Trade, Environment and Development UNCTAD Module 5 Multilateral Environmental Agreements

Trade, Environment and Development

UNCTAD

Module 5

Multilateral Environmental Agreements

http://www.unfccc.de/issues/technology.html

Transboundary and global environmental problems (e.g. climate change, ozone depletion, loss of biodiversity) are of international concern

Developing countries are vulnerable to the effects of such problems, even though they have not contributed significantly to them

Addressing transboundary and global environmental problems requires international cooperation

TrainforTrade: Trade, Environment and Development

Background [1]

Adjustment costs have to be allocated between Parties on the basis of the principle of common but differentiated responsibilities (Principle 7 of the Rio Declaration).

Multilateral environmental agreements (MEAs) are the preferred instrument

Viet Nam can derive important benefits Viet Nam can derive important benefits from participation in MEAsfrom participation in MEAs

Viet Nam participates in all major MEAsViet Nam participates in all major MEAs


Background [2]

There has been considerable debate on the policy instruments used to achieve the objectives of MEAs: The relationship between trade

measures pursuant to MEAs and the provisions of the multilateral trading system

The trade and economic effects of policy instruments used in MEAs


Background [3]

To raise awareness of global environmental issues and multilateral approaches to address these problems

To raise awareness of supportive instruments available under MEAs, such as finance, technology and capacity-building

To promote domestic policy co-ordination To promote the effective participation in

the further development of MEAs and the work of the Conferences of Parties (CoPs)


Objectives of this module

Key MEAs: objectives and policy instuments used

The role of trade measures and supportive measures

The relationship between trade measures pursuant to MEAs and the provisions of the WTO

UNCTAD/CBTF contribution and possible follow up

Issues for discussion


Structure of this presentation

Key MEAs: objectives and policy instruments

TrainforTrade 2000: Trade, Environment and Development

• The Convention on International Trade in Endangered Species of Wildlife and Flora (CITES)

• The Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal

• The Montreal Protocol on Substances that Deplete the Ozone Layer (MP)

• The Convention on Biological Diversity (CBD) and the Cartagena Biosafety Protocol (CP)

• The UN Framework Convention on Climate Change (UNFCC) and its Kyoto Protocol


Selected MEAs

Objectives: Protect wildlife against

over-exploitation Prevent international

trade from threatening species with extinction

http://www.cites.org/index.htmlhttp://www.cites.org/index.html


CITES (1973)

Appendix I includes all species threatened with extinction which are or may be affected by trade Trade is subject to particularly strict

regulation Appendix II includes species that may

become threatened with extinction unless trade is subject to strict regulation Trade is regulated by export permits


CITES trade measures

Appendix III covers species identified by an individual Party as being subject to regulation within its jurisdiction and for which it requests the cooperation of other Parties in the control of trade


CITES trade measures

“Administrative” projects Funding for participation in COPs or other

meetings; Technical assistance (e.g., support in the

development of CITES-related legislation) Training

“Species” projects Funding for scientific research related to a

particular animal or plant species


CITES supportive measures

SStrictly regulates the transboundary movements of hazardous wastes

Parties are obliged to ensure that such wastes are managed and disposed of in an environmentally sound manner

http://www.basel.int


Basel Convention

Article 4.1(a) - Allows Parties to ban imports of hazardous waste

Article 4.1(b) - Prohibits exports to Parties that have banned import of wastes

Article 4.1(c) - prohibits export of wastes without written consent of importing country

Article 4.2(e) - prohibits export of waste believed not to be managed in anenvironmentally sound manner in the importing country


Basel Convention: trade measures

Article 4.5 - prohibits trade with non parties

Exception Article 11 – non-parties can trade in hazardous waste if transboundary movements are subject to appropriate bilateral/multilateral or regional agreement

Provisions in these agreements should not be less environmentally sound than those in the Convention


