26658857 WTO and ENVIRONMENT Environmental Law Project

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WTO AND ENVIRONMENT

ENVIRONMENTAL LAW PROJECT

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TABLE OF CONTENTS

INTRODUCTION 1 - 3

RESEARCH METHODOLOGY. 4

EMERGING ENVIRONMENT DEBATE IN GATT/ WTO... 5 - 8

The 1971 GATT study

EMIT - GATT Group on Environmental Measures and International Trade

Rio in 1992 and after

Trade and Environment in the WTOs Founding Charter

WORLD TRADE ORGANIZATION.. 9- 19

Objectives of the WTO

Functions of the WTO

The Uruguay Round

Committee on Trade and Environment

WTO AGREEMENTS.. 20- 44

Introduction

Important WTO Agreements

- GATT

- TRIPS

- GATS

- Agreement on Agriculture

- The Sanitary and Phytosanitary Measures Agreement

- Agreement on Subsidies and Countervailing Measures

- Agreement on Technical Barriers to Trade

- Agreement on Trade Related Aspects of Investment Measures

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MULTILATERAL ENVIRONMENTAL AGREEMENTS (MEAs).. 45 - 56

Definition

Basic information on selected MEAs in tabular format

MEAs and International Law

How does a multilateral agreement enter into force internationally?

Mechanisms used for implementing agreements

MEAs AND THE MULTILATERAL TRADING SYSTEM 57- 73

Multilateral Environmental Agreements

Trade measures in MEAs

Why Trade Restrictions have been incorporated in MEAs

Inter-relationships between MEA trade measures and WTO Rules.

Interaction of MEA trade measures with the WTO

Relationship between key MEAs and the WTO agreements

- CITES

- Montreal Protocol

- Basel Convention

- Kyoto Protocol

- Convention on Biological Diversity

- Cartagena Protocol

- Stockholm and Rotterdam Conventions

The Doha Mandate on MEAs

Developing Countries and MEAs

TRADE & ENVIRONMENT IN CONFLICT CASE LAWS.. 74 - 95

Case 1: Tuna-Dolphin Case

Case 2: Gasoline case

Case 3: Shrimp turtle case

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Case Studies on MEAs

- Case Study 1- The Kyoto Protocol

- Case Study 2 - Virunga National Park

- Case Study 3 - Invasive Alien Species

- Case Study 4 - The Aarhus Convention

POSSIBLE SOLUTION TO THE CONFLICTS BETWEEN THE WTO &ENVIRONMENT 96 - 98

CONCLUSION 99 -100

BIBLIOGRAPHY 101

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INTRODUCTION

"Trade is a powerful engine of economic growth, and that economic growth is vital to

creating conditions which favour advancing environmental protection, improving socialconditions, or sustaining ethical values. By opening markets, particularly to exports from

developing countries, and by keeping markets open through clear and enforceable rules,

the global trading system is a natural ally of sustainable development"1.

Interaction between international trade and the environment is as old as trade itself.

However, awareness that the interaction has implications in public policy terms dates

back at least to the trade provisions in 1933 convention on fauna and flora.2 In the late

1960s environmental problems caused by the discharge of waste and other pollutantsinto the natural environment emerged seriously, and so did concerns over the

implications for international competitiveness.

Over the past two decades, producers in countries with stricter environmental standards

have worried increasingly about the impact of those standards on their competitiveness in

world markets. At the same time, governments and firms in other countries have

expressed concern about new barriers being erected against imports produced under less

strict standards.

Most recently, there has been growing public concern with issues related to the pollution

of the global commons (for example, ozone depletion and climate change) as well as with

species diversity and the treatment of animals. This has raised important questions about

the use of trade policies to influence environmental measures in other countries.

Since trade and environment both affect the use of natural resources, they naturally

interact, and have had a long legacy of mutual mistrust. For both free-traders andenvironmentalists, the inter-linkage has been a topic of contention and serves as a point

of reference to NGOs as well as to industrial lobby groups. The debate initially was quite

contentious and unproductive as both parties differed greatly in their trust of market

1 Speech by Renato Ruggiero, A shared responsibility: Global Policy Coherence For Our Global Age, December 9, 1997.2 The full title of the convention, which is still in force, is the Convention Relative to the Preservation of Fauna and Flora in their

Natural State.

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forces and typically value the environment differently.3Free traders feared that talk about

environmental protection will be used as an excuse by some economic sectors to gain

protection for themselves against competition from abroad. Environmentalists feared that

free trade will be used as an excuse to give inadequate weight to environmental goals and

excessive weight to maximization of market-measured GDP.

The environmental implications of international trade are becoming an important part of

multilateral and domestic policy agendas. This is particularly the case for trade relations

between developing and developed countries. To what extent developing countries

should devote their resources to lowering domestic environmental costs for their own

welfare and that of the world as whole has frequently been debated. The debate stems

from the widely held view that a tradeoff between economic growth and environmental

quality exists. Many policymakers in developing countries argue that they have the right

to pursue the same material aspirations by the same means as did the industrialized world

during it developmental stages and are thus willing to spend smaller percentages of their

productive resources for pollution abatement than developed countries. It is increasingly

recognized that the import of goods and services entails an implicit transfer of

environmental effects to the exporting country.

The relationship between trade and environment is a complex and highly debated issue.Addressing this relationship is fundamental in order to achieve sustainable development.

As a result of increasing global economic inter-dependence and further trade

liberalisation as well as growing pressure on the environment and the use of natural

resources, there is an ever growing inter-face between trade and environment. It is widely

recognised that trade and environment can be mutually supportive, but, differences

remain on effective implementation. In fact, trade liberalisation and trade policy have

positive and negative impacts on the environment. However, a number of conditions

should be met to ensure that the net gains deriving from trade liberalisation will support

and reinforce the protection of the environment.

The trade and environment debate is complex and varied, and it involves some of the

most fundamental WTO principles and rules, such as the concept of non-discrimination3 Copeland and Taylor, 2004.

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and the definition of "like products". It is a horizontal issue that cuts across many

disciplines in WTO. For example, Multilateral Environmental Agreements have

consequences for trade which may come into conflict with the general aim of the WTO to

reduce trade barriers.

The WTO has no specific agreement dealing with the environment. However, the WTO

agreements confirm governments right to protect the environment, provided certain

conditions are met, and a number of them include provisions dealing with environmental

concerns.

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RESEARCH METHODOLOGY

Aims and objectives

The project aims at studying the issues associated with the trade and the environment

debate. This paper begins with the genesis of the issue of trade and the environment and

examines the inter-relation between trade, environment and the WTO. The Paper further

tries to examine the relationship between certain Multilateral Environmental Agreements

(MEAs) and the WTO Agreements. The paper analyzes how environmental provisions

have permeated into the multilateral trading system, through the incorporation of

environmental provisions under new WTO agreements and the concern of the developing

countries with regard to the MEAs.

The Project covers the basic conceptual issues, as well as the genesis of trade and

environment as it has been dealt with in the WTO. The ultimate objective is to understand

the justification for policy linkages between trade and the environment and the rationale

for special trade rules to reflect environmental concerns.

