Global trade, its sustainability and environmental issues

G K M Towfique Hassan

The long battle for free trade must be waged against many enemies whether protectionists, would-be monopolists or even some anti-free trade lobbyists. But now a newish troop of combatants has become one of the noisiest : environmentalists. When government leaders met in Seattle in November last to talk about launching a new push for trade liberalisation under WTO, much attention was supposed to be paid to ruining of the global environment. However, this assumption is plain wrong. Far from damaging environment, trade is often the best way to improve it.The roots of the current issue on trade and environment can be traced to the early 1970s, partly as a consequence of the first UN Conference on the Human Environment held in 1972 in Stockholm. Although many of the issues that are now under discussion are not entirely new, the context in which they are being discussed has been redefined. The redefinition of environmental degradation from a narrow emphasis on pollution to include its primary cause, poverty, was contained in the Brundtland Commission's concept of " sustainable development." The elaboration of this concept of sustainable development has been one of the most significant factors in forging the basis for a common approach to the subject of trade and environment, particularly between developed and developing countries. It contrasts fundamentally with the "limits to growth" paradigm that was a predominant perspective in the 1970s, which cast economic growth as part of the problem of environment degradation and not part of the solution.The Brundtland Commission report led to the June 1992 UN Conference on Environment and Development in Rio, which was the turning-point in establishing the manner in which to address environmental concerns. One of the central decisions of the UNCED process was an endorsement of the positive role that economic growth can play in the achievement of development that is sustainable. At the Rio meeting the link between economic growth and sustainable development and the contribution of technology transfers and open markets was recognised. The point made is that it is the quality of economic growth and not the reduction in its quality that is fundamental to development if it is to be sustainable.From various aspects, the subject of trade and environment can no longer be viewed as something new and the dimensions of the problems in this area should not be exaggerated. The rules of multilateral trading system and the protection of the environment have been discussed in various fora since 1991. With the conclusion of the Uruguay Round a decision was taken to begin a comprehensive work programme on trade and environment in the WTO. The decision has ensured that the subject of trade and environment will be given a high profile. The objective of sustainable development appears as an important parameter of the WTO programme on trade and environment.The Uruguay Round was launched before environmental issues had taken prominence in many countries and the relationship between trade and environmental measures was not included as a separate subject for negotiation.The Uruguay Round Agreements represent an important step to addressing issues which affect the environment and will make a significant contribution to better environmental protection and conservation. The fundamental point is based on the recognition that trade liberalisation is accepted as an essential if not a sufficient element of policies to achieve better environmental protection and sustainable development. From the point of view of developing countries, where poverty is the number one policy preoccupation and the most important obstacle to better environmental protection, opening up world markets to exports from developing countries has a key role to play. Trade liberalisation on a global scale coupled with financial -and technological transfers is the main means available to them to secure the additional resources to improve their environment and promote sustainable development. The export opportunities of developing countries will be enhanced through the Uruguay Round package both generally, through the reduction of tariff escalation and removal of non-tariff barriers in their main trading partners and specifically in areas such as textiles and clothing. This can make a real contribution to reducing the dependence of so many developing countries on natural resource exploitation and should promote a more efficient allocation and use of resources.There already exists considerable scope for governments to protect national environmental resources as long as they are applied equally to domestically produced and imported products and do not discriminate against imports. Non-discrimination is a fundamental requirement of WTO Article XX, except in case of protection to human, animal and plant life or health or conservation of irreplaceable natural resources. However, it is agreed that environmental standards will differ between countries given differing pollution assimilation capacities and social preferences.There is wide acceptance that the manner in which to resolve transborder, regional or global environmental concerns is through multilateral environmental agreements. These agreements are seen as a safeguard against trade-related environmental measures being taken on a unilateral basis, for example US embargo on Mexican tuna caught in a manner that kills dolphins. The UNCED endorsed multilateral consensus and cooperation as opposed to unilateral measures of environmental protection. To resort to unilateral measures in this context runs the risk of arbitrary discrimination and disguised protectionism which would not only damage trading system, but not necessarily provides environmental protection.Multilateral approaches to resolving global environmental problems are preferable. But the question is how to do it ? Of the trade provisions that have been included in a small number of Environmental Agreements (EA), none has been subject to a legal challenge under WTO. There exists a scope for negotiation of EAs to achieve their objectives in a way that is compatible with WTO rules. Out of about 180 EAs currently in force, only 18 contain trade provisions, such as the Montreal Protocol, the Basel Convention and CITIES.With the functioning of WTO in 1995, the Committee on Trade and Environment have been asked to identify the relationship between trade and environmental measures in order to promote sustainable development and to make recommendations on whether any modifications are required. The Committee prepared a comprehensive report submitted at the first WTO Ministerial Conference in Singapore in 1996 identifying ten issues to be addressed with a view to making international trade and environmental policies mutually supportive and globalised. These are:To establish a relationship between multilateral trading system and trade measures for environmental purpose ;To establish a relationship between environmental policies relevant to trade and environmental measures ;To establish a relationship between global trading system and charges and taxes for environmental purpose and requirements for environmental issues relating to products including standards and technical regulations, packaging, labelling and recycling ;To establish a relationship between dispute settlement mechanisms and environmental agreements ;To assess the effect of environmental measures on market access to developing and LDCs and evaluate benefits of trade liberalisation ;To evaluate the effect of exports of domestically prohibited goodsTo examine environmental aspects in relation to Service and Trade Related Aspects of Intellectual Property Rights ;To provide inputs to the relevant bodies with respect to environmental issues for greater interaction between inter-govt and non-governmental organisation.Trade generally benefits the environment as it boosts economic growth. As people get richer they want a cleaner environment. "The trickiest problems over trade and environment are cases when pollution or other damage spills from one country to another. American factories cause acid rain that poisons Canadian forests, Indian once polluted the Ganges, ruining rice paddies in Bangladesh". (Economist, October 9, 1999 issue). Such problems are resolved by making polluters pay. Global ozone problems such as depletion or global warming can impinge on trade too. These require global action, yet each country has its different perspective. Therefore, while initiating global action it must be kept in mind that no country should be a victim of unfair trade sanctions at the time of enforcing such global action. Sweeping generalisations are common from both the trade and the environmental community, arguing that trade is either good for the environment or bad for environment, while the real world linkages are a little bit of both or a shade of grey. Relations between environmentalists and advocates of free trade might not be very cordial. Often cases are referred to WTO Committee on Trade and Environment. For example the Committee ruled against America's ban on imports of shrimps from countries using nets that trap turtles. The Committee recognised the US right to protect sea turtles, so long as it did this by negotiating turtle protection agreements, as it had done with countries in the Americas rather than by imposing its rules unilaterally. The poorer countries are afraid that environmental issues will be used by rich countries as another excuse to adopt protectionist policies. Barriers to trade on environmental issues should be scrapped, so should subsidies to polluting energy industries. Above all if trade is made freer, the world will get richer and that is the best way to make it cleaner too. 

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