Trade and Sustainable Development: Decisions of the GA and CSD

Commission on Sustainable Development, 8th Session
New York, 24 April - 5 May 2000

Decision by the Commission on Sustainable Development at its eighth session

Resolution Adopted By The General Assembly for the Programme for the Further Implementation of Agenda 21

Making trade and environment mutually supportive

29. In order to accelerate economic growth, poverty eradication and environmental protection, particularly in developing countries, there is a need to establish macroeconomic conditions in both developed and developing countries that favour the development of instruments and structures enabling all countries, in particular developing countries, to benefit from globalization. International cooperation and support for capacity-building in trade, environment and development should be strengthened through renewed system-wide efforts, and with greater responsiveness to sustainable development objectives, by the United Nations, the World Trade Organization and the Bretton Woods institutions, as well as by national Governments. There should be a balanced and integrated approach to trade and sustainable development, based on a combination of trade liberalization, economic development and environmental protection. Trade obstacles should be removed with a view to contributing to the achieving of more efficient use of the earth's natural resources in both economic and environmental terms. Trade liberalization should be accompanied by environmental and resource management policies in order to realize its full potential contribution to improved environmental protection and the promotion of sustainable development through the more efficient allocation and use of resources. The multilateral trading system should have the capacity to further integrate environmental considerations and enhance its contribution to sustainable development, without undermining its open, equitable and non-discriminatory character. The special and differential treatment for developing countries, especially the least developed countries, and the other commitments of the Uruguay Round of multilateral trade negotiations 18/ should be fully implemented in order to enable those countries to benefit from the international trading system, while conserving the environment. There is a need for continuing the elimination of discriminatory and protectionist practices in international trade relations, which will have the effect of improving access for the exports of developing countries. This will also facilitate the full integration of economies in transition into the world economy. In order to make trade, environment and development mutually supportive, measures need to be taken to ensure transparency in the use of trade measures related to the environment, and should address the root causes of environmental degradation so as not to result in disguised barriers to trade. Account should be taken of the fact that environmental standards valid for developed countries may have unwarranted social and economic costs in other countries, in particular developing countries. International cooperation is needed and unilateralism should be avoided. The following actions are required:

(a) There should be timely and full implementation of the results of the Uruguay Round of multilateral trade negotiations and full use of the Comprehensive and Integrated World Trade Organization Plan of Action for the Least Developed Countries; 19/

(b) An open, non-discriminatory, rule-based, equitable, secure, transparent and predictable multilateral trading system should be promoted. In this context, effective measures are called for to achieve the complete integration of developing countries and countries with economies in transition into the world economy and the new international trading system. In this connection, there is a need to promote the universality of the World Trade Organization and to facilitate the admission to membership in that organization, in a mutually beneficial way, of developing countries and countries with economies in transition applying for membership. Actions should be taken to maximize the opportunities and to minimize the difficulties of developing countries, including the net food-importing ones, especially the least developed countries, and of countries with economies in transition, in adjusting to the changes introduced by the Uruguay Round. Decisions on further liberalization of trade should take into account effects on sustainable development and should be consistent with an open, rule-based, non-discriminatory, equitable, secure and transparent multilateral trading system. The relationship between multilateral environmental agreements and the World Trade Organization rules should be clarified;

(c) Implementation of environmental measures should not result in disguised barriers to trade;

(d) Within the framework of Agenda 21, trade rules and environmental principles should interact harmoniously;

(e) Further analysis of the environmental effects of the international transport of goods is warranted;

(f) Cooperation and coordination between the United Nations Conference on Trade and Development, the United Nations Industrial Development Organization, the World Trade Organization, the United Nations Environment Programme and other relevant institutions should be strengthened on various issues, including (i) the role of positive measures in multilateral environmental agreements as part of a package of measures including, in certain cases, trade measures; (ii) the special conditions and needs of small and medium-sized enterprises in the trade and environment interface; (iii) trade and environment issues at the regional and subregional levels, including within the context of regional economic and trade as well as environmental agreements;

(g) Cooperation and coordination between the United Nations Conference on Trade and Development and other relevant bodies within their existing respective mandates should be enhanced, inter alia, on environment and sustainable development issues. Without prejudice to the clear understanding in the World Trade Organization that future negotiations, if any, regarding a multilateral agreement on investment will take place only after an explicit consensus decision, future agreements on investments should take into account the objectives of sustainable development and, when developing countries are parties to these agreements, special attention should be given to their needs for investment;

(h) National Governments should make every effort to ensure policy coordination on trade, environment and development at the national level in support of sustainable development;

(i) There is a need for the World Trade Organization, the United Nations Environment Programme and the United Nations Conference on Trade and Development to consider ways to make trade and environment mutually supportive, including through due respect for the objectives and principles of the multilateral trading system and for the provisions of multilateral environmental agreements. Such considerations should be consistent with an open, rule-based, non-discriminatory, equitable, secure and transparent multilateral trading system.