Method of writing

The researcher has endeavored to use a combination of descriptive and analytical styles

of writing throughout this project. More emphasis has been placed on the analytical style

of writing.

Sources of Data

The main sources have been textbooks, articles and web-search.

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EMERGING ENVIRONMENT DEBATE IN GATT/ WTO

Trade and environment, as an issue, is by no means new. The link between trade and

environmental protection, both the impact of environmental policies on trade, and the

impact of trade on the environment, was recognized as early as 1970.

Growing international concern about the impact of economic growth on social

development and the environment led to a call for an international conference on how to

manage the human environment, and the 1972 Stockholm Conference was the response.

The 1971 GATT study

In 1972, the UN held a Conference on the Human Environment in Stockholm. During the

preparations in 1971, the Secretariat of the General Agreement on Tariffs and Trade

(GATT) prepared a study entitled, "Industrial Pollution Control and International Trade".

The study focused on the implications of environmental protection policies on

international trade. It reflected the concern of trade officials at the time that such policies

could become obstacles to trade as well as could constitute a new form of protectionism

i.e. "green protectionism".

In the discussions that followed, a number of GATT members suggested that a

mechanism be created in GATT for the implications to be examined more thoroughly.

EMIT - GATT Group on Environmental Measures and International Trade

In November 1971, the GATT Council of Representatives agreed to set up a Group on

Environmental Measures and International Trade (EMIT), which would be open to all

GATT members (i.e. GATT signatories). However, the decision also said group would

only convene at the request of GATT members. Therefore, it was not until 1991 when the

members of the European Free Trade Association (EFTA) asked for the EMIT Group to

be convened. (EFTA, at the time included Austria, Finland, Iceland, Liechtenstein,

Norway, Sweden and Switzerland.)

Developments: 19711991

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Between 1971 and 1991, environmental policies began to have an increasing impact on

trade, and with increasing trade flows, the effects of trade on the environment had also

become more widespread. This led to a number of discussions:

During the Tokyo Round of trade negotiations (19731979), participants took up

the question of the degree to which environmental measures (in the form of

technical regulations and standards) could form obstacles to trade. The Tokyo

Round Agreement on Technical Barriers to Trade (TBT), also known as the

"Standards Code", was negotiated. Amongst other things, it called for non-

discrimination in the preparation, adoption and application of technical

regulations and standards, and for them to be transparent.

During the Uruguay Round (19861994), trade-related environmental issues were

once again taken up. Modifications were made to the TBT Agreement, and certain

environmental issues were addressed in the General Agreement on Trade in

Services, the Agreements on Agriculture, Sanitary and Phytosanitary Measures

(SPS), Subsidies and Countervailing Measures, and Trade-Related Aspects of

Intellectual Property Rights (TRIPS).

In 1982, a number of developing countries expressed concern that products

prohibited in developed countries on the grounds of environmental hazards, health

or safety reasons, continued to be exported to them. With limited information on

these products, they were unable to make informed decisions regarding their

import.

At the 1982 GATT ministerial meeting, members decided to examine the

measures needed to bring under control the export of products prohibited

domestically (on the grounds of harm to human, animal, plant life or health, or theenvironment). This led to the creation, in 1989, of a Working Group on the Export

of Domestically Prohibited Goods and Other Hazardous Substances.

In 1991, a dispute between Mexico and United States put the spotlight on the

linkages between environmental protection policies and trade. The case concerned

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a US embargo on tuna imported from Mexico, caught using "purse seine" nets

which caused the incidental killing of dolphins. Mexico appealed to GATT on the

grounds that the embargo was inconsistent with the rules of international trade.

The panel ruled in favour of Mexico based on a number of different arguments.

Although the report of the panel was not adopted, its ruling was heavily criticised

by environmental groups who felt that trade rules were an obstacle to

environmental protection.

During this period, important developments were also taking place in

environmental forums. The discussion on the relationship between economic

growth, social development and environment that began at the Stockholm

Conference continued throughout the 1970s and 80s.

In 1987, for example, the World Commission on Environment and Development

produced a report entitled Our Common Future (also known as the Brundtland

Report), in which the term "sustainable development" was coined. The report

identified poverty as one of the most important causes of environmental

degradation, and argued that greater economic growth, fuelled in part by

increased international trade, could generate the necessary resources to combat

what had become known as the "pollution of poverty".

As a result of these developments, the EMIT groups proposal met with a positive

response. Despite some countries initial reluctance to have environmental issues

discussed in GATT, they agreed to have a structured debate on the subject.

In accordance with its mandate of examining the possible effects of environmental

protection policies on the operation of the General Agreement, the EMIT group

focused on the effects of environmental measures (such as eco-labelling schemes) on

international trade, the relationship between the rules of the multilateral trading

system and the trade provisions contained in multilateral environmental agreements

(MEAs) (such as the Basel Convention on the Transboundary Movement of

Hazardous Wastes), and the transparency of national environmental regulations with

an impact on trade.

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Rio in 1992 and after

The activation of the EMIT group was followed by further developments in

environmental forums.

The 1992 UN Conference on Environment and Development (UNCED), also known

as the Rio "Earth Summit", drew attention to the role of international trade in poverty

alleviation and in combating environmental degradation. Agenda 21, the programme

of action adopted at the conference, also addressed the importance of promoting

sustainable development through, amongst other means, international trade.

The preparatory work for the summit had itself influenced developing countries

approach discussing trade and environment issues in the EMIT group. The concept of"sustainable development" had established a link between environmental protection

and development at large.

These moves were about to yield more concrete results within the trading system. The

environment and trade were to be linked more explicitly in the new constitution of the

multilateral trading system that was to be signed in 1994.

Trade and Environment in the WTOs Founding Charter

The preamble to the Marrakesh Agreement establishing the World Trade

Organization refers to the importance of working towards sustainable development.

The first paragraph of the preamble4 recognizes sustainable development as an

integral part of the multilateral trading system, which illustrates the importance

placed by WTO members on environmental protection.

4 See under objectives of the WTO, in the next chapter

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WORLD TRADE ORGANIZATION

The World Trade Organization (WTO) is an international organization designed to

supervise and liberalize international trade. The WTO came into being on January 1,

1995, and is the successor to the General Agreement on Tariffs and Trade (GATT),which was created in 1948. It represents the culmination of an eight-year process of trade

negotiations, known as the Uruguay Round. The WTO is located in Geneva, and is

administered by a secretariat that also facilitates ongoing trade negotiations and oversees

trade dispute resolution. There are currently 146 member countries of the WTO.

The WTO deals with the rules of trade between nations at a global level. It is responsible

for negotiating and implementing new trade agreements, and is in charge of policing

member countries' adherence to all the WTO agreements, signed by the bulk of the

world's trading nations and ratified in theirparliaments. These documents provide the

legal ground rules for international commerce. The agreements are like contracts which

bind governments to keep their trade policies within the boundaries set by the

agreements.

