UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT UNCTAD activities on trade, environment and development 1995-1996 Note by the UNCTAD secretariat 11 April 1996 Prepared for The fourth session of the United Nations Commission on Sustainable Development New York, 18 April to 3 May 1996 CONTENTS Paragraphs Page INTRODUCTION ....................................... . 1 - 2 3 I. ACTIVITIES AT THE INTERGOVERNMENTAL LEVEL ..... 3 - 12 3 - 5 A. Activities in 1995-1996 ............... 3 - 9 3 - 5 B. Preparing for UNCTAD IX .............. 10 - 12 5 II. TECHNICAL ASSISTANCE .......................... 13 - 28 6 - 10 A. Trade, environment and development ...... 13 - 22 6 - 8 B. Commodities, trade and environment ...... 23 - 26 8 - 9 C. UNCTAD's Biotrade Initiative ............ 27 - 28 9 - 10 III. COOPERATION WITH OTHER INSTITUTIONS ......... 29 - 34 10 - 11 AND CIVIC SOCIETY IV. FOLLOW-UP TO THE COMMISSION'S DECISION ON ..... 35 - 55 11 - 15 TRADE, ENVIRONMENT AND SUSTAINABLE DEVELOPMENT AT ITS THIRD SESSION Annex I Intergovernmental meetings and other activities 16 Annex II Recommendations of the Ad Hoc Working Group on Trade, 17 Environment and Development for future UNCTAD activities Annex III Reports of the Ad Hoc Working Group on Trade, 18 - 19 Environment and Development and documents prepared by the UNCTAD secretariat INTRODUCTION 1. The Commission on Sustainable Development, at its second session, recommended that UNCTAD provide annual reports to the Commission on its activities concerning trade and environment. The present note, prepared by the UNCTAD secretariat under its own responsibility, describes UNCTAD's activities in the area of trade, environment and development carried out in the period April 1995-March 1996. UNCTAD's mandate on trade and environment stems from the "Cartagena Commitment", which embodies the results of UNCTAD VIII, and Agenda 21, and has been endorsed by UNCTAD's Trade and Development Board 1/ and the General Assembly. Recently, the General Assembly requested UNCTAD to continue its special role in trade and environment, taking into account the need for continued close cooperation and complementarity in the work of UNCTAD, UNEP and the WTO (resolution 50/95 of 12 December 1995, paragraph 27). In accordance with its mandate, UNCTAD plays a key role in bringing out the development perspective of the trade and environment debate. I. ACTIVITIES AT THE INTERGOVERNMENTAL LEVEL A. Activities in 1995-1996 2. Since the last report on UNCTAD's activities in the field of trade and environment, submitted to the third session of the CSD in 1995 (CRP 7), UNCTAD has continued to implement its intergovernmental work programme. 3. The Ad Hoc Working Group on Trade, Environment and Development, which was established by the Trade and Development Board in May 1994, held its second session from 6 to 9 June 1995. The session discussed the competitiveness effects of environmental policies, standards and regulations and continued its deliberations on the trade, environmental and developmental effects of eco-labelling. The Group's discussions on the first item focused on three sets of issues: (a) environmental policies and competitiveness; (b) trade and competitiveness effects of multilateral environmental agreements (MEAs); and (c) future issues for research. The Group's deliberations on eco- labelling focused on the following issues: (a) trade, environment, and development effects of eco-labelling; (b) the use of criteria related to process and production methods (PPMs); and (c) measures to take account of developing countries' interests in determining eco-labelling criteria. The discussions were aided by the reports "Trade, environment and competitiveness aspects of establishing and operating eco-labelling programmes" (TD/B/WG.6/5) and "Environmental policies, trade and competitiveness: conceptual and empirical issues" (TD/B/WG.6/6), both prepared by the UNCTAD secretariat. 4. The third and final session of the Working Group was held from 6 to 10 November 1995. Substantive discussions were held on two items: the trade and competitiveness effects of environmental policies, standards and regulations; and newly emerging environmental policy instruments with a possible trade effect. Discussions focused in particular on the relationship between environmental policies and export competitiveness, in particular for developing countries. To aid the discussions, the UNCTAD secretariat prepared a report on "The policy debate on trade, environment and development" (TD/B/WG.6/10), which builds on its earlier report on "Environment, trade and competitiveness: conceptual and empirical issues" (TD/B/WG.6/6), prepared for the second session of the Working Group. In addition, the secretariat prepared synthesis reports on empirical studies in Colombia, India, Zimbabwe, Brazil and Poland as background papers for the discussion. With regard to the second item, the report on "Newly emerging environmental policies with a possible trade impact: A preliminary discussion" (TD/B/WG.6/9 and Add.1) provided an analysis of the possible trade and development effects of different instruments used in the framework of product policies. 