United Nations Commission on Sustainable Development, 4th Session
New York, 18 April - 3 May 1996

Report of the Commission on Sustainable Development on the Fourth Session (18 April-3 May 1996)

Decision 4/1. Trade, environment and sustainable development*
(* Chapter II of Agenda 21. For the discussion, see chapter III below.

Recommendations with respect to the United Nations Conference on Trade and Development (UNCTAD) should bear in mind the outcome of the ninth session of UNCTAD, which is being held concurrently with the present session of the Commission. )

 1. The Commission on Sustainable Development takes note of the report of the Secretary-General on trade, environment and sustainable development (E/CN.17/1996/8 and Add.1) and welcomes with appreciation the analysis contained therein.

2. The Commission reiterates all the decisions made at its second and third sessions on issues related to trade, environment and sustainable development.

3. As to trade measures in multilateral environmental agreements (MEAs), the Commission:

(a) Calls on Governments to ensure appropriate coordination between trade and environment officials at the national level and to take appropriate steps at the national and international levels in order to ensure the mutual supportiveness of trade and environment policies in support of sustainable development, and looks to the World Trade Organization (WTO) to address the relationship between WTO provisions and trade measures for environmental purposes, including those pursuant to multilateral environment agreements;

(b) Recognizes that positive measures, such as improved market access, capacity-building, improved access to finance, and access to and transfer of technology, taking into account the relationship between trade-related agreements and technology, are effective instruments for assisting developing countries in meeting multilaterally agreed targets in keeping with the principle of common but differentiated responsibilities;

(c) Notes that trade measures can, in certain cases, play a role in achieving the objectives of MEAs, while safeguarding a non-discriminatory and equitable multilateral trading system, and that positive measures should be employed, as appropriate, to reduce or obviate the necessity for trade measures to secure compliance with MEAs, and also stresses that the use of trade measures should not deter the consideration of other options that may be more effective. All measures should uphold principles 7, 11 and 12 of the Rio Declaration on Environment and Development; 2/

(d) Recognizes that the different trade provisions in MEAs may have different objectives and that they may involve broader economic and developmental issues, and invites the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Environment Programme (UNEP), jointly and in cooperation with WTO, in accordance with their respective mandates and competencies, to undertake further analysis on the issue of trade and environment, including policy instruments in MEAs, in particular positive measures, taking into account the specific context of each MEA, with a view to promoting sustainable development;

(e) Recalls its invitation at its third session to UNCTAD and UNEP, in cooperation with the United Nations Development Programme (UNDP), international financial institutions, and other relevant 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 to consider how positive measures could assist those countries in meeting their obligations under the MEAs.

4. As to environmental policies and competitiveness, the Commission:

(a) Recognizes that the link between environmental policies and competitiveness is a complex one, and notes that there is no available evidence to suggest that environmental policy generally has a significant detrimental impact on competitiveness. Efforts could be made to identify "win-win" opportunities in the design and implementation of environmental policies, which could improve resource efficiency, competitiveness, employment and market access;

(b) Firmly rejects the use of "green countervailing duties" or other protectionist or trade measures inconsistent with WTO to compensate for the negative competitiveness effects, whether real or perceived, of environmental policies; (c) Stresses that it would be inappropriate to relax environmental laws, regulations and standards or their enforcement in order to encourage foreign direct investment or to promote exports; (d) Considering that complying with the environmental requirements of importing countries may raise particular competitiveness concerns for developing countries and countries with economies in transition, recommends that Governments of developed countries facilitate continued market access for developing countries by ensuring greater transparency and providing them with technical and financial assistance in the area of environmental capacity- building in accordance with the provisions of relevant chapters of Agenda 21;

(e) Encourages UNCTAD to propose positive measures at the national and international levels for supporting developing countries in their efforts to achieve the objectives of sustainable development, focusing on capacity- building and support for national efforts to internalize environmental costs;

(f) Takes note of the progress report submitted by UNCTAD on the analytical study of the relationship of environmental protection to international competitiveness, job creation and development, and invites UNCTAD to further elaborate the study, with input from Governments and regional economic integration organizations, as well as the private sector, non-governmental organizations, and other relevant regional and international organizations, and to submit the results of the study to future sessions of the Commission, as appropriate.

