Regional Meeting of Experts on the Interrelationship between Trade and Environment

environment
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CONTENTS

• 1. Regional Overview of Trade and Environment: Summary

  
  

• 2. Country Reports: Briefing

  
  

• 3. Activities of International Organizations on the Issue: Briefing

  
  

• 4. Recommendations of the Meeting

  
  

• 5. Participants

  
  

• 6. Funding of the Meeting

  
  

1. Regional Overview of Trade and Environment: Summary

A report on the interrelationship between trade and environment in Asia and the Pacific was presented to the Meeting and provided the following observations:

(a) The effect of trade liberalization on the environment needs further study in the region, especially with regard to the agricultural sector;

(b) The perception towards the issues of trade-environment measures seems to be affected by the country's exposure to the international market, not by its income level or state of environment;

(c) All countries attending the Meeting comply with the major multilateral environment agreements (MEAs), many of which have trade provisions, by establishing and enforcing national policies and measures to meet the requirements of MEAs; and

(d) It would be appropriate to establish a regional forum to further address trade-environment issues.

2. Country Reports: Briefing

The participant from Bangladesh stated that trade liberalization in Bangladesh contributed to export growth, especially in the non-traditional manufacturing sectors such as garments and leather industries, and that so far no restriction on Bangladeshi exports occurred on environmental grounds. He introduced the recently enacted comprehensive national legislation on environmental protection, through which environmentally damaging enterprises were strictly regulated. He stated that the level of awareness and familiarity with foreign policies on trade-environment issues were not quite well advanced among Bangladeshi exporters. In future, however, those could be of concerns to Bangladeshi exporters, as some environment related measures such as eco-labelling were likely to be imposed on Bangladeshi exports. Several regional policy initiatives were suggested, including establishment of an appropriate forum on trade-environment issues under the auspices of SAARC or ESCAP, particularly to deal with issues relating to financial requirements.

The participant from China described his country's economic and environmental status, in particular, the recent development of China's Green Food Programme and Eco-labelling Programme. He stated that a lot of development work remains to be done on China's policy on trade and environment, including increasing competitiveness of exports, improving export structure, and formulating trade-environment policies based on domestic needs and international requirements. He particularly emphasized the need for further exchange of information and views among countries in the region and participation in further such kind of meetings or workshops from the Government, academic and business sectors.

The participant from Pakistan representing the business sector stressed the need for full involvement of the business sector in formulating trade and environment policies, in view of its intimate knowledge of environmentally friendly technology and facilities owned by it. Referring to environmental NTBs (non-tarrif barriers) such as the German prohibition of Azo-dyed clothes, he stated that developed countries used environmental or labour issues for the purpose of restricting imports from developing countries. He further emphasized the advantage of business sector involvement in developing appropriate low-cost technology to reduce environmental problems and introduced to the Meeting Pakistan's Environmental Technology Programme for Industry. The other participant from Pakistan requested that a consultant/expert from UNIDO or ESCAP might be sent to have a meeting with Ministry of Commerce and Industry to help them in developing a comprehensive system for eco-labelling to compete in the world market and boost its economy.

The participant from Viet Nam emphasized that deterioration of the environment by trade liberalization should be conceived and addressed. He referred to the case of the export-led growth in aquaculture products which works as an incentive for coastal residents to destroy mangrove ecosystems. He stated that the government was keen to ensure environmental protection at a very early stage of development and pointed out the need for further study on the impact of trade/environmental policies based on domestic needs and international requirements. He particularly emphasized the need for further exchange of information and views among countries in the region and participation in further such kind of meetings or workshops with participation from the Government, academic and business sectors.

The participant from Malaysia emphasized that promotion of sustainable development should encompass initiatives aimed at strengthening and continual liberalization of the multilateral trading system as well as putting in place complementary environmental and resource management policies. In considering environmental policies, the key principles of non-discrimination and avoidance of unilateral action should not be compromised. The concern was raised over the possibility of ISO 14000 becoming a defacto mandatory condition for imports and trade barrier rather than a voluntary requirement. He stated that ISO should take cognizance of the WTO principles and that indiscriminate use of eco-labelling schemes were affecting exports from Malaysia and other developing countries. Rather than punitive measures, positive measures such as improving market access, financing, transfer of environmentally sound technology and capacity-building in assisting developing countries in the ESCAP region towards achieving sustainable development and meeting environmental objectives should be fully explored. The special needs and problems of small and medium-scale industries in responding to the environmental challenge would need to be addressed.