5. The Working Group paid special attention to sectoral and scale factors. It noted that environmental requirements are emerging in sectors of special export interest to developing countries, such as textiles, leather, footwear, and furniture. It also analysed the special situation of small and medium- sized enterprises (SMEs). The Working Group recommended that adverse competitiveness effects of environmental policies can be alleviated by policies at the national and international levels. In this context, it analysed factors such as the openness of the economy, economic growth, the capacity for technological innovation and the development infrastructure and recommended that positive measures at the national and international level are effective instruments to assist developing countries in achieving the objectives of sustainable development. The Working Group also noted that due account should be taken of the role of different environmental and developmental conditions in environmental policy-making, particularly in reconciling national with international concerns. 6. An important part of the debate focused on the trade and development aspects of multilateral environmental agreements (MEAs). The Working Group noted that these effects are different for each agreement and may vary over time. The Group recognized that positive measures could be valuable in assisting developing countries to meet the multilaterally agreed targets, in keeping with the principle of common but differentiated responsibility (see also chapter IV). 7. The Ad Hoc Working Group completed its work with the adoption of its Final Report, which contains: (a) findings and conclusions, principally on environmental policies and competitiveness, trade and competitiveness effects of multilateral environmental agreements, as well as on eco-labelling; (b) recommendations at the national and international level; (c) a programme of future work for UNCTAD (see annex II); and (d) recommendations for technical assistance. 8. The Standing Committee on Commodities, at its fourth session which was held from 30 October to 1 November 1995, discussed "the manner in which prices of natural products and their synthetic competitors could reflect environmental costs, taking into account policies relating to the use and management of natural resources and sustainable development". To aid these discussions, the secretariat had prepared the report "Sustainable development and the possibilities for the reflection of environmental costs in prices" (TD/B/CN.1/29). During the deliberations, it was pointed out that the elimination of distortions, such as subsidies, which caused market prices to diverge from private marginal costs was a prerequisite for implementing measures aiming to have prices reflect social costs. It was also emphasized that in evaluating the costs and benefits of implementing internalization measures, a broad view should be adopted that includes a multitude of socio- economic concerns and goes beyond the narrow concept of the maintenance of international market shares. Under the specific market structures of the commodity sector and the overriding immediate developmental concerns of most commodity-dependent countries, a cooperative approach was indispensable and technical as well as financial participation of the consumers was necessary. UNCTAD was called upon to enhance the exchange of experiences among developing countries on the subject of environmental cost internalization, undertake pilot projects for assisting interested developing countries in the design and implementation of internalization policies, and to expand applied research on the costs and benefits of implementing and not implementing such policies. B. Preparing for UNCTAD IX 9. Trade and environment also figures on the agenda of UNCTAD IX, which will be held in Midrand, South Africa, from 27 April to 9 May 1996. 10. The Ad Hoc Working Group on Trade, Environment and Development, in its Final Report, recommended a number of areas for future UNCTAD activities under the theme "trade, environment and development" after UNCTAD IX. In addition, the General Assembly requested UNCTAD "to address trade and environment matters comprehensively" (resolution 50/95, paragraph 26). Further decisions on priority activities and future intergovernmental work are expected to be taken by UNCTAD IX. 11. As part of the preparations for UNCTAD IX, the UNCTAD secretariat and the Government of Finland organised a topical seminar on "Environment, competitiveness and trade: A development perspective", in Helsinki, on 18 and 19 January. The objective of the seminar was to discuss trade, environment and development linkages in order to advance consensus-building on these issues. The seminar was attended by experts from capitals and from a number of delegations in Geneva, representatives of the secretariats of the WTO, UNEP, OECD, and the Basel Convention, and a number of participants from Finland, all of whom participated in their individual capacity. At the seminar, four topics were discussed; (1) competitiveness effects of environmental regulations and taxes; (2) sectoral and scale issues and competitiveness; (3) trade and competitiveness effects of multilateral environmental agreements (MEAs); and (4) positive measures to mitigate adverse competitiveness impacts. The results of the seminar are contained in report UNCTAD IX/Misc.2. II. TECHNICAL ASSISTANCE A. Trade, environment and development 12. UNCTAD is undertaking a comprehensive technical cooperation programme on trade and environment, with the following objectives: 2/ (a) To assist in increasing awareness and understanding of the complex linkages between trade, environment and development through policy-oriented studies, workshops and seminars; (b) To contribute to building institutional capacity in developing countries and countries in transition to examine the trade and environment interface; (c) To conduct analysis and to provide information to policy-makers; (d) To support the effective participation of developing countries in deliberations in the relevant international forums; and (e) To support a dialogue between trade, environmental and developmental communities. 