A Portal on Sustainability

Trade, Market Liberalization and the Environment

04.05.2005 · Research Group on the Global Future

Over the past years environmental interest groups have increasingly attacked developed countries over the perceived "incompatibilities" between trade and environmental policies. But as a comprehensive WTO background report shows, trade and the environment are neither mutually exclusive nor areas that must be in conflict with one another. Not only can trade help optimize the efficiency with which resources are used, a key requirement in achieving sustainable development, but it can also provide higher levels of wealth to support environmental activities. Business councils draw the conclusion that open trade enables the flow of technology, which, in turn, encourages new environmentally beneficial technologies.

As a result of the GATT Uruguay Round of 1994, trade ministers agreed on a Committee on Trade and Environment (CTE) as part of the World Trade Organization WTO. By doing so, they acknowledged that an open, equitable and non-discriminatory multilateral trading system has a key contribution to make to efforts to promote sustainable development and protection of environmental resources.

Environmental trade issues addressed at the WTO include the controversy on ecolabelling, a practice that was discussed extensively at the GATT meeting and brought up questions of discrimination between home-produced goods and imports. Others discuss when and under what conditions a WTO member is allowed legitimately to place its public health and safety or national environmental goals ahead of its general obligation not to raise trade restrictions or to apply discriminatory trade measures. Of course, the focus is primarily on trade aspects and there is no intention that the WTO might become an environmental agency.

At the 2001 Doha Ministerial Conference WTO Members reaffirmed their commitment to health and environmental protection and agreed to embark on a new round of trade negotiations, including negotiations on certain aspects of the linkage between trade and environment. In addition to launching new negotiations, the Doha Ministerial Declaration requested the CTE to act as a forum in which the environmental and developmental aspects of the negotiations can be debated.

The World Wild Fund for Nature (WWF), one of the largest international conservation organizations, warns that major efforts to save the environment are under threat of current WTO provisions. Read WWF’s press release on this topic and see how the organization views the relationship of economic interests and environmental protection.

Originally, APEC (established in 1989) was designed to promote trade liberalization, trade facilitation and technical assistance among the major economic partners in the Asia-Pacific region. The APEC network seeks to enhance communication among APEC working groups, technical committees and member economies to promote sustainable development. The network provides for communication means and training facilities not only in the areas of sustainable forests, sustainable agriculture, and sustainability in the marine environment but also in economical areas such as cleaner production, sustainable cities, and sustainable energy use.

A paper on biodiversity and trade liberalization developed by International Institute for Sustainable Development (IISD) staff presents a framework for assessing the impacts on biodiversity of trade policies such as tariffs, non-tariff barriers and international liberalization agreements. The intended audience is non-economists working on biodiversity policy, who may wish to integrate such macroeconomic considerations in their work. The framework is described, and applied to two case studies: Papua New Guinea and Indonesia.