Shaheen Rafi Khan and Shahrukh Rafi Khan
shaheen@sdpi.org
This article addresses trade environment links within a broader context of sustainable development. The substantive argument is that linking trade with the environment serves a purely Northern agenda and for it to have resonance in the South, it is important that the environment be linked with poverty and economic efficiency and gender equality.
Three issues are articulated from a Southern perspective:
Four perceptions dominate the discussions concerning trade-environment linkages in South/South East Asia . First, trade-environment linkages formally recognized at the Doha ministerial meeting of the WTO are the reality we have to live and work with. Second, the environment tends to be viewed exclusively as a northern agenda. For the South, the environment cannot be divorced from its broader sustainable development context, which subsumes both intra-generational, as well as inter-generational justice. Third, the global South is amorphous. Negotiating priorities and approaches should, therefore, reflect regional perspectives, interests and differences. Fourth, the South should accept and deal with the reality of multinational corporations and, in general, the reality of the market.
The momentum of WTO negotiations has stalled post the Cancun ministerial. Bolstered by China 's joining their ranks, the increasing assertiveness of the South ground the Northern juggernaut to a halt. The Seattle ministerial had already demonstrated that the South had woken up after the Uruguay Round (UR), during which most Southern governments were caught napping, and realized that trade rules, as established in the UR , and the Northern agenda setting post-UR were not consistent with their sustainable development agendas.
As a consequence of this deadlock, the US continued to push its alternative track trade policy- that is to engage in bilateral and regional trade agreements. The European Union's negotiations with regional groups like the Mercusor suggest that it too might decide to aggressively pursue an alternative track. In bilateral and even regional agreements, Southern countries or groupings are more likely to get overwhelmed. Thus, the survival of multilateralism is clearly in the Southern interest.
However, while current EU and US trade policies may be cause for some concern, an element of posturing is also built into its recent moves. The WTO continues to be of great importance to both the EU and the US , since much of what was agreed to in the UR that is in their interest, such as the implementation of Trade Related Intellectual Property Rights (TRIPS), needs the agency of the WTO and its dispute settlement body. Thus, the US met resistance in the negotiations for the FTAA (Free Trade Association of the Americas ) as it did at Cancun , given that the G-20 was represented there. This was followed by a flurry of US activity in early 2004 including sending letters to all the WTO country capitals and the US Trade Representative making a tour of many Southern nations perceived to be influential in trade negotiations. Quite clearly the message was that the Doha Round needed to be put back on track. The EU has made similar statements followed by concessions at the recently concluded talks at Geneva . Thus, multilateralism in trade negotiations suits both the North and the South. In our view there are likely to be setbacks, but, given this convergence of interests, multilateralism, eventually, will prevail.
While multilateralism remains on track, both the North and the South have to take additional steps to ensure it does not get derailed. The encouraging message is that while both poles will continue to defend their respective economic, social and environmental interests, there exist common grounds where, potentially, these interests converge. An overused but appropriate term is win-win. The challenge is to identify them and craft the right approaches for mutual gain.
Martin Khor of the Third World Network notes that the WTO and its predecessor organization, GATT, has contributed to the global trade system through the provision of a framework of rules within which member countries conduct trade and other commercial relations among themselves. This has contributed to a measure of stability and predictability as contrasted to an alternative scenario in which arrangements are dominated by unilateral policies and bilateral arrangements.
It was in this spirit that the 2001 ministerial meeting of the WTO in Doha (2001) formally recognized the trade-environment linkage and brought it within the ambit of a rules-based framework. Doha fundamentally changed the rules of the game on trade and environment. The issue is no longer whether trade and environment are linked. This is now a given. The challenge is how best to address environmental problems within a rules-based multilateral trading system - a system which ensures that environmental regulations and restrictions stop short of becoming non-tariff barriers which limit market access.
The formal articulation of these links has subsumed arguments by the environmental and trade community questioning the rationale for such links. Similarly, the South can no longer advert to the stance that trade-related environmental measures are protectionist, anti-development, or that existing GATT/WTO regulations already address environmental concerns. Consumer pressure, expressed through the market, provides an additional lever for the Northern position.
The challenge for the South in this changed scenario is to craft a Southern agenda which can counterbalance, as well as benefit from asymmetries related to affluence, bargaining power, science, technology and institutional capacity. Fortunately, there exists considerable leeway for negotiation. The Doha mandate on trade and environment was left purposely vague because the issue is new to multilateral trade negotiations and its many implications and manifestations have not yet been fully explored. For this reason the mandate provides an opportunity for all parties to shape the agenda on future trade and environment issues.
Clearly, the South needs to persist with its stance that the environment cannot be divorced from its broader context of sustainable development. The reasons for this are three-fold:
First, the South is concerned justifiably, and it is supported in this by Northern NGOs, that linking trade and environment in a rules-based regime, while ignoring broader equity and poverty concerns in the South, would weaken the scope for negotiations. Thus, it makes little sense to talk of reducing or preempting non-tariff barriers when tariffs (for instance, on agricultural products) continue to remain high and development assistance continues to decline.
Second, poverty and the environment are linked inextricably. These links are evident across the areas falling within the WTO negotiating agenda. For instance, compliance with environmental standards has implications for distribution. Specifically, small and medium enterprises (SMEs) have limited coping capacity and risk becoming marginalized as environmental standards multiply. However, within this broad category, there are dynamic sectors and evidence from research by Khalid Nadvi and Sajid Kazmi points to their remarkable capacity to respond to limited institutional and technical support. Similarly, biodiversity concerns, whether under TRIPS or related to market access - as in the shrimp turtle case cannot be separated from their livelihood implications. Nor can agricultural subsidies targeted at environmentally friendly practices.
Third, and illustrating the win-win premise, environmental compliance can lead to both environmental and economic benefits for the South. This has particular relevance for market access issues, where compliance is driven by Northern environmental concerns as articulated in environmental standards, whether of a regulatory or voluntary (market driven) nature. Economic benefits ensue from in-plant measures such as modernization, input and waste recycling as well as energy efficiency. However, separate research undertaken by the author/s points to built-in advantages for large firms (financial and information based) which position them favorably towards realizing such benefits, SMEs need special incentives (subsidies, technical support).
The point is that the North needs to address trade-environmental linkages within the holistic framework of sustainable development to ensure more equitable treatment for the South. In particular, poverty-environment linkages in the South create asymmetries both in terms of impacts, as well as realization of economic benefits. There is a strong case for capacity building of poor and disempowered groups, who stand to lose within the framework of the formal environmental negotiations. They need to be adequately represented by the South in the negotiations (a challenge given the prevailing socio-political dynamics) and supported by the North through financial and technical assistance.
To sum up, one can pose the following question to understand the distinction between the interfaces of trade and the environment, and trade and sustainable development. What is it that sustainable development incorporates that the environment does not? The answer lies in exploring what the environmental movement has contributed to an improvement in the conception of social justice i.e. the focus on inter-generational justice.
However, in the exclusive focus on inter-generational justice, it left out intra-generational justice that sustainable development reintroduced. To attain sustainable development, or more specifically to eradicate poverty, poor countries need resources. Trade must serve this end via the agency of measures within the WTO, such as Special and Differential Treatment (SDT) and market access, and also by ensuring that trade is not immiserizing.
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