GLOBAL PUBLIC GOODS AND TRADE: CONFLICTS, COMPATIBILITY AND COMPLEMENTARITIES
Round Table 3 - Regulation policies and global norms: Articulation with the trade regime?
Regulation of global environmental risks- links with trade rules
Trade rules and environment in OECD work
Globalisation has been defined in the OECD literature as a process in which business decisions, production processes and markets gradually come to exhibit more "global characteristics and less "national" ones. Globalisation is characterised by structural reforms- especially trade and investment liberalisation- and increased trade and investment flows 1.
As outlined in the programme of this workshop, in the absence of a legitimate supranational authority, the provision and preservation of global public goods require co-ordinated public interventions and international co-operation.
This paper will focus on one aspect of this issue, namely the potential conflict between what can be considered one global public good - the protection of the environment - and one of the main engines of globalisation - trade liberalisation - and how to ensure that the conflict is not only minimised, but that both policy strands are mutually supportive. It is based mainly on the works done in the framework of the OECD Joint Working Party on Trade and Environment over the past 10 years, and will focus specifically on the interface between trade rules and MEAs.
OECD procedural guidelines on trade and environment
In 1991, the OECD started to analyse the relationship between trade and environment policies, and to this end set up a group composed of both trade and environment experts. The mandate of this group is to focus on analytical work aimed at promoting the mutual compatibility of trade and environment policies in practice, in order to contribute to sustainable development. One of the first outcomes of the work of this group was a set of fours so called "procedural guidelines" on trade and environment. Two of these guidelines seem particularly relevant for the purposes of this workshop: one deals with transparency and consultation, the other one with the review of environmental and trade policies 2.
According to the first guideline, governments should provide for transparency and for consultation with interested parties in the development and implementation of trade and environmental policies with potentially significant effects on each other. In particular, governments should provide for transparency in government policy making (i.e., integrate their own environmental and trade policy making through consultation between environmental and trade policy-makers, participation of trade policy-makers in environmental policy making process and of environmental policy makers on trade policy-making); as well as at the inter-governmental level (notification, publication and consultation in circumstances where a domestic trade or environmental measures may impact on the environment or trade polices of another government). Furthermore, the guideline recommends that governments consult with non-governmental interested parties, and provide for public availability of information by, inter alia, giving advance notice of proposed trade or environmental policies or substantial modifications of existing ones, with potentially significant effects on the other.
The OECD has carried out a number of case studies to look at how Member countries effectively put in practice this guideline, and to what extent countries are providing for consultation and transparency in the areas of trade and environment3. Conclusions vary, but one of the clearest outcomes is that early co-ordination between ministries for trade and for environment respectively, e .g in the framework of trade negotiations or for the negotiation and implementation of MEAS, is important to achieve mutual supportiveness of trade and environment policies both at international and national levels.
The second guideline provides that governments should examine or review trade and environmental policies and agreements with potentially significant effects on the other policy area early in their development to assess the implications for the other policy area and to identify alternative policy options for addressing concerns. The OECD developed in 1994 methodologies to carry out such reviews, and in the past years several countries have undertaken environmental or sustainability reviews of trade policies, or trade negotiations proposals (e.g., the United States, Canada, Norway, the EU). Reviews can be carried out before, during and after negotiations, depending on the purpose, and can vary in scope, depth, resources invested, etc. Environmental or sustainability reviews of trade policies or agreements have gained prominence over the past years, and have been considered as instruments of enhance mutual supportiveness of trade and environment. UNEP has recently developed a manual to assist countries to carry out sustainability assessments4, and the Doha Declaration acknowledges the efforts by Member countries to conduct national environmental assessments of trade policies on a voluntary basis, and encourages that expertise and experience be shared between Members wishing to perform environmental reviews at the national level 5. One general conclusion seems to be that, generally, reviews have contributed to better familiarise trade officials with the potential negative effects of trade policies or negotiation proposals on the environment, and to modify the final policy or to adopt appropriate flanking measures. There seems to be broad agreement that environmental or sustainability reviews enhance supportiveness of trade and environment polices and help overcome real or potential conflicts.
