Brittan bids to dovetail trade rules with environment laws

Date: 22/02/1996

By Michael Mann

THE European Commission is to urge its trading partners to ensure that world trade rules and international environmental agreements can be enforced at the same time without undermining one another.

In a communication due to be adopted by the Commission next week, Trade Commissioner Sir Leon Brittan will stress that as environmental damage occurs across national boundaries, it is inappropriate to deal with such problems unilaterally.

Brittan is expected to suggest new ground rules to prevent problems when simultaneously implementing apparently contradictory trade and environmental agreements.

The paper will stress that there is no reason why the GATT agreement should interfere with measures, for example, to protect the ozone layer.

But Brittan will also underline the correlation between trade and environmental aims. “The CITES (Convention on International Trade in Endangered Species) wouldn't mean much if it wasn't expressed through rules on trade in the species concerned,” said a Commission official.

Similarly, efforts to control damage from hazardous waste and trade in ozone-depleting substances depend on trade restrictions. The Commission may also consider whether there is any need for a safety net, under the auspices of the World Trade Organisation (WTO), to establish a notification system for dangerous goods not already covered by other instruments.

Brittan will suggest that 'eco-duties' - import charges on products from countries where environmental standards are not as high as those in the EU - are an “anathema” and that it is a recipe for political trouble to attempt to ban such imports.

The effect of environmental measures on market access is of particular concern to developing countries. “Things like the German packaging law force not only other EU states to package their produce in a certain way, but also countries like Bangladesh, who are much less able to afford it,” pointed out a WTO official.

The paper will also represent a clear statement that the WTO should not be allowed to become a forum in which countries can sort out their environmental disputes through trade sanctions.

But as pollution damage cannot always be compensated through multilateral agreements, the Commission will examine how far aggrieved countries can go in taking punitive trade measures.

“Multilateral environmental agreements (MEAs) ought to have their own dispute settlement procedures, but still allow countries to appeal to the WTO on purely trade disputes,” said a senior Commission official. “We don't want the WTO to become the world environmental agency.”

The communication will set out the areas for debate, including the need for internationally accepted rules on eco-labelling, recycling and goods which are prohibited on domestic markets.

The recent dispute over fur imports from countries where leghold traps are used is a classic example of a case where the EU's plan to impose its domestic welfare standards on foreign countries brought it into potential conflict with world trade rules.

Officials also plan to examine whether eco-labelling schemes go against the basic rights of certain WTO members and treat their products more harshly than domestic products.

The idea is to draw up an EU platform, after consultations with other Union institutions, for further discussions in the WTO's Committee on Trade and Environment, leading up to the organisation's first ministerial conference at the end of the year in Singapore.

Brittan set out his views on unilateral trade actions by some WTO members at the World Economic Forum in Davos. Such moves, he said, “will drown the solution to environmental problems in a confusion of tit-for-tat measures, mutual recrimination and misunderstanding”.

His paper is likely to address the concern of environmentalists that post-GATT trade liberalisation could place further strain on the exploitation of natural resources, but will also aim to ease business fears about restrictive environmental rules.

Speaking in Davos, Brittan claimed that “open trade encourages efficient production. Efficient production is less demanding on the environment.” He argued that greater prosperity made it easier to achieve high environmental standards. “There is no evidence to suggest that high environmental standards are a key factor in location decisions or have led to large-scale relocation of industry,” he insisted.

Brittan pointed out that the world market for environmental technology was now worth 194 billion ecu per year and was growing by 8&percent; annually.