Objectives of the WTO

The reasons for establishing the WTO and the policy objectives of this internationalorganization are set out in the preamble to the WTO Agreement. According to the

preamble, the parties to the WTO Agreement agreed to the terms of this agreement and

the establishment of the WTO "recognizing that their relations in the field of trade and

economic endeavour should be conducted with a view to raising the standards of living,

ensuring full employment and a large and steadily growing volume of real income and

effective demand, and expanding the production of and trade in goods and services,

while allowing for the optimal use of the worlds resources in accordance with the

objective of sustainable development, seeking both to protect and preserve environment

and to enhance the means for doing so in a manner consistent with their respective needs

and concerns at different levels of economic development".

The ultimate objectives of the WTO are thus:

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The increase of standards of living;

The attainment of full employment;

The growth of real income and effective demand; and

The expansion of production of, and trade in, goods and services

However, it is clear from the Preamble that in pursuing these objectives the WTO must

take into account the need for preservation of the environment and the needs of the

developing countries. The Preamble stresses upon the importance of sustainable

economic development and of integration of developing countries, and in particular least-

developed countries, in the world trading system.

Functions of the WTO

Among the various functions of the WTO, these are regarded by analysts as the most

important:

It oversees the implementation, administration and operation of the covered

agreements.

It provides a forum for negotiations and for settling disputes.

Additionally, it is the duty of WTO to review the national trade policies, and to ensure the

coherence and transparency of trade policies through surveillance in global economic

policy-making. Another priority of the WTO is the assistance ofdeveloping, least-

developed and low-income countries in transition to adjust to WTO rules and disciplines

through technical cooperation and training. The WTO is also a center of economic

research and analysis, regular assessments of the global trade picture in its annualpublications and research reports on specific topics are produced by the organization.

Finally, the WTO cooperates closely with the two other components of the Bretton

Woods system, the IMF and the World Bank.

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The Uruguay Round

As mentioned earlier, the World Trade Organization represents the culmination of an

eight-year process of trade negotiations, known as the Uruguay Round.

The Uruguay Round commenced in September1986 and continued until April 1994. The

Round, based on the GATT ministerial meeting in Geneva (1982), was launched in Punta

del Este in Uruguay (hence the name), followed by negotiations in Montreal, Geneva,

Brussels, Washington, D.C., and Tokyo, with the 20 agreements finally being signed in

Marrakech - the Marrakesh Agreement. The Round transformed the General Agreement

on Tariffs and Trade (GATT) into the World Trade Organization (WTO).

Despite the profile of the trade and environment issue in the mid to late stages of theUruguay Round,5 the negotiations concluded in the Round did not deal directly with

Trade and Environment issues. This was largely a reflection of the absence of reference

to the environment in the agenda of Uruguay Round. As a consequence, the WTO

agreements that emerged from the Round did not deal with environment as a standalone

issue. Environmental groups made much of the fact that their concerns were not reflected

in the 500 pages of legal texts that emerged from the Round, including the tariff

schedules, running to some 26,000 pages. This perceived neglect of the WTO to deal

directly with the Environmental problems was seen by environmentalists as squandering

a crucial chance to centrally address the trade and environment issue and establish broad

principles to guide the WTO in its future work.

On other environmental-related matters, the Uruguay Round generated results with

varying degrees of ambiguity. In the area of standards, the thrust of the agreements from

the round was to discipline trade barriers while allowing for differences in non-border

measures. Exactly how much discipline would be exerted on National regulations,

especially in the case of sanitary and phytosanitary standards, and what would constitute

sufficient scientific justification for standards that were higher than international

standards, remained unclear. Under the subsidies agreement the use of countervailing

5 A number of events contributed to raising the profile of trade and environment during the later part of Uruguay Round besides thetuna/ dolphin dispute. These included the Earth Summit in Rio in June 1992, the vocal opposition of environmentalists to NAFTA andthe Uruguay Round decisions in the US.

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measures to deal with 'unfair' trade practices in the form of lax environmental standards

was not permitted. But the agreement did imply that subsidies that take the form of

foregone revenue for environmental taxes can be countervailable if they are specific.

Nonetheless, trade and environment issues were important in developments runningparallel to the negotiations themselves, and in particular played a role in defining the

work programme for the WTO following the Round. At the ministerial meeting in

Marrakesh in April 1994, governments agreed that trade and environment should be on

the future agenda for the WTO, and that a Committee on Trade and the Environment

should be formed to assess trade and environment linkages.

Committee on Trade and Environment

When Ministers approved the results of the Uruguay Round negotiations in Marrakesh in

April 1994, they took a decision to begin a comprehensive work programme on trade and

environment in the WTO. During the past five years, this work programme has provided

the focus of discussions in the Committee on Trade and Environment (CTE). The CTEs

main aim is to build a constructive relationship between trade and environmental

concerns.

The CTE has a two-fold mandate:

first "to identify the relationship between trade measures and environmental

measures in order to promote sustainable development"; and

second, "to make appropriate recommendations on whether any modifications of

the provisions of the multilateral trading system are required, compatible with the

open, equitable and non-discriminatory nature of the system".

This broad-based mandate covers goods, services, and intellectual property rights and

builds on work carried out in the previous GATT Group on Environmental Measures and

International Trade. Since 1997, the CTE has adopted a thematic approach to its work to

broaden and deepen the discussions and to allow all items of the work programme to be

addressed in a systematic manner. Discussions of the items on the work programme have

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been clustered into two main areas: issues relevant to market access and issues related to

the linkages between the multilateral environment and trade agendas.

Important parameters which have guided CTEs work

The Committee on Trade and Environment (CTE) has brought environmental and

sustainable development issues into the mainstream of the WTOs work. There are

several important parameters which have guided the CTEs work.

The first parameter is that WTO competency for policy coordination in this area is

limited to trade and those trade-related aspects of environmental policies which

may result in significant trade effects for its Members. In other words, it is not

intended that the WTO should become an environmental agency. Nor should itget involved in reviewing national environmental priorities, setting environmental

standards or developing global policies on the environment. That will continue to

be the task of national governments and of other inter-governmental organizations

better suited to the task;

The second parameter is that increased national coordination as well as

multilateral cooperation is necessary to address environmental concerns; and

The third parameter is that secure market access opportunities are essential to help

developing countries work towards sustainable development.

The contribution which the WTO could make to environmental protection was

recognized at the United Nations Conference on Environment and Development

(UNCED the Earth Summit) in 1992, which stated that an open, equitable and non-

discriminatory multilateral trading system has a key contribution to make national and

international efforts for better protection and conservation of environmental resourcesand promotion of sustainable development. Among the most important recommendations

of the UNCED to the GATT at the time was to implement the results of the Uruguay

Round.

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The CTE's in its first report in 1996, recognized that trade and environment are both

important areas of policy making and that they should be mutually supportive in order to

promote sustainable development. The report noted that the multilateral trading system

has the capacity to further integrate environmental considerations and enhance its

contribution to the promotion of sustainable development without undermining its open,

equitable and non-discriminatory character.

