelling requirements for environmental purposes MD, para. 32 on CTE [1] TrainforTrade: Trade, Environment and Development

16. Work on these issues should include the identification of any need to clarify relevant WTO rules The Committee shall report to the Fifth Session of the Ministerial Conference, and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations MD, para. 32 on CTE [2] TrainforTrade: Trade, Environment and Development

17. The outcome of the work of the CTE and negotiations carried out under para. 31 shall: be compatible with the open and non-discriminatory nature of the MTS not add to or diminish the rights and obligations of Members under existing WTO agreements, in particular the SPS Agreement not alter the balance of these rights and obligations will take into account the needs of developing and least-developed countries Qualifications TrainforTrade: Trade, Environment and Development

18. Ministers also: Recognize the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the LDCs (Paragraph 33) Encourage that expertise and experience be shared with Members wishing to perform environmental reviews at the national level (Paragraph 6) MD, capacity building TrainforTrade: Trade, Environment and Development

19. Paragraph 51: The Committee on Trade and Development and the Committee on Trade and Environment shall, within their respective mandates, each act as a forum to identify and debate developmental and environmental aspects of the negotiations, in order to help achieve the objective of having sustainable development appropriately reflected Other role of the CTE TrainforTrade: Trade, Environment and Development

20. WTO principles TrainforTrade 2000: Trade, Environment and Development

21. National Treatment (NT) clause (Article III of GATT) ensures non-discrimination between domestic and imported goods Most Favoured Nation (MFN) clause (Article I of GATT) ensures that imports from all sources are subject to the same treatment National environmental protection policies must not be adopted with a view to arbitrarily discriminating between foreign and domestically produced like products, or between like products imported from different trading partners Non-discrimination TrainforTrade: Trade, Environment and Development

22. WTO members must notify the WTO about measures that may have a significant impact on trade Notification obligations concerning environmental measures should not be more of a burden than is normally required The WTO Secretariat is to compile from its Central Registry of Notifications all information on environmental measures These are to be put in a single database that all WTO members can access Transparency - notification TrainforTrade: Trade, Environment and Development

23. GATT Article XI requires that no prohibitions or restrictions other than duties, taxes or charges "shall be instituted or maintained on the importation or exportation of any product" This means that quantitative restrictions for environmental purposes would normally be considered inconsistent with GATT rules Exceptions (Art. XX) will be taken up later in this presentation Elimination of Quantitative Restrictions TrainforTrade: Trade, Environment and Development

24. WTO Agreement with provisions relating to enviroment TrainforTrade 2000: Trade, Environment and Development

25. The Preamble emphasizes the commitment of WTO Members to reform agriculture in a manner that takes account inter alia of the need to protect the environment “Green box” policies (domestic support measures with minimal impact on trade) are excluded from reduction commitments These include payments under clearly defined environmental programmes, under certain conditions (Annex II, para. 12) Agreement on Agriculture (AoA) TrainforTrade: Trade, Environment and Development

26. Article 20(c) determines that the reform process should take account inter alia of non-trade concerns (NTCs), including the objectives and concerns mentioned in the preamble AoA: Non-trade concerns TrainforTrade: Trade, Environment and Development

27. Seeks to ensure that technical regulations (mandatory) and standards (voluntary), as well as testing and certification procedures, do not create unnecessary obstacles to trade. The Preamble explicitly recognizes that legitimate objectives include: “the protection of human, animal or plant life or health, or for the protection of the environment” See module 3 Technical Barriers to Trade TrainforTrade: Trade, Environment and Development

28. Preamble: No Member should be prevented from adopting or enforcing measures to protect human, animal or plant life, or health, subject to the requirement that these measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimintaion between Members where the same conditions prevail or a disguised restriction on international trade Article 2.1 contains similar language See Module 3 Sanitary and Phytosanitary Measures TrainforTrade: Trade, Environment and Development

29. The TRIPS Agreement makes explicit reference to the environment in Section 5 on Patents Article 27.2 and 27.3 state that Members may exclude from patentability inventions, whose prevention within their territory is necessary to protect, amongst other objectives, human, animal or plant life or health or to avoid serious prejudice to the environment TRIPS Agreement TrainforTrade: Trade, Environment and Development

30. Articles 27.2 Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect, ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by law TRIPS: exclusions from patentability TrainforTrade: Trade, Environment and Development

31. Article 27.3(b) …plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, members shall provide for the protection of plant varieties either by patents or by an effective sui generis systems or any combination thereof TRIPS: exclusions from patentability [1] TrainforTrade: Trade, Environment and Development

32. Article 27.2 and 27.3 state that Members may exclude from patentability inventions, whose prevention within their territory is necessary to protect, amongst other objectives, human, animal or plant life or health or to avoid serious prejudice to the environment TRIPS: exclusions from patentability [2] TrainforTrade: Trade, Environment and Development

33. Adopted a separate declaration on Trips and Public Health: each provision of TRIPS should be read in the light of the object and purpose of the agreement each member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency clarification of procedures for import of generic drugs in countries with insufficient manufacturing facilities (parallel imports) befor end of 2002 Establish a multilateral system of notification and registration of geographical indications for wines and spirits till 5th MM and addressing extension of protection of geographical indications to other products as part of work on implementation-related issues and concerns. TRIPS Agreement: Doha MC TrainforTrade: Trade, Environment and Development

