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Home , Emissions trading, Environmental economics, Environmental technology, Kalpavriksh, Lisbon Principles

Table of Contents

Editorial ...... Ricardo Meléndez-Ortiz ...... 2

Letter from the Chair ...... Taghi Farvar ...... 3 Section I: , and Environment: Crafting the link The of globalisation and — perspectives for progress ... Kevin Gallagher ...... 5-8

Macroeconomic Policies and the Environment ...... Alejandro Nadal ...... 9-13 Inter-linkages between trade, , poverty and biodiversity: perspectives and concerns of the least developed countries ...... Atiq Rahman ...... 14-21 Environment at Cancun: issues in the current trade round ...... Ricardo Meléndez-Ortiz ...... 22-27

Native seeds: humankind patrimony essential for the cultural and ecological integrity of peasant agriculture ...... Miguel Altieri and Clara Nicholls ...... 28-33 Agro-: rescuing organic agriculture from a specialized industrial model of production and distribution ...... Miguel Altieri and Clara Nicholls ...... 34-41 Greening trade in the Americas ...... Carolyn Deere ...... 42-50 How a positive and attitude towards eco-labelling could help unlocking the debate on PPMs – and be a contribution to biodiversity protection ...... Nicola Borregaard ...... 51-54 Reflecting sustainable development in standard-setting and implementation: towards a balanced and differentiated approach ...... By Mahesh Sugathan ...... 54-57 Getting to green: overcoming obstacles to liberalizing environmental and services Nicola Borregaard, Annie Dufey & under the WTO ...... Kevin Gallagher ...... 57-63 Subverting subsidies: could the WTO help alleviate the global crisis? ...... Hugo Cameron ...... 63-69 Section II: Environment and Trade Regimes: Relations and Linkages CITES 30th anniversary: is there still a future for the world’s wild animals and ?...... Willem Wijnstekers ...... 69-71

CITES: the next 30 years and the road ahead ...... Juan Carlos Vasquez ...... 71-76 Applying socio-economic considerations in domestic bio-safety frameworks: the international legal context ...... Matthias Buck ...... 76-82 Trade and investment implications of the ...... Lucas Assunção & Beatriz Garcia ...... 83-86

International processes on genetic and traditional knowledge: options and David Vivas-Eugui, Manuel Ruiz & negotiation alternatives ...... Maria Fernanda Espinosa ...... 86-94 Section III: Regional and National Focus Environmental Services Trade, GATS and Human Development: Asian Experiences ...... Sitanon Jesdapipat ...... 95-101

China’s challenge for trade and environment as a WTO member ...... Wanhua Yang ...... 102-107 Charles Benbrook and Heike Genetically modified soy in Argentina - challenges ahead ...... Baumüller ...... 108-110 Globalisation’s Hidden Tag: The of Invasive Alien Species ...... Kevin P. Gallagher ...... 111-113

Trade and unsustainable growth: the myth of aquaculture in Chile ...... Rodrigo Pizarro ...... 113-115 Working with smallholders towards achieving sustainable development: Foundation for the participatory and sustainable development of small farmers (PBA Foundation)...... Santiago Perry...... 116-119 Flavouring - the pepper industry in Sarawak ...... Niels Fold and Marianne Jacobsen .... 120-125 Section IV: Trade and IUCN Developing a strategic approach for IUCN’s engagement in trade ...... Martha Chouchena-Rojas ...... 126-129

Letters to the Editor ...... 130-132

Network News ...... 133-136

Events at Cancun and beyond ...... 137-138

The CEESP Steering Committee ...... 139-140 LETTER FROM THE CHAIR—Why mince our words? M Taghi Farvar