To raise awareness of the linkages between trade, environment and sustainable

development and to enhance the dialogue between policy makers from Ministries of both

trade and environment in WTO Member Governments, the WTO Secretariat has

organized a series of regional seminars on trade and environment for government

officials from developing and least-developed countries and countries with economies in

transition.

At its meeting in October 1999, the CTE agreed to continue to deepen the analysis of all

items on the work programme based on the thematic clusters of market access and the

linkages between the multilateral environment and trade agendas with the objective of

fulfilling the mandate of the CTE.

Main points of discussion of the CTEs work programme

Some of the main points of discussion of the CTEs work programme include the

following:

1. Trade measures applied pursuant to MEAs

Throughout the discussions on this issue in the WTO, it has become clear that the

preferred approach for governments to take in tackling transboundary or global

environmental problems is through cooperative, multilateral action under an MEA. Whilesome MEAs contain trade provisions, trade restrictions are not the only or necessarily the

most effective policy instrument to use in MEAs. In certain cases they can play an

important role. It has also been stated that the WTO already provides broad and valuable

scope for trade measures to be applied pursuant to MEAs in a WTO-consistent manner.

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As in the past few years, in June 1999 the CTE held an Information Session with

Secretariats of MEAs relevant to the work of the CTE to discuss the trade-related

developments in these agreements. At the June Session, presentations and papers were

provided by the Convention on the International Trade in Endangered Species of Wild

Fauna and Flora; the Montreal Protocol on Substances that Deplete the Ozone Layer; the

United Nations Framework Convention on Climate Change; the Intergovernmental

Forum on Forests; and the International Tropical Timber Organization. This meeting

illustrated how trade-related measures function in MEAs and helped to deepen the

understanding of the relationship between MEAs and the multilateral trading system.

2. Dispute settlement

A related item concerns the appropriate forum for the settlement of potential disputes that

may arise over the use of trade measures pursuant to MEAs. There is general agreement

that in the event a dispute arises between WTO Members who are also signatories to an

MEA, they should try first to resolve it through the dispute settlement mechanisms

available under that MEA. Were a dispute to arise with a non-party to an MEA, but with

another WTO Member, the WTO would provide the only possible forum for resolving

the dispute.

The CTE agrees that better policy coordination between trade and environmental policy

officials at the national level can help prevent situations from arising in which the use of

trade measures applied pursuant to the MEAs could become subject to disputes.

Furthermore, it is unlikely that problems would arise in the WTO over trade measures

agreed and applied among parties to an MEA. In the event of a dispute, however, WTO

Members are confident that the WTO dispute settlement provisions would be able to

tackle any problems which arise in this area, including those cases requiring input from

environmental experts.

3. Eco-labelling

Eco-labelling programmes are important environmental policy instruments. Eco-labelling

was discussed extensively in the GATT, and provided the basis in the CTE for a detailed

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examination of related issues. The key requirement from the WTOs point of view is that

environmental measures that incorporate trade provisions or that affect trade

significantly, should not discriminate between home-produced goods and imports, nor

between imports from or exports to different trading partners. Non-discrimination is the

cornerstone of secure and predictable market access and undistorted competition:

consumers are guaranteed a wider choice and producers better access to the full range of

market opportunities. Subject to that requirement being met, WTO rules place essentially

no constraints on the policy choices available to a country to protect its own environment

against damage either from domestic production or from the consumption of domestically

produced or imported products.

The CTE has acknowledged that well-designed, eco-labelling programmes can be

effective instruments of environmental policy. It notes that in certain cases such

programmes have raised significant concerns about possible trade effects. An important

starting point for addressing some of these trade effects is to ensure adequate

transparency in the preparation, adoption and application of eco-labelling programmes.

Interested parties from other countries should also be allowed to voice their concerns.

Discussion is continuing on how the use in eco-labelling programmes of criteria based on

non-product-related processes and production methods should be treated under the rules

of the WTO Agreement on Technical Barriers to Trade.

4. WTO Transparency Provisions

The WTO transparency provisions fulfil an important role in ensuring the proper

functioning of the multilateral trading system. They help to prevent unnecessary trade

restrictions and distortions and ensure that WTO Members provide information about

changes in their regulations. They can also provide a valuable first step in ensuring that

trade and environment policies are developed and implemented in a mutually supportiveway. Trade-related environmental measures should not be required to meet more onerous

transparency requirements than other measures that affect trade. The CTE has stated that

no modifications to WTO rules are needed to ensure adequate transparency for trade-

related environmental measures. In 1998, the CTE also established a WTO

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Environmental Database which can be accessed electronically by WTO Members. The

WTO Secretariat updates this database annually by reviewing all the environment-related

notifications. The Environmental Database is seen as an important step towards

increasing the transparency of trade-related environmental measures notified by WTO

Members.

5. Export of domestically prohibited goods

During the mid-1980s, concerns were raised by a number of developing country GATT

Contracting Parties that they were importing certain hazardous or toxic products without

knowing the full environmental or public health dangers such products could pose. In the

late 1980s, a GATT Working Party examined ways of treating trade in goods which are

severely restricted or banned for sale on the domestic market of an exporting country. A

key consideration was that the importing country should be fully informed about the

products it was receiving and have the right to reject them if it felt such products caused

environmental or public health problems.

Several MEAs have been negotiated in the last few years to deal with problems of trade

in environmentally hazardous products (e.g. the Basel Convention and London

Guidelines). The WTO does not intend to duplicate work that has already been

accomplished elsewhere in the area of domestically prohibited goods. WTO Members, in

the context of the CTE, have agreed to support the efforts of the specialized inter-

governmental environmental organizations that are helping to resolve such problems.

However, they have noted that there may be a complementary role for the WTO to play

in this area.

6. Trade liberalization and sustainable development

Further liberalization of international trade, both in goods and services, has a key role to

play in advancing economic policy objectives in Member countries. In that respect, WTO

Members have already made an important contribution to sustainable development and

better environmental protection world-wide by concluding the Uruguay Round

negotiations. This contribution will steadily increase as the results of the Round move

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towards full implementation. The UN Conference on Environment and Development (the

Earth Summit) also recognized an open, non-discriminatory trading system to be a

prerequisite for effective action to protect the environment and to generate sustainable

development. This is based on the perspective that countries, particularly developing

countries, are dependent on trade as the main source of continued growth and prosperity.

The CTE is continuing to tackle this item of its work programme in the context of the

built-in agenda for further trade liberalization initiatives contained in the results of the

Uruguay Round negotiations. The CTE has noted that the removal of trade restrictions

and distortions, in particular high tariffs, tariff escalation, export restrictions, subsidies

and non-tariff barriers, has the potential to yield benefits for both the multilateral trading

system and the environment. Discussions in 1999 included the sectors of agriculture and

fisheries, energy, forestry, non-ferrous metals, textiles and clothing, leather and

environmental services. The discussions highlighted areas where the removal of trade

restrictions and distortions can be beneficial for the environment, trade and development,

providing win-win-win opportunities.

