TL: UNCED AND FREE TRADE [presented at PrepCom IV] SO: Greenpeace International (GP) DT: March 3, 1992 Keywords: greenpeace factsheets gp trade unced economy un conferences / Prepared for the Fourth Session of the Preparatory Committee for the United Nations Conference on Environment and Development 2 March - 3 April 1992 New York, USA Greenpeace International (GP) UNCED AND FREE TRADE UNCED's professed goal is to reorient global thinking, actions and institutions towards environmental sustainability. However, by not seriously addressing the enormous impacts of trade policies on environment and development, the UNCED process risks becoming both marginal and irrelevant. Greenpeace believes that one of the main reasons behind the reluctance even to consider the fundamental economic, technological and political changes necessary to achieve socially equitable and ecologically sound development is the concern that such change may violate existing or proposed trade regimes. Restructuring of international trade relations is at present being carried out through the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The Uruguay Round talks complement the emerging trade liberalization arrangements of regional trading blocs dominated by the European Community and the United States. These free trade regimes complete what the World Bank and IMF, with their policy of "structural adjustment," have begun: facilitating the free flow of goods, investments and services across national boundaries. To date, these global and regional trade initiatives have failed to address environmental and development concerns as central. Instead, they have promoted increased subordination to market forces and transnational corporations at the expense of local sovereignty, democracy and the biological and cultural diversity necessary for ecologically sound and socially equitable development. International trade can have positive and negative effects; Greenpeace is not against trade per se. Greenpeace's concern is the lack of attention to the social and environmental consequences of "free" trade, and the fact that certain trade rules unnecessarily impede national efforts to protect health and the environment. It is argued that "freer" trade is all that is needed to increase economic growth and so liberate resources for environmental protection and development. In the past, however, unregulated trade-based growth has led to the overexploitation of natural resources in an effort to counteract low commodity prices or repay debt; the transfer of obsolete and dirty industry to developing countries; the destruction of native and local communities; and the persistent impoverishment of increasing numbers of people in both North and South. While the vast majority of the planet's inhabitants pay the costs of free trade, transnational corporations benefit disproportionately because they can play people and countries off against each other, forcing down wages and obtaining "lowest common denominator" social and environmental regulations. Resource Use, Domestic Regulations and Sovereignty Provisions in current trade agreements make it more difficult for nations to control their own rates of resource extraction by limiting their ability to impose export restrictions. For example, several countries' bans on exports of raw timber to capture more value added at home and thus conserve forest stocks have been challenged under GATT; under the US-Canada Free Trade Agreement energy exports must be allowed, irrespective of the circumstances. A US proposal in the Uruguay Round would remove a nation's ability to limit food exports, even if needed at home. These rules diminish countries' abilities to regulate private exporters' behaviour - even those with serious consequences for resource use and conservation. Furthermore, current GATT negotiations include proposals for harmonization of national laws. With regard to pesticide residue and food safety rules, for example, an international standard would be set by a "neutral" scientific body, the Codex Alimentarius. Codex standards are far more lax than strict local or national legislation in many countries, and under the proposed rules such legislation would be invalid if it exceeded the international standards. Standards would be largely dictated by agricultural transnationals and any further, stricter rules would be virtually impossible to obtain, since countries would have to come to a unanimous decision. Trade, the Precautionary Principle and Environmental Regulation The precautionary principle, which recognizes the need for environmental regulation to proceed in the face of inevitable scientific uncertainty, has been considered a general principle of law for possible inclusion in the Earth Charter. An integral part of the precautionary principle is that the burden of proof should not be on one concerned with the protection of the environment, but rather on the prospective polluter, giving environment and human health the benefit of the doubt. Yet current trade rules reverse this principle and put an impossible burden of proof on legitimate environmental protection measures. Under free trade regimes, environmental, health and safety measures are automatically suspect as non-tariff barriers impeding trade, or as protectionist measures favouring domestic industry. Although in some rare cases environmental regulations may indeed function as disguised protectionist measures, current trade rules on non-tariff barriers view national environmental regulation as an impediment to trade. For example, under the US-Canada Agreement, regulations to reduce emissions at lead, zinc and copper smelters, to recycle newspaper and to support reforestation have been challenged by government and industry as trade barriers. In Europe, bottle recycling and limits on hazardous waste imports have been or are now subject to challenge. Current and proposed trade agreement provisions, and the exceptions to these rules, do not distinguish between narrow protectionism and legitimate protection. Although Article XX of GATT, for example, might exempt health and conservation measures from trade rules, it has been interpreted so narrowly that health and environmental regulations must meet impossibly strict