“China objects to the EU’s decision to impose the scheme on non-EU airlines, and has expressed its concerns over the scheme through various channels,” the 6 February statement by the Civil Aviation Administration of China said. The statement also argues that the inclusion of aviation under the bloc’s Emissions Trading Scheme (ETS) is in breach of UN Framework Convention on Climate Change (UNFCC) and International Civil Aviation Organization (ICAO) principles.

The European Court of Justice, Europe’s top court, ruled in December that the inclusion of aviation under the ETS is fully compatible with international law. Shortly thereafter China’s four biggest airlines said would not comply (see Bridges Weekly, 11 January 2012). This latest move by Beijing, however, raises the level of discourse to the capitals.

According to Xinhua, the country’s official news agency, airlines cannot join the ETS or use it as a justification for raising ticket prices without government approval.

Trade tensions

Some officials have suggested that the aviation policy could result in a “trade war,” with Chinese state media calling it a “trade barrier in the name of environmental protection.” Monday’s statement alluded to the trade dimension, suggesting that it was considering retaliating in some way.

“China will consider additional measures to protect the interests of our citizens and our companies,” the statement said.

The European Commission has said that airlines that do not comply with the ETS will be fined and could be banned from EU airports. But Isaac Valero-Ladrón, the commission’s spokesman for climate action, told reporters in January that they are “confident” that companies will comply.

Markus Ederer, the EU’s ambassador to China told reporters today that Brussels hopes the issue can be resolved through negotiations or, ultimately, in court.

ETS opponents want “global” solution

China - along with fellow ETS opponents, Russia, India, the US, and others - say Europe’s unilateral approach will be less effective than a global solution. The Montreal-based ICAO, the UN body responsible for civil aviation, has said that it plans to form a global emissions system.

The China Air Transport Association - which includes the country’s biggest state-owned airlines Air China, China Southern, and China Eastern - has been pressuring Beijing to oppose the levy. The association says the scheme could cost Chinese airlines as much as US$127 million in 2012.

“I believe all sides will negotiate again and find a solution,” said Chai Haibo, the group’s vice president. “I can’t imagine that the worst case, such as the EU grounding Chinese flights, could happen.”

China has the world’s fasted growing aviation industry, with many direct connections with European cities.

The US House of Representatives in October 2011 passed a similar bill that would make it illegal for US airlines to comply with the scheme (see Bridges Trade BioRes, 31 October 2011). However, the bill must still receive approval from senate and the president to become law.

ICTSD Reporting; “China bars airlines from EU tax plan,” FINANCIAL TIMES, 6 February 2012; “China Bans Airlines From Joining EU Carbon Levies System,” BLOOMBERG, 6 February 2012; “China Bans Airlines From Joining EU Emissions Scheme,” REUTERS, 6 February 2012.

Beijing’s export restrictions could not be justified as resource conservation or environmental protection measures, or as a way to manage critical supply shortages, the dispute panel found in July (see Bridges Trade BioRes, 11 July 2011).

While a victory for the US, EU, and Mexico - which  jointly initiated the case in 2009 - had largely been expected, the ruling provides some clarifications that could have landmark value in future cases.

Beijing has established a system of export duties and quotas for a number of raw materials, including coke, zinc, and bauxite, as well as some that are only available in China. The resulting high export prices and limited supply have impacted foreign steel, aluminium, and chemical industries, and their downstream clients.

The EU estimates Chinese export prices are between 50 and 100 percent higher than domestic prices, affecting four percent of the EU’s industrial activity and approximately 500,000 jobs.

“This final ruling is a great success in our efforts to ensure fair access to the much needed raw materials for EU industry,” EU Trade Commissioner Karel de Gucht said in a statement. “It sends a clear signal that such measures cannot be used as a protectionist tool to boost domestic industry at the expense of foreign competition,” he added.

US Trade Representative Ron Kirk similarly welcomed the ruling as a “tremendous victory.”

“Today’s decision ensures that core manufacturing industries in this country can get the material they need to produce and compete on a level playing field,” he said.

Resource depletion is not critical; no justification

While the complainants portrayed the restrictions as protectionist measures, China had maintained that they were necessary to conserve the finite resources and to ensure domestic supply, as some of the resources face depletion in the near future. The Appellate Body confirmed the panel ruling when rejecting these justifications.

In times where resource-rich developing countries are increasingly eager to maintain their resources for domestic production, the EU, US, and other WTO members had anxiously sought clarification from the global trade arbiter on the issue.

In evaluating this concern, the WTO’s highest court, for the first time ever, addressed WTO rules on export restrictions taken with the aim of managing critical shortages of essential products.

