The European Union is an advocate of high-level environmental protection both within Europe and at the global level. The European Union attaches importance to the international agenda in environmental issues since many of these issues need a global solution. It has been an important supporter of international initiatives such as the Kyoto Protocol and the Johannesburg World Summit on Sustainable Development. Rather than pursuing a unilateral approach, the European Union claims that a multilateral approach is the best option to protect the environment. Regarding the relationship between trade and the environment, the European Union emphasises that trade liberalisation should not damage the environment. It also underlines the need for maintaining a non-discriminatory multilateral trade system. In the WTO the European Union is an important initiator in addressing environmental issues. The European Union supports a more active approach towards environmental issues within the WTO. 

Developing countries are more wary of the inclusion of environmental matters within the WTO. They feel that it is more important to focus on economic development first before raising environmental concerns. Unlike the European Union, they believe that the current mechanisms of the WTO are sufficient to deal with environmental issues. In the context of trade negotiations, many developing countries fear that the inclusion of environmental issues on the agenda might give developed countries hidden measures to protect access to export markets in the developed world. Developing countries also feel that developed countries use the trade-environment link as an opportunity to promote specific environmental goals in developing countries. Usually developing countries are the ones which bear the extra costs of measures taken, while governments in developed countries receive credit for the changes from Western public opinion (South centre, 2002). 

The WTO, however, is not the only arena in which the European Union and developing countries discuss trade-related environmental issues. Environmental issues are also part of the Generalised System of Preferences (GSP) and other trade agreements. This section discusses policy positions in the multilateral WTO, followed by other arrangements at a regional or bilateral level.

Environmental Integration in the External Policies of the General Affairs Council, European Commission, SEC(2002)271

This staff working paper of the European Commission sets out how environmental issues can be integrated into the external policies of the EU.

Integrating environment and sustainable development into economic and development co-operation policy – Elements of a comprehensive strategy, European Commission, COM(2000)264 final

This document provides information on the proposed strategy on issues of environment and sustainable development. Trade is one of the policy instruments which is discussed.

Trade and the environment: support sustainable development, DG Trade, Issues, October 2001

This brief brochure gives an overview of issues which the European regards essential in the discussion on trade and environment.

Trying to de-connect trade and environment is a false prejudice where environment would be the loser, Lamy, P., Speech, 7 June 2000

In this speech, EU Trade Commissioner Lamy explains the EU position on linkages between trade and environment.

Second ASEAN State of the Environment Report 2000 – Chapter 10: Trade and Tourism, ASEAN Secretariat, Jakarta, 2000 

The report describes environmental issues in ASEAN. The document includes a chapter on Trade concerns.

Trade policy and international environmental requirements in Barbados, Ministry of Physical Development and Environment, Government of Barbados, paper prepared for the Extpert Meeting on Environmental Requirements and International Trade, Geneva, October 2002

The Doha Development Round

The trade and environment link in the Doha Development Round is elaborated in three paragraphs of the declaration (Pars 31 to 33). An important issue is the reduction of tariff and non-tariff barriers to environmental goods and services. The liberalisation of environmental goods and services will increase trade and therefore promote environmental protection. Both developed and developing countries agree on that. However, there remains disagreement among WTO members as to which goods and services are actually ‘environmental’ goods and services. The main difference between the European Union and developing countries is that the European Union is pushing more for a broader inclusion of the number of products and services. The Europeans would like to have the production process considered in the decision whether a good/service is environmentally friendly. They advocate so-called process and production method (PPM) criteria. Developing countries fear that the inclusion of PPM criteria will harm their competitiveness and their access to markets. Usually production methods in developing countries have lower environmental standards than in developed countries. Having to meet PPM criteria means that they have to raise their environmental standards in production significantly, for which they will have to incur considerable costs.

In addition to the discussion on promoting trade in environmentally friendly goods, there is discussion on a range of other issues. Some of these issues are directly related to environmental concerns: these are generally the focus of the European Union. Other issues are indirectly related; they involve the environmental implications of current WTO negotiations and agreements. The indirectly related issues generally receive more attention from developing countries.

Examples of direct environmental-related issues are:

• Multilateral Environment Agreements (MEAs). The European Union hopes that the WTO will be able to give more clarity about the relation between MEAs and the WTO. The European Union wants to ensure that the MEAs are compatible with WTO rulings, also in the cases where a WTO member has not recognised a certain MEA. The European Union has proposed to give the secretariats of different MEAs observer status within the WTO. The WTO members have granted the MEA-secretariats ad-hoc observer status, a decision welcomed by the European Commission.
• Eco-labelling. Eco-labelling usually refers to the environmental effects of products after consumption. Through eco-labelling of detergents, for example, consumers can find out whether the detergents are biodegradable after consumption. In the opinion of the European Union, eco-labelling also includes benchmarks for the complete production process of goods and services. In other words, eco-labelling is a way to inform consumers that the production process does not have environmental side-effects. An example is canned tuna, which has been caught with fishing nets without catching other animals such as dolphins. The European Union aims to have the international community accept its Life Cycle Analysis (LCA) as a system of PPM criteria. It urges the WTO to interpret guidelines for eco-labelling within the Agreement on Technical Barriers to Trade. The European Union wants to ensure that the eco-labelling schemes are permitted within the WTO. Developing countries fear that stronger labelling systems will limit access to their export markets and harm their competitiveness. Therefore, they are against allowing eco-labels within the WTO.
• Precautionary principle. The European Union requests the WTO to allow members to apply the precautionary principle (link glossary). The precautionary principle gives a country the right to restrict imports in case there is a possible risk of damage to the environment or public health. Developing countries fear that the principle can lead to abuse as developed countries might use it as an excuse to protect their domestic markets.

Examples of indirect environmental related issues are:

• Distorting agricultural subsidies. Developing countries urge developed countries, including the European Union, to decrease trade distorting agricultural subsidies, which also have environmental implications. An example is the impact of overproduction stimulated by agricultural subsidies.
• Market access, technical assistance and capacity building. India, supported by many developing countries, advocates more attention on the effects of environmental measures on access to markets in developed countries. India believes that environmental measures in developed countries such as eco-labelling raise the costs of production, in particular for small and medium-sized enterprises (SMEs) in developing countries. India emphasises the need for technical assistance and capacity building. In addition, when designing environmental measures the adverse effects on market access for developing countries should be taken into account. The European Union and other developed countries have promised to review the Indian proposal, but are not sure whether they can meet all the proposed items. Technical-environmental assistance is already implemented in the European Union development policies, although shares in total development aid are limited.
• Renegotiation of the TRIPS agreement. Several developing countries have expressed the need to include clauses in the TRIPS agreement which stimulate the dissemination of environmental friendly technologies and protect traditional knowledge and biodiversity. Many new environmental technologies make use of traditional knowledge from developing countries. Developed countries patent the new technologies which are costly for developing countries. The European Union is relatively more willing to change the TRIPS arrangements than other developed countries. The European Union furthermore supplies assistance through development aid to help developing countries seek legitimate rights in relations to provisions of biodiversity, according to the UN Convention on Biological Diversity.

The negotiations within the WTO are still on-going and they should be concluded by January 2005.

Doha Development Agenda; Para 32 iii on labelling for environmental purposes EC Submission to the CTE, DG Trade, Ref.118/03 Rev 1, 3 March 2003, Brussels

This document describes the proposals of the European Union for dealing with eco-labelling in the Doha WTO negotiations.

Doha Development Agenda: Trade and the Environment, DG Trade, Press release, Brussels, 11 October 2002.

This site discusses linkages between the WTO and UNEP. The site includes link to EU proposal on observer status of MEAs’ secretariats.