5. The Commission recognizes that eco-labelling can have an impact on trade. The Commission invites Governments to ensure adequate transparency of eco-labelling, inter alia, by considering inputs from interested parties, including consumer and environmental groups, domestic and foreign producers, at an appropriately early stage in the design of the measures, and to encourage private bodies involved in eco-labelling to do the same. The Commission also calls upon national Governments and private bodies involved in eco-labelling to explore the scope for mutual recognition of procedures and approaches on the basis of equivalency at appropriately high levels of environmental protection, taking into account differing environmental and developmental conditions in different countries. The Commission also invites UNCTAD, UNEP, WTO and, as appropriate, the International Organization for Standardization (ISO) to give the fullest consideration to such concepts in future work on environmental labelling in the best interests of transparency.

6. The Commission supports the promotion of balanced public awareness and educational programmes on issues related to eco-friendly classification to assist both producers and consumers in making environmentally sound decisions.

7. As to trade liberalization and the environment, the Commission:

(a) Recalls the recommendation made in paragraph 67 of the report on its third session, 5/ in which it invited the UNEP/UNCTAD programme to carry out further work and report on the development of a framework to facilitate the assessment of the environmental impact of trade policies, taking into account the special needs of developing countries and countries with economies in transition;

(b) Recognizes the usefulness of UNEP and the Food and Agriculture Organization of the United Nations continuing to examine the environmental effects on importing countries of the export of goods prohibited for sale on environmental grounds in the exporting co untries;

(c) Invites UNCTAD, in cooperation with UNEP and other relevant organizations, such as the Organisation for Economic Cooperation and Development (OECD), taking into account work already under way at WTO, to examine how further trade liberalization, such as through the reduction or elimination of tariff escalation, export taxes or restriction, trade- distortive subsidies and the elimination of tariff and non-tariff barriers to trade, can result in environmental benefits and contribute to sustainable development, including by examining recent analyses on such topics;

(d) Reaffirms the importance of efforts aimed at internalizing environmental costs in order to promote the positive and avoid the negative environmental effects of trade liberalization.

8. As to sustainable development of the commodity sector, the Commission:

(a) Invites UNCTAD, in cooperation with UNEP, the United Nations Industrial Development Organization and other relevant organizations, to assist developing countries in implementing pilot projects in export-oriented production and processing activities aimed at internalizing environmental costs;

(b) Encourages international organizations, Governments and the business community to intensify the search for pragmatic methods for increasing cooperation between exporters and importers with a view to facilitating developing countries' efforts to internalize environmental costs in their development process and to assess the scope for the establishment of sectoral round tables and other formal or informal arrangements for identifying efficient and cost-effective approaches.

9. As to biological diversity and trade issues, the Commission welcomes the BIOTRADE initiative of UNCTAD as a collaborative effort, with the secretariat of the Convention on Biological Diversity, interested United Nations agencies and other intergovernmental and non-governmental organizations, the private sector, local communities and academic institutions, aimed at strengthening capacity-building, and encourages further consultations in that area.

10. The Commission invites UNCTAD, UNDP, the International Trade Centre, UNEP and other relevant United Nations bodies to strengthen cooperation in the implementation of a programme of technical assistance for capacity-building in accordance with the mandates and expertise of each agency, inter alia, with a view to assisting developing countries and countries with economies in transition in participating effectively in international deliberations on trade and environment, international trade negotiations and international environmental negotiations.

11. The Commission takes note of the preliminary background paper prepared by UNCTAD on research into trade, environment and sustainable development linkages carried out by international organizations, as well as academic institutions and non-governmental organizations in developed and developing countries; encourages additional research in particular areas where gaps exist; and recommends that international and bilateral aid agencies support research activities in developing countries and countries with economies in transition, in particular in these areas.

12. The Commission:

(a) Takes note of the work of the WTO Committee on Trade and Environment, looks forward to a substantive report on the results of its deliberations, including further progress in making trade and environmental policies mutually supportive in order to promote sustainable development, and invites ministers to consider all items listed in the Marrakesh Decision on Trade and Environment of 15 April 1994, taking into account the objectives of Agenda 21 and the Rio Declaration on Environment and Development, and to give due consideration to the results of the deliberations of the Commission at the present session;

(b) Looks to the WTO ministerial meeting in Singapore to continue the important work of the WTO Committee on Trade and Environment; (c) Invites UNCTAD and UNEP to transmit the results of their activities in the area of trade, environment and sustainable development to the WTO Committee on Trade and Environment for consideration at the WTO ministerial meeting in Singapore;

