International Trade and Environment

ENVIRONMENTAND

INTERNATIONAL TRADEDiplomacy – IMA 2

12.12.2013

GATTECONOMY

BUSINESS

MNEs

SUSTAINABILTY

GLOBAL COMPACTWTO

VALUES

PROFITS COOPERATION

multilateral

AGREEMENT

negotiationREALISM

perspectives

governments

ineffectivenessKYOTO

UNEP

awarenessCIVIL SOCIETY

education NAFTANGOs

DIPLOMACY

Doha WEO

stakeholdersTRADE

Environment

DevelopedCountries

Developping

countres

EU

USA

China

WETO

SME

green

Environment and International Trade

Case Overview Problems related to Environment and International Trade

- What impact do trade have on the environment?

- Responsible?

- Should trade rules be changed to meet the Environmental standards?

12.12.2013 2Julie ANTOINE, Karin GRÖNVALL, Margareta HEIDT, Sabine JUNGBAUER, Kerstin KNOBLOCH

Trade and Environmental Conflicts

NAFTA

EC

GATT

Multilateral Environmental

Agreements

The Basel convention

CITES

Tropical timber

(ITTA/ITTO)

The Montreal Protocol

3 perspectives

Environmentalist

Economist

Business Community


Evironmental and Trade ConflictsOrganisation Date of Establishment Who was involved Conflict/discussion Did it work out? (problems)

NAFTA Official negotiation 1990, Approved agreement in 1993

Governments& Environmentalists from all three countries(U.S, Canada & Mexico)

Free trade agreement among US, Canada & Mexico • Objections about maquiladora

factories• Increased trade & economic growth=

more pollution• lower environmental and health

standards in U.S & Canada• Jobs lost in US

• The right of every country to establish its own standard as long as it sought legitimate environmental objectives

• First agreement with connection of trade and development. NAAEC (North American Agreement on Environmental Cooperation)

EC Directoratesfor Environment and Trade

From mid 1980s Several nations in EC • EC as the authority to set the same directives to every nation

• Economic reason which led to a Harmonization of member-country standards (recycle law Germany)

• Solutions of standardization disrupted trade, made it ineffective or raised the trade barriers (German recycling law =no effect)

• Over 200 directives and regulations (2000)• Act as a single neglecting unit of its

members

GATT Circulated from 1988, never adopted GATT, MMPA, Mexico and US US MMPA Regulations to ban import of tuna caught with fishing methods fatal to dolphins.

Mexico as the exporter to US, opposed the agreement and said they was discriminated by the rules

MMPA was incompatible with GATT precepts and the “global common of the world” was beyond control of one single nation

• US could not prohibit imports of tuna products from Mexico because it did not match the US regulations .

• GATT U.S. could not use domestic legislation to protect dolphins outside its own territorial limits.

• Eco-colonialism



Problem(s) at Stake

Ineffectiveness and non acceptance of the governmental approach to cohere environment and trade.

Environmental Standards asDiscrimination against DevelopingCountries

Environmental Goals asLegitimation for Suspending theUsual Trade Rules


DILEMMA OF VALUES IN TERMS OF ENVIRONMENT AND INTERNATIONAL TRADE


Stakeholders & Interests


States & Government• Ruling their country & focusing on their country’s

interests

• Enacting laws which could either support the environment, international trade or combine both

Environmentalists• Protecting the natural environment

• Economic development leads to more intensive use of global resources and greater volume of pollutants

• Wish a international cooperation

Economists• Support free trade

• Some reject the bad influence of international trade on the environment (i.e. indirect effect of trade could be environmental beneficial)

Business Community• Conflicting interests

• free trade enables growth & increases the # of competitors

• implementing environmental rules cause costs, but prevention costs are often lower than remedial measures

NGOs• Perspective of NGOs differ. But mainly NGOs are

representing the interests of a certain group of people (i.e. environmentalists)

• International Chamber of Commerce: open cross-border trade and investment and global economic integration for sustainable growth; job creation

• WWF: anti-growth policies; CITES; Creating awareness, finding members to sign & support

Institutions as WTO• Established at the closure of the Uruguay Round (GATT

negotiation 1994) to consider whether environmental provisions (i.e. green taxes) undermined free trade principles. It deals with the global rules of trade between nations.

• Main function is to ensure that trade flows as smoothly, predictably and freely as possible.

• Fundamental goals : sustainable development and protection and preservation of the environment

Civil society• Consumer is driven to fulfil their needs and wants

• Growing awareness on environment issues


Diplomatic Processes

How did the diplomatic processes look like?