Article XI 2(a) of the WTO’s General Agreement on Tariffs and Trade (GATT) stipulates that the general prohibition of quantitative restrictions, including bans and quotas, shall not apply where they are taken temporarily to prevent or relieve a critical shortage of foodstuff or other essential products.

This provision’s relationship with another section of the GATT, Article XX - which establishes a number of justifications for otherwise illegal measures, on the basis of greater public policy objectives, such as public health or resource conservation - was particularly controversial, as China argued that the foreseeable depletion of finite resources was indeed a critical shortage.

Unlike Article XX(g) on resource conservation measures, Article XI 2(a) does not require that external measures be linked with restrictions on domestic production and consumption.

During the proceedings, China had argued that the Article XI 2(a) exception should also apply to long-term preventive measures. The Appellate Body disagreed, however, deeming that Article XI 2(a) only “applies in the interim, to provide relief in extraordinary conditions in order to bridge a passing need.”

It further noted that “if a measure were imposed to address a limited reserve of an exhaustible natural resource, such measure would be imposed until the point when the resource is fully depleted.” This scenario would make it impossible for an export restriction to relieve or prevent a shortage, the judges explained.

The finding that general resource conservation efforts do not permit export restrictions through Article XI 2(a) is likely to shape future global trading patterns in essential raw materials. This is particularly true for trade in the highly precious rare earths materials - another subject that has lately generated heated debate between China and its trading partners.

De Gucht has already called upon China “to bring its overall export regime - including for rare earths - in line with WTO rules.”

Article XX no fall-back option

Another matter before the Appellate Body was the applicability of Article XX to claims based on paragraph 11.3 of China’s accession protocol, which obliges China to eliminate all its export duties. The dispute panel had denied the article’s applicability, a ruling which the Appellate Body now confirmed.

The Appellate Body ruled that, since Article XX was not specifically addressed in the paragraph in question, there was no basis for the article to apply.

“Had there been a common intention to provide access to Article XX, language to that effect would have been included in paragraph 11.3 or elsewhere in China’s accession protocol,” the judges noted.

The issue of whether Article XX can be used as a justification for claims brought under agreements other than GATT has long been a subject of debate among trade observers.

Many have argued in favour of using Article XX as a general “fall-back option” in order to resolve questions at the intersection of environment and trade on those grounds, rather than in a fragmented way under individual WTO law provisions. This is an issue of particular relevance to recently acceded countries that have agreed to “WTO+” commitments in their accession protocols.

While the Appellate Body was careful in limiting its analysis to the dispute in question, rather than generally ruling on the applicability of Article XX, the ruling is an important indication for future cases. This is particularly true for the ongoing dispute over the Canadian province of Ontario’s feed-in tariff for renewable energy and its consistency with the WTO subsidy agreement (see Bridges Trade BioRes, 23 January 2012).

For acceding countries, the ruling means that they will have to carefully ensure that Article XX is referenced in all those provisions that they want covered by the article’s justifications for measures taken in the interest of the environment, resource conservation, human health, or public morality - a monumental task.

The alternative would be to incorporate Article XX as an umbrella clause in the accession protocols - an issue that could be very difficult to negotiate.

A balanced approach to the issue is necessary, Beijing said in a statement following the ruling.

“China takes the view that the WTO rules, at the time of liberalising trade, allow a member to take necessary means to realise its policy objectives, such as protection of the exhaustible resources and the environment,” the statement reads. “A solution should be found by balancing different policy objectives.”

The panel and Appellate Body reports will go before the Dispute Settlement Body for formal adoption within thirty days. China will then have to bring its measures into compliance within a reasonable period of time.

More information

Please note that ICTSD, the publisher of BioRes, along with WTI Advisors will be holding an event to discuss the Raw Material case. The event will take place on 8 February at the WTO in Geneva. Click here for more information.

To access the key WTO documents related to the case, see DS394, 395, 398.

ICTSD Reporting.

The two co-chairs of the High-level Panel on Global Sustainability (GSP), Finnish President Tarja Halonen and South Africa’s Jacob Zuma, presented the report - entitled “Resilient People, Resilient Planet: A Future Worth Choosing” - to UN Secretary-General Ban Ki-moon at a meeting of the African Union in Addis Ababa.

The report arrived 25 years after the release of the Bruntland Report, which coined the concept of sustainable development. The new report highlights the interconnected web tying together the core elements of sustainable development.

“Today we see with increasing clarity that economic growth, environmental protection, and social equity are one and the same agenda: the sustainable development agenda,” the report reads. “We cannot make lasting progress in one without progress on all.”