(d) Requests UNCTAD, in accordance with operative paragraph 27 of General Assembly resolution 50/95 of 20 December 1995, to continue its special role in the field of trade and environment, and invites UNCTAD at its ninth session to consider appropriate arrangements for carrying out intergovernmental activities, taking into account its mandate and competence, as well as the need for continued cooperation and complementarity in the work of UNCTAD, UNEP and WTO;

(e) Invites UNEP to continue its work on trade and environment in accordance with its mandate;

(f) Invites the regional commissions, within their mandates and taking into account the specific context of each region, and OECD, in close cooperation with the competent international organizations, such as UNCTAD, UNEP and WTO, to organize meetings, as necessary, for the purpose of enhancing coordination on trade and environment;

(g) Recalls General Assembly resolution 50/95 of 20 December 1995, in which the Assembly requested UNCTAD and invited WTO, in accordance with their respective mandates and competence and in close cooperation with other competent United Nations bodies and the regional commissions, to address trade and environment matters comprehensively, and to report, through the Commission, to the Economic and Social Council and to the Assembly at its special session in 1997 on the concrete progress achieved on the issue of trade and environment;

(h) Invites UNCTAD and UNEP to continue their joint programme of work on trade, environment and sustainable development, in accordance with chapter I, paragraph 59 of the report on its third session 5/ and paragraph 14 of Assembly resolution 50/95 of 20 December 1995;

(i) Takes note of the ongoing analytical work being conducted by OECD on trade and environment, especially that of the Joint Session of Trade and Environment Experts, including its report to the OECD Council at the ministerial level in May 1995, and encourages OECD to make available to the Commission the results of that work.

United Nations Commission on Sustainable Development
Second Session
New York, 16-27 May 1994

4. Trade, environment and sustainable development

25. As the organ responsible for monitoring progress in the implementation of Agenda 21, the Commission sets forth some initial perspectives for consideration in subsequent work on trade and environment issues.

26. In the framework of the implementation of chapter 2 of Agenda 21, the Commission emphasizes the aim of moving towards the overall concept of sustainable development. In aiming at sustainability, full consideration should be given to the special conditions and development needs of the developing countries and the countries with economies in transition. An open, balanced and integrated approach towards sustainability through an open, equitable and non-discriminatory multilateral trading system, improved market access for products from developing countries, effective environmental protection and mutually supportive trade and environment policies should ensure close cooperation with all policy makers involved, as well as with the private sector and non-governmental organizations.

27. The Commission recognizes that relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with the respective needs and concerns of countries at different levels of economic development.

28. The Commission considers that trade liberalization can make a major contribution to sustainable development and stresses that protectionism should be resisted. The Commission also regards the achievement of a safe and healthy environment, through strong and effective international and domestic environmental protection efforts, as an essential component of sustainable development. The Commission further stresses that there is a need to decrease subsidies that have harmful environmental and trade- distorting effects. In addition, market opportunities and export prospects could be improved by complementing trade policies through sound domestic economic and environmental policies. The Commission points out that an open, equitable and non-discriminatory multilateral trading system and the adoption of sound environmental policies are important means of addressing the environmental implications of trade. The Commission urges national authorities to endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.

29. The Commission welcomes the successful conclusion of the Uruguay Round of multilateral trade negotiations, which is expected to bring about the further liberalization and expansion of world trade; its full implementation will enhance the trade and development possibilities of developing countries and provide greater security and predictability to the international trading system. It notes that regional and subregional economic integration processes, including those among developing countries, have the potential of contributing to an improvement in the medium-term prospects for world economic growth and for an even more rapid expansion of world trade.

30. The Commission also notes with concern that the benefits of trade liberalization will accrue more to those developing countries that have already been pursuing more export-oriented policies than to certain developing countries that will continue to face major difficulties, particularly those highly dependent on trade preferences, those that are net food-importers and those dependent on primary commodity exports, particularly in Africa. In this regard, the Commission takes note of the decision on measures concerning the possible negative effects of the reform programme on the least developed and net food-importing developing countries, taken at the Marrakesh Ministerial Meeting in April 1994. The Commission emphasizes that for all developing countries to benefit more fully from trade liberalization, the achievement of other objectives identified in Agenda 21, particularly better functioning of commodity markets, increasing foreign direct investment in developing countries and financial assistance, including debt relief, are important. It notes that mutually supportive trade and environment policies and structural adjustment policies that would, inter alia, remove biases against exports, discourage inefficient import substitution, improve infrastructure important to trade, diversify economies to reduce dependence on primary commodities, particularly in Africa, and improve domestic market efficiency would also increase the potential for gains from trade liberalization. It hopes that the promotion of trade in environmentally friendly products and technologies would also further improve trading opportunities for developing countries. Bearing in mind the objective of making trade and environment mutually supportive, the Commission underlines the importance of effective multilateral cooperation to protect the environment and also of preserving and enhancing the ability of countries to achieve and maintain high levels of environmental protection while pursuing an open, non-discriminatory, multilateral trade system.