7. Trade in services and TRIPS

The CTE also is to examine the role of the WTO in relation to the links between

environmental measures and the new trade agreements reached in the Uruguay Round

negotiations on services and intellectual property. Discussion on these two items of the

work programme have broken new ground since there was very little understanding of

how the rules of the trading system might affect or be affected by environmental policies

in these areas.

With respect to the General Agreement on Trade in Services (GATS) and the

environment, the CTE has noted that its discussions so far have not led to the

identification of any measures that Members feel may be applied for environmental

purposes to services trade which are not already adequately covered by GATS provisions.

In the case of intellectual property rights, WTO Members have acknowledged that the

Agreement on Trade-related Intellectual Property Rights (TRIPS) plays an essential role

in facilitating access to and the transfer of environmentally-sound technology and

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products. However, further work is required in this area, including clarifying the

relationship between the TRIPS Agreement and the Convention on Biological Diversity.

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WTO AGREEMENTS

Introduction

Environmental issues began to be systematically addressed in the WTO following the

Decision on Trade and Environment taken towards the end of the Uruguay Round at

Marrakesh in 1994. The Committee on Trade and Environment was established in the

same year, with the explicit mandate to resolve environmental issues in the trading

system. Some new agreements under the WTO also contained environmental provisions.

In 2001 the environment was explicitly put on the negotiating agenda in the Doha

Ministerial Declaration in 2001. Today the environment has been mainstreamed into the

multilateral trading system, and has significant implications for shaping future rules

under the WTO regime.

The WTO's agreements are the legal foundation for the international trading system that

is used by the bulk of the world's trading nations. Most of the WTO agreements are the

result of the 198694 Uruguay Round negotiations, signed at the Marrakesh ministerial

meeting in April 1994. The WTOs agreements are often called the Final Act of the 1986

- 1994 Uruguay Round of trade negotiations. These agreements are also called the

WTOs Trade Rules.

The WTO agreements cover goods, services and intellectual property. They spell out the

principles of liberalization, and the permitted exceptions. They include individual

countries commitments to lower customs tariffs and other trade barriers, and to open and

keep open services markets. They set procedures for settling disputes. They prescribe

special treatment for developing countries. They require governments to make their trade

policies transparent by notifying the WTO about laws in force and measures adopted, and

through regular reports by the secretariat on countries trade policies.

Important WTO Agreements

Some of the important WTO Agreements are summarized below.

The General Agreement on Tariffs and Trade (GATT)

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The General Agreement on Tariffs and Trade was the outcome of the failure of

negotiating governments to create the International Trade Organization (ITO). GATT

was formed in 1947 and lasted until 1994, when it was replaced by the World Trade

Organization. The Bretton Woods Conference had introduced the idea for an organization

to regulate trade as part of a larger plan for economic recovery afterWorld War II. As

governments negotiated the ITO, 15 negotiating states began parallel negotiations for the

GATT as a way to attain early tariff reductions. Once the ITO failed in 1950, only the

GATT agreement was left. The GATT's main objective was the reduction of barriers to

international trade. This was achieved through the reduction oftariffbarriers, quantitative

restrictions and subsidies on trade through a series of agreements. The GATT was a

treaty, not an organization. The functions of the GATT were taken over by the World

Trade Organization which was established during the final round of negotiations in early

1990s.

The history of the GATT can be divided into three phases: the first, from 1947 until the

Torquay Round, largely concerned which commodities would be covered by the

agreement and freezing existing tariff levels. A second phase, encompassing three

rounds, from 1959 to 1979, focused on reducing tariffs. The third phase, consisting only

of the Uruguay Round from 1986 to 1994, extended the agreement fully to new areas

such as intellectual property, services, capital, and agriculture. Out of this round the

WTO was born.

In 1993 the GATT was updated (GATT 1994) to include new obligations upon its

signatories. One of the most significant changes was the creation of the World Trade

Organization (WTO).

GATT was a set of rules agreed upon by nations and the WTO is an institutional body.

The WTO expanded its scope from traded goods to trade within the service sector andintellectual property rights. Although it was designed to serve multilateral agreements,

during several rounds of GATT negotiations (particularly the Tokyo Round)plurilateral

agreements created selective trading and caused fragmentation among members. WTO

arrangements are generally a multilateral agreement settlement mechanism of GATT.

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Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)

The agreement recognises that widely varying standards in the protection and

enforcement of intellectual property rights and the lack of a multilateral framework of

principles, rules and disciplines dealing with international trade in counterfeit goods have

been a growing source of tension in international economic relations. Rules and

disciplines were needed to cope with these tensions. To that end, the agreement addresses

the applicability of basic GATT principles and those of relevant international intellectual

property agreements; the provision of adequate intellectual property rights; the provisionof effective enforcement measures for those rights; multilateral dispute settlement; and

transitional arrangements.

Part I of the agreement sets out general provisions and basic principles, notably a

national-treatment commitment under which the nationals of other parties must be given

treatment no less favourable than that accorded to a partys own nationals with regard to

the protection of intellectual property. It also contains a most-favoured-nation clause, a

novelty in an international intellectual property agreement, under which any advantage aparty gives to the nationals of another country must be extended immediately and

unconditionally to the nationals of all other parties, even if such treatment is more

favourable than that which it gives to its own nationals.

Part II addresses each intellectual property right in succession. With respect to copyright,

parties are required to comply with the substantive provisions of the Berne Convention

for the protection of literary and artistic works, in its latest version (Paris 1971), though

they will not be obliged to protect moral rights as stipulated in Article 6bis of that

Convention. It ensures that computer programs will be protected as literary works under

the Berne Convention and lays down on what basis data bases should be protected by

copyright. Important additions to existing international rules in the area of copyright and

related rights are the provisions on rental rights. The draft requires authors of computer

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programmes and producers of sound recordings to be given the right to authorize or

prohibit the commercial rental of their works to the public. A similar exclusive right

applies to films where commercial rental has led to widespread copying which is

materially impairing the right of reproduction. The draft also requires performers to be

given protection from unauthorized recording and broadcast of live performances

(bootlegging). The protection for performers and producers of sound recordings would be

for no less than 50 years. Broadcasting organizations would have control over the use that

can be made of broadcast signals without their authorization. This right would last for at

least 20 years.

With respect to trademarks and service marks, the agreement defines what types of signs

must be eligible for protection as a trademark or service mark and what the minimum

rights conferred on their owners must be. Marks that have become well-known in a

particular country shall enjoy additional protection. In addition, the agreement lays down

a number of obligations with regard to the use of trademarks and service marks, their

term of protection, and their licensing or assignment. For example, requirements that

foreign marks be used in conjunction with local marks would, as a general rule, be

prohibited.

In respect of geographical indications, the agreement lays down that all parties mustprovide means to prevent the use of any indication which misleads the consumer as to the

origin of goods, and any use which would constitute an act of unfair competition. A

higher level of protection is provided for geographical indications for wines and spirits,

which are protected even where there is no danger of the publics being misled as to the

true origin. Exceptions are allowed for names that have already become generic terms,

but any country using such an exception must be willing to negotiate with a view to

protecting the geographical indications in question. Furthermore, provision is made for

further negotiations to establish a multilateral system of notification and registration of

geographical indications for wines.

