BUILDING SUSTAINABLE TRADE:
FOR PEOPLE AND THE ENVIRONMENT
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INTRODUCTION
Although the links between the environment, development and commercial trade have long been recognized, few analyses have focused on how policies prepared for one such issue might have a bearing on either, or both, of the others. Equally, in the few instances where integrated policies have been developed, there has been inadequate follow-through and support for policy implementation.
The World Wide Fund For Nature (WWF)[1] was instrumental in the establishment of an Expert Panel on Trade and Sustainable Development (EPTSD). Established in 1996, the Panel is composed of experts representing each of the three policy fields — trade, the environment and development (see Box 1).
Drawing on the work of governments and inter-governmental bodies, policy research institutes, non-governmental organizations (NGOs) and academics, the main purpose of the Panel is to synthesise information on recent cases where these three issues were a common concern, and to propose positive actions for integrated policy development.
Since its founding the Panel has focused on developing policy packages and toolboxes for three specific trade sectors — timber, textiles and electricity. More recently, efforts have concentrated on applying the EPTSD Framework to actual cases on the ground. Four projects have been identified, working with decision/makers and stakeholders at all levels.
THE EXPERT PANEL
The Panel has the following objectives:
- Develop innovative, integrated policy instruments or policy packages that harness trade (and foreign investment) to the objective of sustainable development.
- Review and guide the work of NGOs, academic and other independent research, and policy institutions.
- Identify analytical gaps and contribute to the ongoing work of the UN Task Manager on Trade for the CSD.
- Inform the general public and stimulate public debate.
KEY PRINCIPLES
The EPTSD Framework builds on the foundations of the Winnipeg Principles (1994) and the Rio Declaration (1992). Taking these recommendations a step further, the Expert Panel identified five key principles and developed specific guidelines and practical tools to translate these declarations into action. In using this framework, it is essential that all five principles be addressed in each situation.
The key principles are:
- Efficiency
- Equity
- Good Governance
- Stakeholder Participation and Responsibility
- International Cooperation.
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Box 1. Behind the Scenes: the Expert Panel
The Panel is funded by donations from five environment ministries, three development cooperation ministries, a government fund for the global environment, and the Environment Directorate of the European Commission.
The Panel is made up of the following:
- 6 representatives from trade
- 6 environmental experts
- 6 representatives from the development sector.
Within each expert group, efforts are made to balance the presence of current and former government or inter-governmental officials, non-governmental organizations, academics and other independent policy analysts. The composition of panellists is balanced on a North-South and regional basis. All panellists serve in their personal capacities.
Since its founding, the Panel has met five times: the next meeting will be in Brazil, 17-21 May 1999. Inter-governmental organizations are invited to attend the meetings as observers.
WWF International serves as the Secretariat for the EPTSD.
Efficiency
In a world of scarce resources and growing demand from consumers, the efficient use of natural resources lies at the centre of all environmental, development and trade policies.
Trade liberalization can be a major contributor to efficiency if complemented by measures to internalize environmental and social costs, and by effective competition policies.
Equity
The fair and equitable sharing of resources, of income derived from the use of such resources – or of any local or indigenous knowledge, or information on these – is fundamental. The following need to be considered:
- the benefits and burdens from trade should be shared equitably between and within nations
- the burdens and benefits of environmental improvement should be shared equally between and within nations.
Particular attention needs to be given to the consequences of trade liberalization and environmental protection on the poor and marginalized.
Good Governance
An effective government is crucial to advancing trade, environment and development objectives. So too are regional and multilateral institutions that are responsive to the needs and concerns of society, and which respect human rights and democracy.
Institutional innovation is a prerequisite if trade, environment and development objectives are to be integrated in government policies and regional or multilateral agreements, or instruments.
Stakeholder Participation and Responsibility
An empowered civil society is crucial to the advancement of trade, environment and development objectives in a way that maximizes consumer welfare and sustainable development.
Many of the costs and benefits of policies designed to achieve these objectives are borne by the public. Therefore, to be successful, policies must be justifiable in the public eye. Various mechanisms are required through which the public can participate in the formulation of these policies. In turn, the public must assume responsibility – through actions and their consumption patterns – for the success or failure of such policies and processes.
International Cooperation
International cooperation is a prerequisite to sustainable development.
Effective cooperation between concerned parties can help prevent conflicts. Procedures for handling disputes, where these arise, should be based on rules and equity considerations, rather than on who is more powerful and can position their interests since they have the necessary financial and technical skills to do so. Any procedure adopted must be capable of addressing social, economic and environmental needs.
PUTTING PRINCIPLES INTO ACTION
Specific guidelines and accompanying tools have been developed for each of the five principles in the EPTSD Framework.
