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To all WTO Mission in Geneva18 March 2002
Re: Negotiations on the MEA-WTO relationship
There is no doubt that the round of WTO negotiations launched in Doha contains a significant environmental dimension. One of the key issues for negotiation will be the relationship between WTO rules and trade measures in MEAs. For WWF, this negotiation offers several opportunities and entails a number of risks. This letter outlines WWF's views with regard to the upcoming negotiations on MEAs. It identifies the nature of the problem arising at the interface of the WTO and MEAs, and then identifies clear demands for what will, and will not, constitute a successful outcome of a negotiations.
Correctly defining the problem is essential to identifying the right solution
To achieve a successful outcome, WTO negotiations must acknowledge the diversity of MEAs and the diversity of goals sought to be achieved by trade measures. Today, around 200 MEAs exist to address transboundary and global environmental problems. Central to many of these MEAs are trade measures. Trade measures provide one essential policy instrument in the toolbox of policy measures available to governments. They are used in over 20 MEAs, including some of the most important and recently negotiated ones. These trade measures serve a variety of purposes. In some cases they regulate trade in environmentally harmful products. In others, they remove the economic incentives that encourage environmental destruction. In still other cases, they are used to ensure compliance with the MEA's provisions, and to encourage broad country participation thereby reducing the potential for non-parties to undermine the treaty's objectives. Without trade measures, the effectiveness of many key MEAs would be undermined, with serious consequences for human health and the environment. In light of this diversity, any outcome of WTO negotiations must ensure significant deference to measures negotiated among groups of governments to achieve environmental goals. In addition, they must refrain from seeking to prescribe the options available to environmental policy makers to address the fundamental and growing environmental problems facing humanity.
To achieve a successful outcome, WTO negotiations must also acknowledge the tendency of WTO rules to impinge on legitimate environmental objectives in a number of ways. The first problem confronting the WTO is that its rules are being used to undermine multilateral solutions to global environmental problems. As the economic implications of effectively implementing certain MEAs become more significant, a number of powerful countries are increasingly choosing not to join key conventions such as the Kyoto Protocol, the Convention on Biological Diversity, the Biosafety Protocol, and the UN Convention on the Law of the Sea. Non-adherence to MEAs not only undermines multilateral efforts to address global environmental problems; it also puts parties to MEAs at disadvantage vis-à-vis free riders, creating an incentive to not join future MEAs. In the light of this reality, trade-related measures in MEAs are often designed to influence the behaviour of non-parties. Such measures directed to non-parties have proved enormously effective in the past; broadening membership of MEAs and removing the incentive to free ride (as the experience of the Montreal Protocol illustrates). Any clarification of the WTO-MEAs relationship, which does not address the treatment of non-parties to an MEA, would be inadequate and unacceptable.
Second, despite the central role of trade measures in many effective MEAs, there is still uncertainty as to whether trade measures taken pursuant to MEAs are compatible with the WTO. This uncertainty about WTO rules is seized on by countries, or coalitions of countries that are economically advantaged by weak MEAs. These countries use such uncertainty during environmental negotiations to protect or promote their trade interests by reducing the scope of MEAs, weakening their provisions and trying to subordinate them to WTO rules (through "WTO savings clauses"). The use of this uncertainty to chill the development of new MEAs, and their effective implementation once they are adopted, has been illustrated recently in the Biosafety Protocol and POPs negotiations. Any clarification of the WTO-MEA relation which does not remove the current 'chill factor' in the development of effective MEAs would be inadequate and unacceptable.
Third, over the last decades trade rules and environmental regimes have evolved in separate tracks, with minimum synergy and often in conflict with each other. The lack of dialogue and co-operation among trade and environment officials at all levels has not helped to improve mutual understanding and create necessary linkages among MEAs and relevant trade processes. Ensuring that both processes produce new rules that are consistent with each other should be a primary focus for negotiators. Moreover, concrete linkages between MEAs and WTO rules and negotiations should be established, both with regard to specific issues and the regular participation of MEAs and UNEP in WTO deliberations. Mechanisms for enhanced co-operation and information sharing among the WTO, MEA Secretariats and UNEP need to be established urgently, also with a view to avoiding potential conflicts escalating into disputes. A positive clarification of the WTO-MEA relationship can only be credible and mutually supportive if co-operation and dialogue among trade and environment officials is enhanced at all levels
Setting clear objectives for the negotiations
In the light of the above identification of the main challenges of the WTO-MEA interface, WWF believes that negotiations on MEAs should have three main objectives:
· Ensuring that trade measures involving non-parties to an MEA are deemed compatible with WTO rules, and exempting them from WTO challenge;
· Clarifying that trade measures taken pursuant to an MEAs are compatible with WTO rules; and
· Ensuring the coherent and mutually supportive implementation of MEAs and WTO rules, including through enhanced co-operation between MEA Secretariats, UNEP and the WTO.