13. Under the joint UNCTAD/UNDP project on "Reconciliation of environmental and trade policies" (INT/92/207), research institutes in developing countries are analysing country-specific experiences in order to better understand trade and environment linkages. In addition, a number of country case studies are being undertaken jointly with UNEP under the project "Capacity-building on trade and environment" (INT/93/A48). UNCTAD's Ad Hoc Working Group on Trade, Environment and Development, in its final report, encouraged the continuation of these studies by UNCTAD in cooperation with UNDP and UNEP. The following countries are presently participating in the programme: (a) Africa: Cameroon, Egypt, South Africa, Uganda, and Zimbabwe. (b) Asia: China, India, Indonesia, Malaysia, Philippines, Thailand and Viet Nam. (c) Latin America: Argentina, Brazil, Chile, Colombia, Costa Rica and Jamaica. (d) Other regions: Poland, Russian Federation and Turkey. 14. A series of studies has now been completed. As mentioned above, synthesis reports of the studies on Brazil, Colombia, India, Poland and Zimbabwe, prepared by the UNCTAD secretariat, were made available to the third session of the Ad Hoc Working Group on Trade, Environment and Development (see annex III). Further synthesis reports, as well as other publications, are under preparation. In response to requests made by Governments of a number of developing countries, additional studies will be undertaken, within the availability of funds. 15. A project on eco-labelling and international trade, funded by the International Development Research Centre (IDRC), has now been completed. The results of this project will be published by MacMillan in the form of a book which will be published towards the end of 1996. Regional and national activities 16. A number of regional and national workshops and seminars were held in the reporting period (see annex I). 17. A series of workshops on trade and environment was organised by the ASEAN secretariat in Manila, Bangkok, Kuala Lumpur and Jakarta from 11 to 23 May 1995. The UNCTAD secretariat provided resource persons for these workshops. 3/ Building on the UNCTAD/UNDP country case studies carried out in ASEAN countries, the ASEAN secretariat has commissioned further country studies to research institutes in the region. The ESCAP secretariat is also undertaking additional research based on the UNCTAD/UNDP studies on Asian countries. 18. A joint regional UNCTAD/SELA meeting of experts on trade and environment, hosted by SELA and supported by UNEP and UNDP, was held in Caracas, Venezuela, on 25-26 July 1995. Experts from nine countries in the Latin American and Caribbean region participated in the meeting. National seminars on trade, environment and development were held in Havana, Cuba on 20-21 July and in Caracas on 27 July 1995, supported by UNDP and UNEP. A representative of the WTO attended these seminars. The seminars in Caracas were also attended by representatives of the OECD secretariat and the Office of the United States Trade Representative (USTR). All of them participated in their personal capacity. 19. Trade and environment linkages of interest to Arab countries were discussed, among other issues, in a Group of Arab experts meeting to consider the implications of the Uruguay Round, particularly in the fields of petrochemicals, environment and services (Bahrain, 16-18 March 1996), and a Conference on the Gulf Co-operation Council external trade relations with regard to the World Trade Organization (Bahrain, 19-20 March 1996). Following the seminars, a series of activities on "trade, environment and development" are being planned as part of a UNDP-funded regional project for Arab Countries. Other activities 20. Other technical assistance activities were initiated under projects funded by the Governments of Italy, the Netherlands and Norway, as well as under the UNCTAD/UNEP project on "Capacity-building on trade and environment". UNCTAD is cooperating with the secretariats of ASEAN and ESCAP in the collection of information on emerging environmental policy instruments and related activities. A number of workshops and seminars will be held in the second half of 1996. Plans for the future 21. The Working Group on Trade, Environment and Development encouraged UNCTAD to continue its technical assistance programme and to contribute to the informed and effective participation of developing countries in international deliberations on trade and environment. New projects will be initiated after UNCTAD IX, including joint projects with UNDP and UNEP. UNCTAD and ITC have also established close cooperation and are considering the possibility of preparing joint awareness-building projects. Joint projects will also be undertaken with the regional economic commissions of the United Nations, in particular ESCAP. B. Commodities, trade and environment 22. UNCTAD's technical cooperation activities on environment-related issues in the export-oriented commodity sector comprise the following three elements: (a) The design and implementation of environmental and economic policies, in particular, the internalization of environmental costs; (b) International trade in recyclable and reusable materials; (c) The production and trade of environmentally preferable products. 