Basel Convention: trade measures

COP 2: Amendment to the Basel Convention (1995) bans movement of hazardous waste for final disposal and for recovery from “Annex VII countries” (Parties and other States which are members of the OECD, EC, Liechtenstein) Amendment has to be ratified by 62 (¾) Parties; 26 have already done so

COP4: Annexes VIII and IX clarify definition of hazardous waste


The Basel ban

Basel Declaration on Environmentally Sound Management

Move from regulatory system to capacity building

Protocol on Liability and Compensation for Damage resulting from Transboundary Movements of Hazardous Wastes and their Disposal

See next slide


Recent developments

Regime for liability and compensation for damage resulting from transboundary movement of wastes, including incidents occurring because of illegal traffic

At COP 6, Parties agreed to re-evaluate the financial limits to strict liability in this Protocol: this may reduce incentives for waste reduction


Liability Protocol

NNo specific financial mechanism to facilitate technology transfer

RRegional and sub-regional centres for training and technology transfer Focal points for capacity building Funding not gauranteed

LLimited funds for capacity building Parties agreed to provide US$300,000 per

year over a three-year period (2000-2002) to initiate activities for the implementation of the Basel Declaration of 1999


Basel Convention: supportive measures

The Montreal Protocol on Substances that Deplete the Ozone Layer

as adjusted and/or amended in London 1990

Copenhagen 1992Vienna 1995

Montreal 1997Beijing 1999


Montreal Protocol (MP)

Control of trade in ODS with non parties

Control of trade in ODS products with non-parties

Trade among Parties is “indirectly” constraint by ODS production and consumption limits

It was decided at MOP V that it was not feasible to ban or restrict trade in products made with, but not containing controlled substances.


Montreal Protocol (MP)

• Created by London Amendment, Article 10

• Has disbursed nearly US$1 billion to 120 developing countries for institutional strengthening, training, project preparation and implementation of investment projects

• The Fund has the obligation to meet all the agreed incremental costs of developing countries for implementing the control measures

• Indicative list of agreed incremental costs

• Funding support has focused more on phasing out ODS than on supporting production of substitutes


MP: Multilateral Fund

Objectives The conservation of biological

diversity The sustainable use of its

components The fair and equitable sharing of

the benefits arising out of the utilization of genetic resources

http://www.biodiv.org/


Convention on Biological Diversity

CBD

No explicit reference to trade measures

Article 8(j): Protection of knowledge, innovations and practices of indigenous and local communities (“traditional knowledge”, TK)

Article 15: Access and benefit sharing Article 15: Access and benefit sharing (ABS) (ABS) subject to prior informed consent (PIC)


CBD: some key provisions

Financial support (Articles 20 and 21) Transfer of technology (Articles 16

and 19) Capacity building (Articles 12 and 18) Market incentives (Articles 10 and 11)


CBD: supportive measures

Objectives

To ensure an adequate level of protection in the field of safe transfer, handling and use of Living Modified Organisms (LMOs) that may have adverse effects on the conservation and sustainable use of biological diversity, taking into account risks to human health

http://www.biodiv.org/biosafety/http://www.biodiv.org/biosafety/


Cartagena Protocol on Biosafety (2000)

Trade and environment agreements should be mutually supportive

The Protocol does not imply a change in the rights and obligations of a Party under existing international agreements (including the WTO); and

The intent is not to subordinate the Protocol to other international agreements


Biosafety protocol: Preamble

LMOs intended for introduction into the environment, such as seeds and microorganisms

These can mutate, migrate and multiply, and may therefore pose unexpected threats to native species

Subject to AIA (see next slide) LMO-FFPs: LMOs that are intended for

direct use as food or feed, or for processing These include commodities such as genetically

modified corn, soy, wheat, canola and tomatoes Subject to less restrictive procedures


Biosafety protocol: Coverage

Artcicle 7 lays down AIA procedures that must be followed, prior to the first intentional transboundary movement of LMOs for intentional introduction into the environment of the Party of import