Industrial designs are also protected under the agreement for a period of 10 years.

Owners of protected designs would be able to prevent the manufacture, sale or

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importation of articles bearing or embodying a design which is a copy of the protected

design.

As regards patents, there is a general obligation to comply with the substantive provisions

of the Paris Convention (1967). In addition, the agreement requires that 20-year patentprotection be available for all inventions, whether of products or processes, in almost all

fields of technology. Inventions may be excluded from patentability if their commercial

exploitation is prohibited for reasons of public order or morality; otherwise, the permitted

exclusions are for diagnostic, therapeutic and surgical methods, and for plants and (other

than microorganisms) animals and essentially biological processes for the production of

plants or animals (other than microbiological processes). Plant varieties, however, must

be protectable either by patents or by a sui generis system (such as the breeders rights

provided in a UPOV Convention). Detailed conditions are laid down for compulsory

licensing or governmental use of patents without the authorization of the patent owner.

Rights conferred in respect of patents for processes must extend to the products directly

obtained by the process; under certain conditions alleged infringers may be ordered by a

court to prove that they have not used the patented process.

With respect to the protection of layout designs of integrated circuits, the agreement

requires parties to provide protection on the basis of the Washington Treaty onIntellectual Property in Respect of Integrated Circuits which was opened for signature in

May 1989, but with a number of additions: protection must be available for a minimum

period of 10 years; the rights must extend to articles incorporating infringing layout

designs; innocent infringers must be allowed to use or sell stock in hand or ordered

before learning of the infringement against a suitable royalty: and compulsory licensing

and government use is only allowed under a number of strict conditions.

Trade secrets and know-how which have commercial value must be protected againstbreach of confidence and other acts contrary to honest commercial practices. Test data

submitted to governments in order to obtain marketing approval for pharmaceutical or

agricultural chemicals must also be protected against unfair commercial use.

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The final section in this part of the agreement concerns anti-competitive practices in

contractual licences. It provides for consultations between governments where there is

reason to believe that licensing practices or conditions pertaining to intellectual property

rights constitute an abuse of these rights and have an adverse effect on competition.

Remedies against such abuses must be consistent with the other provisions of the

agreement.

Part III of the agreement sets out the obligations of member governments to provide

procedures and remedies under their domestic law to ensure that intellectual property

rights can be effectively enforced, by foreign right holders as well as by their own

nationals. Procedures should permit effective action against infringement of intellectual

property rights but should be fair and equitable, not unnecessarily complicated or costly,

and should not entail unreasonable time-limits or unwarranted delays. They should allow

for judicial review of final administrative decisions. There is no obligation to put in place

a judicial system distinct from that for the enforcement of laws in general, nor to give

priority to the enforcement of intellectual property rights in the allocation of resources or

staff.

The civil and administrative procedures and remedies spelled out in the text include

provisions on evidence of proof, injunctions, damages and other remedies which wouldinclude the right of judicial authorities to order the disposal or destruction of infringing

goods. Judicial authorities must also have the authority to order prompt and effective

provisional measures, in particular where any delay is likely to cause irreparable harm to

the right holder, or where evidence is likely to be destroyed. Further provisions relate to

measures to be taken at the border for the suspension by customs authorities of release,

into domestic circulation, of counterfeit and pirated goods. Finally, parties should provide

for criminal procedures and penalties at least in cases of wilful trademark counterfeiting

or copyright piracy on a commercial scale. Remedies should include imprisonment and

fines sufficient to act as a deterrent.

The agreement would establish a Council for Trade-Related Aspects of Intellectual

Property Rights to monitor the operation of the agreement and governments compliance

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with it. Dispute settlement would take place under the integrated GATT dispute-

settlement procedures as revised in the Uruguay Round.

With respect to the implementation of the agreement, it envisages a one-year transition

period for developed countries to bring their legislation and practices into conformity.Developing countries and countries in the process of transformation from a centrally-

planned into a market economy would have a five-year transition period, and least-

developed countries 11 years. Developing countries which do not at present provide

product patent protection in an area of technology would have up to 10 years to introduce

such protection. However, in the case of pharmaceutical and agricultural chemical

products, they must accept the filing of patent applications from the beginning of the

transitional period. Though the patent need not be granted until the end of this period, the

novelty of the invention is preserved as of the date of filing the application. If

authorization for the marketing of the relevant pharmaceutical or agricultural chemical is

obtained during the transitional period, the developing country concerned must offer an

exclusive marketing right for the product for five years, or until a product patent is

granted, whichever is shorter.

Subject to certain exceptions, the general rule is that the obligations in the agreement

would apply to existing intellectual property rights as well as to new ones.

The General Agreement on Trade in Services (GATS)

The General Agreement on Trade in Services (GATS) came into force in 1995 and

constitutes the legal framework through which World Trade Organization (WTO)

Members progressively liberalize trade in services, including health-related services.

Within the GATS framework, trade in health services is understood as the provision of

specialized and general health personnel, nursing services, hospital services, ambulance

services, and physiotherapeutic and paramedical services provided by medical and dental

laboratories.

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GATS allows WTO Members to choose which service sectors to open up to trade and

foreign competition. To date, only 50 WTO Members have made some type of

commitment on health services under GATS, much less than in financial services (100

Members). Liberalization of financial services may have implications for health systems

through its impact on health insurance.

Individual Members' commitments to open markets in specific sectors - and how open

those markets will be - are the outcome of negotiations. The commitments appear in

schedules that list the sectors being opened, the extent of market access offered in those

sectors (e.g. whether there are any restrictions on foreign ownership), and any limitations

on national treatment (whether some rights granted to local companies will not be granted

to foreign companies). For example, a Member could require all foreign-owned hospitals

to provide 25% of beds to care for the uninsured, but this would have to be scheduled as a

national treatment limitation (if it were not already a requirement for locally-owned

hospitals).

The overall aim of GATS is to liberalize trade in services. The agreement covers four

different modes (modes 1-4 trade in services) all of which affect health:

Mode 1 Cross-border supply

Health services provided from the territory of one Member State in the territory of

another Member State. This is usually via interactive audio, visual and data

communication. The patient therefore has the opportunity to consult with physicians in a

different country, as do local doctors. Typical examples include Internet consultation,

diagnosis, treatment and medical education. This form of supply can bring care to under-

served areas, but can be capital intensive and divert resources from other equally pressing

needs.

Mode 2 Consumption abroad

This usually covers incidents when patients seek treatment abroad or are abroad when

they need treatment. This can generate foreign exchange, but equally can crowd out local

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patients and act as a drain on resources when their treatment is subsidized by the sending

government.

Mode 3 Foreign commercial presence

Health services supplied in one Member State, through commercial presence in the

territory of another Member State. This covers the opening up of the health sector to

foreign companies, allowing them to invest in health operations, health management and

health insurance. It is argued that, on the one hand, FDI can make new services available,

contribute to driving up quality and create employment opportunities. On the downside, it

can help create a two-tier health system and an internal brain-drain - and thus exacerbate

inequity of health provision.

