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The trade and environment interface is an increasingly important "horizontal theme" in international relations. Strong interaction in the area of trade and environment promotes a high level of environmental protection and, at the same time, ensures an open, equitable, multilateral trade system.
There are three main aspects to the relationship:
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The environmental impact of trade and trade policies; |
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The potential effects of environmental measures on trade flows; |
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The use of trade measures to achieve environmental policy aims. |
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The trade and environment interface is central to sustainable development, an objective which is a central benchmark for trade liberalisation negotiations. The preamble to the World Trade Organisation (WTO) already underlines that the WTO should contribute to sustainable development. It is, therefore, in the interest of all WTO members to ensure that the multilateral trading system makes its full contribution to the achievement of global sustainable development. |
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Environmental considerations should be reflected throughout any negotiations and that a WTO Round should maximise potential for positive synergies between trade liberalisation, environmental protection and economic and social development. Moreover, WTO rules allow its Members considerable scope to adopt measures to protect the environment, provided they are not discriminatory. |
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The development of environmental policy world-wide has resulted in an increased use of trade measures for environmental purposes. It is in the interest of the global environment, of the open trading system and hence of all WTO members to avoid conflict and also to avoid putting an unreasonable burden on Panels or the Appellate Body. A clearer trade-environment relationship should encourage the use of least trade-restrictive measures at the trade-environment interface.
International action is often the only effective way to tackle environmental concerns like pollution, along with many environmental issues. |
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| It is vital, therefore, that internationally agreed measures to protect the environment such as MEAs are not subordinated to trade rules. Multilateral Environmental Agreements (MEAs) are the best instrument for dealing with international environmental problems. Furthermore, the fact that trade measures MEAs may contain were negotiated and agreed by consensus in a multilateral context should be a guarantee against discriminatory action and their use for protectionist purposes. |
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Domestic environmental regulations, particularly on products or product disposal, can act as nontariff trade barriers. Such measures are sometimes needed to achieve environmental goals. However, some fear that de-facto trade barriers will be erected under the guise of environmental protection. The effects of environmental provisions on trade are not well understood. Governments use various means to regulate environmental conduct within their borders. The governments may regulate manufacturing processes, for example, by requiring permits for the release of pollutants. Countries also may regulate which products may be produced and sold, and how they may be used and disposed of. A country's internal regulations seldom extend to the process by which imported products are made. But the regulations likely would subject imported products to the same standards as domestic products regarding the nature of the product (PCB-free equipment), it uses (catalytic converters must operate effectively for a specified number of miles), and its disposal (reuse of beverage bottles). |
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Differences in internal regulations can impede trade: products made for use in one country might not meet another country's standards. When standards can be harmonized, or made similar, trade can be more open, and trade disputes rarer. Thus, as recognized by the Organization for Economic Cooperation and Development's (OECD) "harmonization principle", harmonization can be a worthwhile goal. However, as OECD recognized, harmonization is not always appropriate or feasible; sometimes it makes sense for countries to have different standards
Harmonization of environmental standards requires governmental action. The basic General Agreement on Tariffs and Trade (GATT) normally permits differences in internal regulations. |
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Internal regulations need not be justified; GATT only requires that domestic goods and imported goods from all countries be treated in the same way. Moreover, these regulations may be enforced against imported goods at the border: nations that ban, tax, or otherwise regulate certain domestic goods may ban, tax, or regulate the importation of those same goods.
The environmental benefits of removing trade restrictions and distortions are likely to be indirect and not readily identifiable in general terms. This is particularly the case for trade policies as they are but one of several areas of policy-making that have an effect on economic activity. |
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more efficient factor-use and consumption patterns through enhanced competition; |
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poverty reduction through trade expansion and encouragement of a sustainable rate of natural resource exploitation; |
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an increase in the availability of environment-related goods and services through market liberalization; and |
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better conditions for international cooperation through a continuing process of multilateral negotiations. |
For developing countries, trade is an important means for securing resources needed for environmental protection. The political promises made at UNCED in 1992 of large financial and technology transfers to developing countries, to help them meet their economic development and environmental protection needs, have not been fulfilled. As a result, trade liberalization in favour of products of export interest to developing countries is fundamental to help them achieve sustainable development. |
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