This structure facilitates application when developing policies for a particular trade sector – such as textiles or timber – linked with sustainable development. The manner in which the Framework is designed further allows its use in generating integrated policy packages for the actual trade, environment and developmental circumstances and conditions of a given country or region.
PRINCIPLE 1. EFFICIENCY
Internalize Costs
Remove or scale back subsidies that promote unsustainable production or consumption
implement market-based instruments; command and control environmental regulations
institute command and control regulations to compensate for market failures where market instruments do not work
complement regulatory frameworks with voluntary approaches
promote business eco-efficiency initiatives.
Internalize Benefits
Implement environmentally friendly subsidies
provide tax breaks for clean technologies/ investment
enlarge the World Trade Organization (WTO) approved elements of such subsidies
support research in, and development of, innovative clean technologies.
Maximize Consumer Welfare
Introduce strong competition policies at the domestic level
negotiate a multilateral agreement on competition policy.
Increase Fair International Competition
Respect national treatment (prohibit countries from applying trade measures in a discriminatory fashion against trading partners) and non-discrimination (environ-mental policies applied to foreign products should be no more onerous than those applied to similar domestic products) in the trade of goods and services
eliminate, or reduce, tariff escalation and non-tariff barriers
eliminate quota systems – especially those that block exports from less developed countries.
PRINCIPLE 2. EQUITY
Promote the Sustainable Use of Natural Resources
Practice sustainable management of renewable resources, such as forests and fisheries
ensure that part of the rent from the depletion of non-renewable resources is invested in socially productive endeavours
create, promote and enhance multilateral environmental agreements that are respected by trade agreements.
Protect Resources, both Cultural and Environmental, for Which There are no Substitutes
Create protected areas and natural resource management areas
protect the diverse cultural heritage of communities, regions or nations
promote, enhance, and/or create multilateral environmental agreements
promote recognized World Heritage Sites
adopt the Convention on International Trade in Endangered Species of Wild Fauna and Flora, the Convention on Biological Diversity, or other trade measures to protect natural resources.
Adopt a Precautionary and Adaptive Approach that Respects the Limits and Unpredictable Nature of Ecosystem Functions
Ensure that the precautionary principle is incorporated in trade agreements, in lending guidelines for public and multilateral agreements, and in guidelines for environmental impact assessment.
Assess and Address the Social Impacts of Trade Policies at the National Level
Conduct pre- and post-assessments of the impacts on income distribution, gender equality and social cohesion
implement offsetting policies, social safety nets, and adjustment programmes for those potentially negatively affected.
Focus on Small Business, especially Small and Medium Enterprises (SMEs) that produce for export
Assistance programmes in certification (Forest Stewardship Council, ISO 14000, ecolabels, etc.)
training programmes in environmentally friendly and appropriate technology
training for potential exporters in business management, that includes environmental protection and labour rights, financing, contract law, finding markets, promotion
training on trade and environment issues for potential exporters
trade missions to facilitate new markets for SME exports and sustainable products
assistance for SME exporters such as export credit, soft business loans, etc.
Strengthen Capacity to Develop Indigenous Technologies thereby Enhancing Self-reliance
Collect information on indigenous technologies; organize and make available in a useable manner
subsidies for research and the development of indigenous technologies
adequate patent protection for domestic innovators
multilateral patent laws geared to enhance, not restrict, innovation
scientific and/or administrative training programmes.
Direct a Greater Portion of the Rents from any given International Commodity Chain to the Primary Producer
Multilateral or international commodity agreements
international commodity-related environ-mental agreements
other innovative international agreements between producers and consumers.
Respect the Principle of Special and Differential Treatment (SDT) of Developing Countries in Trade and Environmental Agreements
Work in the relevant fora to implement the SDT commitments made in the Uruguay Round
incorporate SDT in future trade and environmental agreements that are more sophisticated than simply allowing for longer periods for implementation.
PRINCIPLE 3. GOOD GOVERNANCE
Protect the Recognized Rights of Citizens at Domestic, Regional and International Levels
Multilateral agreements on trade and core labour standards; standards of human rights
effective domestic implementation of core labour standards
domestic observation of the UN Declaration on Human Rights, Rights of the Child, and other recognized human rights-related agreements.
Build Effective Regulatory Networks
Build capacity for environmental and social impact assessments of trade agreements
build capacity for data collection and analysis
address corruption, poor enforcement of laws
assign appropriate property rights to environmental resources
enhance coordination and cooperation between government agencies in pursuit of consistent enforcement of regulations.
Foster Cooperation among all Levels of Government
Inter-ministerial policy groups
require collaboration on, and joint formulation of, policies
multi-departmental representation in international negotiations.
Ensure Transparency, Disclosure and Accountability at all Levels of Government
Parliamentary involvement in formulating trade, environment and development policies
consultative fora and other mechanisms of accountability, participation and partner-ship with stakeholders
setting up mechanisms for the timely and broad dissemination of documents and information.