These are the main objectives and outcomes to be pursued in the course of WTO negotiations, and constitute minimum criteria for what can be called a positive clarification. A more comprehensive list of objectives and approaches to enhance the WTO-MEA relationship is given in the enclosed document ("Towards Coherent Environmental and Economic Governance: Legal and Practical Approaches to MEA-WTO Linkages", WWF and CIEL, 2001, p. 15).
Initial steps leading to a mutually supportive relationship of WTO rules and MEAs
As initial steps towards a more open, transparent and mutually supportive relationship between MEAs and the WTO, three measures should be taken now:
· All pending requests for observer status by environmental institutions to WTO bodies, including those of UNEP and the CBD, should be accepted by the WTO General Council;
· A working group should be established under the joint chairmanship of UNEP and the WTO that includes representatives from those organisations as well as MEAs, and non-governmental actors, to explore the development of a set of principles to guide the use and future development of trade related measures in MEAs, examine common trade-related issues, explore synergies and tensions between the two areas, and develop a common understanding on the content and use of the precautionary principle;
· Enhance capacity building and technical assistance on trade and environment in developing countries. Industrialised countries should increase the funding for trade-related technical assistance and capacity-building for sustainable development in developing countries (CTE-related issues, capacity to undertake sustainability assessments of trade policies and agreements, etc). Increased resources will facilitate the establishment of effective mechanisms for consultation and co-operation among trade, environment and development ministries, including reporting and participatory mechanisms at the national and international levels.
What the WTO negotiations on MEAs should not cover
There is a legitimate concern among the environmental community that WTO negotiations risk approaching the clarification with MEAs in the wrong way. The WTO is not, and should not become, an environmental policy-making body. That is not its core competence, and therefore it should not attempt to replace or undermine the functions of MEAs and other international environmental governance structures. In particular, the WTO should NOT:
· Define what constitutes an MEA. Such a definition, if needed, should be adopted in the context of the UN, by MEA secretariats and UNEP;
· Negotiate the scope and autonomy of MEAs to define trade measures. It is the competence of MEA members to identify and define what trade measures are needed to meet the goals of the MEA;
· Define what a legitimate trade measure is in the context of an MEA, or pursuant to an MEA, including criteria for the 'legitimate' use of trade measures. it is the competence of MEAs to define the scope and nature of trade measures, either autonomously or collectively;
· Have primary responsibility to settle disputes with a trade/environment/sustainable development dimension. the MEAs, UNEP and the WTO should agree on a process and criteria to resolve where such disputes should be heard.
Final remarks
The principles outlined above are minimum requirements to remove the current uncertainty hanging over the use of trade measures in MEAs. By clarifying the relationship between MEA trade measures and the WTO, WTO members will promote coherence among international rules and institutions and ensure that international trade and environmental laws develop in a mutually supportive way, thereby securing the joint contribution these systems can and must make to the overarching goal of sustainable development.
Last but not least, while in this letter I have referred to work that needs to be done at the WTO level, much needs to be done outside WTO, in the relevant international fora such as UNEP, MEAs and in the run up to the WSSD in Johannesburg to support the above recommendations. These include, but are not limited to:
· Ensure full assessment of future trade rules and liberalisation that could affect the mandates of the MEAs;
· Encourage MEA Conference of Parties to become involved in the interface between trade liberalisation and their areas of expertise;
· Strengthen measures for compliance, enforcement and dispute settlement in the environmental instruments to reduce the potential that environmental disputes will migrate to the WTO.
Should you wish to discuss any of these points further please do not hesitate to contact the undersigned.
Aimee T. Gonzales
Senior Policy Adviser
Trade and Investment Unit