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View a list of Coalition members The World Trade Organization and Environment Technical Statement by United States Environmental Organizations July 16, 1999 This statement provides further detail on the concerns and recommendations regarding environmental issues outlined in the July 16 letter from several United States environmental groups. Part I details our opposition to further expansion of the World Trade Organization (WTO) at this time. Part II identifies specific reforms needed to WTO rules and procedures. Part III outlines procedural and substantive elements of the environmental assessment of existing and proposed multilateral trade agreements. I. No WTO Expansion The Administration must avoid rushing into more negotiations on liberalization that would place the environment and environmental laws further at risk. In light of the potential for significant environmental impacts, this is not the time to embark on further expansion of the WTO’s power or the scope of its rules. Thus, we oppose the launch of negotiations within the WTO on investment liberalization, government procurement or accelerated sectoral liberalization, including "early harvest" of tariff reductions. We oppose the Administration’s effort to accelerate liberalization, especially in environmentally sensitive sectors such as forest products, in the absence of a careful and public assessment of the potential environmental impacts (see Part III.3 below). Aiming to reach agreement on further liberalization at the Seattle meeting itself — as the Administration proposes to do with reduction of tariffs on forest products — flies directly in the face of the Administration’s commitment to review the environmental impacts of liberalization, because the schedule is too short to do a thorough assessment of effects and policy alternatives. As we have repeatedly stated, multilateral investment rules beyond the current Agreement on Trade-Related Investment Measures (TRIMs) should not be the subject of negotiations at the WTO. Our objections to an investment agreement in the WTO go beyond the issues of establishing rights to sue for lost profits and investor-to-state dispute resolution. We are also concerned that enforceable rights to national treatment and most favored nation status could pry open environmentally sensitive sectors in markets where regulatory frameworks are inadequate to manage the increased environmental pressures that would result. If unaccompanied by strong frameworks of environmental and labor rights, application of the principles of national treatment and most favoured nation could also increase "industrial flight" by companies seeking to avoid costs of compliance with labor and environmental requirements. In light of these objections, we are concerned that the Administration seems to be considering support for partial negotiations under WTO auspices. Prior to the negotiation of any investment rules in any forum, an over-arching international framework is needed to ensure that international investments promote sustainable development consistent with the needs of host countries and to guarantee that the environment is protected. The development of such a framework and any subsequent investment agreement should take place within the United Nations system. Any such agreement must include investor obligations with respect to environmental and community protection. II. Reform WTO Rules and Procedures In its Communiqué from Cologne in June, the G-8 stated that "environmental consideration should be taken fully into account in the upcoming round of WTO negotiations." We are pleased to hear the United States join other industrialized countries in this ambitious commitment. Unfortunately, the United States’ proposals to date have been entirely inadequate to the task. To make significant progress, the Administration will need to make positive proposals on both substantive and procedural rules, including existing rules of the WTO as well as the terms of reference for any further negotiations launched at Seattle. The Administration will need to make a clear political statement that affirms environmental values and define a clear process involving the right mix of agencies and other partners for achieving progress on a range of issues. Substantively, the Administration will need to take action to ensure that the scope of WTO rules is limited to trade policy and does not intrude into matters that come under environmental law and policy. WTO rules must provide for deference to international and national environmental standards (Part II.1), and protect the consumer’s right to know (Part II.2). At the same time, WTO rules can and should be applied so that they encourage the elimination of environmentally damaging subsidies that also distort trade (Part II.3). Procedurally, the Administration must take steps to ensure that all WTO forums take environmental implications of their work into account (II.4), and that their operations become transparent and accountable (II.5). WTO Deference To International And National Environmental Standards and Institutions WTO rules need to be reformed so that they stay within the bounds of trade policy and do not intrude into areas within the jurisdiction of environmental institutions and regulations. We are pleased to learn that the Administration now seems to agree that ad hoc dispute settlement decisions alone are not a solution to the impact that WTO rules as currently interpreted may have on