International Trade

Environment 

Trade & Environment

The WTO has no specific agreement dealing with the environment. But a number of WTO agreements include provisions dealing with environmental concerns. The Agreement on Technical Barriers to Trade and the Agreement on Sanitary and Phytosanitary Measures address environment related issues. Environment issues have also been addressed in GATT Article XX (b) and (g) as part of general exceptions.

After the conclusion of the Uruguay Round in 1994, a Committee on Trade and Environment (CTE) was established in the WTO. The broad mandate of the CTE was to promote an understanding of the relationship between trade measures and environmental measures for achieving sustainable development and to make recommendations on the need for modifications of the provisions of the multilateral trading system to ensure compatibility with an open, equitable and non-discriminatory trading system.

In keeping with the above mandate, the CTE developed a Comprehensive work programme, which covers the items as below:

Item 1: The relationship between the provisions of the multilateral trading system and trade measures for environmental purposes, including those pursuant to Multilateral Environmental Agreements (MEAs)   

Item 2: The relationship between environmental policies relevant to trade and environmental measures with significant trade effects and the provisions of the multilateral trading system.

Item 3: The relationship between the provisions of the multilateral trading system and charges and taxes for environmental purposes and the relationship between the provisions of the multilateral trading system and requirements for environmental purposes relating to products, including standards and technical regulations, packaging, labelling and recycling.

Item 4: The provisions of the multilateral trading system with respect to the transparency of trade measures used for environmental purposes and environmental measures and requirements which have significant trade effects.

Item 5: The relationship between the dispute settlement mechanisms in the multilateral trading system and those found in Multilateral Environment Agreements.

Item 6: The effect of environmental measures on market access, especially in relation to developing countries, in particular to the least-developed among them, and environmental benefits of removing trade restrictions and distortions.

Item 7: Issue of export of domestically prohibited goods (DPGs)

Item 8: The relevant provisions of the Agreement on Trade-related aspects of Intellectual Property Rights (TRIPS).  

Item 9: The work programme envisaged in the decision on Trade in Services and the Environment.

Item 10: Inputs to the relevant bodies in respect of appropriate arrangements for relations with intergovernmental and non-governmental organizations referred to in Article V of the WTO Agreement.

• Relationship between the TRIPS Agreement and the Convention on Biodiversity (WT/CTE/W/65, dated 29th September, 1997)

• The relationship of the TRIPS Agreement to the   development,  access   and   transfer of   environmentally sound technologies and  products ( WT/CTE/W/66 dated 29th September, 1997).

• Protection of biodiversity and traditional knowledge – The Indian experience (WT/CTE/W/156 dated 14th July, 2000).

• Study of the effects of environmental measures on market access ( WT/CTE/W/177 dated 20th October, 2000).

• The effects of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them ( WT/CTE/W/207 dated 21st May, 2002).

Doha Ministerial Declaration

The WTO Ministerial Conference at Doha in 2001 stated the following on trade and environment:

“Para 31 - With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on:

Para 32 - We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda within its current terms of reference, to give particular attention to:

1. The effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development;

2. The relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights; and

3. Labelling requirements for environmental purposes.

Paragraph 33 - We recognize the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the least-developed among them.  We also encourage that expertise and experience be shared with Members wishing to perform environmental reviews at the national level.  A report shall be prepared on these activities for the Fifth Session.”

Paragraph 31 is being discussed in the Special Sessions of the CTE (CTE-SS) and Paragraphs 32 and 33 are being discussed in the Regular Sessions of the CTE.

The Ministerial Declaration at Hong Kong in December 2005 reaffirmed the mandate in Para 31 of the Doha Ministerial Declaration and recognized the progress made by the Members. It also instructed Members to intensify the negotiations, without prejudging their outcome, on all parts of paragraph 31 to fulfill the mandate. Regarding paragraph 31(iii), the Declaration instructed Members to complete the work expeditiously. The Ministerial Conference adopted the following declaration on environment negotiations:

“30. We reaffirm the mandate in paragraph 31 of the Doha Ministerial Declaration aimed at enhancing the mutual supportiveness of trade and environment and welcome the significant work undertaken in the Committee on Trade and Environment (CTE) in Special Session. We instruct Members to intensify the negotiations, without prejudging their outcome, on all parts of paragraph 31 to fulfill the mandate. 

31. We recognize the progress in the work under paragraph 31(i) based on Members’ submissions on the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs). We further recognize the work undertaken under paragraph 31(ii) towards developing effective procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and criteria for the granting of observer status.

32. We recognize that recently more work has been carried out under paragraph 31(iii) through numerous submissions by Members and discussions in the CTE in Special Session, including technical discussions, which were also held in informal information exchange sessions without prejudice to Members’ positions. We instruct Members to complete the work expeditiously under paragraph 31(iii).”

Submissions by India

a) Paragraph 31(i)

India believes that trade and environment should be mutually supportive with the objective of achieving sustainable development. India is one of the strongest proponents of Multilateral Environment Agreements (MEAs) and is party to all the major MEAs.

On Paragraph 31(i), India made a submission (TN/TE/W/23) in February, 2003 giving its views on the criteria for considering an environmental agreement as a “Multilateral Environmental Agreement” (MEA) and its “Specific Trade Obligations” (STO).

