4:06 PM Feb 17, 1995
WTO DISCUSSIONS ON DOMESTICALLY PROHIBITED GOODS
Geneva 17 Feb (Chakravarthi Raghavan) -- The Committee on Trade and Environment (CTE) the World Trade Organization on Thursday discussed the question of GATT rules and disciplines to deal with the export of domestically prohibited goods (DPG) and is to continue the discussions at its next meeting in March. Among the 'ideas' to be further explored are whether work on this should be conducted in the CTE or in a separate working group, whether work should start anew or should take off from where the previous GATT working group had left it in July 1991 (when a draft decision was proposed) and what should be the point of departure for the new work. The discussions were described as wide-ranging and open. The CTE chaired by Amb. Sanchez Arnau of Argentina held its first meeting and settled on a work programme and schedule for this year. The CTE is to meet once every two months and consider the issues on its terms of reference, and will make an assessment at the end of the year on what to do further, sources said. Nigeria suggested the reconstitution of a working group to consider the issue and taking as the starting point the draft decision prepared in 1991 July. The United States seemed to favour the issue being considered in a working group, but in a fresh manner, taking into consideration what it saw was various developments since 1991 which made a new look imperative. But several other delegations had some doubts on a new working group to decide this, and wanted rather the question pursued in the CTE itself. One of the reasons weighing in the minds of some of the developing country delegations seemed to be that they did not want this to become an opening for the other US ideas to pursue its own Trade and Environment agenda in a piecemeal way. Several of the countries wanted the earlier work to be the starting point, and not for the work in the CTE to start all over again. Some participants said they saw some movement in the US position. Its earlier opposition to bringing chemicals, pharmaceuticals and automobile spare parts had virtually killed the 1991 draft. Though the US did not indicate that its stance on this was changing, others felt there was some change given that some actions were being taken in the United States domestic context. Earlier work in GATT had called for full notification by countries banning or severely restricting products on their domestic markets and the ability to invoke the GATT dispute settlement mechanism. The concept of 'prior informed consent', under which the countries banning such products would not grant export licence without first notifying the country about the dangers and hazards and getting the prior informed consent of that country for the export of the product to their territory. Thursday's discussions, some participants, showed that some countries were now chary of the exporting country being able to ban the exports -viewing this as a possible sanctioning of 'extra-territoriality', which, once recognized for exports, could extend to imports too and thus extra-territorial application by a country of its environmental objectives and laws. The question of GATT rules against exports by countries of domestically prohibited goods -- on health or grounds of hazard -- came on the GATT agenda (at the instance of Sri Lanka and Nigeria) at the 1982 GATT Ministerial meeting, but has been pursued by fits and starts. When Nigeria brought it up in 1982 it was to demand that countries banning or severely restricting various products on their home markets should not allow their free exports to other countries. The subject was put on the GATT agenda and the 1982 work programme, but remained dormant. Soon the idea of a blanket ban by the exporting country was viewed as unfeasible for various reasons: whether thus a country should decide what is or what is not hazardous or dangerous in other countries, whether such a ban by a country would place it at a "commercial disadvantage" if others don't follow this. But the Transnational Corporations, particularly those in the arena of chemicals and pharmaceuticals, were totally opposed to any such ban and the major home countries of the TNCs (the US, Europe and Japan) backed them. The issue disappeared from the GATT agenda -- Nigeria was not even present at Punta del Este to insist on this being put on the Uruguay Round agenda -- and made its appearance again only belatedly, sometime after the mid-term review of 1989, and that too at the instance of some other leading Third World nations like Brazil and India. By then the UNEP mediated Basle convention against hazardous and toxic waste trade, with its provisions for notification and "informed consent" had come into being -- with the United States though still not a party to it. A working group of the GATT was set up, chaired by Amb. Sankhey of the United Kingdom, to look into the issue and make a recommendation for adoption by the GATT Contracting Parties at the time of the conclusion of the Uruguay Round in Brussels. The Sankhey working group narrowed down the possible GATT action to a full notification to the GATT by any country prohibiting or severely restricting a product in its own markets, giving the reasons for its action. Such a notification would automatically involve its circulation to other contracting parties. The Sankhey working group and its draft decision ran into the problem of US opposition -- with the US at that time reported as insisting on exclusion from the scope of the decision of pharmaceuticals and chemical products as also automobile parts. Though at that time it was intended that the issue should be decided along with the conclusion of the Round, the African countries who had been principally agitating on this issue did not pursue it when the Uruguay Round negotiations (based on the draft Dunkel text) was resumed in July 1993. Almost everyone forgot