The report focuses on a range of issues, such as modalities for including social and environmental issues into economies; ways of measuring progress beyond gross domestic product; developing sustainable development indicators, as well as sustainable development goals; and strengthening the role of science in the political process. The report contains 56 specific recommendations, including the need for a periodic sustainable development outlook report.

A new set of SDGs

The sustainable development goals, or SDGs, that were included in the report echo similar discussions taking place in the lead-up to Rio+20. The deadline for implementing the current Millennium Development Goals is approaching in 2015, and the report notes that the world now faces a wider set of sustainable development challenges.

Therefore, the authors support “a set of key universal sustainable development goals [that] could help to galvanize action, drawing on the experience of the Millennium Development Goals and building on their successful aspects.” These should be defined in a way that complements the Millennium Development Goals while allowing for a post-2015 successor framework, they added.

In receiving the report, Secretary-General Ban Ki-moon noted several recommendations for further action on his part, including task forces to develop indicators to measure progress towards sustainable development and to define new Sustainable Development Goals for the post-2015 period. He stressed that sustainable development lies at the core of his second term in office.

Reactions

A number of non-governmental organisations active in the field of sustainable development, such as WWF and Oxfam, welcomed the report, while saying that it did not call for enough immediate and concrete action.

Greenpeace agreed with the report that “it’s time to end the perversity of taxpayers paying for fossil fuels which destroy our future and to admit that ‘tinkering at the edges will not do the job’ of achieving a sustainable future for all.” However, Greenpeace said that it would have preferred immediate targets, rather than SDGs with targets stretching out to 2030 in terms of their implementation.

On the other side, the Times of India reports that government officials there had taken a more cautious approach to some of the GSP recommendations, specifically with regards to Sustainable Development Goals. In their view, agreeing on a set of universal SDGs would go against the principle of common but differentiated responsibilities, eliminating the ‘firewall’ between obligations on developing and developed countries - a statement that some observers say is contrary to common interpretation of last December’s outcomes at Durban’s UN climate conference.

Initial discussions on Rio+20 Outcome Document

Meanwhile, diplomats and interested stakeholders met in New York late last week for initial discussions on the Outcome Document for Rio+20. The zero draft of the Outcome Document was released on 10 January (see Bridges Trade BioRes, 23 January 2012).

Among the topics receiving strong support among delegates at the meeting were the SDGs. However, with different actors viewing the Goals in a myriad of ways, some observers say the road ahead towards concrete and workable definitions remains long.

For example, in their intervention, the African group said the SDG’s negotiation must not lead to the MDGs being left aside. The group also called for higher ambition overall in the zero draft, and stressed the importance of sustainable land management and responding to desertification as an African issue. The group also noted the continent’s particular vulnerability to climate change.

The EU said they strongly believe that countries at Rio+20 should agree to accelerate and broaden the worldwide transition towards a green economy.

The G-77 group of developing countries emphasised the need to fulfil obligations and goals undertaken at Rio twenty years ago, as well as other major conferences on sustainable development. The group also underscored the need to secure new and additional financing, as well as technology transfer.
India, in its statement, noted regarding SDGs that these should be understood as voluntary and aspirational, should not distract from the MDGs, and should respect the principles of common but differentiated responsibilities.

In an informal meeting convened by Colombia’s delegation, as a co-proponent with Guatemala, broad support was voiced for the initiative of establishing SDGs, whether at Rio or in a process initiated then. Civil society and various government representatives took the floor to endorse SDGs as a visionary idea that could speed up efforts towards sustainable development.

Road to Rio

A new round of “informal-informal” negotiations on the zero draft is expected on 19-23 March, and the next inter-sessional meeting of the Preparatory Committee for Rio+20 will be held on 25-27 March.

The last Preparatory Committee meeting is scheduled for 13-15 June, only days before Rio+20 itself, which takes place from 20-22 June.

Rio+20 marks the twentieth anniversary of the 1992 United Nations Conference on Environment and Development (UNCED). The conference aims to secure renewed commitment to sustainable development and meet new and emerging challenges.

More information

The UN report Resilient People, Resilient Planet: A future worth choosing can be accessed here.

ICTSD Reporting; “India opposes UN panel’s ‘back door’ for green caps,” THE TIMES OF INDIA, 31 January 2012.

Obama, addressing a joint session of Congress in his 24 January speech, made a pitch for developing an energy strategy that would open more than 75 percent of the country’s potential offshore oil and gas resources, while also developing natural gas and increasing Washington’s backing of renewable energy.

“The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy,” he promised.