31. The Commission notes that important progress was made in addressing trade and environment issues in the Uruguay Round but recognizes that further progress is needed to address unresolved issues and ensure that the international trading system is responsive to environmental concerns. In this regard, the Commission supports the decision taken at the Marrakesh Ministerial Meeting in April 1994 to establish the Committee on Trade and Environment. The Committee has a broad mandate and will report to the first Ministerial Conference of the World Trade Organization (WTO), to be held probably in 1997. Together with the improved framework for dispute settlement, the Uruguay Round agreements and the decision on trade and environment advance several of the trade, development and environment issues of Agenda 21. The Commission recognizes that it needs to interact with WTO in future work on these matters. It also considers that work undertaken in the Committee on Trade and Environment would benefit from cooperation with the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Environment Programme (UNEP).

32. The Commission emphasizes the results of UNCED relating to trade, environment and sustainable development, including Principle 12 of the Rio Declaration and Agenda 21, paragraph 2.22 of which calls upon Governments to encourage the General Agreement on Tariffs and Trade (GATT), UNCTAD and other relevant international and regional economic institutions to examine, in accordance with their respective mandates and competences, a number of propositions and principles, such as ensuring that environment- related regulations or standards, including those related to health and safety standards, do not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade and avoiding unilateral actions to deal with environmental challenges outside the jurisdiction of the importing country. Environmental measures addressing transborder or global environmental problems should, as far as possible, be based on an international consensus. Domestic measures targeted to achieve certain environmental objectives may need trade measures to render them effective. Should trade policy measures be found necessary for the enforcement of environmental policies, certain principles and rules should apply. These could include, inter alia, the principle of non-discrimination; the principle that the trade measure chosen should be the least trade- restrictive necessary to achieve the objectives; an obligation to ensure transparency in the use of trade measures related to the environment and to provide adequate notification of national regulations; and the need to give consideration to the special conditions and developmental requirements of developing countries as they move towards internationally agreed environmental objectives.

33. The Commission notes the importance of developing a framework to facilitate the assessment of the environmental impact of trade policies, taking into account the special needs and conditions of developing countries. Any such assessment should be carried out within the overall perspective of promoting sustainable development. In this context, there is a need to foster a better understanding of the trade implications of a number of environmental concepts and principles, such as the polluter pays principle, the precautionary principle and life-cycle management. In this context, there is also a need to consider the interactions between trade, technological cooperation and changes in production and consumption patterns. Further work in this area by UNEP and UNCTAD, in cooperation with other relevant organizations, would represent a valuable contribution to the objective of making trade and environment policies mutually supportive in promoting sustainable development.

34. In the context of the overall aims of sustainable development, the Commission welcomes the substantial progress achieved in GATT/WTO, UNCTAD and UNEP. The Commission further underlines efforts to make trade and environment mutually supportive through, inter alia, strengthening technical assistance in the capacity-building undertaken by UNCTAD, UNDP and UNEP. As GATT/WTO, UNEP and UNCTAD are key actors in the implementation of chapter 2, sections A and B, of Agenda 21, the Commission emphasizes the need for close cooperation and complementarity in their work, as well as the need for appropriate inputs from other organizations involved, such as UNDP, the World Bank and the Organisation for Economic Cooperation and Development (OECD). The Commission underlines the importance of complementarity in work on the identification and development of international trade rules and international environmental law. For the purpose of fostering cooperation, the Commission, UNCTAD and UNEP should be appropriately represented at the WTO Committee on Trade and Environment. In addition, there should be close cooperation between GATT/WTO and UNEP, in particular, when considering the relationship between the provisions and dispute settlement mechanisms of the multilateral trading system and those of multilateral environment agreements, including with respect to the question of compliance with the trade provisions in multilateral environmental agreements negotiated under the auspices of the United Nations.

35. Regarding national environmental requirements and international trade, the Commission notes that further examination and work are needed to ensure that the trading system is adequately responsive to the needs and possibilities of Governments in taking action to protect the environment in accordance with international law, including health and environmental requirements. Further consideration will have to take into account that: (a) there are legitimate reasons for diversity in environmental regulations across countries; (b) differences in the relative costs of production constitute the very basis for gains from international trade; (c) the effects of national environmental regulations should be studied to determine whether they have a greater potential impact on trade competitiveness than other non-trade policy measures; (d) disguised protectionism in the name of environmental standards should be avoided; (e) efforts should be geared to promoting the convergence of environmental standards and regulations at a high level of environmental protection, while bearing in mind that regulations and standards that are valid in the most advanced countries may be inappropriate and have unwarranted social costs for the developing countries; (f) the transparency of environmental regulations and standards should be ensured and adequate information should be provided in particular to developing countries.

36. Regarding further international cooperation in the field of environmental requirements, the Commission notes the need for a careful examination of the issues relating to competitiveness, particularly in the light of evidence that, in some cases, environmental compliance costs are a small proportion of total costs. It should, on the other hand, be clearly seen that investing in environmental activities has many positive effects, such as the improvement of market opportunities and job creation.

37. The Commission takes note of the ongoing consultative process in UNCTAD on the establishment of an ad hoc working group on trade, environment and development as a result of the mid-term review at the eighth session of UNCTAD and encourages interaction with GATT/WTO and UNEP. The Commission welcomes the joint UNEP/UNCTAD programme and welcomes the participation of GATT/WTO as well as other relevant organizations, including OECD, the private sector and non-governmental organizations. In this regard the Commission supports the proposal of UNEP and UNCTAD to hold, in a forum complementary to WTO and other forums as a follow-up activity of the joint informal ministerial meeting in February 1994 in Geneva, a working-level session and a high- level/ministerial meeting on trade, environment and sustainable development to examine (a) the role of environmental policies as they relate to trade liberalization policies, (b) the promotion of trade in environmentally friendly products and technologies and (c) the promotion of international cooperation in the field of product-related environmental policy instruments.

38. The Commission also welcomes the relevant provisions of the Programme of Action for the Sustainable Development of Small Island Developing States and calls for adequate support for the implementation of the provisions of the Programme.

39. The Commission suggests that consideration be given by Governments and relevant organizations to (a) further development of trade-compatible environmental instruments, such as non-discriminatory eco-labelling as well as non-discriminatory certification and verification schemes, taking into account the financial and institutional capacity of developing countries to do so; and (b) cooperative work on environmental standards based, inter alia, on input from the International Standardization Organization (ISO), with due regard to the differentiated responsibilities of developed and developing countries.

40. The Commission reaffirms its role, in accordance with General Assembly resolution 47/191, in monitoring progress in the implementation of Agenda 21 and activities related to the integration of environmental and developmental goals throughout the United Nations system. The Commission agrees to review annually developments in the area of trade, development and environment, according to its mandate, with a view to identifying possible gaps, and to promote cooperation and coordination. The Commission recommends that GATT/WTO, UNCTAD and UNEP continue to provide annual reports to the Commission on their activities concerning trade and environment. The Commission recommends that relevant reports from the international financial institutions should be made available to facilitate its work. The Commission calls on the Secretary-General to ensure an appropriate division of labour within the United Nations system in the area of trade and environment through the IACSD and its task-manager approach.

41. In order to gain a better understanding of the impact of internalization of environmental costs on competitiveness and trade earnings, particularly in developing countries, the Commission recommends that the Secretary-General, through the Economic and Social Council, seek the views of Governments, regional economic integration organizations, the private sector and non-governmental organizations, on an analytical study to be undertaken on the relationship of environmental protection to international competitiveness, job creation and development. The Commission stresses that this work could benefit from the input of various relevant institutions, such as the World Bank, GATT/WTO, UNCTAD, UNEP, UNIDO, UNDP, OECD and ILO. 42. Finally, the Commission highlights the importance of achieving transparency, openness and the active involvement of the public and experts, in relation to work on trade and environment, including work within WTO, UNEP and UNCTAD, and to dispute settlement processes. The Commission recognizes that there is a considerable need for improvement in these areas, and looks forward to the development of specific recommendations in this regard by Governments and the appropriate organizations, in accordance with chapter 38 of Agenda 21.

United Nation General Assembly
3rd Session
New York, 11-28 April 1995

Report of the Commission on Sustainable Development on the Third Session (11-28 April 1995)

 5. Trade, environment and sustainable development

47. The Commission reiterates the initial perspectives for consideration in subsequent work on trade and environment issues contained in its 1994 decision and stresses that trade and environment policies should be mutually supportive in promoting sustainable development. This requires that account be taken of the special conditions and development needs of the developing countries. There is also a need for support to build institutional capacity in the area of trade and development and environmental assessment in developing countries and countries with economies in transition. There is also a need for complementarity, coordination, transparency and accountability among international organizations involved in the development of policies on trade and environment.