Mode 4 Movement of natural persons (individuals rather than companies)

The temporary movement of a commercial provider of services (for example, a doctor)

from their own country to another country to provide his or her service under contract or

as a member of staff transferred to a different country. This is one of the most contentious

areas for health, as there is concern that it will increase the brain drain of health personnel

from poor to rich countries. However, GATS is concerned only with health professionals

working in other countries on a temporary basis. Brain drain refers to the emigration ofeducated, qualified, and skilled people from poorer countries to richer countries. WHO's

Human Resources for Health initiative aims to increase individual countries' pools of

qualified health staff.

The extent to which GATS will have an impact on public services such as health and

education is controversial. GATS comes into the equation when countries decide to allow

foreign private suppliers to provide services.

Opponents of GATS are convinced that it will limit a state's sovereign powers to protect

human health, and ensure provision of good quality, affordable health services.

Specifically, they fear that progressive liberalization of services under GATS will force

WTO Members to privatize health care currently provided by governments, and that

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these changes will be irreversible. They are also concerned that the capacity of states to

regulate health-related services will be eroded.

The counter-argument stresses that GATS allows WTO Members to decide for

themselves which sectors will be liberalized and to define country-specific conditions onthe form that liberalization will take. Some WTO Members have already indicated they

will not be requesting or offering commitments on health services in the current

negotiations. Those states that do proceed are not obliged to respond positively to any

particular request. Nor is there any requirement for reciprocity. Moreover, the Doha

declaration specifically reaffirmed the right of Members to regulate or introduce new

regulations on the supply of services. Defenders of GATS therefore argue that national

control over policy and practice has been enhanced.

The political dynamic around GATS may be somewhat different from that affecting the

Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. Many

developing countries are keen to welcome foreign direct investment and to secure access

in the north for their professionals. Many developed countries, on the other hand, are

nervous about the political and economic effects of liberalization on publicly-funded

health services.

GATS is a complex treaty and it does not lay down minimum standards as TRIPS does.

Rather, it takes shape through the process of negotiation. Overall, there is lack of

empirical data on the level of international trade in health-related services, as well as on

the effects of liberalization in specific countries. Finally, trade in services is increasing in

any case (often through bilateral negotiations), thus making attribution to GATS very

difficult.

Certain other WTO Agreements are as follows:

Agreement on Agriculture

The WTO Agreement on Agriculture was one of the many agreements which were

negotiated during the Uruguay Round.

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The implementation of the Agreement on Agriculture started with effect from January 1,

1995. As per the provisions of the Agreement, the developed countries would complete

their reduction commitments within 6 years, i.e., by the year 2000, whereas the

commitments of the developing countries would be completed within 10 years, i.e., by

the year 2004. The least developed countries are not required to make any reductions.

The products, which are included within the purview of this agreement are what are

normally considered as part of agriculture except that it excludes fishery and forestry

products as well as rubber, jute, sisal, abaca and coir.

Salient Features

The WTO Agreement on Agriculture contains provisions in 3 broad areas of agricultureand trade policy: market access, domestic support and export subsidies.

Market Access

This includes tariffication, tariff reduction and access opportunities. Tariffication means

that all non-tariff barriers such as quotas, variable levies, minimum import prices,

discretionary licensing, state trading measures, voluntary restraint agreements etc. need to

be abolished and converted into an equivalent tariff. Ordinary tariffs including those

resulting from their tariffication are to be reduced by an average of 36% with minimum

rate of reduction of 15% for each tariff item over a 6 year period. Developing countries

are required to reduce tariffs by 24% in 10 years. Developing countries as were

maintaining Quantitative Restrictions due to balance of payment problems, were allowed

to offer ceiling bindings instead of tariffication.

Special safeguard provision allows the imposition of additional duties when there are

either import surges above a particular level or particularly low import prices ascompared to 1986-88 levels.

It has also been stipulated that minimum access equal to 3% of domestic consumption in

1986-88 will have to be established for the year 1995 rising to 5% at end of the

implementation period.

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Domestic support

For domestic support policies, subject to reduction commitments, the total support given

in 1986-88,measured by the total Aggregate Measurement of Support (AMS) should be

reduced by 20% in developed countries (13.3% in developing countries). Reductioncommitments refer to total levels of support and not to individual commodities. Policies

which amount to domestic support both under the product specific and non-product

specific categories at less than 5% of the value of production for developed countries and

less than 10% for developing countries are also excluded from any reduction

commitments. Polices which have no or at most minimal trade distorting effects on

production are excluded from any reduction commitments (Green Box-Annex 2 of the

Agreement on Agriculture - http://www.wto.org). The list of exempted green box policies

includes such policies which provide services or benefits to agriculture or the rural

community, public stock holding for food security purposes, domestic food aid and

certain de-coupled payments to producers including direct payments to production

limiting programmes, provided certain conditions are met.

Special and Differential Treatment provisions are also available for developing country

members. These include purchases for and sales from food security stocks at

administered prices provided that the subsidy to producers is included in calculation ofAMS. Developing countries are permitted untargeted subsidised food distribution to meet

requirements of the urban and rural poor. Also excluded for developing countries are

investment subsidies that are generally available to agriculture and agricultural input

subsidies generally available to low income and resource poor farmers in these countries.

Export Subsidies

The Agreement contains provisions regarding member's commitment to reduce Export

Subsidies. Developed countries are required to reduce their export subsidy expenditure by

36% and volume by 21% in 6 years, in equal instalment (from 1986-1990 levels). For

developing countries the percentage cuts are 24% and 14% respectively in equal annual

installment over 10 years. The Agreement also specifies that for products not subject to

export subsidy reduction commitments, no such subsidies can be granted in the future.

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The Sanitary and Phytosanitary Measures Agreement

The Agreement on the Application of Sanitary and Phytosanitary Measures sets out the

basic rules for food safety and animal and plant health standards.

It allows countries to set their own standards. But it also says regulations must be based

on science. They should be applied only to the extent necessary to protect human, animal

or plant life or health. And they should not arbitrarily or unjustifiably discriminate

between countries where identical or similar conditions prevail.

Member countries are encouraged to use international standards, guidelines and

recommendations where they exist. However, members may use measures which result in

higher standards if there is scientific justification. They can also set higher standards

based on appropriate assessment of risks so long as the approach is consistent, not

arbitrary.

The agreement still allows countries to use different standards and different methods of

inspecting products.

Key Features

All countries maintain measures to ensure that food is safe for consumers, and to prevent

the spread of pests or diseases among animals and plants. These sanitary and

phytosanitary measures can take many forms, such as requiring products to come from a

disease-free area, inspection of products, specific treatment or processing of products,

setting of allowable maximum levels of pesticide residues or permitted use of only

certain additives in food. Sanitary (human and animal health) and phytosanitary (plant

health) measures apply to domestically produced food or local animal and plant diseases,

as well as to products coming from other countries.