23. Concerning the design and implementation of environmental and economic policies, in particular the internalization of environmental costs, the aim is to assist developing countries in overcoming the domestic and external obstacles that prevent them from taking the measures that they deem necessary for ensuring the sustainability of their development process. Under a joint UNCTAD/UNEP project, two expert group meetings were held in New York and Geneva. Participants discussed the need to undertake measures that reconcile a multitude of objectives, whether these economic, social and environmental objectives were contradictory, and what the best approach would be when contradictions were apparent. The meeting in Geneva also discussed three case studies, on Egypt, South Africa and the Czech Republic, respectively. In the same area of policy-making and implementation, the UNCTAD secretariat has prepared a training course (GREENTRAIN) aimed at capacity-building for decision-makers from both the private and public sectors of developing countries, who are faced with the task of reconciling short-term economic and social priorities with long-term sustainable development prospects. Training activities will be organized upon request from Governments. 24. Concerning the recycling/re-use of materials in order to bridge the substantial gaps in information required for sustainable management of secondary resources by developing countries, with the financial and technical support of the International Council on Metals and the Environment (ICME) UNCTAD conducted a statistical review of international trade in recoverable metals and metallic compounds, with particular emphasis on trade between OECD and developing countries, as well as trade among developing countries. The paper was presented at the Global Workshop on the Applicability of Decision II/12 of the Basel Convention in Dakar, Senegal, in March 1995. In the light of the discussion in Dakar and the feedback on the review, UNCTAD revised the paper, which was then circulated at the 3rd Conference of the Parties of the Basel Convention in September 1995. Given the information gaps on trade in waste and secondary material, ICME and the Canadian Government encouraged UNCTAD to set up a data base on international trade in waste, scrap and residues. UNCTAD therefore started work on shaping a self-contained data base on international trade of recoverable metal scrap and residues. 25. Activities relating to the production and trade of environmentally preferable products (EPPs) have responded to growing needs among developed and developing countries for more sustainable production and consumption patterns. The aim is to assist developing countries to take better advantage of the rising demand for environmentally preferable products, both domestically and in international markets. This would help in the attainment of environmental and economic objectives such as: (a) improvement of environmental conditions in developing countries themselves; (b) increase in foreign exchange earnings by expanding exports of environmentally preferable products; and (c) creation of additional jobs in environmentally friendly sectors. In this context, case studies have been or are being undertaken in several developing countries to identify the supply potential and constraints to increased production and trade in these products. A series of country studies is under way funded by the Government of the Netherlands (project INT/92/A06), two of which concerning Brazil and potential European Union demand for biofuels from developing countries have already been finalized. C. UNCTAD's Biotrade Initiative 26. One of the main objectives in relation to the implementation of the Convention on Biological Diversity is to contribute to the design and implementation of policies and measures ensuring that developing countries attain economic benefits from the full use of the Convention. UNCTAD's BIOTRADE Initiative underlies this concern. The Initiative has been designed as an integrated programme intended to increase the capabilities of developing countries to compete in the emerging market for biological resources, while also reducing transaction costs, increasing demand for biochemical resources, and enhancing conservation incentives. The Initiative has been broadly defined to include potential applications to the full diversity of biological resources and markets. 27. The BIOTRADE Initiative of UNCTAD proposes to achieve these goals through: (i) the creation, in biodiversity-rich developing countries, of a concrete export capacity in biological resources, including economic and market research through the analysis of the size and structure of an emerging market for biological resources, an international certification programme, and the opportunities available to developing countries for sustainable development of their biological resources; (ii) the building of competitive bio-resource industries; (iii) the identification of the most suitable mechanisms ensuring an equitable approach to the issue of rights over biological resources, including the development of protocols for biochemical prospecting contracts; (iv) enhancing conservation and sustainable development opportunities through, among others, the analysis and implementation of the most suitable economic tools for the internalization of environmental benefits (positive externalities) from biodiversity, which could provide, in turn, local residents with an economic stake in protecting biodiversity, as well as more funds for conservation; (v) private sector collaboration, including the setting-up of an ongoing private sector advisory group to the BIOTRADE Initiative ; and finally (vi) training and capacity-building/host country programmes covering (i), (ii), (iii) (iv) and (v) above. III. COOPERATION WITH OTHER INSTITUTIONS AND CIVIC SOCIETY 28. The UNCTAD secretariat is cooperating closely with other international organizations and other institutions. UNCTAD participates as an observer in the WTO Committee on Trade and Environment and in the OECD Joint Session of Trade and Environment Experts, and as a liaison organization in ISO Technical Committee 207 on Environmental Labelling. 