48. The Commission considered a number of key issues related to the linkages among trade, environment and sustainable development. These include product measures and market access, process standards and competitiveness, internalization of environmental externalities and trade, multilateral environmental agreements and trade policy, environmental factors as trading opportunities, and trade policies and the environment. Each of these issues involves conceptual and empirical as well as policy questions. Ongoing work in different international organizations aims at clarifying these issues, through policy analysis and debate, and at deriving policy conclusions therefrom. Major groups, such as non-governmental organizations and the private sector, are also addressing trade and environment linkages and are making important contributions to a better understanding of them, as well as to awareness-building and public education.

49. The Commission stresses that States should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, so as to better address the problems of environmental degradation.

50. The Commission notes that the Uruguay Round of multilateral trade negotiations agreements represent a substantial liberalization of international trade, the strengthening of multilateral rules and disciplines to ensure stability and predictability in trade relations, the establishing of rules and disciplines in new areas and the founding of a new institutional framework in the form of the World Trade Organization, with an integrated dispute-settlement mechanism that should avert unilateral actions that are against international trade rules. The agreements thus represent an essential element for the achievement of global sustained economic growth for the benefit of all countries, in particular developing countries, which is a fundamental element for achieving sustainable development. In this context, the Commission calls for the urgent and full implementation of the agreements contained in the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, 5/ stresses the urgent need for trade liberalization, including through substantial reduction of tariffs and other barriers to trade and the elimination of discriminatory treatment in international trade relations, and improved access to markets of all countries, in particular those of developed countries.

51. The Commission on Sustainable Development stresses the importance of the work of the Committee on Trade and Environment of the World Trade Organization, in accordance with its mandate, which calls upon the Committee to make appropriate recommendations on whether any modifications of the provisions of the multilateral trading system are required, compatible with the open, equitable and non-discriminatory nature of the system, as regards, in particular (a) the need for rules to enhance positive interaction between trade and environmental measures, for the promotion of sustainable development, with special consideration given to the needs of developing countries, in particular those of the least developed among them; and (b) the avoidance of protectionist trade measures, and the adherence to effective multilateral disciplines to ensure responsiveness of the multilateral trading system to environmental objectives set forth in Agenda 21 and the Rio Declaration on Environment and Development, 6/ in particular principle 12; and (c) surveillance of trade measures used for environmental purposes, of trade-related aspects of environmental measures that have significant trade effects, and of effective implementation of the multilateral disciplines governing those measures. 52. The Commission notes that positive measures, such as improved market access, improved access to finance, access to and transfer of technology, capacity-building and special provisions for small firms, are effective instruments to support developing countries and countries in transition in their efforts to internalize environmental costs.

53. The Commission reiterates paragraph 32 of its 1994 decision. It further notes that trade provisions in multilateral environmental agreements (MEAs) should be transparent and should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade. In accordance with principle 12 of the Rio Declaration, unilateral actions to deal with environmental challenges outside the jurisdiction of the importing country should be avoided. Environmental measures addressing transboundary or global environmental problems should, as far as possible, be based on international consensus.

54. The Commission recognizes that progress has been made by virtue of the new World Trade Organization provisions, and underscores the importance of building on these accomplishments, in particular with regard to transparency and the use of outside review groups where specialized knowledge is relevant.

55. The Commission reaffirms that efforts should be geared to promoting the convergence of environmental standards and regulations at a high level of environmental protection, while bearing in mind that regulations and standards that are valid in the most advanced countries may be inappropriate and have unwarranted economic and social costs for the developing countries. It further notes the importance of transparency of environmental regulations and standards and of supporting developing countries in the development of effective domestic regulations and standards.

56. The Commission considers that there is a need to analyse the potential effects of product-specific policies, in particular those based on life-cycle approaches, which have emerged recently, such as eco-labelling and certain packaging and recycling requirements, especially as regards their potential impacts on the exports of developing countries and countries with economies in transition. It is also important to analyse how improved transparency and international cooperation could be strengthened so as to facilitate the export prospects of developing countries and as a means of strengthening environmental protection.

57. The Commission notes that consumer preferences for "environment-friendly" products may create trading opportunities including for developing countries. More work is needed to specify ways and means by which the credibility of environmental claims relating to products and technologies can be substantiated.