Obama also urged Congress that it was time to “double-down” on the clean energy industry.
“I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here.”

While the US recently retook the top position in investment in clean energy - surpassing China - US solar panel producers have struggled to keep up against cheap solar imports from China and sharp decreases in the price of solar panels (see related story, this issue).

The buzz around finding new sources for US energy needs reached new heights last month, after Obama’s 18 January announcement rejecting a plan for the building of a multi-billion dollar pipeline that would have carried crude oil from Canada to the US state of Texas, faulting Republicans for having imposed an “arbitrary” deadline for the project’s approval (see Bridges Trade BioRes, 23 January 2012).

However, in last week’s announcement, Obama insisted that the decision was “not a judgement on the merits of the pipeline,” potentially leaving the door open for the project to move forward at a later date.

The proposed pipeline had been the subject of weeks of debate on its environmental and economic implications. Opponents had called the Keystone XL project environmentally irresponsible, citing concerns over the proposed pipeline’s carbon footprint, among others. Meanwhile, supporters - which include many Republicans - had argued that the project was key to creating US jobs and increasing US energy resources.

Republican presidential candidates respond

Obama’s address drew harsh rebukes from Republican presidential candidates, who hit back at Obama’s economic and energy policies in their responses.

With the US presidential election scheduled for the first Tuesday in November, Republican candidates have spent the past several months jockeying for position in the contests for their party’s nomination.
“I will open up new markets for American goods, and open up our lands so that we can finally develop our energy resources,” former Massachusetts Governor Mitt Romney promised in his pre-rebuttal remarks.

“My administration will support the development of these resources, not find excuses to stand in the way,” the former governor added, pledging both to take advantage of a “revolution in drilling for natural gas” and to approve the Keystone oil pipeline should he win office.

Gingrich, in his response to Obama’s address, also took aim at the White House decision to reject TransCanada Corporation’s proposed pipeline.

“Only recently the president cancelled the Keystone XL Pipeline that would have created countless new jobs and helped America on the way to energy independence because he wanted to appease the far left of his party,” the former House speaker said. “And yet not a single word on the Keystone XL pipeline tonight.”

US “on track” to double exports

In his speech, the US President also highlighted the need for China to do more to level the playing field for US products and reported on the progress to date on the goal he set at the 2010 State of the Union address, in which he promised to double US exports within five years in an effort to create new jobs.

“Two years ago, I set a goal of doubling US exports over five years. With the bipartisan trade agreements I signed into law, we are on track to meet that goal - ahead of schedule,” Obama said, referring to the US’ free trade agreements with Colombia, Panama, and South Korea.

The three trade pacts had been the subject of prolonged political debate between parties for years, having been signed into law by former US President George W. Bush in 2007. The FTAs were ratified by the US Congress and signed into law this past autumn (see Bridges Weekly, 12 October 2011).

ICTSD Reporting; “Russia threatens to ignore WTO commitments in trade with US if Cold War law isn’t scrapped,” ASSOCIATED PRESS, 18 January 2012.

The oral arguments represented one of the final hurdles preceding what some observers are already calling a landmark case. The presiding judge Naomi Buchwald is expected to issue a ruling on whether the case will proceed within two months.

The Organic Seed Growers and Trade Association (OSGATA) initiated litigation on 29 March 2011 against Monsanto in response to the hundreds of cases in which Monsanto has received damages from small farmers on the grounds of seed patent infringement litigation (see Bridges Trade BioRes, 4 April 2011).

Monsanto and its opponents disagree on the frequency of such cases. While some of the complainants claim to know of more than 900 incidents, Monsanto says it has sued only 145 times in the United States. When taken in the context of the 250,000 farmers it services, Monsanto argues that this is a negligible percentage. However, critics say Monsanto’s data does not include cases settled outside of court.

Inadvertent crops

OSGATA v. Monsanto alleges that the crops of many small farmers fall victim to cross-pollination, a process for which they cannot be held responsible. The group claims that many small farmers are forced to stop growing certain crops to avoid genetic contamination and potential patent infringement litigation.

“This case asks whether Monsanto has the right to sue organic farmers for patent infringement if Monsanto’s transgenic seed should land on their property,” says lead prosecutor Dan Ravicher. But Monsanto dismisses the accusation, arguing that it only pursues cases where crops were planted intentionally.

“Monsanto never has and never will sue a farmer if our patented seed or traits are found in his field as a result of inadvertent means,” Thomas Helscher, a Monsanto spokesman said in a statement.

Monsanto has filed a motion to dismiss the trial, and the oral arguments on 31 January were an opportunity for both the plaintiff and defendant to address the motion. Arguments reportedly lasted for over an hour as each party was presented its case.

