Ethical Trade and Protectionism

• Introduction
• Eco-labelling
• Basis of protectionist allegations
• Summary

The promoters of ethical trade schemes believe that there are numerous benefits to be gained by producers from ethical trade, but some stakeholders in the South see eco-labelling schemes ethical trade schemes as protectionist.

Frequently, allegations of 'green protectionism' are to do with the government actions to ban the import of certain goods deemed environmentally unfriendly, e.g. Mexico's complaint against the US ban on tuna caught in nets that trap dolphins. The Dispute Panel ruled that the import ban on tuna that was not considered 'dolphin-safe' was contrary to WTO regulations but that voluntary labelling was allowed. However, voluntary schemes that label goods according to environmental criteria may also create barriers to trade, or more precisely impediments to trade. (Bourke and Leitch [1998] distinguish between state-implemented non-tariff barriers which have the explicit aim of protecting the domestic market and the impediments to trade that may be a by-product of eco-labelling schemes).

The allegations of protectionism in eco-labelling are related to:

a) Lack of southern participation. To some developing countries ethical trade initiatives are the result of decisions and ideas in the North and thus reflect Northern values and priorities. The initiatives may not take account of issues affecting developing country producers and developing countries have rarely been involved. Hence there is suspicion that the schemes are more to do with protecting markets than protecting the environment. A case in point is the Dutch eco-label for cut flowers which included the environmental costs of transport, thus favouring local producers (Verbruggen, 1995). This imbalance may have been rectified were southern producers included in the discussions over criteria. It has also been noted that some criteria on eco-labelling schemes do not recognise differences in environmental absorptive capacity and the importance of local factors for example: low limits for sulphur dioxide emissions are not an issue for countries with dispersed populations and no history of acid rain.

b) Knowledge and technical resources. Involvement in many schemes requires knowledge and technical resources, to which many developing countries producers lack access, for example there may be no local recognised certification bodies.

c) Sovereignty. Many nation states argue that they alone have the responsibility for establishing environmental and social standards within their own territory according to their own environmental attributes and preferences.

d) Financial Resources. Certification can be expensive. Many producers cannot afford the cost of auditors to verify that they meet the required standards. There is an argument that schemes should be accompanied by additional resources for groups that might otherwise be excluded.

e) Scientific basis. Some critics argue that the science underlying many eco-labels is questionable in scientific terms or is subjective. Indeed many aspects of eco-labels are based on weightings and the FSC's principles are based on values rather than scientific criteria. This is not to say FSC criteria lack objectivity or rigour, but to emphasise the importance of collecting a wide view of opinions in the establishment of standards.

f) Unilateralism. There may be many different standards operating in different countries. An exporter selling to different markets may be judged against many standards. This can be costly and act as a barrier to some markets.

In trade terms the constraints to participation in ethical trade schemes are impediments to trade or barriers to trade. Some authors speak of them as actual or potential barriers whilst others, who acknowledge that their effects are very similar to non tariff barriers, call them impediments to trade (e.g. Bourke and Leitch, 1998).

To a certain extent these allegations of protectionism are based on potential, usually unintended, effects of some ethical trade schemes. Indeed, little evidence has come to light to date to suggest that ethical trade schemes are actually protectionist.

Eco-labelling of forest products, with the exception of pulp and paper products 'has not significantly distorted trade patterns' (Ruddell, et al 1999).

However the extent to which eco-labelling and forest certification create impediments to trade may well change as less well-resourced groups try to get involved in ethical trade schemes, as demanded by their markets. We may not yet have encountered the real barriers to participation.

It is likely that potential negative effects can be counter-acted or minimised if ethical trade schemes are designed with care and with the participation of producers. It should be noted that not all developing and transitional countries are opposed to eco-labels and forest certification per se. For example Brazil and Indonesia are developing forest product certification schemes (CERFLOR and LEI respectively).

Despite its high profile and the rapid growth in certification, only 0.3% of the world's forest has been certified to date, to say nothing of non-timber forest products (FAO, 1999: 91). Nevertheless, the trade and eco-labelling issue is alive in the WTO.

Some Member states would like to clarify the WTO position at the Seattle Round, e.g. the EU and Norway. Go to Proposals

Go to The Trade and Environment Debate at the WTO

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