The United Nations should make the WTO more accountable

The following is the presentation by Martin Khor, Director, Third World Network, on 'Trade, Environment and Sustainable Development' at the Session on 'Future Role of CSD' as part of the CSD Dialogue Sessions with Major Groups. (15 April 1997, Fifth Session of the Commission on Sustainable Development, United Nations).

1. Trade and Environment is a major part of Agenda 21 and its discussions during UNCED and at previous CSD sessions have generated much interest and has had an important impact on the environment and development policy debate. NGOs consider this to be a very important cross-cutting issue.

2. The first point to be made is that the issue should be broadened to incorporate trade and sustainable development (and not only the environment) in line with Agenda 21's aspirations. Therefore, our first proposal is that in the CSD in future, the issue should incorporate trade and environment; trade and development; and the intersection of trade, environment and development.

3. The second point is that given the developments in the world trading system (especially in the WTO) 'trade' no longer means only the international exchange of goods, but also includes intellectual property rights, services and investments. It may in future also include other new issues such as competition policy and government procurement practices, following the decision of the WTO Ministerial Conference in Singapore. Our second proposal is that in line with these developments, the CSD in future should also deal with these other issues under the theme trade, environment and development, in the context of implications for sustainable development.

4. The third point is that the issue has become so important and also so complex, with rapid developments taking place in the world trade system, that the CSD should give it very high priority. Accordingly, our third proposal is that the CSD set up a special Sub-Commission or Panel on Trade and Sustainable Development, which should meet at least every year. Moreover, the issue should be one of the priority cross-cutting issues to be discussed at each annual session of the CSD. The scope of the issues for such a Panel should include trade and environment, trade and development and their interrelation; as well as the issues mentioned in para 3.

5. Our fourth proposal is that the CSD should evolve further to become the appropriate and important venue for policy discussion and recommendation in this complex set of issues because it is the natural 'home' for the intersection between trade, environment and development in the broad context of sustainable development and Agenda 21. It should of course continue to work closely with UNCTAD and UNEP on these issues.

6. Our fifth proposal is that the CSD should also initiate much closer dialogue with the WTO in general and with its Committee on Trade and Environment, and generate a process by which the WTO can be made more transparent and accountable to the larger international framework of cooperation and development. This is critical because the rapid developments in the WTO have such major ramifications for sustainable development and yet there is a lack of information and participation from the public, from many sections of national governments and Parliaments, and from other international institutions. Our endeavours in other areas in environmental protection or in social and economic development may be offset (in fact are being offset) in many aspects by decisions and policies at the WTO.

7. In this context, our sixth proposal is that the CSD secretariat as well as the CSD inter-governmental process and its national focal points generate processes to assess the implications of existing agreements as well as new proposals in the WTO and other trade agreements, from a sustainable development perspective. Such assessments should be inputed into the process of the WTO and other institutions.

8. There are many issues of concern to NGOs within the trade and sustainable development theme. The following are brief summaries of some of them and proposals.

9. On trade liberalisation and the environment, there is on one hand the reality that trade liberalisation is expanding and spreading the existing unsustainable patterns of production and consumption, with adverse environmental effects. We must recognise the need to reform trade patterns as we do the need to change production and consumption patterns since 'business as usual' is not working. On the other hand in the adjustment process, the principle of 'common but differentiated responsibilities' must be adhered to, so that the burden is carried by the strong and rich and not shifted to the weak and poor. The equity principle must be central to all trade reform processes. The CSD's role is to be the guardian and guide that this principle is adhered to in trade.

10. On trade, commodities and financial resources, we note that the continuous decline in the terms of trade of most developing countries is the major cause of their lack of financial resources. An UNCED paper revealed that the tremendous decline in commodity prices vis-a-vis prices of manufactures caused Sub-Sahara Africa to suffer a 28% fall in terms of trade (1980 to 1989), leading to $56 billion income losses in 1986-89 (the loss in 1987-89 being 15-16% of GDP). Unless such catastrophic resource outflows are checked or offset it would be ironical to talk about 'finance for sustainable development', especially in the face of aid decline. The CSD should initiate a new round of commodity agreements, based on supply planning and higher commodity prices to reflect ecological and social values, that would ensure net benefits to commodity-exporting developing countries and as a means to generate financial resources for sustainability.