Sustainable development is about nothing short of the universal eradication of the scourge of poverty and a “Sustainable development” is about nothing short complete end to the shameful extinction crisis. of overcoming the twin crisis of poverty and biodiver- showed that only 1% per year of the number of hun- sity loss. The universal eradication of the scourge of gry people was supposedly being reduced. At this poverty and the complete stopping of the shameless rate, it would take a hundred years to wipe out extinction crisis are the heart hunger affecting the present hungry! But we know Why is it that when so many of the matter. These are that hungry people don’t live long anyway… the ultimate goals against Why is it that when so many Heads of State get heads of state get together which we must all gauge our together, they prove themselves utterly incapable of progress. they prove themselves totally agreeing on the real solutions to the problems of incapable of reaching agree- The conservation commu- which they are in charge? Are these not the same nity has tried to enrich itself leaders who are capable of mobilising some of the ment on the real solutions to with the opportunities best capacities in their countries—and thousands of the problems for which they offered by the major global millions of dollars—for armaments and war? And the forums. The presence of matter is not only ingenuity or . Some fair are responsible? IUCN in Johannesburg last “rules of the ” and the willingness to get them September at the centre of respected may be even more important than direct the World Summit on Sustainable Development pro- outside inputs and aid. But such fair rules of the vided an opportunity for conservationists to partici- game are openly in contrast with the “free pate in the debate on the central issue of our times: lie,” and it is a very uphill battle even to get them dis- “Will the world manage to save the Earth and the cussed, let alone agreed upon. diversity of its inhabitants?” From the African conti- What can we conclude? As Ricardo Melendez sums nent, the world asked its political leaders whether up in his guest editorial in this issue, civil society thirty years since the Stockholm Conference of 1972 must not be content with raising the issues for the and a multitude of global forums later, the commit- governments to examine, but needs to play its own ments towards sustainable development have actually active role in enunciating and communicating the resulted in any real progress towards both the eradi- links between trade and sustainable development. cation of the scourge of poverty and stopping the loss Chief among civil society actors and yet too often of biodiversity. While the final Declaration of the powerless are Johannesburg Summit contained some elements of hope, on the whole the fanfare was a tolling of the local communities, including indigenous peoples. It is bells for the inability of governments to come to time communities and their terms with either of these issues. The odds against supporting institutions realised Empowering civil society, success are more than great. that while pursuing thepath of influencing policy to solve the especially local communi- The inability of governments to take decisive action fundamental problems facing on the most crucial crises of the times showed itself ties, is an essential paral- humanity, they cannot count not only in Johannesburg, but in June of 2002 in the on governmental and intergov- lel way, including in find- World Summit: five years later. The World Food ernmental mechanisms alone. Conference of 1974 had set a target of eliminating ing alternative, pro-poor Empowering civil society, espe- all of hunger within 10 years. When world leaders cially local communities, is an trade and conservation got together 22 years later in 1996, they realised not essential parallel way, includ- much had been achieved, and the number of hungry mechanisms. ing in finding alternative, pro- in the world had increased to 800 million people. poor trade and conservation mechanisms. One would Rather than seeking ways of intensifying efforts to hope that this could be one of the main results of the solve the problem, they decided to cut back on civil society meetings in Cancun. Possibly, the prom- expectations and set the target of eliminating half of ises of sustainable development could still be main- the hunger (400 million people) in twice the time, tained, despite all the odds. namely two decades. When they got together 6 years later to assess progress, government statistics Taghi Farvar, Chair, CEESP

2 Policy Matters 11, September 2003 The Cancun Ministerial—the debate is not about abstract rule-making or commercial gains The Editor

