Index

Expert Opinion: Are Environmental Goods Good for the South?

By Amb. Magda Shahin

After over a decade of relentless efforts and difficult negotiations, discussion on the relationship between trade and environment in the WTO seems to have entered a vicious circle, which—if it goes out of control—could very well undermine the “Doha Development Round.” Although the ongoing debate has not brought the key concerns surrounding the relationship much closer to being resolved, it has helped clarify the underlying rationale and purpose of the issues involved.

Before the Doha Ministerial Conference in November 2001, developing countries had never shown interest in giving additional ground to the environment in the trade debate, least of all in a round that is supposed to be, at least by proclamation, a development round. It had seemed clear that the trade and environment debate in the WTO, with its ten item agenda mandated at the Singapore Ministerial in December 1996, was leading nowhere. Had it not been for the maneuvering of the Nordic countries, the trade and environment relationship would have remained a forlorn issue in the WTO. Disregarding altogether the ten items on the agenda of the Committee on Trade and Environment (CTE), the three items in Paragraph 31 of the Doha Ministerial Declaration were carefully negotiated into the “Doha Development Agenda.” The real innovative addition was sub-paragraph 31(iii), which calls for the reduction or elimination of tariffs and non-tariff barriers to environmental goods and services.

The issue was force-jumped into the front seat, and negotiations on the reduction of tariff and non-tariff barriers became a priority. With the inclusion of this topic, WTO Members agreed to venture again into a cycle of endless debate between environmentalists and business interests, who want to see as broad a definition as possible for environmental goods, and “developmental tradists,” who resist enlarging the definition. The basic question that remains unanswered, is: Why should developing countries legalize preferential trade in terms of zero tariffs for environmental goods?

Even if the narrow definition of environmental goods prevails and they are defined according to end-use criteria based on a process and production methods (PPM)-free rationale, the complexities attached to favouring environmental goods as exceptions would tilt the entire market access debate in favour of developed countries. It is worth recalling that the original intention of bringing market access and competitiveness concerns into the interface between trade and environment was to balance an already lopsided debate. With the market access component of the debate now focused on environmental goods and services, to the predominant interest of developed countries, the objective of the former market access discussions (under Item 6 of the Marrakech Agreement agenda for the CTE) have been rendered void and futile.

With the objective of safeguarding the interests of developing countries—which have refused any automatic linkage between trade liberalization and environmental protection— Item 6 was the only item on the CTE agenda stressing the link between trade, environment and development and the inter-relatedness between poverty and environmental degradation. It was intended to promote goods and services of export interest to developing countries, with a view to promoting developing country participation in the trading system and enabling them to protect their environment and improve their capability to implement sustainable development.

Importantly, the concept of environmental goods is relative. What may be defined as an environmental good in one country could be treated very differently in another. Developed country recycling regulations, which discriminate against environmentally friendly and biodegradable products from developing countries, remain a valid example of the subjectivity of the concept. Moreover, using the lists forwarded by European and Asian countries as a basis for defining environmental goods is prone to risks, given that these lists are as biased towards the interests of the sponsoring countries. Developing countries should not be lured into accepting different lists at their face value. With regard to environmental services, why should developing countries concede on issues related to the services negotiations, when developed countries have not yet budged on the movement of natural persons— the so-called Mode 4 supply of services— which constitutes the priority issue for developing countries?

On the whole, Doha Round negotiations seem to be in a state of flux. Environmental goods are not necessarily good for developing countries. A case has not yet been made for why this issue merits priority in a development round. Maybe not coming to a conclusion on this issue would not be a bad thing. At this critical juncture of the negotiations, we should avoid detracting the development round with issues that do not help integrate developing countries in the multilateral trading system.

Ambassador Magda Shahin is Egypt’s Assistant Foreign Minister for International Economic Affairs and earlier served as her country’s Ambassador to Greece and its chief trade negotiator. This essay is written in her personal capacity.