Index

The Trade and Environment Policy Formulation Process

Doaa Abdel Motaal

“…it is mainly developed countries that have the financial resources to bring environmental experts to WTO meetings held in Geneva from their capitals. Developing countries seldom do so…”

It is impossible to discuss the trade and environment policy formulation process without enquiring about the nature of the policy relationship involved. Does trade and environmental policy differ from the policy relationship between trade and any other non-commercial consideration? Arguably, there is nothing intrinsically different about the trade and environment relationship that distinguishes it from, let us say, the “trade and health” or “trade and national security” relationships. All relationships involving trade and non-commercial concerns tend to share the same set of challenges in the policy formulation process, with the principal challenge being that of reconciling trade objectives with broader public policy goals.

However, of the many “trade and” relationships, trade and environment tends to capture public and media attention the most, since it is a subject that is not only close to people’s minds, but also to their hearts. The Tuna-Dolphin dispute, settled under the General Agreement on Tariffs and Trade (GATT), and the Shrimp-Turtle dispute, settled under the World Trade Organization (WTO), captivated public attention with images of drowning dolphins and sea turtles— species that can easily stir emotions. To some extent, the trade and environment relationship has now come to symbolize all the “trade and” relationships, pointing to the ever expanding reach of the multilateral trading system. The multilateral trading system today no longer stops at a country’s borders, or at tariffs; it goes beyond those borders to ensure that health, environmental and other types of regulations do not constitute unnecessary obstacles to trade. So how then do countries formulate policies at the complex trade and environment interface?

Actors and Institutions: Policy Formulation at the National Level

All “trade and” issues involve more complex policy formulation processes than do the issues that are mainly commercial in nature. They typically involve a broader set of interests; a broader set of actors; and a broader set of fora within which policy deliberation and formulation take place. At the national level, a multitude of different actors can be involved in the formulation of trade and environmental policies, including governmental bodies, industry, non-governmental organizations (NGOs), various international organizations and, in many developing countries, aid agencies.

Governmental actors can consist of the different agencies responsible for trade and for environmental policy; or, depending on the issue, more specialized institutions dealing with natural resources (such as ministries of fisheries or energy). At the national level, industry is involved in policy formulation mainly in order to advance the “economic point of view” on an issue, and NGOs to advance the economic, developmental or environmental angles. The regional offices of international organizations such as the World Bank, the International Monetary Fund (IMF), the United Nations Environment Programme (UNEP) and the United Nations Development Programme (UNDP) can influence policy formulation by giving policy guidance to governments, or funding targeted studies and projects. Moreover, aid agencies in developing countries can play a particularly influential role in giving policy advice and direction to governments.

Whereas the coordination process at the national level among different actors and stakeholders is often led by trade agencies, some countries have established special interministerial task forces to explore the trade and environment policy interface. These tend to act as more neutral fora for policy deliberation, supposedly giving equal weight to environmental considerations as they do to trade.

On the international stage, the actors depend on the institutions in which trade and environment, or environment and trade, discussions take place. The principal trade institutions are the WTO and the United Nations Conference on Trade and Development (UNCTAD), and the principal environmental institutions are multilateral environmental agreements (MEAs) and UNEP. To a large extent, however, trade and environment discussions at the international level revolve around developments in the WTO.

There are a number of reasons for this. First, while MEAs often negotiate trade measures for environmental purposes within their agreements, there are no institutional spaces within MEAs in which governments may discuss all aspects of the trade and environment relationship, nor is there such a forum within UNEP. The WTO’s Committee on Trade and Environment (CTE)—a forum exclusively reserved for trade and environment discussions among governments—has no parallel in any other international institution.

To explain, whereas discussions may be held in the Convention on Biological Diversity (CBD) on the relationship between the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) and the CBD, other aspects of the trade and environment relationship cannot be discussed in that MEA. Thus, in MEAs, the trade and environment relationship is only addressed in a fragmented way. While this is not a weakness of the MEAs, and could perhaps even be their strength in that they are able to address narrower and better-defined sets of issues, it still means that the WTO offers the only platform at the international level for a more general, cross-cutting debate. Second, because much of the trade and environment discussion at the international level is designed to influence WTO rules (with the environmental community wanting to relax or “green” those rules), and because trade and environment disputes have a tendency to gravitate towards the WTO, the WTO has come to occupy centre stage.

Principal Fora within the WTO

How, then, is trade and environmental policy formulated within that organization? What are the relevant fora within the WTO? When the WTO was established in 1995, the CTE was created as a forum for dialogue on the various linkages between trade and the environment. It was asked to examine the trade and environment relationship in relation to all areas of WTO rules (i.e., issues related to “goods,” to “services” and to “intellectual property”), and advise the WTO General Council on the need for changing WTO rules. It was the very first forum created within the WTO for “making recommendations” on policy formulation in the area of trade and environment.