The participant from the Philippines presented the political economy of natural resource use in the country and its effect on the environment, including the gradual shift of the economy from a natural resource-driven one to manufacturing and services-oriented. The Philippines' trade, industrial and investment policy regime has shifted since the turn of the 1990s towards a more outward-oriented economy with reduced tariffs and liberal foreign investment terms. There was a growing consensus that the Philippines was in a good position to move towards sustained economic growth in the future. He expressed the view that the Philippines was to benefit from the adoption of more outward economic policies together with stronger domestic environmental management. He also stated that the Philippines was committed to fulfill its obligations to multilateral environmental agreements and the WTO.

The participant from the Republic of Korea (ROK) set out the national trade and environment concerns. He stated that there should be further research on selected priority sectors to obtain more tangible and substantial results, which, through harmonized data classification, analytical tools or frameworks, would help generalize the outcomes of such research. He also stated that international cooperation in research and development of environmentally sound technologies should be strengthened at all levels, at firm, industry and intergovernmental levels.

The participant from the business sector of Republic of Korea (ROK) introduced two environmental management schemes encouraged by the Government and presented the status of the environmental management in ROK industry. He introduced the Environmental Management Programme operating in his company, the goal of which was to achieve green management of the company based on social trust. The Programme consists of the greening of products, greening of work-sites, greening of communities, and greening of management, which should be achieved on the basis of top-down approach and everybody's participation.

The participant from Australia noted that not all trade and environment issues were problems, some could be win-win situations. Where problems arise, Australia has sought consensual solution in the multilateral forum. Referring to the negative effects of legal imports on the domestic environment in the form of discharge of inadvertently contaminated ballast water, Australia had successfully sought improved shipping practices through the International Maritime Organization to address this problem. It has also become aware of the potential negative effects of some exports, such as unwanted hazardous wastes and hazardous chemicals. Australia has conformed to multilateral regimes in these situations. There could also be positive international effects for the environment through trade. Australia's clean agricultural exports offer a net environmental benefit by easing the need for production by more polluting agricultural commodities overseas. In other situations, such as lead risk reduction and climate change negotiations, Australia has found it necessary to try to influence the design of MEA regimes under negotiation so as to avert unnecessary negative domestic impacts on trade.

3. Activities of International Organizations on the Issue: Briefing

The representatives from selected international organizations introduced the Meeting on their activities on trade and environment issues.

The representative from the Asian Development Bank (ADB) stated that it had recently initiated its activities in the field of the environment and trade, and would continue placing high priority in this field. He informed the Meeting that ADB had several environment related projects, including studies on environment impact assessment and the projects of capacity-building such as ISO 14000, which could be linked with trade issues. He further mentioned that ADB had produced several relevant research papers and that it had been collaborating with international organizations such as ESCAP, WTO and the World Bank on environmental issues. He also mentioned that in future, it was possible that ADB loans may be linked with environmental issues.

The representative from the Organisation for Economic Cooperation and Development (OECD) briefed the Meeting about their activities including the establishment of the Joint Session of Trade and Environment Experts in 1991, which had led to the 1993 report of the Joint Session to OECD Ministers containing procedural guidelines on the concerns. The guidelines included (i) transparency and consultation; (ii) trade and environmental examinations, reviews and follow-up; (iii) international environmental co-operation; and (iv) dispute settlement, accompanied by checklists for policy-makers undertaking reviews of the trade effects of environment policies and agreements. A further analytical report was presented to Ministers in 1995. The representative further stated that OECD was currently working on the effects of trade liberalization on the environment by focusing upon environmental effects of deregulation and trade liberalization on the transport sector. Energy and environmental goods and services were possible future case studies. A work programme on tariff escalation, eco-labelling and life-cycle management was also underway. Moreover, OECD was continuing examination of actual experience with trade provisions in major multilateral environmental agreements.

The representative from the World Trade Organisation (WTO) briefed the Meeting on the work of the WTO Committee on Trade and Environment. She presented the main characteristics of the Report that the Committee had submitted to the WTO Ministerial Conference in Singapore, in December 1996. The Report addressed all the ten items which had been contained in the 1994 Marrakesh Decision on Trade and Environment and it reflected in details the state of the debate on trade and the environment in WTO. The Report also identified a number of issues which the Committee should address in its future work. In Singapore, Ministers recognized the progress achieved so far and agreed that the Committee should carry on its work under its existing mandate.

