The Trade and Environment Debate at the WTO

• Trade and Environment
• Legal position of forest certification
• Relevant parts of GATT

A key issues raised within WTO committees has been the trade effects of eco-labelling schemes. This debate has proved to be contentious because, as with many trade and environment issues, it has divided nations largely on a north-south basis. The relationship between trade and the environment emerged as an important issue during the negotiations for the Uruguay Round, leading to the formation of the Committee on Trade and the Environment, CTE.

Two important topics of debate have been whether or not eco-labelling schemes break some of the WTO's rules and particularly whether they create trade impediments.

The legal position of eco-labels & forest certification schemes in terms of trade law is unclear, hence the debate in WTO committees. This is for two reasons:

• WTO text dealing with environmental measures does not specify eco-labels. Hence we must rely on interpretations.

• The WTO is an agreement between sovereign states whilst many eco-labels are private, voluntary initiatives. WTO trade disciplines are either not relevant for private sector initiatives or are less specific.

Moreover, interpretations of the relevant parts of WTO rules are evolving over time

'The policy interface which joins trade and environment is still very much unsculpted marble whose final image is even now being shaped...The rules which define the trade-environment interface are not hard and fast. They are rather dynamic and changing in response to an ongoing process of debate' (Cosbey, 1997)

Some WTO members are pushing for clarification on these issues, others want the WTO's scope to be formally extended to cover eco-labels, whilst others again do not believe this is a matter for the WTO to decide at all.

The relevant parts of the WTO for understanding the relationship between trade and the environment in relation to eco-labels and forest certification are:

Technical Barriers to Trade Agreement
A set of guidelines which specify the conditions under which Members may establish regulations and standards.

Exceptions to the Most Favoured Nation status and National Treatment Rules
GATT Article XX(g) states conditions under which trade measures contrary to MFN and NT rules may be made to protect human, animal or plant life or health under certain conditions.

The free trade discipline of the WTO leads to pressures for harmonised standards with regard to the environment. The WTO tends to prefer environmental issues to be dealt with in a simple way that easily translates to the trade policy context. However, the WTO's perspective on the environment is unduly simplistic. It tends to look for quick, simple, common denominator solution to environmental questions but such solutions do not always exist.

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