about it and the GATT secretariat was embarrassed when at the end of negotiations, newsmen asked as to what happened to the domestically prohibited goods issue and the Sankhey draft decision and why the secretariat had not brought it up at the final TNC. But this unfinished agenda was however raised (after the TNC at its official level ended the negotiations on 15 December 1993) early in January 1994 by the Chairman of the Contracting Parties (Amb. B.K.Zutshi of India) when he drew attention to this unfinished agenda. The subject was then added on to the work to be done in the WTO, and ahead of it in its Preparatory Committee, on Trade and Environment questions. The Preparatory Committee's sub-committee though did not pursue this matter in greater detail -- other, "more sexy" issues of trade and environment agitating the US and Europeans and their NGOs got more attention. The Sankhey draft had definitions of 'banned' and 'severely restricted' products and was to apply to questions not covered by the existing multilateral agreements and treaties in this area. 'Banned' products were those which prohibited for sale or use (including cases where this is result of expiration of the approved period) or refused for sale or use or withdrawn from sale or use. 'Severely restricted' product was defined to include products for which virtually all sales or use have been banned except for certain authorized uses. In the case of pharmaceutical products, it included only those approved or subsequently subjected to restrictions excluding their use in a substantial proportion of the potential target population of patients for reasons of safety or those which contained substances whose dangerous properties required extraordinarily narrow content limitations. It was to cover all products, substances or wastes that present serious and direct danger to human, animal or plant life or health or environment in its territory and which are for this reason banned or severely restricted. The principal obligation of the proposed 1991 decision lay in Art 3.1 which required any contracting party adopting measures to ban or severely restrict in its domestic market any of the products to "examine whether the reasons for such measures would also require adoption of equivalent measures for exports of the same products". If the examination under the proposed Art 3.1 in the exporting country banning or severely restricting a product resulted in a decision of no action on exports, the country concerned was required to notify the GATT secretariat of such measures and the reasons. It was also required to provide information on the potential hazardous effects and domestic regulations on their use, transport, labelling etc. The idea was that the importing country could then exercise its own GATT right and ban or severely restrict the import of these products under the Art XX exception clauses. India, which had flagged this issue in 1994 CPs session, and at the WTO General Council on 31 January, stressed the need and importance of the notification idea. Developing countries, the Indian delegate said, in some cases would be unable to control the imports, since the countries did not know that the products were prohibited or restricted for use or sale in the home markets. International environment groups and developing country NGOs have been accused Pharmaceutical and Chemical TNCs of knowingly exporting to developing countries banned and severely restricted products, and also substandard products and often long after expiry dates. The trade is estimated at being worth billions of dollars, with the consumer and developing country blissfully unaware of the harmful consequences. The TNCs and their home governments often invoke the 'sovereignty' of the importing country in these matters and its right to ban or restrict -- but knowing often that this is just a cloak behind which they hide for the profit of their corporations. In a reference to these arguments,l India said that exporters could, and indeed did, make false declarations about the products prohibited or restricted in their home markets and customs authorities of developing countries did not have adequate testing facilities to check claims of the exporters to their countries. Consumer protection legislation in developing countries were also inadequate in terms of prohibition and enforcement of sale of products beyond the expiry dates. India therefore suggested that taking the draft decision as a starting point, the notification obligations should be considered in greater detail as also the "prior informed consent" (PIC) concept. Meanwhile, the environment group, Greenpeace, in a memorandum to some CTE members said that if the 1991 draft decision is be a basis for further work, it should be strengthened and Trade in DPG should be prohibited and not "legitimised" through the notification system of the GATT. Also, the measures called for under other multilateral agreements should be supported by the GATT. The PIC concept is now coordinated in the codes and guidelines in the FAO and UNEP voluntary programmes -- the London guidelines on exchange of information on chemicals in international trade and the FAO code of conduct on pesticides. At some near future point these voluntary programmes, Greenpeace hoped, could be made mandatory. Any GATT rule should be supportive of these. Recently, at a UNEP/FAO consultation, Malaysia and Denmark had proposed that the new PIC agreement "should prohibit the export of pesticides and chemicals that are banned domestically". There had been strong support for this from nearly all the non-OECD countries. The Basel Convention on Transboundary Movements of Hazardous Wastes has also adopted recently by consensus a decision to fully prohibit the export of hazardous waste from OECD to non-OECD countries by 1998. Greenpeace wanted the WTO to "protect" such measures and not allow the CTE forum to weaken or oppose the proposals.