The purpose is to ensure that recipient countries have the opportunity to assess the risks that may be associated with the LMO before agreeing to its import

LMO-FFPs and 4 other categories of LMOs are not subject to AIA


Advanced Informed Agreement (AIA)

• Article 8: Exporting party (or exporter) shall notify the competent national authority of the importing prior to the first intentional transboundary movement of an LMO

• Article 10: Decisions taken by the Party of import shall be in accordance with the risk assessment under Article 15

• Article 26: Parties may take into account socio-economic considerations such as the value of biological diversity to its indigenous and local communities in reaching a decision on import of LMOs


Practical application of AIA

• Article 1 (Objective): the objective of the Protocol is to be pursued “in accordance with the precautionary approach contained

in Principle 15 of the Rio Declaration..”


Precautionary approach [1]

• Article 10, paragraph 6: “lack of scientific certainty due to insufficient relevant scientific information and knowledge regarding the extent of the potential adverse effects of a LMO on the conservation and sustainable use of biological diversity in the Party of import, taking also into account risks to human health, shall not prevent that Party from taking a decision, as appropriate, with regard to the import of the LMO in question, in order to avoid or minimize such potential adverse effects”


Precautionary approach [2]

• Can a WTO Member refuse import of LMOs?

• The precautionary principle• Relationship to WTO• Issues to be dealt with in the future

Documentation of LMO-FFP Issue of liability


Key issues

LMOs intended for introduction into the environment

• Subject to AIA Procedure (facilitated through a central clearing house mechanism)

• Responsibilities rest on exporting party: notification and possible burden of proof to show harmless nature of the LMO and to conduct and finance risk assessment


Can imports of LMOs be refused? [1]

LMO-FFPs• Shipments of commodities that contain, or may

contain LMO-EPPs must be identified as such in accompanying documentation

• Such information may be useful to countries enacting domestic labelling schemes

• Details still have to be worked out• Exporters of LMOs fear they have to segregate

LMO and non-LMO commodities or to label all commodities as “may contain LMO-FFPs”

• Miami Group: segregation is not currently feasible


Can imports of LMOs be refused? [2]

Miami-Group (Argentina, Australia, Canada, the United States and Uruguay)

• Exporters of LMOs

• Had opposed inclusion of LMO-FFPs arguing that these do not pose a threat to biodiversity

• Canada and United States contested EU plans to impose mandatory labelling


Positions

Like-Minded Group (most developing countries)

• Need for a strong protocol

• It is impossible to ensure that LMO-FFPs would not be introduced into the environment

• Protocol should take account of human health risks

• Need to protect countries without adequate regulatory or institutional capacity to effectively handle LMO imports


Positions

• The Protocol promotes international co-operation to help developing countries build the human resources and institutional capacity to use biotechnology safely and to regulate it efficiently


Supportive measures

”Framework" for future action, intended to stabilize and reduce the emissions of greenhouse gases, the primary cause of climate change

The UNFCCC does not directly rwgulate or restrict trade

However, actions of countries implementing the UNFCCC could have significant trade implications

http://www.unfccc.de/


UNFCCC

Article 11: Establishes a financial mechanism (which is the GEF) to provide financial resources, including for the transfer of technology


UNFCCC-supportive measures

Sets quantified emission limitation and reduction commitments for industrialized or "Annex I" countries (developed countries and Central and Eastern European countries with economies in transition)

Developing countries are not required to limit their emissions

http://www.unfccc.de/resource/convkp.htmlhttp://www.unfccc.de/resource/convkp.html


Kyoto Protocol

Represent the widest use of market-based instruments of all MEAs

Article 6 Joint Implementation (projects between Annex I countries to help meet a Party’s commitments)

Article 12 Clean Development Mechanism (CDM)

Article 17 Emissions Trading

http://www.unfccc.de/issues/mechanisms.html


Three flexibility mechanisms

Role of trade measures and supportive

measures


To control trade in, and restrict markets for, products that may constitute a health and/or environmental risk or that are unsustainably produced