In terms of its mandate and institutional setup, the CTE was strong in some respects, but weak in others. It was strong in the sense that it reported to one of the highest decisionmaking bodies of the WTO (the General Council is second only to the WTO’s Ministerial Conference), and also because its mandate was to explore the trade and environment relationship in relation to all areas of WTO rules (i.e., issues related to “goods” area, to “services” and to “intellectual property”). However, it was weak in the sense that, unlike certain other committees of the WTO, it could not itself alter any WTO Agreement. Any change of rules can only be proposed by the CTE to the General Council, and it is up to the Council to decide what to do with a proposal. However, since its establishment, the CTE has not recommended any change to the rules of the multilateral trading system.

In addition to the CTE, a number of other WTO bodies discuss issues that are relevant to the trade and environment relationship, such as the Committee on Technical Barriers to Trade (TBT) and the Negotiating Group on Rules, on environmental product requirements and environmental impacts of subsidies. While these other committees do not hold discussions on trade and environment in a general sense, they tackle very specific aspects of the trade and environment relationship, like that of fisheries subsidies.

In 2001, the launch of what some have called the “Doha Development Agenda” (Doha Round) multiplied the number of WTO fora within which trade and environment policy formulation takes place. The CTE in Special Session (CTE-SS) was created to act as a special arm of the regular CTE, and to conduct negotiations on the trade and environment issues agreed to in Doha. Furthermore, various other new negotiating groups were created, some of which are negotiating on issues linked to trade and environment. For instance, the Council for Trade in Services in Special Session is looking at liberalizing trade in environmental services (such as waste disposal services), and the Negotiating Group on Rules (NGR) is looking at improving WTO disciplines on fisheries subsidies. The negotiating groups that were created in the Doha Round are, of course, more powerful fora than the regular bodies of the WTO in the sense that they have been mandated to either examine the potential for changing WTO rules in certain areas, or for making certain changes right away.

The CTE-SS, for one, is more powerful than the regular CTE in that it can make changes to the rules of the WTO if it so chooses. One condition is that the CTE-SS not change the overall balance of rights and obligations under WTO agreements. However, it is also true that the CTE’s influence is broader in that it has instructions under the Doha mandate to examine the environmental aspects of all Doha Round negotiations. Therefore, it can make enquiries about the developments taking place in the different negotiating groups, as well as launch discussions on how environmental considerations can best be integrated. However, it remains to be seen if the CTE will indeed succeed in injecting environmental considerations into the negotiating process.

To influence the outcome of discussions in the WTO, various other actors/fora conduct trade and environment work of their own. UNCTAD helps developing countries in formulating their national positions, and in reinforcing the “developmental” aspects of WTO work. UNEP attempts to develop coordinated positions among the MEAs on WTO issues, so as to give better environmental guidance to the WTO. Industry continuously lobbies WTO Members, through industry associations and chambers of commerce, mainly to ensure that environmental requirements do not become obstacles to trade. And, finally, NGOs and civil society exercise pressure on the WTO to ensure that consumer, environmental and developmental concerns, as well as many other interests are considered in policy formulation. They also contribute amicus curiae briefs (“friends of the court” briefs) to influence the course of the WTO dispute settlement process.

Principal Actors within the WTO and within Environmental Fora

For the most part, governmental trade or foreign affairs representatives are the ones who lead trade and environment discussions in the WTO. However, in the CTE and the CTE-SS, some countries are occasionally represented by delegations that not only consist of trade officials, but also of environmental ones. Occasionally, specialists in technical fields, such as in the areas of forestry or fisheries, are included. However, it is mainly developed countries that have the financial resources to bring environmental experts to WTO meetings held in Geneva from their capitals. Developing countries seldom do so, and, in the past, have generally only done so when UNEP has financed their environmental representatives to attend UNEP meetings organized back-to-back with the CTE. When CTE meetings are attended by environmental officials, discussions can have a greater environmental focus. However, there is no continuity in their participation. In other more technical WTO committees, it is more common for countries, both developed and developing, to bring capital-based experts to meetings, such as in the TBT Committee.

In many areas of WTO work, country groupings— like the Group of Twenty (G20) or the Cairns Group on agriculture—can play an important role in policy coordination and formulation at the regional and international levels. However, in the environment area, no such groupings exist. The Asia Pacific Economic Cooperation (APEC) forum countries, the Association of Southeast Asian Nations (ASEAN) countries and the African countries have sometimes spoken in one voice for their regions in the CTE, but this has been rare, reflecting little policy coordination at the regional level, or a limited convergence of interests. In the CTE-SS, regional groupings have spoken in unison on even fewer occasions.