34. “Non-actionable subsidies” include subsidies used to promote the adaptation of existing facilities to new environmental requirements Article 8(2)(c) In accordance with Article 31, the Subsidies Committee will review the operation of these provisions “with a view to determining whether to extend their application, either as presently drafted or in a modified form, for a further period.” Subsidies and countervailing measures TrainforTrade: Trade, Environment and Development

35. The Committee on Trade and Environment TrainforTrade 2000: Trade, Environment and Development

36. The WTO is only competent to deal with trade; it is not an environmental agency. Its only task is to study issues that arise when environmental policies have a significant impact on trade Any solution that stems from the discussions within the CTE must support the principles of the WTO trading system Background of CTE’s work TrainforTrade: Trade, Environment and Development

37. Environmental policies and the MTS (item 2) Environmental measures (item 3) (a) Charges and taxes for environmental purposes (b) Standards and technical regulations, packaging, labelling and recycling Transparency of environmental requirements with significant trade effects (item 4) Market access (item 6) (a) Environmental measures and market access (b) Environmental benefits of removing trade restrictions and distortions Items on CTE agenda [1] TrainforTrade: Trade, Environment and Development

38. Provisions of the MTS and trade measures for environmental purposes, including those pursuant to multilateral environmental agreements and their dispute settlement mechanisms (items 1 and 5) TRIPS and the environment (item 8) The issue of exports of domestically prohibited goods (DPGs) (item 7) Decision on Trade and Services and the Environment (item 9) Relations with IGOs and NGOs (item 10) Items on CTE agenda [2] TrainforTrade: Trade, Environment and Development

39. Selected issues TrainforTrade 2000: Trade, Environment and Development

40. Agriculture and environment Services and envirionment TRIPS and environment TRIPS and the Convention on Biological Diversity (CBD) Precautionary principle Genetically modified organisms (GMOs) Domestically prohibited goods (DPGs) “Like products” Issues TrainforTrade: Trade, Environment and Development

41. Environmental protection is used as an argument both in favour and against agricultural trade liberalization Trade distortions Agricultural trade distortions can have negative environmental effects “Win-win" situations arise when the removal or reduction of trade restrictions and distortions yield both direct economic benefits for developing countries as well as positive environmental results Cairns Group and others Agriculture and environment TrainforTrade: Trade, Environment and Development

42. Non-trade concerns Some Members argue that certain domestic support measures are justified for environmental reasons Multi-functionality: advocated by EU, Norway, Switzerland, Iceland, South Korea US and “like-minded countries” support non-trade concerns in particular as regards rural development and food security (such measures, however, have to be transparent, MTS-compatible and not distorting production and trade) EU would like to introduce the precautionary principle into the issue of food security Agriculture and environment TrainforTrade: Trade, Environment and Development

43. General Agreement on Trade in Services (GATS), negotiated in the UR: Progressively higher level of liberalization of trade in services, securing greater participation of developing countries Members have the right to regulate, and to introduce new regulations, on the supply of services within their territories to meet national policy objectives Given assymetries in the development of the services sector, developing countries have a particular need to exercise this right Services and environment TrainforTrade: Trade, Environment and Development

44. Consists of: A framework of general rules and disciplines Annexes addressing special conditions relating to individual sectors Liberalization commitments specific to the service sectors and subsector’s listed in each country’s schedule Exceptions Members are not prevented from taking meausres necessary for the protection of inter alia human animal and plant life GATS TrainforTrade: Trade, Environment and Development

45. The WTO secretariat has divided services in 12 categories and 155 subcategories. These include inter alia: Environmental services Sewage services Refuse disposal services Sanitation and similar services Other Health services Tourisms and travel services Service sectors TrainforTrade: Trade, Environment and Development

46. Services are protected mainly by national domestic regulations on foreign direct investment and the participation of foreign service suppliers in domestic industries Civil society and some developing countries have raised concern on provision in Art. VI:4 requiring Members to develop disciplines to ensure that certain kinds of domestic regulation are not more burdensome than necessary to ensure the quality of the service Protection in the service sectors TrainforTrade: Trade, Environment and Development

47. The objectives of TRIPS include the promotion of technological innovation and transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and with a balance of rights and obligations (Article 7) In the WTO Council, Cuba, Dominican Republic, Honduras and Nicaragua proposed that circumstances under which Members have the right to use compulsory licences should include public interest, including public health and the protection of the environment TRIPS and environment TrainforTrade: Trade, Environment and Development

48. There should be mutual supportiveness between relevant provisions of the CBD and those of the WTO TRIPs Agreement Many developing countries argue: The TRIPS Agreement should support the CBD provisions in the areas of biological resources and traditional knowledge systems TRIPS and the CBD TrainforTrade: Trade, Environment and Development

49. TRIPS does not mention CBD principles, in particular: Sovereignty Prior Informed Consent (PIC) Equitable sharing of benefits Protecting the rights of communities, farmers and indigenous people CBD recognizes that TRIPS may affect CBD objectives TRIPS/CBD TrainforTrade: Trade, Environment and Development

50. Is there a conflict between TRIPS and CBD? Are TRIPS and CBD mutually supportive? Ethical, economic, environmental and social issues related with patenting of life forms Several proposals by developing countries TRIPS/CBD: key issues TrainforTrade: Trade, Environment and Development