IISD Reporting Services at ITTC-34, 12-17 May 2003, Panama City, Panama

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34th Session of the International Tropical Timber Council and Associated Sessions of the Committees
12 - 17 May 2003 Panama City, Panama

SIDE EVENT: THE LINKAGES BETWEEN TRADE AND ENVIRONMENT IN THE CONTEXT OF THE WORLD TRADE ORGANIZATION – organized by the World Trade Organization Trade and Environment Division

Doaa Abdel Motaal (right), World Trade Organization (WTO) Trade and Environment Division, provided an overview of the trade and environment debate as it pertains to the WTO. She explained that this discussion started in 1991 with the tuna-dolphin dispute, in which the US imposed an import ban on Mexican tuna on the grounds that Mexico’s tuna fishing practices resulted in high levels of dolphin mortality. In this case, Mexico challenged the US import ban under GATT rules, arguing that the US had no right to take trade measures to address environmental concerns outside their territory (extraterritorial measures), and should not discriminate against imports on the basis of process and production methods (PPMs). Whether or not countries should be allowed to discriminate between “like” products, she said, lies at the heart of the trade and environment debate.

Motaal then gave an overview of GATT rules that are relevant to the trade-environment debate. She explained that GATT Article I on the “Most-Favored Nation” stipulates that countries must not discriminate between “like” products from different sources, and that GATT Article III on “National Treatment” specifies that countries must not discriminate between imported and domestically-produced “like” products. By way of example, she said countries cannot place higher tariffs on plywood from country “A” than from country “B”, and cannot give privileges to domestic plywood over imports. This, she stressed, is the backbone of the multilateral trading system.

Motaal also drew attention to GATT Article XI on the “Elimination of Quantifiable Restrictions”, which stipulates that countries cannot put quantifiable restrictions, or bans, on any product that they import or export. She noted, however, that GATT Article XX on “General Exemptions”, states that violations to GATT rules are permissible when taken to protect human, animal or plant life or health, or to conserve an exhaustible natural resource, provided that such measures are taken in conjunction with restrictions on domestic production and consumption. She highlighted that this may be of particular relevance to the ITTO because tropical forests are an exhaustible natural resource. By way of example, she explained that a country banning certain wood imports in order to conserve an exhaustible natural resource, if challenged, would be asked to show how it is restricting domestic production and consumption, and may be asked to consider non-discriminatory methods, including stumpage fees or logging taxes.

Motaal then highlighted the WTO’s Committee on Trade and the Environment (CTE), which was created in 1995. She noted that the CTE addresses the relationship between multilateral environmental agreements (MEAs) and WTO rules, noting that the WTO considers the ITTA to be an MEA in this context. She said the CTE attempts to determine whether specific trade obligations (STO) of MEAs are compatible with WTO rules, and if not, considers what can be done to ensure harmony between the two. She noted that the CTE also addresses issues such as product labeling, and the environmental effects of removing trade restrictions. Providing an example, she noted that Japan declared that trade liberalization and tariff reductions in the forest sector would not necessarily benefit the environment, whereas the US argued that trade liberalization can only improve forest management.

Motaal then drew attention to the WTO Doha Development Agenda. She explained that paragraph 31 of the Doha Ministerial Declaration calls for new negotiations on the relationship between MEAs and WTO rules, information exchange, observer status, and trade liberalization of environmental goods and services. She noted a division between people who are calling for automatic conformity to MEA STOs, and those who argue that the WTO should address STOs on a case by case basis. She highlighted that paragraph 31(iii), calling for new negotiations on reducing tariff and non-tariff barriers to trade for environmental goods and services, could be relevant for the ITTO because it could cover sustainably managed timber if WTO members agree that it is an environmental good.

She explained that paragraph 32 of the Doha Ministerial Declaration calls on the CTE to report to the Cancun Ministerial Conference in September 2003 on the desirability of expanding negotiations on the environment beyond paragraph 31.