The representative from the United Nations Industrial Development Organization (UNIDO) informed the Meeting about its activities for information dissemination on cleaner production and other environment related issues such as ISO 14000 and eco-labelling, particularly referring to UNIDO/UNEP collaboration for the establishment of the Cleaner Production Centres in India and China. He stated that one of the consequent issues was the high cost of environment compliance, which possibly endangered the competitiveness of the small and medium size local enterprises. He also stated that UNIDO supported integration of environmental and industrial policies through a government-private sector dialogue.

The ESCAP secretariat informed the Meeting on the results obtained from the work on enhancing trade and environment linkages in selected environmentally vulnerable export-oriented sectors in the ESCAP region. It was stated that the adverse impact of environmental regulations on international competitiveness in major industrial markets, market access and export earnings was an issue of concern to developing countries of the ESCAP region, particularly as empirical findings suggest that labour-intensive manufactures, especially those destined to European Union markets could be particularly affected by environmental product measures. The challenge facing these countries was to reconcile outward-oriented trade liberalization with environmental protection policies.

4. Recommendations of the Meeting

The Meeting made the following recommendations for future action. The objective of the recommendations was to further promote the implementation of Agenda 21 and Regional Action Programme for Environmentally Sound and Sustainable Development, 1996-2000, especially, Chapter 17 on "Mutually Supportive Trade and Environment Policies", adopted at the Third Ministerial Conference on Environment and Development in the Asia and the Pacific held in Bangkok, in November 1995.

(a) Economies in the Asia and the Pacific region are heavily dependent on the utilization of their ecosystems to provide their economic resource base. Development requires open international markets for regional exports drawn from these resources. In order to be sustainable, such development must be supported by strong domestic environmental policies which can effectively protect the ecosystems on which all else rests.

(b) The Government policies need to be strengthened for the effective management of the issues on the trade and environment. In particular, the enhanced and effective coordination among the various Ministries and Departments should be established.

(c) Co-operation should be strengthened among governments, business sectors, international organizations, NGOs and researchers in order to secure the full participation and involvement of all stakeholders.

(d) The adoption of environmentally friendly technologies can be commercially viable over the longer term but it is necessary to promote access to and transfer of such technologies in then favourable terms with financial assistance.

(e) Substantial reviews on the economic and environmental implications for the trade provisions in MEAs, with special reference to the case of vulnerable developing regional economies, should be fully considered in advance of regime design.

(f) Developing countries in the region concerned that ISO 14000 and eco-labelling schemes in developed countries may have a negative impact on certain industries, including dyeing, paper and textile industries. Transparency in eco-labelling schemes, and mutual recognition of eco-labels, are important. Voluntary mutual recognition of environmental management system certificates and eco-labels should be pursued under the auspices of appropriate international organizations.

(g) Cooperation and coordination among the countries in the Asia and Pacific region should be promoted to build their capacity in formulating environmental policies, both for welfare increases and the natural environmental resource base. In the first instance, such cooperation would take the form of exchange of information to share common understanding of trade and environment issues through the meetings at both inter and intra-regional levels, workshops, and, where useful, through the establishment of databases, information clearing-houses, and the use of the internet. Some forms of a regional network of policy and educational institutions to address trade-environment issues should be considered.

(h) To facilitate wider access to information, the OECD Secretariat and other international organizations, such as the WTO and UNCTAD might be approached for possible co-publication and cooperative distribution of trade and environment studies, policies and other documents.

(i) Two priority project proposals were also identified as follows:

1. Case studies on the focused priority sectors and feasibility study on mutual recognition: (i) the case studies to deepen understanding of the regional trade and environment dynamics; and (ii) a feasibility study on the mutual recognition arrangements for environmental management systems of certification and eco-labellings.

2. Capacity-building for enhancing understanding and competence on trade and environment issues at the regional level: (i) activities will be designed in respect of trade and environment data collection and management, relevant inter-ministerial coordination including policy improvement, and business sector liaison; and (ii) exchange of information through regional networks, meetings, workshops, publications, databases and the internet site are necessary part of such activities.

5. Participants

The Meeting was attended by experts from Australia, Bangladesh, China, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, Republic of Korea, and Viet Nam. It was also attended by representatives from United Nations Environment Programme (UNEP), United Nations Industrial Development Organization (UNIDO), World Health Organization (WHO), World Trade Organization (WTO), Asian Development Bank (ADB) and Organization for Economic Cooperation and Development (OECD).

6. Funding of the Meeting

The Meeting was funded by the Government of the Republic of Korea.