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Comments to the Trade Policy Staff Committee, United States Trade Representative Washington DC, May 20, 1999 On behalf of the Sierra Club’s more than 500,000 members, we would like to thank the US Trade Representative for inviting public testimony on the World Trade Organization (WTO). For nearly ten years, the Sierra Club’s Responsible Trade Campaign has educated the Club’s members and the general public about the need for environmentally responsible trade policies. Such policies would ensure that freer trade does not damage the web of life on which healthy communities and a sustainable economy depend. At the upcoming WTO Ministerial in Seattle, the United States and its trading partners will make decisions that will affect not only the economy, but the environment, for generations to come. We urge that you take as your guiding principle the need to mainstream environmental considerations into all the deliberations, agreements, and actions of the WTO. In particular, we believe that this Summit should launch a comprehensive review and reform of current WTO rules rather than conclude new trade agreements or launch new trade talks. I. The Health and Environmental Impacts of Existing WTO Rules With establishment of the North American Free Trade Agreement (NAFTA) and the 134-nation World Trade Organization (WTO), our governments sharply increased the rate at which international trade is fusing the world’s economies into a single, homogeneous market. Current trade policy promotes global economic competition, the mobility of capital, the conversion of untouched natural resources into marketable commodities, the spread and deepening of consumer values, an increase in cross-border investment, the erosion of political, ecological, cultural, and social boundaries, and limitations on the role of government worldwide to define the public good. It is then no wonder that trade ranks among today’s most important environmental issues. Some of trade’s environmental effects are positive. For instance, trade may help to convey some less-polluting technologies from wealthier to poorer countries. And, by promoting growth, trade may provide the wealth needed to clean up certain pollution problems. But the environmental damage caused by unregulated free trade on the terms fostered by current trade rules may be even greater than the benefits. A. A Race to the Bottom By promoting economic growth without adequate environmental safeguards, trade increases the overall scale and pace of resource consumption; promotes adoption of high-consumption, high-polluting lifestyles; and prompts countries to seek international advantage by weakening, not raising, environmental protections. Since the implementation of NAFTA, each of the NAFTA countries has weakened basic environmental protections despite a commitment to strengthen environmental standards under NAFTA’s environmental side agreement. For instance, British Columbia, Canada recently relaxed environmental standards for its forestry sector in order to compete more effectively for export markets. B. Eroding Democracy Economic globalization erodes democratic values, hampering the ability of citizens and democratic governments to protect public health and the environment. Challenges to democratically enacted environmental and public health rules under the WTO are heard by tribunals of trade experts operating behind closed doors. The harmonization of environmental standards between and within countries occurs within international trade bodies closed to public participation. The number and variety of trade institutions making critical decisions about environmental rules threatens to overwhelm the resources of citizen watchdog groups accustomed to operating in more transparent domestic fora. As capital becomes more mobile in a global market, communities lose control over their resources. For instance, after Boise Cascade moved mills from Oregon and Idaho to Mexico, a company spokesman stated, "How many more mills will be closed depends on what Congress does.... The number of timber sales [from national forests] will determine our decision to move south." C. Undermining Health and Environmental Standards The WTO shows a distinct bias against the environment and public health in dispute settlement proceedings. Standards have been weakened as a result. For instance: The State Department weakened U.S. turtle-safe shrimp regulations in 1998 after a successful challenge in the WTO. Before the challenge, U.S. regulations required all shrimp-exporting nations that traded with the U.S. to equip their shrimp trawlers with turtle excluder devices. These could save 97 percent of the 150,000 sea turtles that drown in shrimp nets each year. But after the dispute panel ruling, the State Department modified the regulations to apply only to those individual foreign trawlers selling shrimp to the U.S. market. The new regulations are unenforceable because turtle-deadly shrimp can easily be passed off as turtle-safe. Canada was forced to roll back its ban on MMT, a gasoline additive that is a suspected neurotoxin. MMT’s U.S. manufacturer used a NAFTA dispute process to charge that Canada’s ban had defamed the company’s good name and hurt its profits in violation of NAFTA provisions barring the partial "expropriation" of investor property. Under the precedent established in this case, virtually any environmental law that affects the profits of a foreign investor can be challenged as a NAFTA violation. After a complaint by the United States, a WTO panel ruled against Europe’s ban on beef from cattle treated with growth hormones. The precedent established in this case could haunt American consumers, forcing us to adopt international health and safety standards that are lower than our own. Ironically, as a result of the WTO dispute, European Union scientists have conducted new studies establishing a cancer risk from hormone-treated beef. American consumers may question the safety of their own food supplies as they learn about these results. In addition to direct challenge in the international trading system, business lobbyists, regulators, and trade officials have weakened or blocked proposed laws and regulations as violations of trade rules. The "chilling effect" of trade rules on environmental law can be more powerful than the direct impact of formal dispute resolution. To cite several recent examples: In 1995, the U.S. Animal and Plant Health Inspection Service (APHIS) refused to mandate the strongest options for controlling