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Info Service on WTO and Trade Issues (Feb22/11) Geneva, 9 Feb (D. Ravi Kanth) – The European Union along with several other developed as well as some developing countries on 7 February accelerated their efforts at the WTO on their controversial plurilateral initiative on the Trade and Environmental Sustainability Structured Discussions (TESSD), in an apparent attempt to create new mandates for “weaponizing” the climate change related issues into new trade rules, said people familiar with the development. The EU and the other members of the TESSD initiative held a meeting on 7 February with several stakeholders including the International Chamber of Commerce (ICC), the World Customs Organization (WCO), the World Economic Forum, and the non-governmental organization CUTS among others to make presentations on how to bolster their case in pushing forward this initiative. The exclusion of other global civil society organizations working on climate change related issues such as the Third World Network (TWN) among others, has reinforced the general perception that the TESSD is being advanced by the Ottawa Group of countries, particularly the EU, contrary to the trade and environment mandate as laid out in the Doha Development Agenda (DDA), said people, who asked not to be quoted. At the meeting, Brazil, Australia, and other members of the Cairns Group of farm-exporting countries apparently called for the inclusion of the issue of agricultural subsidies in the dialogue under the pretext of “sustainable agriculture”. However, the EU and the other members rejected the call by these countries during the meeting, people familiar with the discussions said. UK NON-PAPER ON FOREST, AGRICULTURE & COMMODITY TRADE At the meeting, the United Kingdom also highlighted issues concerning the dialogue on the forest, agriculture, and commodity trade (FACT). Earlier, the UK had submitted a non-paper at the meeting of the WTO’s Committee on Trade and Environment (CTE) on 2 February. The non-paper, according to the UK, is aimed at highlighting the work of the FACT dialogue, which was established “through COP26 and is dedicated to considering how forest and agricultural commodity trade and supply chains can support environmental sustainability.” In a restricted unofficial room document (RD/CTE/203), the UK said “it is important to bring this initiative (FACT) to the attention of the Committee on Trade and Environment (CTE) as a helpful foundation for further collaboration and discussions on sustainable supply chains through this committee”. It informed the CTE that “the Dialogue’s goal is to promote sustainable development and trade while protecting forests and other critical ecosystems.” It further argued that “the alignment of environmental policy with trade policy can support economic as well as environmental benefits by creating market certainty, supporting sustainable economic growth, reducing costs for producers and consumers, reducing vulnerability of trade flows to climate change and mitigating the impacts of the land use sector.” Clearly, there appears to be a determined move to bring as many issues as possible to the table under the TESSD, said people, who asked not to be quoted. MEETING WITH STAKEHOLDERS On the meeting with the stakeholders, it appears that both the International Chamber of Commerce (ICC) and the World Customs Organization (WCO) made a strong pitch to bolster and give legitimacy to the TESSD, despite its alleged violation of the WTO’s rules. The presentation of the ICC and the WCO reports on 7 February indicates how the TESSD can be made operational. The ICC, in its presentation of a report titled “the International Trading System and the Circular Economy: Recommendations for Action in the WTO,” and on “International Trade: Options for WTO negotiations” (INF/TE/SSD/RD/3), argues that “support to the WTO Trade and Environmental Sustainability Structured Dialogue (TESSD) in the run-up and after MC12 (the WTO’s 12th ministerial conference)” must be enhanced (1) by forming a Reference Group made up of WTO delegates, business networks, IGOs (Intergovernmental Organizations), and experts; (2) building on ICC’s large international network of companies; and (3) convening a series of events in the run-up to MC12. The ICC proposed a ministerial statement at MC12 on the circular economy in the TESSD based on the options for possible “deliverables” at the ministerial meeting. The options include “as part of the revived plurilateral EGS (environmental goods and services) talks”; “reviving/ extending previous work on re-manufactured goods”; and “identifying common principles and sectoral best practices.” The Brussels-based World Customs Organization, an independent intergovernmental organization, said that it shares “the view that international trade and trade policy can support environmental and climate goals towards achieving the UN’s Sustainable Development