In addition to the WTO Ministerial, the Global Biodiversity Forum—Cancun, the High Level Roundtable on Trade and Environment in Cozumel, Mexico and the Fifth World Parks Congress—Benefits overnments at the Fourth WTO Ministerial G Beyond Boundaries in Durban, South Africa, all set to Conference in Doha in November 2001 reaffirmed take place in early September 2003, are important their commitment to the objectives of sustainable opportunities for the conservation community. We development. Eighteen months on we are still waiting need to lever Johannesburg World Summit for to see this commitment translated into concrete out- Sustainable Development outcomes and discussions comes of the trade negotiations. And the expectations around the Convention on Biological Diversity towards are high and rising. As I write this note, development building an and environment becoming the most uttered intangible buzz word regime that prioritises public policy objectives in the talks and around them and even though issues over the mercantilist approach prevalent in the con- related to trade and environment are an integral part struction of the current global architecture. In order to of the Doha round negotiations and will feature during achieve this, we need to move away from a reactive discussions at the Fifth WTO Ministerial Conference in agenda to a proactive course. Cancun in September, they are unlikely to top the This issue of Policy Matters presents knowledge that agenda. should help to formulate this agenda not only for the Inserting sustainable development policies and con- Cancun Ministerial but also for the years to come. The cerns into trade policy-making is not only a priority contributors to this issue are primarily drawn from the and responsibility of governments and negotiators. Working Group on Environment, Trade and Investment Civil society, including the conservation community, (GETI) of IUCN’s Commission on Environmental, has a key role in enunciating the links between trade Economic and Social Policy (CEESP). and sustainable development and conveying these With no illusion that we would cover such a multi- and other concerns to relevant actors. Such efforts farious theme in an exhaustive manner, the commen- are crucial and opportune not only for negotiations at taries in this issue have been chosen in order to the WTO, but also for the many other—and proliferat- reflect its complexity and—borrowing semantically ing—regional and bilateral trade negotiation processes from Jacobsen’s title—to provide a flavour of the intri- currently going on. cate debate. It is not by chance that this issue focus- In order to ensure that issues related to trade and es primarily on systemic aspects of international gov- equity, including on the use of biological resources ernance. Nations seem to have discovered contracts and on effects on their diversity, don’t drown in the as the preferred device to assemble the puzzle of their backwater in Cancun amidst pressing commercial interdependence and they currently find themselves , the conservation community needs to step intensively engaged in negotiations leading to binding up efforts to articulate its own environment and devel- rules. In such a mode, public policy aspirations, opment concerns and ensure their incorporation in the embracing the values and hopes of people, are in this trade agenda. We need to stress that this debate is way traded on a platform of rules on which the bene- not about abstract rule-making at the international fits and costs are not evident and the quid-pro-quos level, but above all about livelihoods in developing are not always of comparable . countries, the sustainable of natural In Section I of this issue, on Eighteen months after resources and ultimately eradicating hunger and crafting the link between trade, poverty. There is an urgent need to balance the pro- environment and biodiversity, the governments in motion of intensive natural use, driven by and aimed at making sense of this Doha reaffirmed their trade liberalisation and its continued focus on market all, Gallagher and Nadal explore access as the engine for , with sup- some of the challenges posed to commitment to sus- portive action for the environment and for the conser- economics by the precepts of sus- tainable development vation and sustainable use of these resources both in tainable development and what we developed and developing countries. The Cancun are doing there; Rahman presents we are still waiting to Ministerial provides a timely opportunity to raise these an outlook from a largely populated see this translated into issues in the context of the Doha mandate and vulnerable camp—the least devel- beyond in an effort to ensure that trade liberalisation oped countries; Meléndez-Ortiz concrete outcomes of works for, rather than against sustainable develop- runs very succinctly over develop- ment. the trade negotiations.