PRINCIPLE 4. STAKEHOLDER PART-ICIPATION AND RESPONSIBILITY
Greater Openness and Accountability in the Formation, Negotiation and Implementation of Environment, Social and Trade Policies, Laws and Regulations
Information dissemination among groups likely to be affected by new measures
publication and distribution of infor-mation on a timely basis
freedom of the press.
Create Structures that will Enable Locally Responsive and Responsible Action
Consultation with local communities
partnerships between local government, business, community and citizens’ organizations, environmental and developmental NGOs, academia and research institutes.
Consumer Education and Responsibility
Educate consumers on the meaning of label information; on the power of making informed choices
enforce strict guidelines to give credibility to “green” and “fair” trade labels
educate consumers on basic environmental and social issues, creating a domestic constituency for improved environmental and social standards, and more sustainable consumption patterns.
Foster Sustainable Alternatives in Production and Consumption
Conduct research to establish what constitutes a sustainable alternative in the various sectors
establish appropriate ecolabels and labeling requirements that take into account the diverse environmental and social requirements in different countries
facilitate negotiation and actual implementation of international consumer-producer commodity agreements.
Promote Corporate Responsibility
Encourage the development and pursuit of more sustainable practices, services, investments and products by multinational and local companies
support and implement legal frameworks
develop and carry out voluntary initiatives
build capacity through cooperation and sharing of best practices with SMEs, particularly in developing countries
establish partnerships with governments and stakeholders, including the issue of developing new sustainable products and practices.
PRINCIPLE 5. INTERNATIONAL COOPERATION
Help Build Capacity for Environmental Improvement, to Avoid Environmentally-based Trade Disputes
Facilitate the sharing and transfer of environmentally-beneficial and appropriate technology and services
financial assistance in improving local resource allocation
build administrative and technical capacity for environmental improvement
technical assistance towards meeting environmental criteria
training in certification; testing techniques at the local level
establish local certification bodies.
Avoid Standards-based Trade Disputes
Seek standards that are equivalent to each other
avoid invoking unilateral environmentally- based trade disputes for protectionist purposes.
Avoid having Trade Disputes Resolved with Prejudice to Environmental or Development Objectives
Safeguard mechanisms to review the relevant trade rules, and to seek cooperative solutions, in cases where disputes impact negatively on environment and development objectives.
FROM PAPER TO ACTION
The Expert Panel is an action-orientated forum.
Four projects have been identified to test and refine the EPTSD Framework. The themes and issues addressed are quite different in scale and nature, with projects ranging from national interests on forests (Gabon and Vietnam), to a regional study of electricity demand in Mercusor — a region comprising Argentina, Brazil, Paraguay and Uruguay — and an international analysis on preventing disputes. A brief description of each follows: additional information can be obtained from the Secretariat.
Gabon
The size and biological richness of Gabon’s tropical forests make it one of the conservation priorities on the African continent. For years, the lack of uncontrolled development ensured that the country was untouched by environmental problems that have affected many other developing countries. This situation is about to change.
Recent drops in commodity prices for Gabon’s traditional exports, together with currency devaluation, has shifted emphasis to the forestry sector. Some forests are now threatened by logging and road construction. Mineral prospecting and oil exploration are additional threats to these important reservoirs of biological diversity.
In a significant move, the government has acknowledged the need to integrate environmental considerations into the development planning process. WWF and the Netherlands Development Agency is already working with the Government of Gabon on two integrated conservation and development projects geared towards finding a balance between the interests of extractive development and the need to conserve unlogged forests. The joint project between the EPTSD and WWF-NEDA will, using the EPTSD framework, evaluate current policies and develop policy recommendations for achieving forest conservation and management goals. A review of Gabon’s compliance with international policy agreements, and its application of policy instruments aimed at achieving sustainable development, will also be undertaken.
Vietnam
Production forest management is in a state of transition in Vietnam, providing a window of opportunity to introduce, and apply, new tools geared towards improving forest management. Forest certification is one such tool.
Following a Prime Ministerial decree mid-1997, the Ministry of Agriculture and Rural Development has set out to reform national forest policies in an attempt to save remaining natural forests outside of protected areas. As a result, logging has ceased in more than 80 per cent of the country’s state forest enterprises. Certification was proposed as a management tool to improve forest management and determine which of the state enterprises might be allowed to continue forest harvesting.
With funding from the Swedish International Development Agency, the Ministry of Agriculture and Rural Development, together with WWF Indochina and the EPTSD, will host a meeting of stakeholders and experts to review the current certification initiative in Vietnam. Recommendations will be forthcoming on ways of broadening and strengthening this initiative, to include essential environmental and development components. This will lead to the development of an integrated forestry plan which will be presented to donor agencies for funding.
The following steps have already taken place: