STRATEGIES SHOULD EXPAND, NOT RESTRICT TRADE

5:58 AM Nov 25, 1994

STRATEGIES SHOULD EXPAND, NOT RESTRICT TRADE
Geneva 23 Nov (TWN) -- A two-day high-level meeting this week on 'Trade, Environment and Sustainable Development', with participation of about eight Environment Ministers, agreed that measures for environment protection should expand trade and not inhibit it, Zimbabwe's Minister for Tourism and Environment, Herbert Murerwa announced at a press conference Tuesday.

The widely attended meeting, second of its kind, had been cosponsored by UNCTAD and UNEP. In three sessions (held behind closed doors) they discussed issues of "Trade and Competitiveness in relation to Environmental Policies", "International Environmental Agreements and Trade Policy" and "Strengthening International Cooperation, including Institutional Cooperation".

Murerwa, (also his country's acting industry and commerce minister), and his three other colleagues -- Finland's Environment Minister Ms Sirpa Pietikainen, India's Environment and Forests Minster Mr. Kamal Nath, the UK's Secretary of State for Environment John S. Gummer -- all spoke both of need for greater coordination within governments and among the various institutions and organizations dealing with the whole complex of issues.

There was a strong preference at the meeting, Murerwa told the press, for the use of positive incentives rather than trade sanctions in International Environmental Agreements for ensuring compliance with its objectives.

Also such sanctions should be used only as a 'last resort' and when used should be least trade restrictive, be justified on environment grounds and based on sound science, he said in summing up the outcome of the high-level meeting.

"Social and economic realities and political considerations may militate against effectiveness of trade sanctions for achieving environmental protection," he added.

On the issue of harmonization of standards, the discussions at the high-level meeting brought out the complexities involved and the need to proceed with caution and on basis of greater knowledge and empirical studies and investigations, both scientific and economics.

Murerwa said the high-level meeting felt that the first step towards harmonization should be at the regional level, moving towards more globally accepted harmonization. While environmental standards need to be improved gradually in both the developed and developing countries, standards were not the only means for achieving environmental improvements, in the view of some of the participants at the high-level meet, it was also important to change consumption patterns.

According to the presentations of the ministers, there was also agreement at the two-day meeting on the desirability of internalizing environmental costs and a consensus on the need to devise a mechanism to compute such costs. Existing mechanisms for doing this were seen as inadequate.

Greater trading and investment opportunities for developing countries was more likely to lead to environmental benefits. But the question was how and when such benefits could be realized.

The meeting also discussed the dangers of hidden protectionism lurking behind environmental requirements. Transparency, consultation and higher dependence on internationally-based mechanisms were seen as important to alleviate such worries.

Unilateral trade measures for environmental purposes may achieve neither trade nor environmental objectives whereas multilaterally-based initiatives with the full participation of all countries were more likely to provide equitable and efficient solutions.

It was strongly felt in the meeting that international trading system and the IEAs did not need to be in conflict with each other but could, and should, be mutually reinforcing in the light of sustainable development.

The high-level meeting praised the work being done in UNCTAD and UNEP in this area and this was seen as complimenting the work of GATT/WTO. The UNCTAD-UNEP work was seen as playing an important role in clarifying the issues through scientific analysis and consensus building.

At the press briefing the ministers spoke of the high level meeting providing a format to send messages to GATT/WTO and other organizations as well as to national governments to clarify standpoints on policies that could be taken to promote sustainable development.

On the trade and environment mechanisms within the WTO, the UK Minister Gummer, said the WTO should not be overloaded with environment questions since they did not have the expertise nor resources. They were hence looking to the UNEP and UNCTAD to provide it.

Asked how there could be 'inputs' into the WTO, when the WTO did not want to have any formal links with the UN and the Bretton Woods institutions were not accountable either, Gummer said that national governments had to come to terms with themselves and must speak with one voice at all places. Several representatives at the meeting, he said, had noted that some governments spoke with different emphasis on the same issues in different fora, depending on the organizations where they were involved. "We all need to speak with the same voice," he said, adding that the UN-ECOSOC Commission on Sustainable Development was there to coordinate all these activities and various institutions must be clear about their remits.

Indian Minister Kamal Nath said it was a matter of concern that the WTO might deal with these issues without adequate inputs and environment could be used as a Trojan horse for protection. The WTO should have adequate inputs from UNEP and UNCTAD, he added. Kamal Nath did not see any urgency in WTO pushing ahead without any clear evidence of collective ecological damages.

On eco-labelling and sustainable forest management, Ms. Pietkainen stressed the importance of internationally acceptable eco-labels based on correct indicators and agreed basis about sustainable use of forests. There was no such basis so far, "and unilateral actions are not acceptable," she said.

At a final closing plenary, which was opened to NGOs, there was mention in this regard of the complementarity of roles of UNEP and UNCTAD on the one hand and of the WTO on the other, and of cooperation and coordination among these three, the Bretton Woods Institutions, some of the UN specialized agencies involved, and the UN and its Commission on Sustainable Development.