Hard power failed, soft power? Hard power: i.e. US banned imports of tuna 1988

Soft power: i.e. GATT installed WTO (diplomatic approach)

Inefficient i.e. DOHA round

Negotiations WTO

Treaties



Existing Solutions

• Non-profit organization (Established 2006)

• Voluntary corporate responsibility initiative in the world

Purpose:

• Public-private collaboration to find long-term solutions concerning areas of human rights, labour standards, the environment and anti-corruption

Environmental principles:

• Business should support a precautionary approach to environmental challenges;

• Undertake initiatives to promote greater environmental responsibility, and;

• Encourage the development and diffusion of environmentally friendly technologies


• UNEP, established in 1972 within the United Nations system

• global environmental authority

• UNEP acts as a catalyst, advocate, educator and facilitator to promote the wise use and sustainable development of the global environment.

• UNEP work encompasses:

• Assessing global, regional and national environmental conditions and trends

• Developing international and national environmental instruments

• Strengthening institutions for the wise management of the environment

ESG:

• ESG stands for Environmental, Social and Governance. There is growing evidence that suggests that ESG factors, when integrated into investment analysis and decision making, may offer investors potential long-term performance advantages. ESG has become shorthand for investment methodologies that embrace ESG or sustainability factors as a means of helping to identify companies with superior business models.

EITI:

• The Extractive Industries Transparency Initiative (EITI) is a global coalition of governments, companies and civil society working together to improve openness and accountable management of revenues from natural resources

Round of Trade Negotiations 2001-2013

Purpose:

• A more open market for environmental goods and services

• More coherence between trade and environment rules

• Better cooperation between the WTO and MEAs

Committee on Trade and Environment (CTE)

• 1995

• identifying the relationship between trade measures and environmental measures in order to promote sustainable development, and making appropriate recommendations on whether any modifications of the provisions of the multilateral trading system

• objective: sustainable development

UN Global

Compact

UNEP

Voice of the Environment

Business andEnvironment

Initiatives

Doha Round

Not compulsory, not much influence on international

level

Tool to negotiate, not usefulfor business issues, on

national level

Good starting point, need togo deeper (expand)

Non-discrimination dilemma, only framework setting


• Developed countries have pressure from environmental interest groups to reconcile what they perceived as "incompatibilities" between trade and environmental policies

Consequence: no more market access opportunities for developing countries

• Proposals for the creation of a United Nations Environmental Organization (UNEO) have come as some question the efficacy of the current United Nations Environmental Program (UNEP) at dealing with the scope of global environmental issues.

• Created to act as an anchor institution in the system of Global Environmental Governance (GEG)

failed to meet those demands

Various Problem Sets

12.12.2013 Julie ANTOINE, Karin GRÖNVALL, Margareta HEIDT, Sabine JUNGBAUER, Kerstin KNOBLOCH 8


Our Proposed Solution(s)

No single solution possible

BUT starting point for further improvement

Business

WTO

CivilSociety

12.12.2013Julie ANTOINE, Karin GRÖNVALL, Margareta HEIDT, Sabine

JUNGBAUER, Kerstin KNOBLOCH 9

Sustainable development and

protection and preservation of the

environment are fundamental goals

of the WTO implemented

Marrakesh Agreement (1995)

WTO

CivilSociety

Increase awareness among civil societies

Strengthen NGOs‘ position in the society and media

Implement “environment“ along the course of people’s education

Business

Increase commitment towardssustainability among the MNE and SME because companies are important actors

Offer benefits


Business

WTO

GovernmentNGO

Civil Society

Virtuous Circle

12.12.2013 Julie ANTOINE, Karin GRÖNVALL, Margareta HEIDT, Sabine JUNGBAUER, Kerstin KNOBLOCH 10

WTO 2.0 / WETO

WTO 2.0 / WETO

WTO 2.0 / WETO

GET ALL STAKEHOLDERS TO A ROUNDTABLE

REPRESENTATIVESOF CIVIL SOCIETY

MULTILATERAL DRAFTS FOR AGREEMENTS

LESS POSSIBILITY TO REJECT AGREEMENTS


Our Proposed Solution(s)

• Creation of an International evironmental agency who is taking the lead to set an international framework for the environmental issues concerning international trade

agreements

• (international level)

• Try to reduce the overlapping of the agreements, values

• increasing awareness of environmental issues amongthe MNE and SME, civil societies

• Most important actors will be the companies

• But also on national level


A World Environmental Trade Organization could serve as an umbrella for the implementation of

existing multinational environmental agreements, as well as promoting further agreements consistent

with global sustainable development strategies.

THANK YOU FOR

YOUR ATTENTIONDiplomacy – IMA 2

12.12.2013

GATTECONOMY

BUSINESS

MNEs

SUSTAINABILTY

GLOBAL COMPACTWTO

VALUES

PROFITS COOPERATION

multilateral

AGREEMENT

negotiationREALISM

perspectives

governments

ineffectivenessKYOTO

UNEP

awarenessCIVIL SOCIETY

education NAFTANGOs

DIPLOMACY

Doha WEO

stakeholdersTRADE

Environment

DevelopedCountries

Developping

countres

EU

USA

China

WETO

SME

green