OSGATA Confident case will move ahead

Following the oral arguments, Daniel Ravicher of the Public Patent Foundation, lead attorney for OSGATA, addressed a demonstration that was being staged outside the courthouse. He expressed confidence that the motion to dismiss would be denied.

“While Monsanto’s attorney attempted to portray the risk organic farmers face…as hypothetical and abstract, we rebutted those arguments with the concrete proof of the harm being suffered by our clients,” Ravicher said. “The judge indicated that she will issue her ruling within two months. We expect she will deny the motion and the case will proceed forward.”

Ravicher indicated that if the motion to dismiss were to be granted, his organisation would appeal.

ICTSD Reporting; “Will farmers receive justice?,” OSGATA, 2 February 2012; “Organic farmers sue Monsanto,” OSGATA, 29 March, 2011; “Organic farmers sue agribusiness giant,” VOICE OF AMERICA, 31 January 2012, “Saved seed and farmer lawsuits,” MONSANTO, 3 February 2012.

The lumber pact, which was set to end in 2013, will now remain in effect for two additional years until October 2015, according to statements from both governments made earlier this week. The extension included no modifications to the agreement, which was originally signed in 2006 (see Bridges Trade BioRes, 14 July 2006).

Softwood lumber is one of Canada’s largest exports to the United States; in the first 11 months of 2011, Canada exported US$2.6 billion of softwood lumber to its southern neighbour, according to Canadian trade ministry data.

Some observers had speculated that Obama’s rejection of the Keystone project could have damaging effects on trade relations between Washington and Ottawa. However, Canadian Minister for International Trade Ed Fast, who signed the two-year SLA extension, rebuffed these concerns, insisting that the trade relationship between the two countries remains strong.

“Obama’s action on the Canada-US pipeline hasn’t soured relations,” he told reporters in Washington on Monday, adding that TransCanada - the company behind the pipeline - will be allowed to file a revised route for the Keystone XL project that avoids an environmentally sensitive area in the US state of Nebraska.

“This extension agreement will bring much-needed stability and predictability to the lumber industry,” he added.

Disagreements between the two countries on the lumber issue date back well over two decades, with legal battles having taken place both within the WTO and the North American Free Trade Agreement (NAFTA) dispute settlement systems.

The heart of the disagreement lies in Washington’s claim that the Canadian lumber industry was the recipient of unfair government support. The US argued that the prices Canada charged to harvest the timber on state-owned land, known as “stumpage fees,” were too low and should be seen as a subsidy. In response, Washington began levying retaliatory tariffs on Canadian lumber imports in 2002.

Under the 2006 agreement, the United States agreed to cease imposing antidumping and countervailing duties on softwood lumber from Canada. In exchange, Ottawa agreed to apply export measures, the majority of which are export changes and volume limitations, to shipments of softwood lumber from Canada to the United States when the price of softwood products falls below a certain market level.

Under the original seven-year deal, the US has returned approximately US $4.5 billion, or roughly 80 percent of the levies collected, to Canada.

While lumber industry representatives welcomed the announcement, they also cautioned that fundamental disagreements still remain about trade practices in the disputed sector.

The US Lumber Coalition, a Washington-based lobby group, warned that it will continue to keep a close eye on Canada, citing concerns regarding Canada’s compliance record under the agreement.

Since the 2006 signing of the deal, the US has taken Canada to the London Court of International Arbitration twice on cases regarding lumber exports, winning both times; a third dispute is currently ongoing, and is expected to conclude this autumn.

“If the US industry continues to find itself having to seek multiple arbitrations to address Canada’s unwillingness to adhere to its commitments, then the US industry has to seriously consider whether it would not be better off exercising its rights under US trade laws,” US Lumber Coalition Chairman Steve Swanson said.

ICTSD Reporting: “Softwood Lumber Agreement with U.S. Extended,” CBC NEWS BRITISH COLUMBIA, 23 January 2012; “Canada-U.S. Softwood Lumber Agreement Extended Until 2015,” BLOOMBERG, 23 January 2012; “U.S. Canada Extend Multibillion-Dollar Softwood Lumber Agreement,” CANADA.COM, 23 January 2012; “US, Canada Extend Lumber Trade Agreement,” THE HILL, 23 January 2012.

“The bottom line is there has been a huge surge at the end of the year, way out of proportion to demand, in an effort to beat the imposition of duties,” said Timothy Brightbill, one of the attorneys representing SolarWorld. That’s why we’re urging Commerce to make what’s called a critical-circumstances finding and to impose the duties 90 days retroactively.”

