6:43 AM May 10, 1993

NORTH SEEKING GATT LEGITIMACY FOR ECO-UNILATERALISM?

Geneva 7 May (Chakravarthi Raghavan) -- The GATT Working Group on Trade and Environment ended a two-day meeting here on packaging and labelling requirements in countries, purportedly to achieve environmental objectives, and their trade effects.

The group headed by Ambassador Ukawa of Japan is to meet again early in July to pursue its mandate, and devoting one day to consider GATT followup to UNCED.

Discussions at this week's meeting, both informal and formal, reportedly brought to the fore the North-South divisions, with the Nordics and some of the European countries and the United States in effect seeking to shift the delicate balance between trade and environment interests stuck at the UNCED Earth Summit at Rio de Janeiro, and looking for multilateral cover or legitimacy for the actions they are taking or plan to take to satisfy their domestic opinion on environment.

Such measures have ranged from socalled recyclable packaging and other local or domestic concerns to measures to protect socalled 'global commons' and global issues.

The developing countries, atleast elsewhere, have refused to accept the definition of 'global commons' and 'global environment issues' propagated by the North and the institutions controlled and run by them: the World Bank, the Global Environment Facility (GEF) etc.

For the North, and the World Bank etc, whatever concerns the industrialized countries have become global issues and whatever concerns developing countries have become national issues.

With the environment lobbies and groups in the North increasingly strident on protecting 'global commons' (which often has come to mean the resources and the 'space' of the South that are sought to be kept in virgin purity to enable the North to continue its style of life and consumption), the governments of the North have found it easier to move via trade against such perceived threats than take serious actions in their own countries and affecting their own economies.

The ecolabelling and packaging rules and requirements have become one such area of easy action.

While the present General Agreement, and the Agenda 21 approved at Rio, do envisage measures being taken to protect the environment and which may have trade effects, such measures are permissible only to the extent that they are not hidden protectionist moves and the trade instrument or effect is ancillary and inevitable and no other instruments are available or possible.

The General Agreement allows measures to be taken by countries on health and environment grounds -- under Art XX. (b), the general exception provision of the GATT, "to protect human, animal or plant life or health" which could be contrary to GATT obligations. Environment and ecology are not mentioned but health and protection of human and plant or animal life is taken as covering these.

But, such measures are not to be applied in a manner constituting "a means of arbitrary or unjustifiable discrimination between countries where same conditions prevail or as a disguised restriction on international trade".

These provisions have been generally interpreted to mean that the measures permitted under the general exception clauses should have the 'least trade restrictive effect' -- that is as between several possible measures, the one to be taken would be that with the least trade restrictive effect.

Also, in any GATT dispute arising from actions of a contracting party that prima facie is contrary to the provisions of the General Agreement, it is the party that takes such measures that has to show that its action is justified by the 'exceptions'.

In the discussions this week, the working group had been looking at national or regional standards and regulations on labelling and packaging.

Developing countries have been arguing that the country imposing these measures has to prove that they are needed to protect the environment in terms of an international consensus and that any trade restrictive effect is unavoidable and that it operates in fact and law in a non-arbitrary and non-discriminatory way.

However, according to participants, the Nordics, Austria and the United States have been taking the position that the view that the view that governments taking such measures had to prove that the measures are necessary was an idealistic view and the GATT and the CPs have to come to terms with reality, namely that countries and governments are under pressure from domestic public opinion and environment lobbies to take actions and a way had to be found to reconcile thee.

The proponents of this view appear to be saying that if the GATT lags behind (public opinion) in these matters, they wold take action any way.

A seminar attended by delegates where experts from the International Trade Centre explained the various packaging and labelling requirements, promulgated on 'environment grounds', and affecting exporters from developing countries seemed to strengthen the concerns of the developing world.

A growing practice is the socalled 'eco-labelling' to show that the products being sold are friendly to ecology and environment -- and by implication those not carrying that label are unfriendly.

However, the ITC experts at the seminar showed how some of these 'green dot' label products have little to do with ecology and being granted on very arbitrary grounds.

A laminated plastic package for cosmetics was cited as an example. Plastics clearly are not easily biodegradable or recyclable, but yet got a green dot or eco-friendly label in one country.

Any packaging done in wood or jute bags, for example, are apriori eco-friendly because they are biodegradable in terms of waste disposal.

But since, Germany has no waste disposal facility for bio-degrading them, products exported to Germany from developing countries can't be packaged in such natural materials.

Exporters from South Asia and Southern Africa (like Zimbabwe) are now reportedly finding that they have to 'import' the packaging from Germany, in order to package their exports to Germany or set up costly facilities for recovery of the 'waste package' and their return and disposal to the exporting country.

Again plastic bottles are banned in Switzerland, but allowed in France.

How is an exporter in a developing country, with small exports to a number of European countries, to undertake different packaging for different markets, the ITC experts posed.

An issue before the group has been the extent of permissible actions, particularly on socalled global issues.

The working group in its earlier meetings has gone through the various international agreements on environment protection with trade effects or provisions for restriction of trade and have examined the compatibility of these instruments with the General Agreement.

There has been in effect little argument about environment agreements, with trade provisions (such as the Montreal Ozone protection treaty) commanding universal or near-universal consensus. Any remaining difference here relates to the treatment of GATT Contracting Parties who are not parties to such agreement.

However, a more general question relates to treaties and conventions of a regional nature or with less adherents and any trade instruments in them.

A view that Northern delegations have put forward at earlier meetings has been that countries could take trade actions to protect the environment if it is in line with multilateral agreements.

Since a 'multilateral agreement' could be any agreement involving three countries, developing countries have insisted that they should be agreements negotiated under the United Nations, open to all countries and which has a balance in terms of adherence from countries not merely in regional terms but at different levels of development.

Some industrialized countries are for a looser definition, or no definition, so that any regional agreements, negotiated under OECD or European fora could qualify, while a number of developing countries have been resisting it.

This is not an academic issue. The OECD for example is now moving in the direction of saying that actions to prevent global warming and greenhouse gas, particularly CO2 emissions, have to involve not only the industrialized countries with their overconsumption of energy for a high life style, but the poorer countries like China and India struggling to achieve a modicum of living standards for their people where energy consumption has to go up.

The ICs could easily reach an agreement, or even a limited protocol to existing treaties, where they would link greenhouse emissions and maintenance of 'lungs' for their emissions in the South (forests etc) and take trade actions to limit imports from countries not falling in line.