Finland's Ms. Sirpa Pietkainen who co-chaired the session, said the meeting had shown that a whole complex set of issues were involved and the international discussions were at a very early stage. But major responsibilities lay within nations who have to clarify their stands and provide adequate resources, both at national level and to international organizations. Trade and Environment were not mutually contradictory. But to make them work together, environment set the limits to which trade must adapt itself and this required considerable analytical work.

Colombian Environment Minister Ms. Cecilia Lopez, the other co-chair, said while trade and environment issues were being dealt with, problems of sustainable use of forests and pricing mechanisms for natural resources, border taxes etc had not been adequately dealt with. Some unanimity had to be found within east-west and north-south, and within commerce and environment ministries, "to set the political agenda for the WTO".

Dr. Robert Repetto of the Washington-based World Resources Institute (an NGO which however was allowed to sit in on the closed meetings) said various studies had shown that concerns about effects of environment regulations on trade had not been borne out.

"Everyone cannot become uncompetitive at the same time," he said -- presumably implying that if all countries acted to take environmental measures, they would not affect the trade. The cost of environmental protection measures had an upper limit of one to two percent of GDP and countries spending it would gain in terms of reversing environmental degradation. He also advocated the need for internalisation of environmental costs in prices of commodities.

The representative of the Third World Network said that unlike the WRI, other NGOs had not been present at the three earlier sessions, and could only go by what the co-chair had now said or in their press conference. Environment, Trade and Sustainable Development issue was very complex and was one involving considerable divisions within governments in the North and the South, between North and South governments, as well as among environment and development NGOs. Everytime there was a new definition or meaning being given to 'sustainable development', but their net effect seemed to be to reduce the content of development and increase the burdens on the South.

Open debates and discussions were needed to spread understanding and reconciliation of conflicting views before any consensus could be achieved. A great deal of empirical research and analysis work was needed. Economists, environmentalists, international secretariats and NGOs should be more cautious before throwing up suggestions and ideas. A two percent of GDP expenditure for environment protection might not cost the United States very much. But could any African country with the kind of debt burden (more than the GDP) and debt servicing absorbing such a large portion spend on environmental protection measures needed by the North?

And how could one talk of internalisation of costs and its reflection in commodity prices, given the price elasticities of commodity markets and the 'market dogma' that has eliminated most commodity agreements with price mechanisms? Preliminary estimations by the Institute of Agricultural Trade Policy had brought out that a bushel of US wheat priced at $2.50 a bushel, cost the farmer $6 to produce and when full environmental costs are reflected would work out to $111 a bushel. How would it all be internalised and who would pay for it and would the African countries be able to import at this price? It was easy to talk of sustainable management of forests. But everyone knew that the very same governments of the North, at the timber commodity negotiations, refused to include temperate and boreal forests and would not put their money where their mouth was.

The GATT had recently produced some new estimations of the Uruguay Round package in year 2005 -- ranging from about $110 billion world gdp and welfare gains to $510 billion. The last was postulated on monopolistic competition. Presumably, the GATT message is to maximise the benefits countries should encourage monopolistic competition. Leaving trade theory aside, what would it do to sustainable development or equitable distribution of trade gains?

The TWN also wondered how governments at the meeting could be speaking of need for the coordination involving the UN and UN system, the WTO and the Bretton Woods Institutions when their own finance ministers were not ready to ensure BWI accountability to the UN, while their trade ministries had now more or less decided against any WTO-UN formal links. It was nice to talk about the CSD role in coordination, But one had only to contrast the positions taken by the German environment minister who chaired the CSD with the German Finance Minister's stand at the Madrid Fund-Bank meetings. Perhaps some answers would be provided at the meeting on these questions.

Ms. Pietikainen and later Chairman Murerwa acknowledged that these were difficult but pertinent questions for which they had no answers which needed further discussions and research.

In other comments, the representative of the Friends of the Earth and the World Wide Fund for Nature called for the creation of an process for an intergovernmental panel on trade and environment to ensure integration of environmental and trade policy to promote ecologically sound and socially just development. Such a panel, the FOE said, would work closely with the CSD, UNEP, UNCTAD, UNDP and OECD and also consult with the IFIs like the Fund and Bank to evaluate environmental effects of loan policies that encouraged countries to adopt export-led development policies. The WWF said their ideas were evolving and that while they did not envisage a very large membership, they did want to ensure openness both to governments and non-government actors.

Egypt noted the weak bargaining power of developing countries in fora where international trade was discussed. Argentina felt that internalisation of environmental costs in commodity prices -- how and where to do it -- needed to be studied. Italy felt that developing country exports should find their place in super-markets of the North. The US found the interventions of the NGOs 'constructive' and felt they could have been present at all the sessions.

In their own concluding remarks, UNEP Executive Director, Mrs. Elizabeth Dowdeswell and UNCTAD's Officer-in-charge Carlos Fortin outlined their own organizations work programme in these areas and the priorities. Fortin referred to eight country studies by UNCTAD on eco-labelling which showed that these could have some negative effects on competitiveness, but could also expand trade when done under multilateral disciplines and with transparency.

Murerwa said sustainable development was fundamental to improve the quality of life of the present and future generations and trade and environment were the indispensable means to achieve these objectives. The best way to meet these challenges was to ensure greater market access, greater international cooperation and incorporating development dimension in trade and environment policies.