The Treasury Department’s 1603 program offered cash subsidies of up to thirty percent for renewable energy projects if they commenced construction on projects by 31 December 2011, and could complete construction by 31 December 2016.

SolarWorld has been a vocal critic of China’s solar industry, arguing that Beijing’s subsidies and preferential policies unfairly benefit Chinese manufacturers. These concerns led to a separate complaint being filed by SolarWorld at the US International Trade Commission in 2011. This complaint was upheld on 2 December 2011, resulting in continuing further investigation (see Bridges Trade BioRes, 19 December 2011).

SolarWorld is asking that duties be imposed on any solar import from a Chinese company received after 15 November 2011. The complaint cites a remarkable seventy-five percent spike in imports from Chinese solar giant Suntech Power - the world’s largest photovoltaic panel manufacturer - between October 2011 and November 2011. Similarly, major Chinese manufacturer Trina Solar reportedly saw exports to the US triple in the first half of December 2011 when compared with the first half of November.

ICTSD Reporting; “How tariffs on Chinese solar could backfire and destroy 60,000 US jobs,” BUSINESS INSIDER, 30 January 2012; “Before SolarWorld went to war with Chinese solar, it had a lucrative partnership in China,” BUSINESS INSIDER, 31 January 2012; “SolarWorld seeking retroactive duties after China imports surge,” BLOOMBERG BUSINESSWEEK, 25 January, 2012.

Coming up in the next two weeks (6-20 February)

1-10 February, New York, US. 50TH SESSION OF THE COMMISSION FOR SOCIAL DEVELOPMENT (CSocD). The fiftieth session of the Commission for Social Development (CSocD) will be held at the United Nations North Lawn Building (NLB) in New York. The overarching theme of this year’s session will be poverty eradication. The Commission’s main mandate is to advise the Economic and Social Council (ECOSOC) and Governments on social policy issues and on the social perspective of development. More information on the commission can be found of the CSocD website.

8 February, Geneva, Switzerland. TALKING DISPUTES VOL. 4: THE CHINA-RAW MATERIALS APPEAL. This event, jointly hosted by ICTSD and WTI will introduce the recent WTO appellate decision on Chinese export restrictions applied to raw materials (DS cases 394, 395, 398). The Appellate Body confirmed that China violated general WTO law and its Accession Protocol by restricting the exportation of nine raw materials. Experts will introduce key aspects and potential implications of the case, setting the stage for a targeted discussion. More information and an agenda can be found here.

8-9 February, Geneva, Switzerland. WORKSHOP ON THE UN-REDD SOCIAL AND ENVIRONMENTAL PRINCIPLES AND CRITERIA (SEPC). This event, organised by the UN-REDD Programme, is designed as a forum to present and discuss the latest version of the UN-REDD SEPC. This latest version incorporates feedback which was received during the last public consultation period which ended on 20 January. More information can be found at the UN-REDD website.

9-10 February, London, UK. ILLEGAL LOGGING UPDATE AND STAKEHOLDER CONSULTATION NUMBER 19. This event, organised by Chatham House, will provide an update on efforts from around the world to improve forest governance and reduce illegal logging. Topics to be considered include EU timber regulation, use of technology to enable traceability, management of deforestation drivers, forest finance and REDD+, as well as updates on the situation in Asia, with an emphasis on India. Presenters will include representatives of government, the private sector, academia and civil society. More information on the logging series can be found here.

10 February, Geneva, Switzerland. DISCUSSION ON THE FREE, PRIOR, AND INFORMED CONSENT (FPIC) GUIDELINES. FPIC guidelines were developed through a consultative process with indigenous peoples and civil society representatives between June 2010 and January 2011. This discussion will provide a forum to examine comments received on the proposed guidelines and a chance to clarify any outstanding key issues before finalizing the Guidelines. More information can be found here.

14-16 February. New York, US. BUSINESS PERSPECTIVE ON SUSTAINABLE GROWTH: PREPARING FOR RIO+20. Convened by KPMG International, in cooperation with the UN Global Compact, the World Business Council for Sustainable Development (WBCSD) and the UN Environment Programme (UNEP), this global summit aims to facilitate business solutions to sustainability challenges. It also seeks to craft a forward-looking agenda to focus on global green growth. Its outcomes will be shared at the UN Conference on Sustainable Development (UNCSD, or Rio+20). More information can be found here.