measures to protect the environment. United States leadership of a multilateral approach to a number of issues is needed to ensure that WTO forums — including the Dispute Settlement Body — and WTO rules consistently defer to regulations and other measures adopted by international and national institutions, including measures based on the precautionary principle. In the absence of such consistency, there is a serious risk that these institutions will be impeded from pursuing legitimate environmental objectives through negative interpretations advanced by trade policy-makers, ad hoc challenges, and the threat of adverse decisions in WTO dispute settlement. Of particular concern are the GATT, the TBT Agreement and the SPS Agreement; also relevant are the TRIPS Agreement as well as agreements on subsidies and agriculture. Seattle is a critical opportunity for the United States to send a clear signal that trade policy must be developed and applied consistently with environmental principles, and to define a process and terms of reference for achieving agreement on how to ensure that WTO rules do not interfere with environmental measures. That process should aim at the following specific outcomes. a. Burden and Standard of Proof. Ensuring that the complaining party in a WTO dispute settlement proceeding has the burden to show the lack of an adequate basis for challenged local or national environmental and health regulations, and that WTO decision-makers employ a deferential standard of review, perhaps along the lines of Article 17.6 of the Anti-Dumping Agreement. b. SPS. Ensuring that the provisions of the SPS Agreement: 1. Do not interfere with the right of national governments to develop and enforce high environment and health standards at the level they deem appropriate; 2. Fully recognize the precautionary principle; 3. Acknowledge clearly that international standards establish minimum, not maximum standards for the levels of environmental and health protection set by WTO Members. c. Acknowledge Multilateral Environmental Agreements (MEAs) in WTO Rules. Consistent with the recent G-8 Cologne Communiqué, there must be an affirmation that trade-related environmental measures (TREMs) authorized or required under multilateral environmental agreements or internationally recognized environmental principles are consistent with WTO rules, including Article XX of the GATT, the TBT Agreement and the SPS Agreement. Criteria should be defined indicating to the WTO how to recognize the types of agreements or principles that fit within the MEA category. Contrary to USTR’s suggestion in the July 2 briefing, the concept is not to establish criteria for evaluating whether an MEA measure is legitimate. Rather, such measures will be deemed legitimate by virtue of their adoption under an MEA. d. Build Effectiveness of MEAs including Trade-Related Measures. The Administration needs to make it a positive priority to build effectiveness of MEAs. Where trade-related measures are appropriate means for addressing the environmental problem, the Administration should support their use. A WTO decision to defer to MEAs will do little good if MEAs are written to include "carve-outs" that ensure that WTO rules prevail over MEA obligations. Disputes over the implementation of MEAs should be resolved by MEAs, not by the WTO. Thus, we are also seeking a commitment from the Administration not to advocate the inclusion of "savings clauses" in future MEAs. The Administration should also work with other countries through appropriate environmental institutions such as the United Nations Environment Programme (UNEP) to develop principles of trade policy to which negotiators of MEAs can refer during negotiations. e. Production or Processing Methods (PPMs). Ensuring that distinctions between products based upon PPMs related to environment, human rights and internationally recognized labor standards are recognized as legitimate measures for promoting sustainable commerce that are consistent with WTO rules. f. Procurement. A clarification or amendment to the Agreement on Government Procurement ensuring that it recognizes the right of governments to use social and environmental criteria in making purchasing decisions. Several of our organizations provided further suggestions on this topic in comments submitted to USTR by the Consumer Choice Coalition in January. g. UNEP and other Environmental Institutions. Adoption of cooperative agreements between WTO and international environmental institutions, including UNEP, by which the WTO defers to the role of appropriate institutions in addressing environmental aspects of international decision-making. Specifically, institutions such as UNEP and the secretariats of relevant MEAs should have a role in the settlement of environment-related disputes under the Dispute Settlement Understanding (DSU) as well as the definition of key international environmental principles such as the precautionary principle. Deference to such outside expertise is necessary in light of the specialized nature of WTO as a trade policy institution with trade expertise. We will be happy to discuss the precise legal form that these steps might take at the appropriate time. For instance, a clarification could involve language in a statement adopted by a WTO Ministerial Conference or the WTO General Council, an agreed-upon interpretation formally adopted by the General Council, or an amendment to the text of the relevant agreement. As a general matter, we would like to emphasize that