To prevent free-riding (whereby non-participants enjoy the advantages of the MEA without incurring its costs) and promote wide participation by encouraging governments to join and/or comply with the MEA


Objectives of trade measures

To ensure the effectiveness of an MEA by preventing leakage –the situation where non participants increase their emissions or otherwise unsustainable practices, as a result of the control measures taken by signatories


Objectives of trade measures

Taking into account the common but differentiated responsibilities of States and difficulties that developing countries may encounter in implementing an MEA, several measures have been included in the agreements or developed over the years to assist developing countries

Such measures include transfer of finance and technology, technical assistance and capacity building


Positive or enabling measures

Trade measures and the WTO provisions


• There is broad support for MEAs

• Trade measures play a significant role in some MEAs

• There has been no challenge under the WTO against trade measures taken pursuant to MEAs

• Many WTO Members believe that Article XX of GATT (see Module 2) is sufficient to resolve any problems


Background of the debate [1]

• Many believe national coordination and consultations between the secretariats of WTO and MEAs will be sufficient to avoid conflicts

• Some believe that conflicts are nevertheless not excluded. They point out that the Chile/EU dispute on swordfish almost resulted in a conflict


Background of the debate [2]

• EU complaint in WTO • Chile presented the case to the special

chamber of IFTLOS (International Tribunal of the Law of the Seas in Hamburg, Germany)

• In the light of an amicable arrangement, ITLOS has suspended proceedings (until 1 January 2004)

Gehring, M., Sustainable development angles to the swordfish dispute, Bridges, No. 7, Vol. 5 (September 2001), pp. 13-14)


SwordfishChilean measure prohibiting EU vessels

to enter Chilean ports

Initially discussions focused on:

• Status Quo • Ex-ante approach (“environmental window”)

Amendment of paragraph (b) of Article XX Introduction of newparagraph (k) of Article

20 Authoritative interpretation of Article XX by

the WTO General Council

• Ex-post (or waiver) approach Assumes implicit hierarchy


MEA trade measures and the WTO

Amendment to Article XX + Understanding Understanding on the Relationship

between Trade Measures taken pursuant to MEAs and WTO Rules. Some elements:

Basic principles regarding WTO rules and

MEAs could be developed MEAs not be subordinated to WTO rules Dialogue with MEA Secretariats Considering the development of a Code of

Good Conduct for the use of trade measures in MEAs


Proposal by EU (1)

• New paragraph XX (k), to read: "taken pursuant to specific provisions of an MEA complying with the Understanding on the Relationship between Measures taken Pursuant to MEAs and the WTO rules.”

Amendment to Article XX (b), to read:"necessary to protect human, animal, plant life or health or the environment; and measures taken pursuant to specific provisions of MEAs complying with the provisions of the Understanding on the Relationship between Trade Measures Taken Pursuant to MEAs and WTO rules."


Proposal by EU (2)

Coherence Clause Understanding on "mutual

supportiveness and deference”: WTO Panel would only look at the application of a measure taken pursuant to an MEA, but not question the legitimacy of its objective, or its necessity

Cooperation Mechanism WTO and MEA secretariats


Proposal by Switzerland

Understanding + consultative mechanism

Understanding covering the entire WTO Agreement to accommodate trade measures under MEAs, subject to Procedural Criteria: MEA is open,

includes broad participation, and adequate representation

Substantive Criteria: trade measure is specifically prescribed by MEA, is necessary, effective, proportional, etc


Proposal by New Zealand

Consultation between countries prior to the imposition of a trade measure to achieve the objective of an MEA. First-best policy options should be

pursued, these should be the least trade-distortive options that deal with the source of the problem

Informal Mechanism for Broad Dialogue Dialogue between WTO, MEAs, UNEP,

NGOs and industry should be encouraged


Proposal by New Zealand

Strengthened coordination at the Strengthened coordination at the national level; national level;

Strengthened cooperation between the Strengthened cooperation between the WTO, UNEP and the MEA secretariats WTO, UNEP and the MEA secretariats • The secretariats of several MEAs have The secretariats of several MEAs have

provided briefings in Committee on Trade provided briefings in Committee on Trade and Environment and WTO symposia. and Environment and WTO symposia.