18-22 February, Nairobi, Kenya.27TH SESSION OF UNEP GOVERNING COUNCIL / GLOBAL MINISTERIAL ENVIRONMENT FORUM. The 27th session of the Governing Council/Global Ministerial Environment Forum (GC 27/GMEF) of the UN Environment Programme (UNEP) is scheduled to convene from 18-22 February 2013, in Nairobi, Kenya. In pursuance of General Assembly resolution 53/242 (Report of the Secretary-General on environment and human settlements) of 28 July 1999, the Governing Council constitutes the annual ministerial-level global environmental forum in which participants gather to review important and emerging policy issues in the field of the environment. More information can be found on the UNEP webpage.

Other Upcoming Events

14-16 March, Vancouver, Canada. TWELFTH ANNUAL GLOBE CONFERENCE 2012. Hosted by the GLOBE Foundation in collaboration with the United Nations Environment Programme Finance Initiative (UNEP FI), this event aims to provide platforms for thinking, dialogue, and action by the worldwide financial services and investment community in preparation for the United Nations Conference on Sustainable Development (UNCSD Rio +20). Conference session topics will include developing sustainability initiatives through social media, efficient water use for corporations, and more. For more information about GLOBE 2012, visit the event website.

26-29 March. London, UK. INTERNATIOANL PLANET UNDER PRESSURE. This international science conference will focus on solutions to the global sustainability challenge. The conference will discuss solutions at all scales to move societies on to a sustainable pathway. It will draw on the final report of the UN Secretary-General’s High-level Panel on Global Sustainability (GSP) and will seek to provide scientific leadership towards the 2012 UN Conference on Sustainable Development (UNCSD, or Rio+20). More information can be found here.

18-20 April. Gussing, Austria. SUSTAINABLE BIOMASS FOR ELECTRICITY (SB4E) CONFERENCE. This conference, organised by UN-Energy in cooperation with the Global Bioenergy Partnership (GBEP) and other partners, will consider the role of biomass technologies in decarbonising the global energy system. The SB4E Conference will provide an opportunity for governments, international organisations and private sector to share knowledge, lessons, best practices and experiences. More information on the conference can be found here.

30 April-5 May. Montreal, Canada. SIXTEENTH MEETING OF THE SUBSIDIARY BODY ON SCIENTIFIC, TECHNICAL AND TECHNOLOGICAL ADVICE. CBD SBSTTA 16 will be held in Montreal, Canada, from 30 April to 5 May 2012 and will discuss advice on REDD+ biodiversity safeguards, and indicators to assess the impacts of REDD+ on biodiversity and on indigenous and local communities. Relevant SBSTTA documents on REDD+ safeguards are now online for peer review here.

INTELLECTUAL PROPERTY TOOLS FOR PRODUCTS BASED ON BIOCULTURAL HERITAGE: A LEGAL REVIEW OF GEOGRAPHICAL INDICATIONS, TRADEMARKS AND PROTECTION FROM UNFAIR COMPETITION. By Graham Dutfield, Published by the IIED (November 2011). This review examines specific types of intellectual property law that could be of use to small producers and indigenous communities. Geographical indications and trademarks in particular can be used in communities to promote biocultural heritage and support sustainable development. The review explores steps necessary to create conditions conducive to the adoption of these laws as well as historical successes. The full review can be found here.

THE RIGHT TO DECIDE: THE IMPORTANCE OF RESPECTING FREE, PRIOR, AND INFORMED CONSENT. Published by Amazon Watch (February 2011). This briefing paper focuses on the roles and responsibilities of companies, investors and finance institutions to identify, prevent and address the adverse human rights impacts of company operations. It identifies the rights of indigenous peoples that are potentially affected by extractive industry and infrastructure projects and explores the ethical, legal and financial reasons for respecting these rights. This paper highlights the importance of a company operating only where it has the free, prior and informed consent of any indigenous peoples potentially affected by their operations. It identifies some of the key challenges involved in implementing a Free, Prior and Informed Consent (FPIC) policy and makes recommendations for companies and shareholders who engage in business activities or investments in the Amazon. The full brief can be found here.

FARMS AND FUNDS: INVESTMENT FUNDS IN THE GLOBAL LAND RUSH. By Abbi Buxton, Mark Campanale, and Lorenzo Cotula, published by IIED (Jan 2012). Investment funds show a growing interest in farmland and agriculture. They are buying up land and agribusinesses in developing countries with the expectation of high long-term returns linked to rising land prices, growing populations and increasing demand for food. While the media has reported extensively on the involvement of these funds in the global land rush, the mechanics remain little understood by the broader public. What is the interest and what is driving it? Who are the players and what processes do their investment decisions go through? What are the impacts in recipient countries? And what action can be taken to promote investments that genuinely support local people? This paper seeks to answer these questions. The full article can be accessed here.

