6:37 AM Mar 3, 1994

GREEN PROTECTION, ECO-PROTECTION AND TREMS

Geneva, March 3 (Chakravarthi Raghavan) -- Third World fears about environment becoming another trade weapon against it need to be examined closely and dealt with promptly to enable the GATT Work Programme on Trade and Environment to be advanced, says the World Wide Fund for Nature (WWF-International) in a new publication titled 'green protectionism'.

The WWF seeks to distinguish between 'green protection' and 'environment protection' which it considers mutually exclusive, but supports use of Trade Related Environmental Measures (TREMs) or measures that protect environment but which incidentally provides a degree of economic protection for a domestic industry.

The study, far from achieving its intent of helping to remove fears or suspcisions of developing countries on this issue, may reinforce those fears by its advocacy of legitimacy of TREMs and trade restrictive measures aimed at protecting the environment, distinguishing and discriminating between products on basis of the processes used.

The idea of product discrimination in imports based on the process used by the exporter was a concept that was sought to be promoted by several Northern groups in the run-up to the UNCED Rio Earth Summit of June 1992 in relation to the Agenda-21 chapter on trade and environment, but was abandoned because of strong opposition from many Southern NGOs.

Northern governments and many of their senescent industries that initially raised possibilities of trade restrictions on purported environment grounds and talk of 'internalisation' of environment costs, PPMs and even 'polluter pays' principles have backed away because of realization that this could be a two-edged instrument that would equally work against the North which now depends a great deal more on Southern markets and exports.

Labour-intensive processes and production methods are by definition less environmentally costly than capital- or energy-intensive processes and many of the North's exports (textiles and clothing or agriculture etc) could be priced out on 'environment protection' grounds.

A number of Northern NGOs have been looking at and advocating PPMs and other such instruments (ECO-dumping and countervailing duties ala antidumping subsidization of domestic production and exports to protect competitivity while adopting higher standards), to enable their communities to have higher environment standards and norms than others are willing to accept or need to because of their differing environmental endowments, and preserve domestic industries becoming uncompetitive and shedding jobs.

While some of the NGOs are obviously 'protectionist', a number of national and international NGOs (most of whom in any event are dominated by US-EC groups), in their single focus on saving 'nature', 'wildlife', have been advocating US unilateralism to achieve these aims.

Currently, in the Congressional hearings over the Uruguay Round agreements, several of them have been pressing this view.

The WWF study is based on an analysis of four dispute settlement cases in the GATT, purportedly involving environment issues, -- two disputes involving the US and Canada over fishing, the US Superfund levy (where imported petroleum products were subjected to a higher levy than domestically produced products, to finance the cleanup of US environment by past pollution of its industries) and the GATT panel ruling against the US over Mexican tuna fishing.

The WWF study cites the US tuna fish law, purportedly to protect some kinds of dolphins in one part of the oceans off US west coast but on the high seas, and the GATT panel ruling against it, to complain that the ruling's treatment of processing and production methods and TREMs with extrajurisdictional effect gave precedence to trade objectives over environmental ones.

The tuna fish panel report was never brought up or allowed to be adopted in the GATT Council, the United States having persuaded Mexico not to press the issue but reach a compromie.

The panel ruling was based on a number of issues including US discrimination, attempts to exercise 'extra-territoriality' for its environment protection laws. The panel ruling, which has been a target of attack from many environment groups with the somewhat simplistic argument that the panel was against 'dolphins' and in favour of trade.

The panel had however pointed out that any environment protection or conservation of natural resources beyond national jurisdictions should be sought through international cooperation and agreements in multilateral fora and not through unilateral exercise of power including trade sanctions.

In questioning the ruling, the WWF study thus appears to support US attempts to exercise unilateralism and exercise of extra-jurisdictional power so long as it purports or is intended for environmental protection, rather than take recourse to the multilateral processes and international cooperation to fashion international instruments commanding global consensus.

WWF defines 'green protectionist' measure as one that provides economic and or political protection for domestic industry ostensibly on environmental grounds and 'environmental protection' measure as one protecting the environment effectively without affecting trade.

TREMs are defined as measures aimed at environment protection but have trade effects, and calls for changes in the GATT trade rules to enable TREMs which, in WWF view, could play an important role in securing sustainable development.

It cites as example cases where environmental protection measures could affect competitiveness of national business enterprises in the short-term and thus would need TREMs to enable import restrictions based on products process methods -- citing as an example European Union's difficulties in imposing a carbon tax because of concerns over competitiveness of European industry being affected.

The WWF advocates bilateral or multilaterally designed incentive-based TREMs to promote internalizing the environmental costs of traded goods and setting a fair price for a traded product so that an exporting country does not have to degrade its environment to trade profitably.

The WWF calls for changes in the GATT dispute settlement process, for establishing formal links with other multilateral institutions (UNEP, UNCSD etc) with expertise on environment playing a key role to assess environmental effects of trade measures.

The WWF also advocates qualification of the GATT's most-favoured-nation principle and national treatment principle, wherever it conflicts with sustainable development objectives, to enable discrimination in trade and traded products (of domestic and foreign origin) on environmental grounds.

In the WWF view, unilateral and multilateral TREMs should meet basic GATT priciples (MFN, national treatment and transparency), but there would be cases where exceptions would have to be made for national treatment requirement for production processes most intimately linked to environment and management of natural resources or for internalizing transport costs.