the use of trade measures that affect developing countries to accomplish environmental goals should be accompanied by assistance to those countries to help them achieve those goals. This is consistent with the Rio bargain that developed countries would assist developing countries in raising environmental standards and combating environmental problems, so that all could share in sustainable development and an improved global environment. The merit of this approach was recognized in the Appellate Body’s Shrimp/Turtle decision. Unfortunately, developed countries have failed to carry out their end of the bargain, with foreign assistance budgets declining, and debt relief proposals still inadequate. A renewed political commitment from the United States and other industrialized countries would contribute significantly to multilateral agreement on the program outlined here, and would offer long term payoffs for the United States economy and environment. Protection of the Consumer’s Right To Know Markets can allocate resources properly only if consumers have the necessary information to make informed decisions. Unfortunately, some WTO Members — including the United States government itself — have advanced interpretations of WTO rules that threaten to restrict the power of governments and private organizations to provide consumers with information they want about the environmental and health aspects of products and their production. We urge the United States to work with other WTO Members to launch a process at Seattle that leads toward the following outcomes:
As with the proposals in Part II.1 above, we are open to further discussion about the precise legal form that these assurances should take. Generally, however, the principle is that the WTO must recognize that the TBT Agreement effectively includes an exception along the lines of Article XX, to the extent it applies to ecolabeling. Eliminate Environmentally Damaging Subsidies We welcome and support the Administration’s willingness to push for the elimination of fishery subsidies that have contributed to the current global fisheries crisis. The Seattle ministerial should unambiguously place the fishery subsidies issue on the negotiating agenda, and should do so in the context of an open interdisciplinary and inter-organizational procedure that includes other institutions with relevant and needed expertise alongside the WTO. We urge the United States to push for a similar review of other environmentally damaging subsidies, such as those for forestry, fossil fuels and nuclear energy. At the same time, WTO Members must ensure that WTO rules allow governments to craft measures that reward the social and environmental values conferred by certain activities, such as adoption of environmentally responsible technologies, artisanal fishing and development of renewable sources of energy. The ability of the WTO to play a constructive role on subsidies will be a significant test of the organization's ability to produce the oft-promised "win-win" outcomes for trade and the environment. Recognizing Environmental Aspects of WTO Decision-Making Another key question is how to reform the procedures and institutions of the WTO so that decision-making takes into account its environmental implications. The United States proposes to use the Committee on Trade and Environment (CTE) on a "rolling basis" and in an advisory capacity to address the environmental aspects of WTO decisions. But compartmentalizing environment in the CTE has not worked in the past and will not work in the future. The Administration has offered no concrete steps that would effectively link the CTE to the real decision-making forums at the WTO. In our view, much more is needed to ensure that the WTO takes environment into account in its decision-making. As a general matter, all relevant WTO bodies — including councils, committees, and working groups — must include reference to environmental protection and sustainable development among their objectives or terms of reference, consistent with the preamble of the WTO Agreement itself. The WTO will also have to adopt procedures that ensure that these forums take these objectives seriously. For instance, each forum could periodically consult with international environmental institutions with relevant expertise, report on the environmental implications of their work, and make recommendations on how to address environmental impacts of the trade policies with which they are concerned. The CTE might have a role through review and comment on that report. Another option is for the WTO’s Director General to present a review of the WTO’s record on environment and sustainable development in a section of the annual report. The United States itself could do a better job of integrating environment by including representatives from relevant agencies such as the EPA on delegations when forums such as the SPS or TBT Committees discuss environment-related issues. Improved Transparency, Public Participation And Accountability At The WTO We very much appreciate the efforts made by the Administration to advance democratic reform of the WTO. We ask that the Administration continue to include increased transparency, participation and accountability as a priority on its negotiating agenda in Seattle. However, effective achievement in this area will require more actions in addition to broader and faster access to working documents and consideration of NGO submissions in dispute settlement. It will also require, at a minimum:
We recognize the validity of concerns raised by developing countries that they may have fewer resources than do some NGOs. The United States and other developed countries should support fuller participation by poorer WTO Members, for instance through financial and technical assistance. A first step towards improved transparency of the WTO and trade policy must begin at home. We have indicated our willingness to work with the Administration to provide input into the negotiating agenda, yet little information and no documents have been shared with the NGO community as the Administration prepares its position for the WTO Ministerial. Only at the July 2 briefing did we hear any degree of detail about the Administration’s proposed positions. We urge the Administration to be more transparent, to share information and documents, to engage the NGO community in a constructive dialogue, and to ensure balanced representation on advisory committees dealing with trade issues that have environmental implications consistent with the Federal Advisory Committee Act. Furthermore, we reiterate our request that the United States include NGOs on its delegation to the WTO Ministerial meeting, especially since other governments, such as Denmark, have already done so. III. Environmental Assessments of Current and Proposed Trade Policies We are pleased that President Clinton has committed the federal government to conducting an environmental review of the next round of talks at the WTO. However, the Administration needs to make significant progress in this area. We are concerned about the adequacy of the process and criteria for such an assessment. We believe that the assessment should include a review of both past and current impacts of existing trade policies on the environment and on environmental law and policy, a similar review of foreseeable impacts of proposals for negotiations, and consideration of policy alternatives. We remain very concerned about the conduct of assessments of proposed tariff reductions in environmentally sensitive sectors. Finally, we have concerns about certain process issues, including the roles of relevant agencies and cooperation with other governments. Procedures and Criteria for Assessment We are concerned that the Administration has yet to suggest any procedures or criteria for the assessment, with Seattle less than six months away. In our view, there are some clear principles with which this assessment must comply. Many of these principles are found in the National Environmental Policy Act (NEPA). The starting point for this assessment must be NEPA’s mandated procedures and methodologies, as elaborated through regulations of the Council on Environmental Quality, and enriched through decades of federal agency experience with implementation. At a minimum, the assessment must be comprehensive in scope, covering all Administration proposals for modifying or adding to existing trade policies embodied in the WTO Agreements. The assessment should be framed in terms of two basic questions. Is the framework of laws, policies and institutions in place to ensure that additional multilateral steps to liberalize trade will lead to environmentally and socially beneficial outcomes? If it is not, then what institutional, legal and policy changes must we make before we move forward with further liberalization? The assessment must involve the full participation of civil society. In light of the short time remaining before Seattle, the assessment procedure must begin immediately. It must consider reasonably foreseeable impacts on a global scale. It must continue until the conclusion of any new negotiating round, taking into account new knowledge as it accumulates, as well as evolving trade policy positions. It must identify areas in which existing WTO agreements and new negotiations have (or will have) significant environmental effects, and evaluate policy alternatives and mitigation measures, including reforms of existing agreements and modifications of proposed ones including the no-action alternative. And it must integrate social and development concerns. To ensure that the results are balanced and objective, the process should be overseen by the CEQ and conducted with the full and equal participation of affected federal agencies, state and local governments, and interested members of the public. Finally, we urge the Administration to take the lead in facilitating an assessment at the multilateral level by a balanced panel of experts drawn from the WTO Secretariat, international institutions with environmental and other relevant expertise, the scientific community, and the public. Assessments of Existing Trade Policies A forward-looking assessment must be complemented by consideration of lessons learned. To date, unfortunately, governmental consideration of environmental impacts of trade policy have been inadequate. As a result, we urgently need to gain a better understanding of the impacts of past trade policies. Thus, the Administration should also conduct an assessment of the environmental impacts of the WTO Agreements adopted in the Uruguay Round, carried out consistent with the principles we have outlined for conducting an assessment. This review should cover all relevant WTO Agreements, such as the General Agreement on Tariffs and Trade (GATT), the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), the Agreement on Technical Barriers to Trade, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and agreements on subsidies and agriculture. In