“Law and order in rare earth exploration and production and environmental protection are taking a turn for the better,” China’s Ministry of Commerce said of the 2012 policy.

Beijing says the new conditions are a reaction to China’s concerns over the environmental impact of its massive rare earths production facilities. But with the materials being essential to advanced manufacturing and necessary components for modern technologies like hybrid car batteries, lasers, wind turbines, and guided missiles, critics contend that Beijing is also interested in keeping global prices high and protecting domestic access.

Countries with advanced industries have been particularly vocal about the export restrictions. The EU, Mexico, and US have already taken similar Chinese restriction measures on raw materials to WTO dispute settlement where China’s claim for an exception on environmental and resource conservation grounds was unsuccessful in front of the panel (see Bridges Weekly, 6 July 2011). As the appellate report in this case (China - Raw Materials) is pending, rare earths importers will soon have some insight into how such environmental measures will fare under WTO law.

Unprecedented price fluctuations in 2011

China supplies over 97 percent of the world’s rare earths, with one company - Baotou Steel Rare Earth Hi-Tech - singlehandedly responsible for more than half of this. China is also the lone source for all of the most precious “heavy” rare earths.

When Beijing in 2010 slashed the export quota of rare earths from 45,490 tonnes to 27,449 tonnes, major manufacturers dependent on the exports voiced concern (see Bridges Trade BioRes, 8 November 2010). In response to the limited quota and other global events, prices rose until summer 2011 when they reached an all-time high.

But since mid-2011 prices have been plummeting due to decreased demand brought on by the lasting economic crisis, slowed industrial production after the Japanese Tsunami, and China’s decision to release rare earths stockpiles. Baotou Steel - which is state owned - even stopped production for one month in order to ease the market (see Bridges Trade BioRes, 31 October 2011).

The impact of the newly-released 2012 quota is expected to be less severe as it provides for increasing quotas throughout 2012. However, according to data reported by the Financial Times, the quota for the first half of 2012 is down 27 percent with almost two-thirds of allocations pending approval because of the new environmental compliance rules. Baotou Steel, for example, is not yet in compliance.

Thus, much depends on the companies’ reactions as exports will shrink if industry fails to meet environmental regulations.

Dominance in rare earths is not a matter of geological coincidence. For example, China is gifted with only 37 percent of the world’s known reserves. China gained its large market share by consistently having the cheapest product at a time when strict environmental regulation over rare earths mining and refinement was driving up costs in other countries. But China has been signalling to the world in recent years that it is willing to make tough decisions to tackle its environmental problems. With rare earth mining and refinement being a toxic, even radioactive, process the move is not completely out of line with its declared ambitions.

The green side of the debate

The new quota has been interpreted by many experts as evidence that China is willing to take steps toward a more sustainable rare earths industry by requiring compliance to get quota. In 2010, the country’s Ministry of Environmental Protection conducted a crackdown on illegal rare earths mining. Last year, the Ministry restricted new rare earths projects to those companies listed as passing an environmental protection check. Now, Beijing says the new measures offer more oversight over environmental degradation by withholding quota allocation for failure to meet recent regulations such as the Standards on Pollutant Discharge of the Rare Earth Industry.

While Beijing insists that their policy is environmentally driven, rare earths importers point to the fact that a tight quota has potential benefits for Chinese business. Lower exports can keep commodity prices high, provide a stable supply for domestic users, and entice foreign manufacturers - along with jobs and investment - to relocate to China for easier access.

Further complicating the issue is the fact that China’s 2012 policy also distinguishes between more accessible light rare earths and the highly coveted heavy ones, giving only about 15 percent of the entire quota to the latter.

Thus, even if China’s quota has a genuine environmental objective in part, importers will likely continue to struggle with Beijing’s 2012 rare earths policy. However, by conditioning quota allocation on environmental compliance, China’s rare earths system already shows higher environmental considerations than what it does for other raw materials. The upcoming Raw Materials appeal will serve to inform whether these measures qualify under what members can and cannot do in managing natural resources even if the decision does not translate into a WTO dispute on rare earths.

ICTSD Reporting; “MOFCOM Answered Questions by Reporters Concerning First Batch of Rare Earth Export Quotas in 2012,” Ministry of Commerce, People’s Republic of China, 30 December 2011; “After China’s Rare Earth Embargo, A New Calculus,” The New York Times, 29 October 2011; “The Battle over Rare Earth Metals, Journal of Energy Security, 12 January 2010; “China Rare Earths Move Unlikely to Buoy Prices,” Financial Times, 29 December 2011.