standards. Proponents of a regulation must prove there are no less restrictive alternatives, that their objectives are more important than any negative trade effects, and that the regulation applies only in their territory. Regional trade agreements employ similar tests. No health or safety measure has ever been fully upheld under these standards. The fundamental problem with Article XX is that it is framed as an exception to the general rules of the agreement, not an affirmative principle. Environmental provisions are considered invalid to begin with, and must prove they fit into one of the exceptions. This is what violates the precautionary principle and must be turned on its head. Similarly, trade rules on import restrictions limit the use of tariffs or quantitative restrictions on products made using hazardous or unsustainable processes. The refusal to recognize any differentiation between goods on the basis of their productive process precludes international incentives to clean production. Trade policy must allow for appropriate incentive structures to promote clean production, use and disposal of goods in all countries. Moreover, these trade rules conflict with several multilateral environmental protection or conservation treaties, including CITES and the Montreal Protocol on Substances that Deplete the Ozone Layer. These treaties which differentiate among countries for trade purposes, include measures taken to protect the environment outside the parties' territory. They also differentiate partially on the basis of production processes. Democracy and Participation Despite the rhetoric - including that of UNCED debates - concerning transparency, accountability and citizen participation in decision making, the public is excluded from any participation in the trade-rules process. Negotiations and dispute-resolution mechanisms remain shielded from public scrutiny and dominated by private interests. Furthermore, current global trade negotiations have centralized power in the hands of a few northern countries; thus "northern" issues such as intellectual property protection have received privileged attention. Under both GATT and regional agreements, panels for dispute resolution, with broad policy-making powers, are drawn from a narrow pool of experts in trade alone. Proposals by the GATT Secretariat would give these secret panels even greater power. And despite widespread outcry about the anti-democratic nature of trade regimes as well as their social and ecological impacts, pending proposals to transform GATT into a more far-reaching Multilateral Trade Organization to date address neither problem. Transforming Trade Relations Although many proposals have recently been put forward to make environmental sustainability part of current trade regimes, few address the central issues. For example, the agenda of GATT's recently-reactivated working group on environmental measures looks only at how environmental regulation affects trade, with no consideration of the impact of trade regimes and agreements on the environment. Similarly, environmental add-ons to GATT which leave its basic powers and functions intact, or the parallel environmental agreements with which social and ecological concerns have been removed from discussions of regional trade agreements, amount to little more than "greenwashing" efforts. Greenpeace believes that no ecologically sound future for our planet is possible unless fundamental changes take place in the negotiation and implementation process of trade rules. It should be UNCED's job to challenge the premises and effects of free trade; otherwise, it will fail to address the issues of environment and development contained in its name. Agenda 21 and other outcomes of UNCED must clearly state that international trade is not in itself an objective, that trade institutions must be accountable, that trade must be subordinated to concern for the environment and to authentic, people-centred, socially equitable development. Among the fundamental changes that must take place are: þ Commodity production, export and use, including market access and the terms of trade, must be re-examined in light of the need for global equity as well as socially and ecologically sound production processes in both North and South; þ Communities and nations must be able to conserve their own resources through export restrictions aimed at conservation; þ Harmonization proposals must be reformulated to eliminate regulatory ceilings, and to serve as the minimum acceptable standard (or floors); þ There should be a broad range of representation on international regulatory bodies like Codex Alimentarius; þ The burden of proof should be on the party claiming an environmental regulation is an illegitimate trade barrier. Without evidence of protectionist intent, regulations of a general character should be presumed valid and not subject to challenge; þ Import restrictions should be allowed to protect the domestic environment, as part of multilateral efforts to protect the global environment, or to force producers elsewhere to internalise their own costs. Specifically, bans on waste imports or those of other hazardous substances must be allowed. However, care should be taken that such measures do not impose or perpetuate a (especially North-South) double standard, targetting one country's practices while exempting those of the imposing country. Instead, trade rules should discourage resource exploitation and production process harmful to health and the environment through product-based distinctions applied to all producers; þ Provisions on trade in multilateral environmental protection and conservation treaties must prevail over other trade law; þ Because trade agreements have profound effects on the environment, they should be subject to prior environmental assessment studies that are open to public input and assessment, and which parties to the negotiations would be expected to take fully into account; þ Trade disputes involving environment and development issues should be decided in a transparent, globally-representative, publicly accountable forum that includes NGO participation, where ecological sustainability and social equity, not narrow commercial interests, are the first priority.