relation to the TRIPS Agreement, we are concerned that the expanded scope and enforcement of intellectual property rights required under the WTO TRIPS Agreement may affect the transfer of technology required under multilateral environmental agreements (MEAs), the rights of farmers and indigenous peoples, and the equitable distribution of benefits required under the Biodiversity Convention. Assessment of Proposals for Accelerated Sectoral Liberalization Beginning in the context of Asia-Pacific Economic Cooperation (APEC), and more recently in the WTO, the Administration has proposed accelerated reduction of tariffs, accompanied by examination of non-tariff measures, of a number of sectors, including environmentally sensitive sectors such as energy, chemicals, fish and forest products. In light of the potential environmental impacts, we urge the Administration to assess carefully the environmental effects of accelerated liberalization in all sectors, and to define and implement policy measures to maximize environmental benefits and mitigate harmful impacts. The United States should not push for accelerated liberalization until full environmental assessments have been conducted — of the proposals for both tariff and non-tariff measures — along the lines discussed in this letter. In light of the severe threats confronting forests and fisheries, and the demonstrably inadequate national and international frameworks for conserving them, this approach is particularly important with respect to the fish and forest product sectors. We appreciate the step in the right direction represented by the joint analysis of the economic and environmental effects of the forest product initiative to be conducted by CEQ and USTR. We are skeptical, however, whether the review as defined in the June 25, 1999 Federal Register notice will be an adequate basis for sound policy making. Even if it is, we are equally concerned that the review’s results will not be taken into account in the ultimate decision. Thus, we call on the Administration to explain on the record the environmental basis for whatever policy decision it takes. As currently proposed, the review does not reflect key principles of NEPA. For instance, the Federal Register notice allows only 30 days for the public to provide input, and it is unclear whether there will be any other opportunities for public participation. Assessment of the Built-In Agenda Services. We have concerns that negotiations on services could have some of the same far-reaching implications for domestic environmental and health regulation as would investment liberalization. Services, like investment, involve activities within a country’s territory that relate to a host of regulatory functions performed by federal, state and local authorities. When it comes to trade liberalization, services, like investment, raise a host of concerns about community values, regulation and sovereignty that are not so directly posed by goods. We urge the Administration to assess environmental and social implications as it develops its positions. Agriculture. The United States has called on WTO members to carry forward with agricultural negotiations with the objectives of gaining "further deep reductions in support and protection, while encouraging non-trade distorting approaches for supporting farmers and the rural sector." We share the Administration’s desire to reform policies and programs that encourage environmentally damaging expansion and intensification of production. At the same time, government agricultural policy can and must reflect the multiple environmental and social functions that agriculture plays. Support for environmentally responsible agriculture can help level the playing field for farmers who take responsibility for the impacts that production has on the environment of their neighbors, and at the same time have to compete with producers that externalize environmental costs onto society. Government policy also should take into account the social values that independent farmers provide to communities. We urge the Administration to make an effort to ensure that the United States approach to agriculture at the WTO strikes a better balance among these policy objectives than in the past. The United States continues to maintain direct and indirect subsidies and protections that distort agricultural markets and threaten our environment, such as below-market pricing for water from government-funded projects and for grazing on public lands. The Administration should carry out a thorough review and restructuring of these policies and programs. The agricultural negotiations on the built-in agenda will offer governments a chance to develop a multilateral understanding of which policies and programs should be reduced, and which should be permitted, on environmental and social grounds. The assessment we are calling for will provide an opportunity for this. Governments should also explore how to help developing countries implement such support, whether through multilateral financial and technical assistance or through some system of preferences. We urge the Administration to provide leadership on the issue of food security in these talks. Governments must consider the impacts that dumping of food exports have on the productive capacity of countries whose populations suffer from chronic hunger, and take this into account in defining relevant trade policies. Submitted by:
On behalf of:
Coalition Members:
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