pests on imported wood, pleading that it "cannot establish regulations that would contravene other laws and policies associated with trade...." Under its proposed pest regulations, scientists estimate a 50 percent chance that the Douglas fir forests of the Pacific Northwest could be wiped out by pests imported on raw logs from Siberia. The Sierra Club is concerned that trade interests will prevail when APHIS sets new standards for tree pests carried in solid wood packing material. The Maryland state senate rejected a bill banning contracts with firms doing business in Nigeria after the State Department testified that the legislation violated international trade rules. Under the WTO’s Agreement on Government Procurement, states and localities could be barred from procurement aimed at promoting environmental protection, human rights, and other causes. Maryland activists had promoted the legislation, modeled word-for-word on anti-apartheid legislation adopted by Maryland in the 1980s, to focus attention on the plight of Nigeria’s Ogoni people. The Ogoni have been severely persecuted by the Nigerian government for protesting the pollution of the Shell Oil Company. The United States Trade Representative (USTR) is now lobbying the European Commission to reject proposed new regulations aimed at cleaning up the computer industry. The USTR and the American Electronic’s Association charge that the proposed regulations, including a hazardous materials phase-out and a recycled plastics requirement, violate WTO rules. At last years WTO Summit in Geneva, President Clinton stated, "We should be leveling up [environmental protections], not leveling down." The Sierra Club hopes that US regulators would seize this opportunity to raise US standards for electronic equipment rather than lower the proposed European standard. The Commerce Department is also lobbying Japanese environmental officials to block improvements in Japan’s guidelines on motor vehicle fuel efficiency, charging the regulations would hurt U.S. auto exports. Japan’s new regulations could help protect American citizens from the perils of global warming pollution. Yet the Commerce Department launched its pressure campaign without seeking public comment. II. New Trade Talks Despite growing evidence that U.S. trade policy has a number of serious, adverse environmental impacts, new trade negotiations are proceeding with few indications of a course correction. The United States will play host to a Summit of the World Trade Organization in Seattle from November 30 to December 3, 1999. The Summit could be used to conclude a series of agreements reducing industrial tariff reductions and to launch a sweeping new, "millennial round" of trade negotiations. The proposed new agreements could have serious environmental or public health implications. A. Advanced Tariff Liberalization At the Summit, the United States hopes to complete tariff-elimination agreements in eight industrial sectors, including energy, fisheries, and forest products, among others. US officials have insisted that the forest products agreement would not have adverse environmental impacts. Yet a recent industry study predicts that the agreement could increase world-wide wood consumption by 3 - 4 percent. A rise in forest products consumption could easily translate into more logging on the ground. The Sierra Club believes it is essential to conduct a thorough, open, and balanced environmental impact assessment before completing any of the agreements to eliminate tariffs. B. A Millennium Round? In addition, the Summit could sweep together a series of on-going and new trade negotiations to launch a new "millennium round" of trade talks. Many of these talks raise serious potential environmental concerns. Agricultural talks could foster the worldwide sale of bioengineered seeds that contain natural pesticides built into their genes. By ensuring that insect pests will consume a steady diet of the pesticide, these seeds guarantee the development of resistant insects within a few decades. Farmers could then lose an important tool for safely controlling insect pests without synthetic pesticides. Intellectual property talks could require countries to enforce patents over plants and animals. Such patents could hurt agriculture or health in poor countries by eliminating control over local genetic resources and by restricting access to foreign seeds and pharmaceuticals. Investment talks could globalize strict standards against the partial "expropriation" of property. Such standards in the NAFTA were used to eliminate Canada’s ban on MMT. Given global effect through the WTO, such rules could undermine environmental safeguards world-wide. Government procurement talks could strengthen trade disciplines that bar governments from basing procurement on non-market criteria. The new rules could eliminate government procurement as a tool to promote zero-emission vehicles, solar energy, organic foods, sustainable wood, and labor or human rights. Cooperative arrangements with the International Monetary Fund and the World Bank could authorize these international agencies to condition their loans on compliance with WTO rules. Doing so would delegate WTO enforcement powers, undermining the minimal procedural safeguards in the WTO’s dispute settlement process. III. The State of Environmental Reform On a few issues, the Unites States has been a leader in promoting environmental reform of the World Trade Organization, but on many other issues it has lagged behind our trading partners. In any case, the proposed reforms fall well short of what is necessary for ecologically sustainable international trade. A. Transparency The United States has lead efforts to expand the range of WTO documents available to the public and continues to promote broader derestriction of documents, including dispute panel reports. We welcome these US proposals, but they are far from sufficient to make the WTO a truly accountable institution. B. Other Issues On other issues, the United States has lagged behind. According to news reports, at a high-level symposium of trade and environment officials in Geneva earlier this year, the Administration indicated that it would not seek to revise existing trade rules to better safeguard the environment. Instead, reports indicate, the Administration would rely on trade dispute panels to re-interpret trade rules in ways that are more environmentally benign. The Sierra Club agrees that the recent appellate body opinion on the shrimp/turtle case avoided some of the egregious errors