Protection or protectionism?

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Sanitary and phytosanitary measures, by their very nature, may result in restrictions on

trade. All governments accept the fact that some trade restrictions may be necessary to

ensure food safety and animal and plant health protection. However, governments are

sometimes pressured to go beyond what is needed for health protection and to use

sanitary and phytosanitary restrictions to shield domestic producers from economic

competition. Such pressure is likely to increase as other trade barriers are reduced as a

result of the Uruguay Round agreements. A sanitary or phytosanitary restriction which is

not actually required for health reasons can be a very effective protectionist device, and

because of its technical complexity, a particularly deceptive and difficult barrier to

challenge.

The Agreement on Sanitary and Phytosanitary Measures (SPS) builds on previous GATT

rules to restrict the use of unjustified sanitary and phytosanitary measures for the purpose

of trade protection. The basic aim of the SPS Agreement is to maintain the sovereign

right of any government to provide the level of health protection it deems appropriate, but

to ensure that these sovereign rights are not misused for protectionist purposes and do not

result in unnecessary barriers to international trade.

Justification of measures

The SPS Agreement, while permitting governments to maintain appropriate sanitary and

phytosanitary protection, reduces possible arbitrariness of decisions and encourages

consistent decision-making. It requires that sanitary and phytosanitary measures be

applied for no other purpose than that of ensuring food safety and animal and plant

health. In particular, the agreement clarifies which factors should be taken into account in

the assessment of the risk involved. Measures to ensure food safety and to protect the

health of animals and plants should be based as far as possible on the analysis and

assessment of objective and accurate scientific data.

International standards

The SPS Agreement encourages governments to establish national SPS measures

consistent with international standards, guidelines and recommendations. This process is

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often referred to as "harmonization". The WTO itself does not and will not develop such

standards. However, most of the WTOs member governments (132 at the date of

drafting) participate in the development of these standards in other international bodies.

The standards are developed by leading scientists in the field and governmental experts

on health protection and are subject to international scrutiny and review.

International standards are often higher than the national requirements of many countries,

including developed countries, but the SPS Agreement explicitly permits governments to

choose not to use the international standards. However, if the national requirement results

in a greater restriction of trade, a country may be asked to provide scientific justification,

demonstrating that the relevant international standard would not result in the level of

health protection the country considered appropriate.

Adapting to conditions

Due to differences in climate, existing pests or diseases, or food safety conditions, it is

not always appropriate to impose the same sanitary and phytosanitary requirements on

food, animal or plant products coming from different countries. Therefore, sanitary and

phytosanitary measures sometimes vary, depending on the country of origin of the food,

animal or plant product concerned. This is taken into account in the SPS Agreement.

Governments should also recognize disease-free areas which may not correspond to

political boundaries, and appropriately adapt their requirements to products from these

areas. The agreement, however, checks unjustified discrimination in the use of sanitary

and phytosanitary measures, whether in favour of domestic producers or among foreign

suppliers.

Alternative measures

An acceptable level of risk can often be achieved in alternative ways. Among the

alternatives and on the assumption that they are technically and economically feasible

and provide the same level of food safety or animal and plant health governments

should select those which are not more trade restrictive than required to meet their health

objective. Furthermore, if another country can show that the measures it applies provide

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the same level of health protection, these should be accepted as equivalent. This helps

ensure that protection is maintained while providing the greatest quantity and variety of

safe foodstuffs for consumers, the best availability of safe inputs for producers, and

healthy economic competition.

Risk Assessment

The SPS Agreement increases the transparency of sanitary and phytosanitary measures.

Countries must establish SPS measures on the basis of an appropriate assessment of the

actual risks involved, and, if requested, make known what factors they took into

consideration, the assessment procedures they used and the level of risk they determined

to be acceptable. Although many governments already use risk assessment in their

management of food safety and animal and plant health, the SPS Agreement encourages

the wider use of systematic risk assessment among all WTO member governments and

for all relevant products.

Transparency

Governments are required to notify other countries of any new or changed sanitary and

phytosanitary requirements which affect trade, and to set up offices (called "Enquiry

Points") to respond to requests for more information on new or existing measures. Theyalso must open to scrutiny how they apply their food safety and animal and plant health

regulations. The systematic communication of information and exchange of experiences

among the WTOs member governments provides a better basis for national standards.

Such increased transparency also protects the interests of consumers, as well as of trading

partners, from hidden protectionism through unnecessary technical requirements.

A special Committee has been established within the WTO as a forum for the exchange

of information among member governments on all aspects related to the implementation

of the SPS Agreement. The SPS Committee reviews compliance with the agreement,

discusses matters with potential trade impacts, and maintains close co-operation with the

appropriate technical organizations. In a trade dispute regarding a sanitary or

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phytosanitary measure, the normal WTO dispute settlement procedures are used, and

advice from appropriate scientific experts can be sought.

Agreement on Subsidies and Countervailing Measures

The Agreement on Subsidies and Countervailing Measures (SCM Agreement)

addresses two separate but closely related topics: multilateral disciplines regulating the

provision of subsidies, and the use of countervailing measures to offset injury caused by

subsidized imports.

Multilateral disciplines are the rules regarding whether or not a subsidy may be provided

by a Member. They are enforced through invocation of the WTO dispute settlement

mechanism. Countervailing duties are a unilateral instrument, which may be applied by a

Member after an investigation by that Member and a determination that the criteria set

forth in the SCM Agreement are satisfied.

Structure of the Agreement

Part I provides that the SCM Agreement applies only to subsidies that are specifically

provided to an enterprise or industry or group of enterprises or industries, and defines

both the term subsidy and the concept of specificity. Parts II and III divide all

specific subsidies into one of two categories: prohibited and actionable(1), and establish

certain rules and procedures with respect to each category. Part V establishes the

substantive and procedural requirements that must be fulfilled before a Member may

apply a countervailing measure against subsidized imports. Parts VI and VII establish the

institutional structure and notification/surveillance modalities for implementation of the

SCM Agreement. Part VIII contains special and differential treatment rules for variouscategories of developing country Members. Part IX contains transition rules for

developed country and former centrally-planned economy Members. Parts X and XI

contain dispute settlement and final provisions.

Coverage of the Agreement

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Part I of the Agreement defines the coverage of the Agreement. Specifically, it

establishes a definition of the term subsidy and an explanation of the concept of

specificity. Only a measure which is a specific subsidy within the meaning of Part I

is subject to multilateral disciplines and can be subject to countervailing measures.

Definition of subsidy Unlike the Tokyo Round Subsidies Code, the WTO SCM

Agreement contains a definition of the term subsidy. The definition contains three

basic elements: (i) a financial contribution (ii) by a government or any public body within

the territory of a Member (iii) which confers a benefit. All three of these elements must

be satisfied in order for a subsidy to exist.

The concept of financial contribution was included in the SCM Agreement only after a

protracted negotiation. Some Members argued that there could be no subsidy unless there

was

Documents

26658857 WTO and ENVIRONMENT Environmental Law Project