Within MEAs, the main players tend to be governmental environment officials and NGOs. Most countries tend to send their environmental officials to MEAs, including officials working in highly specialized fields, such as fisheries. In MEAs, NGOs also play an important role in the policy formulation process where they are allowed to attend meetings as observers. Their rights as observers sometimes extend to the right to intervene in meetings. Moreover, numerous NGOs organize side events at MEA meetings, to make their positions known. In the WTO, only intergovernmental organizations can be granted observer status. Thus, UNEP and UNCTAD have observer status in the CTE. Increasingly, trade representatives, mainly from developed countries, are starting to attend MEA meetings. This has been especially the case in the MEAs that have, or that risk having, a substantial impact on trade. For instance, in the negotiations of the Biosafety Protocol, some countries included environmental as well as trade experts in their delegations.

Interests and Fault Lines

Many assumptions are made about policy formulation at the international level in the trade and environment field. The first is that all policies are “formulated” and are the result of active governmental deliberation. The second, related assumption is that policies at the international level are determined by decisions at the national level, and not the reverse. The third is that inconsistent positions taken by countries in different international fora must be the result of insufficient national coordination. A country taking one position in a trade forum, and another in an environmental forum, must be a country whose trade and environment officials are not properly coordinating. While these assumptions are sometimes true, sometimes they are not. WTO deliberations show that the realities of the policy formulation process are complex and simple assumptions seldom explain the course that decisions take.

In the WTO, different countries have shown different levels of engagement in trade and environment negotiations. While numerous proposals have been forwarded by developed countries in the newly launched negotiations, there have been very few proposals from developing countries to the CTE-SS. Asian developing countries, followed by the Latin American, are the most active. However, not a single African proposal had been submitted to the CTE-SS (as of May 2007). There are various factors that may explain the more limited engagement of developing countries in trade and environment negotiations. While some disengagement is the result of deliberate decisions that governments take, some is also the result of countries underestimating the gains that may be achieved from more active participation.

Deliberate disengagement can be motivated by a variety of factors. First, trade and environment, as an area, may not be of equal importance to all countries. Countries with limited representation in Geneva (including many developing and least developed countries) may prefer to channel the little negotiating resources that they have towards market access, rather than environmental, negotiations. Second, for some of the smaller players in the WTO, in particular those that are opposed to environment negotiations, it may be more efficient to allow the bigger players that share their position to argue their case. These countries may choose to only substantially engage at crunch time, when key decisions are taken. Both of these factors would reflect very deliberate disengagement, and active policy or strategy formulation.

However, not all disengagement is deliberate. Some negotiators may underestimate the importance of trade and environment negotiations, only to suffer the consequences later (for instance, in terms of dispute settlement). For countries that fall into this category, policies are not “formulated,” nor are international decisions based on national interests. Instead, it is the decisions at the international level that tend to fill in the domestic policy gap.

There is a widespread view among certain governmental actors, scholars and activists that potential inconsistencies between WTO rules and the trade obligations in MEAs are the result of insufficient national coordination. While there is certainly insufficient coordination in many countries, it is sometimes the case that governments deliberately argue different positions in different fora. For instance, many have wondered why it is that African countries who were principal demandeurs for strict trade measures in several MEAs, like the ban on the transboundary movement of hazardous waste between developed and developing countries in the Basel Convention, have not given their blessing in the WTO to the trade measures contained in MEAs. The explanation could lie in the fact that these countries see the WTO and MEAs as playing fundamentally different roles. While they want to regulate trade under various MEAs, they also want a strong WTO that is capable of protecting them against any disguised restrictions on trade (green protectionism). Thus, some countries may simply try to obtain the most they can out of different fora—even if this means certain inconsistencies— since different regimes play different roles. Their intention would be to see these different fora balance each other out on the international stage.

Trends and Future Directions

The focus of the current WTO negotiations on trade and environment has been on the ways in which policy is formulated. In the negotiations, WTO Members are not only looking at the relationship between WTO and MEA obligations, but are also exploring mechanisms for greater coordination and information flow between the WTO and MEA secretariats. Whereas WTO Members have serious differences in these negotiations, one issue on which they all agree is the need for greater national coordination between trade and environment officials. Many Members have argued that coherence between these two policy areas would be key to averting potential WTO-MEA disputes.

The trend towards placing such a strong emphasis on policy formulation indicates just how central the policy formulation process is to the trade and environment debate. A political signal by the WTO on the importance of such coordination could lead to greater collaboration among different governmental bodies at the national level and to greater resources being allocated to such collaboration on the international stage. While this would not eliminate all policy inconsistency—some of which may be deliberate—it would eliminate the inconsistency that results from insufficient coordination. As with all “trade and” issues, the multiplicity of interests, actors and fora, makes it crucial to have effective and inclusive processes of policy formulation.