of the past. But the panel still interpreted trade rules in ways that needlessly restrict environmental protection. Moreover, without changes to underlying rules, the WTO will still exert a powerful chilling effect on health and environmental safeguards. IV. Recommendations: Review and Reform Despite its name, the World Trade Organization exerts powerful influence on many issues other than trade. Experience shows that the WTO has a profound impact on health and environmental laws as well as on democratic governance. Given the relative novelty of the WTO and the scope of its known impacts, it would be a mistake to expand its powers by concluding or launching additional trade negotiations at the Seattle WTO Summit. Such agreements could have far-ranging harmful impacts on the environment and public health for generations to come. Instead, the Summit should be used to launch a thorough environmental, social, and legal review of the WTO with a view to reforming existing WTO rules to protect public health and the environment. The United States should set an example by conducting a review to assess the impacts of the WTO agreements on specific sectors and for representative developed and developing countries. In addition, the WTO and national governments should begin a review of the environmental impact of proposed agreements and new negotiations. Such assessments should include a comprehensive scoping of impacts involving extensive comment from the pubic and affected government agencies, a draft assessment with another opportunity for outside comment, and a final assessment. In addition, negotiators should use the WTO Summit to begin adoption of significant trade rule reforms. The United States should call a moratorium on all challenges to health and environmental laws until such changes are in place. The following preliminary recommendations are meant to be suggestive, not comprehensive. A. Transparency, Public Participation, and Accountability To ensure genuine public participation in the WTO and increase its legitimacy in the eyes of the public, several reforms are needed. Citizens’ groups should be allowed to make direct submissions to WTO negotiating committees and working groups as well as to the General Council. Governments should provide notice and an opportunity for public comment on submissions to the WTO. Meetings of minutes should be made public. And the public should have ready access to working documents. Reform of the dispute settlement mechanism is essential to create a neutral forum to weigh environmental and public health issues. For example, dispute panels on environmental issues should include panelists with demonstrated environmental expertise. On issues involving multilateral environmental agreements, consultations should be required with the MEA secretariats. Questions of environmental fact and law should be delegated to other relevant bodies, including the secretariats of MEAs. Interested parties, including officials of subnational governments and representatives of citizens organizations, should be allowed to provide oral and written testimony. National submissions should be developed after public notice and comment. Dispute panel reports should be publicized on the Internet upon release. B. Trade Rule Reforms To overcome the WTO’s demonstrated biases against the environment, trade rules should be amended to incorporate environmental principles. Moreover, all WTO committees should be required to consider such principles in their deliberations and open their proceedings to environmental organizations and government agencies. The following recommendations are, again, suggestive, not comprehensive. In particular, we urge reform of the WTO with respect to: Trade measures in MEAs. Without the ability to use trade measures, international environmental law will be permanently relegated to second class status. For instance, trade measures against non-members of an MEA could be granted a "safe harbor" in cases when the MEA does not exclude any country able to join. The precautionary principle. Allow countries to enforce protective standards for public health and the environment in the absence of complete scientific information. Shift the burden of proof from the challenged country to the challenger. Upward harmonization. Ensure upward harmonization in reconciling differences in the levels of health or environmental protections between countries. Ensure that harmonized standards are floors, not ceilings in order to avoid stopping environmental progress. Science. Ensure that WTO dispute panels do not substitute their own scientific judgement for the judgement of domestic regulators when a scientific basis exists for a given level of protection. The consumers right to know. Require that recognized standard-setting bodies under the WTO are open, participatory, and balanced. Standards for ecolabels developed by bodies that do not meet these criteria would not be allowed to prevail in trade disputes, ensuing that standards for ecolabels are developed in an open and participatory, and manner. Production and process methods. Ensure that countries can regulate imports based on the way products are made as long as standards are non-discriminatory on their face and are developed in an open, transparent manner. Investment. The WTO should not negotiate further agreements on international investment. In an era of increasing capital mobility, it is vital to develop enforceable standards of investor responsibility before developing new standards of investor rights. V. Will this Summit be Fair? The Seattle WTO Summit offers a choice: will US trade policy follow a path that erodes environmental sustainability or will we start a comprehensive review and reform of the WTO that protects the environmental values on which a high quality of life depends? Initial indications about the Summit’s direction are troubling. In particular, the Sierra Club is deeply concerned that the Administration has chosen to fund this Summit from private sector contributions rather than from the federal budget. As the Los Angeles Times editorialized, "Privatizing the meeting...does not serve the interests of either the WTO or the United States." Private financing, in our view, compromises the Summit as an impartial forum for deciding issues of vital importance to both industry and ordinary citizens. We urge you to replace the private financing with federal funds to ensure citizen confidence in these proceedings. Up to Top HOME | Email Signup | About Us | Contact Us | Terms of Use | © 2008 Sierra Club