6:52 AM Jan 26, 1994

LEVY ON IMPORTS FOR ENVIRONMENT SOLIDARITY FUND ?

Geneva 26 Jan (Chakravarthi Raghavan) -- The idea of a 0.25 percent ad valorem levy on all imports to finance a 'Solidarity Fund' for the environment, under the overall responsibility of the World Trade Organization (WTO) but with participation in its management of specialized bodies including the Global Environment Fund was proposed at the annual session of the GATT CPs Wednesday by the European Community's GATT Representative, Amb. Tran Van-Thinh.

Tran, who is retiring in a few weeks and was giving a farewell speech to the CPs, called for a healthy link between trade policy and environmental policy.

Tran's idea of a levy confined to imports on items where customs duties are being collected, would however exempt from the levy of a large share of imports of developed countries -- on energy and raw materials which generally carry no duty. Also, it may have disproportionate burdens on those with large imports and those with export surpluses and may even be iniquitous in not touching on output as such.

Tran noted that the earlier confrontations and divisions on this issue in the GATT had been resolved by the TNC decision for a work programme which opened up a reasonably promising vista for the future WTO.

It was clear that trade policy and environmental policy were inextricable intertwined and it was only to the extent that these two were mutually supportive that a judiciously balanced development of the planet on a sustainable basis could be assured.

On the trade policy side of the equation, "two gangrenes, unilateralism and protectionism, must first be eradicated". And as long as these two sores were not fully healed, "the betrothal of trade and environment will not lead to a durable marriage, without the possibility of divorce or separation."

But the weaknesses of multilateral policy on environment must also be emphasized, in particular its weakness in financing and lack of funds collected and used as a matter of priority to reduce disparities between advanced countries and less well-provided countries.

It was therefore conceivable, fitting and well-advised for multilateral trade policy to bring "a handsome dowry to the marriage".

Trade should be able to provide a simple, transparent, multilateral, non-discriminatory, equitable, automatic and predictable contribution based on the idea of financing a "Solidarity Fund" for the environment through levies on imports as from the entry into force of the WTO.

In this regard, Tran suggested that:

* the levy would be paid on all imports of goods on which customs duties are collected, in all member countries of the WTO, with the exception of the least developed countries who should benefit from a grace period to be agreed upon;

* the levy would be initially set at a uniform rate of 0.25 percent ad valorem on each tariff line -- but would involve no additional charge on imports to the extent that it would be offset by the Uruguay Round tariff reductions;

* the WTO would have general responsibility for the Fund, with the participation of other specialized bodies, particularly the Global Environment Facility in its management.

All members of the WTO would have access to the fund resources, subject to agreed conditions and modalities such as:

* half the available resources being reserved for developing countries with a priority, to be determined, for least-developed countries;

* the other half to be allocated to the developed countries with a double priority to be determined -- on the one hand for countries in transition and on the other for transfer of technology to the countries of the South;

* the release of resources to be a function of projects based on criteria to be determined, going beyond a strictly national framework and having an impact outside national borders, regionally or globally.

Views and comments of NGOs should be obtained for further work on this idea and for negotiations on the approach to be adopted and its implementation, Tran further added.