• UNEP has organized workshops bringing UNEP has organized workshops bringing together the secretariats of UNEP-together the secretariats of UNEP-administered conventions, WTO and administered conventions, WTO and UNCTADUNCTAD


Practical proposals to avoid conflicts between MEA trade measures and WTO

The creation of working groups on trade The creation of working groups on trade issues in MEA negotiations or the further issues in MEA negotiations or the further development of such instruments development of such instruments • put in practice during the final negotiations put in practice during the final negotiations

of the Rotterdam Convention on Prior of the Rotterdam Convention on Prior Informed Consent measuresInformed Consent measures

Joint business/NGO expert groups Joint business/NGO expert groups proposed at WTO symposium in July 1998proposed at WTO symposium in July 1998

Enhanced implementation of enabling measures


Practical proposals to avoid conflicts between MEA trade measures and WTO

UNCTAD/CBTF contribution and

possible follow up


Promoting the objectives of the CBD Sustainable use of biodiversity

BIOTRADE: Stimulate trade and investment in biological resources for sustainable development

Harnessing TK for development Building on previous UNCTAD/UNDP

work


Ongoing UNCTAD initiatives [1]

Sustainable management of waste for recovery (e.g. multi-stakeholder panels for

developing coherent national stategies for sustainable material maangement)

Clean Development Mechanism Attract investment and promote

sustainable development


Ongoing UNCTAD initiatives [2]

• Support to a multi-stakeholder panel in the Philippines for design and implementation of a comprehensive national strategy on sustainable (i.e. environmentally sound, economically viable and socially acceptable) management and recovery of used lead-acid batteries

• Through CBTF, support to some 10 countries in Central America and the Caribbean to build capacity of sound management of used vehicle batteries, including through regional

co-operation


Basel Convention UNCTAD capacity-building projects

• In co-operation with the Thailand Environment Institute and the Basel Convention Asia-Pacific Centre for Hazardous Waste Management Training and Technology Transfer, support to a panel of government and private sector experts from rapidly industrializing countries that discusses practicable avenues for implementing the concept of environmentally sound management of waste destined for recovery operations


Basel Convention UNCTAD capacity-building projects

CDM project implemented by UNDP, UNCTAD and UNIDO under the overall co-ordination of UNFCCC Secretariat

UNCTAD component focuses on upstream activities relating to CDM investments, more specifically promotion of CDM projects facilitation of project approval

Future activities envisaged


Kyoto Protocol (CDM)

Issues for discussion


• Are trade measures likely to be a feature of future MEAs?

• What criteria could be taken into account in considering the use of trade measures and/or other policy instruments to achieve the

objectives of an MEA? • What should be done to ensure that MEA

negotiators consider a whole range of policy options, in particular supportive measures?

• Are conflicts between trade measures pursuant to MEAs and the provisions of the multiateral trading system likely to arise and how can they be prevented?


General issues

How has Viet Nam benefitted from supportive measures available under MEAs?

Should national co-ordination between MEA and trade negotiators be strengthened?

What needs to be done, at national level, to derive maximum benefits from MEAs

reduce adjustment costs reflect Vietnam’s priorities in the further

development/negotiation of MEA provisions


Experience of Viet Nam

• How can CBTF be most useful to Viet Nam National policy dialogues? Research? Training? Emphasizing development issues in

international debates? Other activities?

• What programmes should CBTF seek to develop to assist developing countries in participating effectively in international debates?


What can CBTF do for Viet Nam?U

NEP

-UN

CTA

D C

BTF

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Trade, Environment and Development UNCTAD Module 5 Multilateral Environmental Agreements