The effects of environmental measures on market access, especially in relations to developing countries, WTO-Committee on Trade and Environment, Submission from India, WT/CTE/W/207, 2002

This document was submitted by India in order to ensure that the interests of developing countries are not harmed by environmental trade measures.

Multilateral Environmental Agreements (MEAs) and WTO rules; proposals made in the Committee on Trade and Environment (CTE) from 1995-2002, WTO Secretariat, TN/TE/S/1, 2002

This document contains a WTO proposal on how to deal with the MEAs in the WTO.

Precaution in the WTO – EC position paper, DG Trade, July 2001

This paper sets out the position of the EU regarding the precautionary principle.

Cusco Declaration on Access to Genetic Resources, Traditional Knowledge and Intellectual Property Rights of Like-minded Megadiverse Countries, State Ministers and Representatives of Bolivia, Brazil, China, Colombia, Costa Rica, Ecuador, the Philippines, India, Indonesia, Kenya, Malaysia, Mexico, Peru, South Africa and Venezuela), 2002, Cusco

This declaration is an attempt of a large number of developing countries to ensure the protection of traditional knowledge and its use.

Trade and environment, ICTSD/IISD, Doha Round Briefing Series, Vol.1, No. 9, 2003

Generalised System of Preferences

The European Union applies the GSP to give developing countries preferential treatment through lower import tariffs. As a positive incentive to promote environmental protection in developing countries, the latter can qualify for additional trade preferences by complying with environmental standards. The current GSP provides limited preferential treatment on the basis of standards of the International Tropical Timber Convention. Therefore, the additional tariff preferences are only offered for tropical forest products. The European Commission aims to make more use of the GSP to promote environmental concerns in the future. 

User’s guide to the European Union’s Scheme of Generalised Tariff Preferences – Item  9. The special incentive arrangements for the protection of the environment, DG Trade, February 2003

This guide sets out the background and rules of the GSP scheme. Item 9 of the guide discusses the special incentives for protection of the environment, in particular tropical forests.

International Tropical Timber Agreement - 1994, International Tropical Timber Organisation, Yokohama

This site provides more information on trade in timber and the International Tropical Timber Agreement.

Trade agreements

In addition to the GSP, the European Union is promoting environmental protection through trade agreements with countries and regions. Agreements often include articles on trade and environment. Examples are the Cotonou Agreement, the Euro-Mediterranean Agreement, the EU-Chile Association Agreement and the Trade and Development Co-operation Agreement with South Africa. 

The Cotonou Agreement is particularly relevant since it covers a large number of developing countries. In this agreement, the EU and the ACP countries have committed themselves to promote, from the perspective of both international conventions and the development levels of countries, the ACP countries in particular, “the development of international trade in such a way as to ensure sustainable and sound management of the environment” (Art. 49.1). The EU and ACP countries have also committed themselves to enhance co-operation in the light of the Declaration made during the United Nations Conference on Environment and Development, which was held in 1992 in Rio de Janeiro. Concrete initiatives on how to realise the objectives and commitments are not outlined in the Cotonou Agreement.

Other instruments

The effects of trade agreements with third countries on the environment is included in the Sustainability Impact Assessments (SIAs). The SIAs, which from 2003 will be conducted gradually with each major EU trade agreement, need to ensure that the parties have an insight on the social and environmental effects of policy initiatives. A SIA has, for example, been conducted for the EU-Chile Association Agreement which was signed in Autumn 2002. An environmental assessment of the agreement has been part of this SIA.

More information on this instrument is available in the separate section on SIA. Similarly, the section on Corporate Social Responsibility (CSR) focuses on the policies of the European Union in promoting environmental standards by influencing business behaviour.

Links

Doha Declaration explained: Trade and environment, WTO

This WTO site gives more information on the state of discussion on environmental issues.

Trade and environment, DG Trade

The site provides more information on the position of the European Commission concerning trade and environment.