29. UNCTAD and UNEP will continue the implementation of their joint programme of work, in accordance with paragraph 59 of Chapter I of the report of the CSD on its third session and paragraph 14 of General Assembly resolution 50/95 of 20 December 1995. UNCTAD and UNEP are currently cooperating on issues such as criteria for the use of trade measures in MEAs, the concepts of equivalencies and mutual recognition in the context of eco- labelling, and capacity-building. An UNCTAD/UNEP seminar will be held on 7 May 1996 in South Africa, as a parallel event of UNCTAD IX. This seminar will also provide an opportunity to discuss the content and implementation of the joint work programme with delegates to UNCTAD IX. 30. New and expanded cooperation between UNCTAD and the WTO is under way in the framework of the general arrangement for cooperation between the United Nations and the WTO, as agreed by the executive heads of the two organizations in September 1995. In particular, the Director-General of the WTO and the Secretary-General of UNCTAD have agreed to improve the working relationship between the two organizations at all levels, including in the area of trade and environment. UNCTAD and WTO are also working for greater complementarity in technical cooperation activities. 31. UNCTAD is also cooperating with UNDP in the area of capacity-building. So far, most activities have been carried out under the project on "Reconciliation of Environmental and Trade Policies" and UNDP-sponsored regional and national projects. New areas of cooperation are described in chapter IV. 32. As mentioned in chapter II, the UNCTAD secretariat is also cooperating closely with the secretariats of ASEAN, ESCAP and SELA. 33. The UNCTAD secretariat is also cooperating closely with civic society and has participated in numerous activities of academic institutions and NGOs in developed and developing countries. For example, the UNCTAD secretariat has been participating in trade and environment activities of the "Policy Dialogue", the "Global Environment and Trade Study (GETS)", the Quakers, the Carl Duisberg Gesellschaft, the "Environment Forum" 4/ (Singapore) and - jointly with UNDP - has set up a network of research institutions in developing countries and countries with economies in transition. IV. FOLLOW-UP TO THE COMMISSION'S DECISION ON TRADE, ENVIRONMENT AND SUSTAINABLE DEVELOPMENT AT ITS THIRD SESSION 34. The Commission, at its third session, invited UNCTAD to undertake work in a large number of areas related to trade, environment and development. Progress has been made in the implementation of different activities in response to this invitation. As indicated in chapter I, several of the issues identified by the Commission have been addressed by the Ad Hoc Working Group on Trade, Environment and Development. This chapter reviews progress in the implementation of activities by UNCTAD related to the corresponding paragraphs of chapter I of the Report of the Commission on Sustainable Development on its third session. (Official records of the Economic and Social Council, 1995, Supplement 12 (E/1995/32). 35. It is further to be noted that the General Assembly requested UNCTAD "... to report, through the Commission on Sustainable Development, to the Economic and Social Council and the General Assembly at its special session in 1997 on the concrete progress achieved on the issue of trade and environment" (resolution 50/95, paragraph 26). On that occasion UNCTAD will report to the Commission on the results of work that UNCTAD itself has been invited to undertake. Capacity-building 36. The Commission underlined efforts to make trade and environment mutually supportive through, inter alia, strengthening technical assistance for capacity-building undertaken by UNCTAD, UNDP and UNEP, including in integrating the consideration of all factors relevant to the formulation of trade and sustainable development policies (paragraph 59 of the report mentioned above). Progress in the implementation of UNCTAD's programme of technical assistance and plans for future work have been reported in chapter II. In addition, the UNCTAD secretariat has prepared a monograph on capacity- building on sustainable development and trade for UNDP's Capacity-21 Programme and is cooperating with UNDP in the design of a broad programme of technical assistance for capacity-building, which may involve different UN agencies, in accordance with the mandate and expertise of each agency. Identifying gaps in research on trade, environment and sustainable development 37. The Commission invited UNCTAD, in cooperation with UNEP, WTO, FAO, WHO, DPCSD and other appropriate institutions, "to prepare a background paper for the Commission that would review the growing volume of research on trade, environment and sustainable development linkages carried out by international organizations, as well as academic institutions and NGOs in developed and developing countries, including within the framework of projects supported by international and bilateral aid agencies with a view to identifying possible gaps, including through the use of independent trade and environment expert groups" (paragraph 60). 