India believes that the term "Specific Trade Obligation" has three elements that must be considered together i.e. the provision must be specific with a trade element and should be in the nature of an obligation. Thus, any provision in an MEA to qualify as an STO must be specific and mandatory in character, and so precise in its direction that there can be no doubt about the action or restraint that a party to the MEA must adopt. India believes that the mandate given under Paragraph 31(i) of the Doha Declaration refers only to the trade measures that are both mandatory and specific in their entirety.  Non-specific provisions cannot qualify as an STO.  Also if the provision set out in the MEA does not contain the crucial "obligation" element, such provisions too would fail to qualify.

India sees benefit in furtherance of the negotiations in identifying the STOs set out in MEAs prior to discussing its outcome, since it would help appreciate the likely consequences as well as strengthening the logic behind any of the suggested outcomes.

Considering the importance of the issue, an Inter-Ministerial Consultative Group has been jointly formed under the Ministry of Environment & Forests and the Ministry of Commerce & Industry. An Expert Group under Prof. Dr. U. Sankar, Hon. Professor, Madras School of Economics has also been formed to give its considered views on Paragraph 31(i) issues

b) Paragraph 31(iii)

For negotiations on Paragraph 31(iii), identification of environmental goods has been at the core of the negotiation process so far.  A number of Member countries and groups have made their submissions. Countries, mostly developed, have proposed a “List approach” for seeking tariff reduction on “environmental goods”. The potential criteria, definitions and classification of environmental goods continue to be the subject of intense discussions in the CTE-SS. The ambiguity, however, continues. Suggested definitions have varied between "limited primarily to pollution prevention activities" to "extend beyond simply end-use criteria". 

Many of the items suggested for inclusion in the list of environmental goods have dual and multiple uses. Though these items may be utilized for an environmental purpose, other industrial applications of such goods are also significant. Examples include electricity meters, liquid flow meters, heat exchangers, conveyers and centrifugal drums. The list of environmental goods contains equipments, which cannot even be considered to be predominantly used for environmental purposes, for example suggestions for inclusion of consumer appliances, such as microwave ovens, energy efficient refrigerators, etc.  If preferential tariff treatment, including zero tariffs, is to be given to dual use and consumer goods, there would be significant ramifications for industrial sectors, particularly in developing and least‑developed countries where industry is largely dominated by small and medium enterprises (SMEs).

Considering these issues, India had submitted an alternate approach for negotiations under Para 31(iii) (TN/TE/W/51). This approach, called the “Environmental Project Approach”, intends to address the diversity in environmental standards with common but differentiated responsibilities and bring in trade liberalization to meet the environmental as well as development goals of both the Doha Development Agenda and Agenda 21. Under this approach, a project, which meets certain criteria, could be considered by a Designated National Authority (DNA). If approved, the goods and services included in the project would qualify for specified tariff concessions for the duration of the project.

• An alternative approach for negotiations under paragraph 31(iii): TN/TE/W/51, dated 3 June 2005

• Structural Dimensions of the Environmental Project Approach: TN/TE/W/54, 4 July, 2005.

• Procedural and Technical aspects of the Environmental Project Approach - TN/TE/W/60, 19 September, 2005.

• Environmental Project Approach – Compatibility and Criteria - TN/TE/W/67, 13 June, 2006.

Paragraph 31(ii)

Transparency is an important aspect of WTO work on trade and environment. Numerous notification systems in the WTO increase the transparency of trade-related environmental measures (TREMs). GATT Article X on the Publication and Administration of Trade Regulations, the 1979 Understanding Regarding Notifications, Consultation, Dispute Settlement and Surveillance, and the transparency provisions of the TBT and SPS Agreements create a broad basis for ensuring the transparency of TREMs at the multilateral level.

The elements of Paragraph 31(ii) are procedures for regular information exchange between various Multilateral Environmental Agreement secretariats and the relevant WTO Committees and the criteria for the granting of observer status to these MEA secretariats.  

Effect of environmental measures on market access

The effect of environmental measures on market access is being discussed in the CTE.  India had submitted a paper (WT/CTE/W/177) on “the study of the effects of environmental measures on market access”. Another paper (WT/CTE/W/207) was submitted on “the effects of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them”.

India in its paper proposed that it is the responsibility of importing countries to ensure that such measures do not affect the market access of developing countries. Environmental measures should be based on the criteria of sound science, transparency and equity.  These measures should be compatible with the open, equitable and non-discriminatory nature of the multilateral trading system and conform to its basic provisions and disciplines. While participation of developing countries in developing the environmental measures needs to be ensured, Members also need to promote suitable mechanisms for information dissemination systems to ensure that changes in environmental measures and standards can be accessed by industries in the developing and the least-developed countries.

India also proposed that longer time frames for compliance should be accorded to products of interest to developing country Members so as to maintain opportunities for their exports. Exceptions should be provided to environmental measures in exporting countries, which are equivalent in effect with environmental measures in the importing country, though the measures themselves may be different.

On the issue of technical co-operation, it was proposed that when environmental measures affect the market access of developing countries, they should be assisted by way of bilateral technical and financial assistance for compliance. Such technical assistance and transfer of technology should be provided and/or facilitated on concessional and preferential terms. The negative effects of environmental measures on market access should be mitigated or eliminated altogether by providing additional market access to developing countries in these products.

This item is being discussed in the TRIPS Council, and may be seen under TRIPS AGREEMENT AND CONVENTION ON BIOLOGICAL DIVERSITY (CBD).