WTO rules and MEAS
One area which has been central to the debate on conflicts between environmental protection and trade disciplines, and which is therefore important in the framework of this workshop, is the issue of compatibility between international trade rules and trade measures in Multilateral Environmental Agreements (MEAs). It has been a key topic on the agenda of the WTO CTE since its inception, and has been included in the Doha agenda among the three areas of negotiation in the field of trade and environment6. So far, no formal dispute has emerged involving WTO rules and implementation of measures provided for in an MEA.
A number of recent MEAs acknowledge the potential for conflict with trade rules, though they do not provide concrete guidance on how to overcome such conflict. The UNFCCC for example provides that "…Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction of international trade" (Article 3 of the UNFCCC). Some recent MEAs contain more general text on the relationship between trade and environment agreements. The Preamble of the 2000 Cartagena Protocol on Biosafety for example states: "The Parties to this Protocol… recognizing that trade and environment agreements should be mutually supportive with a view to achieving sustainable development, emphasizing that this Protocol shall not be interpreted as implying a change in the rights and obligations of a Party under any existing international agreements, understanding that the above recital is not intended to subordinate this Protocol to other international agreements… ". The Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade uses similar language. The Stockholm Convention on Persistent Organic Pollutants recognizes , in the Preamble, "that this Convention and other international agreements in the field of trade and the environment are mutually supportive."
Trade measures in MEAs
A few years ago, the OECD Joint Working Party on Trade and Environment examined trade measures in selected MEAS, namely CITES (1973), the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer and the 1985 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal7. Based on these examinations, it drew some conclusions on the design of trade measures in MEAs and factors contributing to their success on the one hand, and limiting success, on the other.
Among the conclusions was that trade measures should be carefully designed and targeted to be environmentally objective, by inter alia, carrying out prior assessments of the potential environmental and economic ramifications of the measures in questions (e.g., bans).
One major factor contributing to success of an MEA, including the trade measures it may contain, is genuine multilateral consensus on shared environmental problems. Further, comprehensive and balanced packages of policy instruments have more chances of addressing all aspects of an environmental problem than reliance on one form of policy instrument. A strong scientific basis for policy action increases credibility and acceptance; and policy based on an understanding of the underlying economics is likely to be more effective than attempts to cut across economic factors. NGO support greatly increases the chances of success.
Factors limiting the success of trade measures in an MEA are, among others: lack of funds for implementation and enforcement capacity; illegal trade; over-reliance on one single type of measure in cases where the underlying environmental and economic context is complete; inadequate recognition of the underlying economic context; inadequate reporting of information by the Parties; insufficient incentives for participation and compliance.
Conclusions
The above findings of work on trade and environment in the OECD provide some useful insight into the complexity of preserving global public goods within the structure of existing international norms and disciplines. Consensus about the goods to preserve; prior assessment of planned policies and their impacts on other polices and disciplines; co-ordination within and among governmental sectors, involvement of the public; adequate funding and capacity; and strong political leadership are likely to be factors contributing to this goal.
1-Sustainable development. Critical issues.
OECD 2000, page 213 back to text 2-The two other guidelines address the issues of international
environmental co-operation and dispute settlement respectively. All documents
mentioned in this paper are available on the OECD
Trade and Environment webpage back to text 3-These case studies have been done in 1999, 2000 and 2001, and
a synthesis report has been issued in 2002. back to text 4-www.unep.ch back to text 5-WTO Ministerial Conference 9-14 November 2001, Doha Declaration
paragraphs 6 and 33 back to text 6-Paragraph 31 of the Doha Declaration: "With a view to enhancing
the mutual supportiveness of trade and environment, we agree to negotiations,
without prejudging their outcome, on (i) the relationship between existing WTO
rules and specific trade obligations set out in MEAs." back
to text 7-Trade measures in Multilateral Environmental Agreements, OECD
1999 back to text