38. In response to this invitation, the UNCTAD secretariat has prepared a preliminary note, which is being made available to the Commission. The note is based on a preliminary review of issues related to trade, environment and sustainable development, drawing on research papers, documents and background materials made available to UNCTAD by international organizations, academic institutions and non-governmental organizations. The final version of this paper will incorporate additional information and take into account comments received on the note. The conclusions and recommendations will be submitted to the Commission at its fifth session in 1997, after consultation with the institutions mentioned above. Positive measures 39. The Commission invited UNCTAD, in cooperation with UNDP, FAO and UNEP and other international bodies, programmes and organizations to undertake further work on policies and measures which could support developing countries and countries with economies in transition in their efforts to internalize environmental costs (paragraph 61). 40. Policies and measures aimed at supporting efforts of developing countries and countries in transition to meet environmental requirements and the objectives of sustainable development have been proposed in several reports prepared by the UNCTAD secretariat, in particular report TD/B/WG.6/10. The country case studies also contain recommendations in this regard. The Working Group on Trade, Environment and Development recognized that "positive measures such as improved market access, improved access to finance, transition mechanisms, access to and transfer of technology, capacity-building and special provisions for small firms and for some sectors, are effective instruments in supporting developing countries and countries in transition in their efforts to meet the objectives of sustainable development". 5/ 41. Possible positive measures were further discussed at the seminar on "Environment, Competitiveness and Trade: A Development Perspective". At the seminar, several suggestions for positive measures were made, including for small and medium-sized enterprises. Many participants stressed that UNCTAD had an important role to play in proposing positive measures at the national and international levels. However, there is a need to further identify such measures. 6/ Environmental protection and international competitiveness 42. The Commission invited UNCTAD "to carry out an analytical study on the relationship of environmental protection to international competitiveness, job creation and development, with the input of governments, regional economic integration organizations, the private sector and NGOs as well as other relevant regional and international organizations" (paragraph 62). 43. A separate note, setting out progress in the elaboration of this study, is being made available to the Commission. It is envisaged that the final version of this study, for which UNCTAD will seek inputs as indicated above, will be submitted to the Commission at its fifth session in 1997. Product policies 17. Paragraph 63 invited UNCTAD and UNEP in cooperation with WTO, ISO, and other relevant international organizations "to analyze how transparency and international cooperation could be strengthened with respect to product- specific policies, in particular to eco-labelling and certain packaging and recycling requirements, so as to avoid or mitigate adverse trade effects, including through the provision of technical assistance to developing countries and countries with economies in transition and other measures aimed at facilitating their exports". 44. The Ad Hoc Working Group on Trade, Environment and Development addressed these issues under two different items of its terms of reference. At its first and second session, it held extensive discussions on the trade, environmental and development effects of eco-labelling 7/, aided by two reports prepared by the UNCTAD secretariat (TD/B/WG.6/2 and TD/B/WG.6/5). Both reports make recommendations on how to strengthen transparency and international cooperation as well as on technical assistance. 45. At its third session, the Working Group carried out a preliminary analysis of emerging environmental policy instruments with possible trade effects, aided by a report prepared by the UNCTAD secretariat (TD/B/WG.6/9). The Working Group stressed the importance of transparency and the need to establish appropriate transitional provisions to allow foreign producers to adjust to newly emerging requirements. In its Final Report, the Working Group recognized that "it is important to ensure appropriate transparency of newly emerging environmental policy measures with possible trade effects, including eco-labelling, inter alia by considering inputs from interested countries" and invited eco-labelling organizations to take the fullest possible account of developing countries' interests. The Working Group also invited national Governments and standardization bodies to explore the scope for mutual recognition and equivalencies at an appropriate level of environmental protection. Multilateral environmental agreements 46. With regard to multilateral environmental agreements, the Commission invited "UNCTAD and UNEP, in cooperation with UNDP, international financial institutions (IFIs) and other international bodies, programmes and organizations to examine the effects of trade measures in MEAs on the achievement of environmental goals and on trade and competitiveness of developing countries and countries with economies in transition and how positive measures can assist those countries in meeting their obligations under the agreements" (paragraph 65). 