Goals.” The WCO argues that “customs administrations have a critical role to play with respect to the control of the trans- boundary movement of environmental goods, by supporting effective implementation of various Multilateral Environmental Agreements (MEAs), whose objectives include, among others, addressing the illicit trade in hazardous waste and ozone-depleting substances, combating the illicit trade in endangered species, and preventing the spread of plant and animal diseases, as well as of invasive alien species.” Expressing support for the plurilateral “Ministerial statement on trade and environmental sustainability, on the need to explore opportunities and approaches for facilitating the legal trade in environmental goods,” it called for “considering not only the regulatory perspective, but also the technical requirements and the specificities of sustainable supply chains.” It provided updates on “the WCO’s Asia-Pacific Plastic Waste Border Management Project”, saying that identifying “environmentally desirable goods and materials at the border is a central aspect in facilitating trade in such goods, and Building Customs Administration capacities to foster compliance while promoting trade facilitation and revenue collection and so on.” In short, the TESSD, which is a plurilateral initiative without any legal status at the WTO, appears to be an attempt to “weaponize” climate change related goals into burdensome and onerous trade-related commitments, which are not part of the Doha mandate, said people familiar with the development. SERIOUS CONSEQUENCES FOR GLOBAL SOUTH The recent policy brief by Carleton University and the Centre for European Studies highlights the seeming inadequacy of the WTO to act as the body for tackling environmental challenges, and emphasizes instead that the role of the WTO should be limited to only trade issues. It said that the non-trade issues should be left to the relevant agencies to handle. For example, on climate change, the optimal solutions should come from the UNFCCC (the UN Framework Convention on Climate Change) – ideally, the regulatory approach of the Paris Climate Agreement would have included some normative rule to allocate responsibility for GHG emissions occurring from imported products. For plastics, the ideal venue for solutions would be the trans-border regimes for waste (for example, the Basel Convention), it said. The UN Conference on Trade and Development (UNCTAD)’s Trade and Development Report (TDR) last year conveyed the same message in that there is a need to de-link international trading rules from the climate goals. The TDR argued that while climate adaptation remains a priority for the developing countries, greenhouse gas emissions in traded goods and services account for only 27 per cent of global carbon emissions. This points to a rather limited scope for international trade policy to contribute to a global green growth agenda, with trade policy only serving as a complementary tool for attaining environmentally sustainable growth, the TDR said. It pointed out that international trading rules have a much more limited role to play, arguing that they should be designed in a way that developing countries have the policy space to design the required climate adaptation policies without fearing punitive action. Incentive-based approaches, such as optional preference schemes that provide ring-fenced climate financing additional to ODA (official development assistance) or preferential market access in exchange for progress towards nationally determined contributions (NDCs), could accelerate climate action without recurring to punitive measures with anti-developmental effects, the TDR said. As a step towards such an arrangement, the international community could support initiatives to transform rules governing intellectual property rights, such as through a WTO Ministerial Declaration on TRIPS and Climate Change, with a view to expanding TRIPS flexibilities for developing countries in relation to climate-related goods and services. This could provide a basis for innovative mechanisms for promoting access to patent-protected critical green technologies. Other initiatives that could support this agenda include the open-sourcing of key green technologies as global public goods, said the TDR. Both the TDR and the policy brief by Carleton University and the Centre for European Studies conveyed a strong message that the “WTO should not be perceived as an institution capable of solving important non-trade problems. Indeed, the question of whether the WTO is capable of solving trade problems remains to be answered.” In a nutshell, while the WTO is failing to deliver on the mandated Doha work program on trade and environment, the EU and its allies are bringing new non-trade issues into the WTO that could ultimately impose huge costs on the developing countries, according to several people who spoke to the SUNS
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