COMMENTARY ON THE WTO MINISTERIAL MEETING

By Doeke Eisma, Chairman, and Pieter van der Gaag, Project Leader Policy Coherence, IUCN National Committee of the Netherlands

The preamble of the WTO agreement puts sustainable development at the heart of the organisation. So how well did the WTO Members do at the Ministerial Conference in Hong Kong? Based upon the poor progress made on environmental issues, one minister suggested that countries for now do not seem ready to add the element of sustainability to their work, the preamble of the WTO agreement notwithstanding. Certainly, increasing the complexity of what is in front of negotiators now might make achieving success in the trade round nearly impossible, especially in the middle of a WTO crisis in which the world's largest blocks seem unable to find common ground, even in high-profile negotiations such as those on agriculture. This might lead one to presume that, for the time being, negotiators consider including sustainable development in their agenda as 'something' for the 'next time'.

However, short-term gains that may result from trade liberalisation may prove devastating to achieving long-term sustainability. For example, the proposal submitted in October 2005 by Canada, Hong Kong China, New Zealand, Thailand and the US to reduce tariffs on forest products argues that such liberalisation will probably increase the value of exports for producer countries, increase the volume of trade and as such increase revenue, resulting in positive social impacts in the short term and a greater ability to invest in proper management. However, these predictions can be juxtaposed with the conclusions of the UN Millennium Ecosystem Assessment, which warns that increased trade in forest products coming from badly managed forests will exacerbate deforestation and biodiversity loss to an extent that the long term effects will likely result in a loss of this economic base. As the Millenium Ecosystem Assessment shows, the problems our ecosystems are facing are urgent and WTO negotiators need to deal with these issues this time.

Why Trade?

Many biodiversity effects can be linked to 'trade'. The increased demand for soy-based fodder for hogs in Europe can be linked to the conversion of Amazon Forests to soy plantations, with devastating impacts on deforestation, desertification, biodiversity and carbon sequestration. The increasing demand for vegetable oils, not only in food products but also soon for bio-energy, can clearly be linked to the conversion of South-East Asian forests to palm-oil plantations. The dumping of milk-powder onto markets impacts -- through the inability of local dairy producers to invest in suburban dairy farms -- on desertification in sub-Saharan countries that is linked to grazing cattle herds.

So what did happen around the environment in Hong Kong?

In the non-agricultural market access negotiations, discussions took place on the side on how to address non-tariff barriers, including standards relating to the environment, but nothing was agreed on. The series of environment-related negotiating issues under Paragraph 31 of the Doha mandate have all been left unresolved. The negotiators simply agreed to continue to work on addressing the relationship between multilateral environment agreements (MEA) and WTO rules, but at least negotiators did not drop this discussion. The same holds true for the negotiations focusing on the relationship between the TRIPS Agreement and the Convention on Biological Diversity. The negotiations on environmental goods and services did not move forward one inch from where they were left prior to the Hong Kong meeting. What this clear lack of progress may signify is a view amongst trade negotiators that the environment is a secondary issue, and that the negotiations had more important issues to tackle first. Regretfully, it shows that there is still little understanding of the direct link between ecosystems and trade policy, and thus the importance of considering and addressing the environment/trade policy linkage.

In this context, environmentalists must play a more active role in researching and clarifying the relationships between trade regimes and ecosystem degradation and biodiversity loss. They need to understand what the industrial goods and agriculture negotiations will mean for natural resource use and ecosystem services in order to be able to better safeguard these resources and services. Environmentalists still lack some of the basic understanding -- a few environmental economists amongst us aside -- what the liberalisation of trade means for quantities of trade flows; how and if producers can re-invest revenues earned from trade into sustainable management of resources, including in environmental technology for those sectors; and whether trade liberalisation will enhance the ability to produce goods more efficiently and to use natural resources sustainably. Environmentalists must do more to link their knowledge about commodity chains and ecological footprints to economic rule-making. Let the lack of priority given to environmental issues in Hong Kong result in more interaction between environmental groups and trade policy makers at home and in Geneva.

Yet tucked away in a small corner of the negotiations something important did happen. In the Negotiating Group on WTO Rules the unsustainable exploitation of fisheries was cause for consensual movement on disciplining fisheries subsidies based on their contribution to overfishing. Thus, environmental protection is no longer only a justified cause for deviating from the rules (as embodied in Article XX of the GATT) but an agreed goal worth pursuing.

We believe this decision is a truly fundamental watershed in WTO thinking. The importance of the idea of using the protection of the natural resource base as a basis for long-term sustainable economic development cannot be overstated. Sustainably managed resources can continue to be distributed and can thereby continue to support the creation of wealth. The negotiators on fisheries subsidies understood this. Now the rest of the negotiators must understand and reflect this in their disciplines.

This understanding also opens up possibilities for the negotiators in the Committee on Trade and Environment as they try to grapple with the relationship between MEAs and their secretariats and the WTO. When natural resource protection as a goal is included in the WTO disciplines, it becomes a must to involve expert institutions, also in dispute settlement. Qualitative judgements, for example on the state of a fishery, should be left to those institutions that understand the biological dynamics of fish populations in their ecosystems. When the WTO is confronted with a need to understand an environmental problem, expert institutions should be their best ally.

The consensus on how to move forward on fisheries shows that environmental protection has something to offer to economic development. Understanding what that offer really is urgently requires more study and more involvement from environmentalists.