47. The Ad Hoc Working Group on Trade, Environment and Development undertook a preliminary analysis of the trade and competitiveness effects on developing countries of the Montreal Protocol on Substances that Deplete the Ozone Layer, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), aided by two reports prepared by the UNCTAD secretariat (TD/B/WG.6 and TD/B/WG.10). 48. The trade and competitiveness effects of MEAs were further discussed at the seminar on "Environment, Competitiveness and Trade: A Development Perspective". A detailed analysis of the trade and development aspects of MEAs is also contained in reports E/CN.17/1996/8 and Add.1. 49. The costs of environmental standard implementation differ widely among parties to an MEA, based on variables like the specificity of the standard, the availability and adequacy of substitutes, the degree of patent protection of specified technologies, administrative costs and other factors. Costs vary in accordance with the levels of economic development and existing environmental standards prior to the introduction of the international standard. MEAs may impose relatively higher costs on developing countries. It is therefore important to include the concept of common but differentiated responsibility in MEAs. 50. The Working Group recognized that the trade and competitiveness effects of MEAs are different for each agreement and may change according to dynamic factors such as the rate of economic growth, availability of environmentally friendly technologies and substitutes, amendments to the agreements, and the timely availability of finance. 51. The Working Group further recognized that positive measures could be valuable in assisting developing countries to meet the multilaterally agreed targets in keeping with the principle of common but differentiated responsibility. In this context, the Working Group discussed incentives that encourage trade in environmentally-friendly substitutes, voluntary mechanisms on foreign direct investment and technology transfer, and market-based instruments. 52. The Working Group also recommended further analytical and empirical work on positive and negative trade and competitiveness effects of MEAs, taking due account of the ongoing work of UNEP. It noted that this work should be carried out in parallel with an analysis of facilitating mechanisms and incentives under different MEAs. 53. UNCTAD is cooperating with UNEP in a project, executed by the latter agency, aimed at examining the contribution of different policy instruments, including both trade measures and positive measures, to achieving the environmental objectives of three MEAs. The project will draw from the experience of selected developing countries with regard to specific MEAs (the Montreal Protocol, the Basel Convention and CITES). 54. As mentioned in chapter II above, UNCTAD has also developed a "Biotrade Initiative", which proposes positive measures in support of the objectives of the Convention on Biological Diversity. Annex I Intergovernmental meetings 6-9 June, 1995 Ad Hoc Working Group on Trade, Environment and Development (second session) 30 October - Standing Committee on Commodities, Fourth Session 3 November, 1995 6-10 November, 1995 Ad Hoc Working Group on Trade, Environment and Development (third session) Other activities 10-11 April, 1995 UNEP/UNCTAD Expert Group Meeting on Internalization of Environmental Costs (New York) 10-11 April, 1995 UNDP/UNCTAD Expert Round Table on Trade, Environment and Development (New York) 11-23 May, 1995 ASEAN workshops on trade and environment (Manila, Bangkok, Kuala Lumpur and Jakarta) 20-21 July, 1995 National seminar on trade, environment and development (Havana) 25-26 July, 1995 UNCTAD/SELA regional meeting of experts on trade and environment, supported by UNEP and UNDP (Caracas) 27 July, 1995 National seminar on trade, environment and development (Caracas) 4-5 December, 1995 UNCTAD/UNEP Round Table Meeting on Internalization of Environmental Costs and Benefits (Geneva) 18-19 January, 1996 Topical seminar "Environment, Competitiveness and Trade: A Development Perspective" in preparation for UNCTAD IX (Helsinki). 16-18 March, 1996 Group of Arab experts meeting on the implications of the Uruguay Round, particularly in the fields of petrochemicals, environment and services (Bahrain) 19-20 March, 1996 Conference on the Gulf Co-operation Council external trade relations with regard to the World Trade Organization (Bahrain) Annex II Recommendations of the Ad Hoc Working Group on Trade, Environment and Development for future UNCTAD activities The Ad Hoc Working Group on Trade, Environment and Development, in its Final Report, recommended a number of areas for future UNCTAD activities within the theme "trade, environment and development": (a) Competitiveness effects of environmental policies, standards and regulations (through country case studies as well as sectoral, cross-country studies). Competitiveness effects of new and emerging environmental policies, standards and regulations in sectors of export interest to developing countries, including where removal of trade barriers has been negotiated in the Uruguay Round; (b) Short and long term competitiveness effects of environmental policies on small and medium-sized firms, taking into account their importance in the exports of developing countries; (c) Positive and negative trade and competitiveness effects of MEAs in parallel with an analysis of facilitating mechanisms and incentives under different MEAs (taking due account of the ongoing work of UNEP); (d) Exports of domestically