11. In our analysis, the WTO agreements have on the whole benefited the stronger trading countries much more, and many weaker countries are likely to suffer net losses in many areas. The CSD should facilitate a sustainable development and equity review of the WTO agreements with the aim of providing inputs for the WTO process of reviewing the agreements in the next few years. It should advocate in favour of weaker and poorer countries so that their economic resource base is not further eroded, rendering sustainable development more difficult.

12. In particular, we are concerned that the WTO agriculture agreement has not taken into account the needs and interests of small farmers, especially the non-commercialised farmers in developing countries that form a large section of the population. The CSD should initiate an assessment of the Agriculture Agreement, in particular its impact on the situation of small farmers and in the context of food security and sustainable agriculture.

13. The CSD should take up the issue of intellectual property rights and sustainable development. We are concerned that the 'upgrading' of intellectual property rights regimes under the TRIPs agreement of the WTO is hindering the transfer of technology, making it difficult or impossible (especially for developing countries) to fulfil their environmental obligations. Therefore the CSD should recommend that the TRIPs agreement be amended to enable the effective transfer of environmentally sound technology. Moreover there are many technologies that are environmentally damaging. The CSD should examine how the use and transfer of such technologies can be discouraged by allowing exclusion from patentability of such ecologically damaging technologies.

14. The patenting of life (including crops, medicinal plants, animals, micro-organisms and even human beings and human parts) is opposed by many NGOs of the North and South on grounds of environment, development, equity and ethics. It is a major sustainable development issue, and has become an issue of public controversy and unease due to recent developments in genetic engineering, such as the cloning of animals, the sale of genetically-engineed foods and the safety and ecological effects of genetic engineering. The CSD cannot remain absent in the discussion and should take an overview position on patenting of life in favour of sustainability goals. This should include supporting alternatives to commercial patenting of crops, such as helping farmers and indigenous communities to develop a sui generis system of protecting their community intellectual rights and protect them (and the public) from corporate patenting (or 'biopiracy') of indigenous knowledge in the use of biological materials.

15. The liberalisation of investment regimes and flows has significant implications for sustainable development. The CSD should urgently examine and discuss this phenomenon. Moreover, the critical rapid developments in the formulation of a multilateral agreement on investment (MAI) in the OECD will also have a very major impact and could to a large degree offset or undermine the CSD's sustainable development endeavours. The MAI would grant unprecedented rights of entry, freedom of operations and 'national treatment' to foreign investors, whilst depriving governments (and people) of the right to regulate the entry and operations of foreign companies and investors. The CSD should collect information on the MAI and make an analysis of its implications for both environment and development, and provide the results to the OECD process as well as to all CSD members and related NGOs. The CSD should also closely monitor developments in the WTO on trade and investment. As the custodian of sustainable development and Agenda 21, the CSD cannot ignore or remain aloof from these critical developments in investment regimes.

16. The above are only some of the issues which concern NGOs. In conclusion, the issues of trade, investment, environment and development are key to the interaction between economic globalisation and sustainable development. This is probably the most important set of issues in the entire field of environment and development. Globalisation is the most powerful force driving and determining the global environment as well as national development and environment patterns. The globalisation process is so far unregulated and in fact has thrived on massive deregulation. This is recognised increasingly by a wide spectrum of people as a threat to economic and political stability due to its greatly inequitable effects, its generation of financial volatility, and its adverse social and environmental impacts. The CSD is perhaps the most appropriate international institution to examine this phenomenon and to initiate ideas and actions to deal with it. The CSD-V and the General Assembly Special Session should not pass up the opportunity to do something concrete about this. (TWR No. 81/82, May/June 1997)