58. The Commission considers that further trade liberalization is a necessary but not sufficient condition for sustainable development. Trade liberalization along with sustained economic growth can be expected to pave the way for the gradual raising of environmental standards at the national and the global level. At the same time, trade liberalization needs to be complemented by the adoption of sound environmental policies. National Governments have an interest in analysing environmental and social effects of significant changes in the volume and composition in production and consumption patterns, including those resulting from trade policy reforms, and making, if required, the necessary policy adjustments with a view to correcting market and policy failures and internalizing environmental costs.

59. Within the context of the overall aims of sustainable development, the Commission welcomes the substantial progress achieved in the World Trade Organization, UNCTAD and UNEP, in particular through the work of the World Trade Organization Committee on Trade and the Environment, the UNCTAD Ad Hoc Working Group on Trade, Environment and Development and the joint UNEP/UNCTAD programme, as well as the important role of UNEP, in particular in relation to multilateral environmental agreements, and invites the institutions concerned, as well as OECD, to continue their work on trade and the environment. It further emphasizes 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. The Commission considers that the present division of labour in the international discussions on trade and the environment is generally satisfactory and stresses the need for continued close cooperation and complementarity in the work of the World Trade Organization, UNEP and UNCTAD. In this context, the Commission invites UNEP and UNCTAD to continue their joint initiative, preferably at a technical level with a focused agenda.

60. The Commission invites UNCTAD, the task manager for trade and environment, in cooperation with UNEP, the World Trade Organization, FAO, WHO, the Department for Policy Coordination and Sustainable Development of the United Nations Secretariat 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 non-governmental organizations 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.

61. As called for in Agenda 21, the Commission recommends that Governments of developed countries and multilateral aid agencies strengthen efforts to improve access to markets, finance and access to and transfer of technology and to build capacity in order to support developing countries and countries with economies in transition in their efforts to internalize environmental costs. UNCTAD in cooperation with UNDP, FAO and UNEP and other international bodies, programmes and organizations is invited to undertake further work in this area with a view to identifying innovative approaches. The joint UNEP/UNCTAD programme is also invited to carry out further work in this area, giving particular attention to principle 16 of the Rio Declaration and capacity-building in developing countries and countries with economies in transition, in cooperation with other relevant organizations, such as FAO.

62. In order to gain better understanding on the impact of the internalization of environmental costs on competitiveness and trade earnings, particularly in developing countries, UNCTAD is invited 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 non-governmental organizations as well as other relevant regional and international organizations.

63. The Commission invites UNCTAD and UNEP in cooperation with the World Trade Organization, the International Organization for Standardization (ISO), and other relevant international organizations to analyse 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.

64. The Commission recognizes that eco-labelling and recycling requirements must be transparent and should take into account the special situation and needs of the developing countries and countries with economies in transition. The Commission encourages UNCTAD and UNEP, in cooperation with other relevant international organizations, to continue to explore the scope for mutual recognition among eco-labelling schemes on the basis of environmental equivalencies or appropriately high levels of environmental protection.

65. The Commission invites 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.

66. With respect to eco-labelling and environment-friendly products, the Commission invites multilateral and bilateral development institutions to provide technical assistance, as appropriate, to developing countries and countries with economies in transition in order to facilitate their participation in international work on eco-labelling and environment-friendly products carried out by ISO and other relevant international organizations.

67. The Commission invites the joint UNEP/UNCTAD programme to carry out further work, in cooperation with UNDP and other relevant international organizations, on the development of a framework to facilitate the assessment of the environmental impact of trade policies, taking into account the special needs of developing countries and countries with economies in transition. Such work should take into account the different elements mentioned in paragraph 33 of the 1994 Commission on Sustainable Development decision.

68. The Commission notes the ongoing work of OECD on trade and environment and encourages it to submit the results of its work to the Commission on Sustainable Development.

69. The Commission encourages Governments to develop or strengthen processes to assess the environmental effects of trade policies, enhance coordination between environmental and trade policies, including cooperation between environmental and trade officials in the policy development process, and promote transparency and openness to the public in these processes.

70. The Commission encourages cooperation and exchange of experiences among countries to develop and strengthen environmental protection laws and programmes in the pursuit of the mutual supportiveness of trade and environment.

71. The Commission encourages international organizations, Governments and the business community, and non-governmental organizations, to promote the implementation of trade and sustainable development principles consistent with Agenda 21.

72. The Commission reiterates the importance of achieving transparency, openness and the active involvement of the public and experts in relation to work on trade and environment.