prohibited goods (DPGs), to determine if the issue has been sufficiently dealt with from the perspective of the developing countries. (e) Effects of the removal of environmentally harmful subsidies and of tariff escalation on the environment of developing countries. (f) Transfer of environmentally sound technologies, including those necessary to meet external environmental measures and requirements; (g) Equivalencies and mutual recognition (e.g. in the context of eco- labelling); (h) Environmental management systems (EMS), in particular ISO-14000; analysis of factors affecting and means to improve the participation of developing countries in EMS standards, development and application. Annex III Reports of the Ad hoc Working Group on Trade, Environment and Development and documents prepared by the UNCTAD Secretariat Reports of the Ad Hoc Working Group - Report of the Ad Hoc Working Group on Trade, Environment and Development on its first session (TD/B/41(2)/5 - TD/B/WG.6/3). - Report of the Ad Hoc Working Group on Trade, Environment and Development on its second session (TD/B/42(1)/6 - TD/B/WG.6/7). - Final report of the Ad Hoc Working Group on Trade, Environment and Development incorporating the report on its third session (TD/B/42(2)/9 - TD/B/WG.6/11). Reports prepared by the UNCTAD secretariat - Eco-labelling and market opportunities for environmentally friendly products (TD/B/WG.6/2, 6 October 1994). - Internalization of environmental damages in agriculture: effects on environmental and economic variables (UNCTAD/COM/Misc.67, January 1995). - Trade, environment and competitiveness aspects of establishing and operating eco-labelling programmes (TD/B/WG.6/5, 28 March 1995). - Environmental policies, trade and competitiveness: conceptual and empirical issues (TD/B/WG.6/6, 29 March 1995). - A statistical overview of selected eco-labelling schemes (TD/B/WG.6/Misc.5, 2 June 1995). - Newly emerging environmental policies with a possible trade impact: a preliminary discussion (TD/B/WG.6/9, 28 August 1995). - UNCTAD ad hoc expert group on internalization of environmental externalities: Report of the meeting (UNCTAD/COM/67, August 1995). - Examination of the manner in which prices of natural commodities and their synthetic competitors could reflect environmental costs, taking into account policies relating to the use and management of natural resources and sustainable development (TD/B/CN.1/29, August 1995). - The policy debate on trade, environment and development (TD/B/WG.6/10, 12 September 1995). - The policy debate on trade, environment and development: A statistical annex (TD/B/WG.6/10/Add.1, October 1995) - Trade, environment and development, lessons from empirical studies: the case of Colombia (TD/B/WG.6/Misc. 6, 25 October 1995). - Trade, environment and development, lessons from empirical studies: the case of India (TD/B/WG.6/Misc. 7, 31 October 1995). - Trade, environment and development, lessons from empirical studies: the case of Zimbabwe (TD/B/WG.6/Misc. 8, 31 October 1995). - Environmental cost internalization in the South African coal mining industry (UNCTAD/COM/Misc.87, October 1995). - Environmental cost internalization in the commodity sector - A case study for the Czech Republic (UNCTAD/COM/Misc.88, October 1995). - Internalization of environmental costs (UNCTAD/COM/Misc.93, October 1995). - Internalization of externalities associated with export commodities: the case of cotton and crude petroleum in Egypt (UNCTAD/COM/Misc.96, October 1995). - Trade, environment and development, lessons from empirical studies: the case of Brazil (TD/B/WG.6/Misc. 9, 3 November 1995). - Trade, environment and development, lessons from empirical studies: the case of Poland (TD/B/WG.6/Misc. 10, 6 November 1995). - Newly emerging environmental policies with a possible trade impact: a preliminary discussion. A statistical annex (TD/B/WG.6/9/Add.1, 6 November 1995). - UNCTAD's technical cooperation programme on trade and environment (TD/B/WG.6/Misc. 1, 21 November 1995). - Report on the workshop on eco-labelling and international trade, (TD/B/WG.6/Misc. 2, 21 November 1995). - Environmentally preferable products (EPPs) as a trade opportunity for developing countries (UNCTAD/COM/70, December 1995). Notes 1/ The Trade and Development Board sharpened the description of UNCTAD's role as follows: "UNCTAD's role in the field of trade and environment lies in policy analysis and debate, conceptual work, the building of consensus among member States on the interaction between environmental and trade policies, the dissemination of information to policy-makers and the encouragement and provision in capacity-building. Particular attention is given to the problems and special circumstances of the developing countries". See paragraph 3(a) of Trade and Development Board conclusions 407(XL) on the first part of its fortieth session on sustainable development. 2/ See TD/B/WG.6/Misc.1. 3/ ASEAN Workshop Report. Trade and the Environment: Issues and Opportunities. Manila, Bangkok, Kuala Lumpur, Jakarta 11-23 May 1995. ASEAN Secretariat, October 1995. 4/ A joint programme of the Institute of Policy Studies and the Faculty of Law, National University of Singapore. 5/ Final Report of the Ad Hoc Working Group on Trade, Environment and Development incorporating the report on its third session (TD/B/WG.6/11). 6/ UNCTAD IX/Misc.2. 7/ Following an UNCTAD seminar held in June 1994, a book on "Eco- labelling and International Trade" will be published by MacMillan, probably in late 1996.
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Date last posted: 3 December 1999 10:27:35