Policy Matters 11, September 2003 3 This debate is… about liveli- hoods in developing countries, the of ments on the trade and environment. Deere makes the case for inserting environment linkage at the environmental considerations in the emerging Western natural resources and ulti- mid-term of this Doha Hemispheric order under negotiation in the context of mately eradicating hunger and Round; Altieri and the area of the Americas. Jesdapipat Nicholls look at native looks at the experience of China, Pakistan and poverty. seeds—the object of much Thailand with liberalization of services, from a sustain- international trade interest able human development perspective, and concludes and biopiracy—and argue its importance for peasant with some positive thoughts on its impact on the envi- agriculture. In a second article, they argue for rescu- ronment. Yang examines the perspective of China in ing organic agriculture from an industrial model of dealing with the trade and environment challenges production and distribution commanded by large-scale now that it has embraced the WTO. Benbrook and trade and globalisation, in order to make it accessible Baumuller, and then Fold and Jacobsen, give criti- again to peasant producers. Borregaard motivates cal marks to the handling in Argentina and Malaysia of negotiators to resolve one of the most daunting issues the aspects of trade-induced agricultural in the debate, posed by the inescapable fact that the production. The Argentinean case refers to expansion way goods are processed or manufactured for trade of genetically-modified soy in contrast with the determines its relevance to the environment and the Malaysian case of diverse type of farmers dealing with sustainability of the resources involved; Sugathan pepper production. Perry presents a refreshingly opti- follows with an analytical proposal to tackle standard- mistic example of the use of bio-based to setting through differentiation; Borregaaard et al., improve the livelihoods of small holders while protect- look at the intricacies of defining environmental goods ing agro-biodiversity in Colombia, and Gallagher syn- and services and the potential interest of developing thesises for the uninformed reader, the intricacies of countries in the so-called triple-win purpose of liberal- dealing with the unintended damages—current and ising trade in them; and, Cameron offers us an potential—caused by undesirable non-indigenous overview of the talks on reducing subsidies for fish- species in and ecosystems, and does so by eries with the dual aim of confronting diminishing fish- looking at the case of the of America. eries stocks and levelling the commercial playing We close in Section IV with a presentation by field—yet another daunting dossier in the negotia- Chouchena-Rojas, Head of IUCN Policy, Biodiversity tions. and International Agreements Unit, on the develop- Section II is a selection of writings dealing with ment of a strategic niche for IUCN in trade—the the operational relationship between regimes. object of support for GETI’s and IUCN’s engagement. Wijnstekers and Vasquez take a forward-looking The reader that follows is the product of many help- lens to reviewing the effectiveness of the most obvi- ing and supporting hands. Above all I would like to ous trade and environment agreements, the thank Marianne Jacobsen, the GETI focal point at Convention on International Trade in Endangered ICTSD, for keeping GETI alive and coordinating devel- Species, thirty years into being and at a time now opment of this issue of Policy Matters, and the when it faces dealing with potentially or actively heav- CENESTA and CEESP teams, especially Maryam ily-traded species. Buck tackles another challenge for Rahmanian and Jeyran Farvar, for their fine production the emerging order, applying socio-economic consider- skills. And not least, all my GETI colleagues and other ations to the establishment and development of regu- guest writers for their involvement and friendship. latory and management frameworks to deal with the GETI seeks to fulfil the mandate entrusted to it at the uncertainties and potentials of genetically-modified 2000 Amman World Conservation Congress to: “help organisms. Two other relatively novel subjects of in defining the IUCN niche in trade and environment, international governance in urgent and continuous focusing on providing practical information services to need of enlightening thinking— change and the IUCN membership on the interface between inter- traditional knowledge—are taken up by Assunção national trade rules and biodiversity.” We offer this and García (exploring trade and investment implica- publication towards that end. tions of the Kyoto Protocol) and Vivas-Eugui, Ruiz and Espinosa, through a prescriptive reflection on Ricardo Meléndez-Ortiz possibilities of effective cooperation between con- cerned institutions. Ricardo Meléndez-Ortiz ([email protected]) is the Chair of Section III offers some regional and national GETI, Vice Chair of CEESP and Executive Director of the experiences of the articulation of trade and International Centre for Trade & Sustainable Development (ICTSD).

4 Policy Matters 11, September 2003 Section I: Trade, Biodiversity and Environment: Crafting the link

The economics of and sustainable development: perspectives for progress Kevin Gallagher

earth’s ecosystems, and on government’s The beginning of this millennium has wit- development choices. They see liberalisation as driving the demand for greater of nessed an unprecedented opening of the glob- natural resources and as creating pressures to al market place. The previous decade saw, at dismantle environmental regulation. A growing the global level, the transformation of the but disparate scholarly and popular literature General Agreement on Tariffs and Trade has emerged to answer these questions. (GATT) into a stronger and more and encom- passing World Trade (WTO). At There is an emerging consensus among the regional level, free trade and investment about the relationship between agreements were initiated in Europe, Asia, trade and investment liberalisation and sustain- Africa, Latin America, and North America. Since able development. Without the proper environ- 1990, the of world trade has tripled, and mental and social policies in place, economic flows of foreign direct investment have integration can create new problems for increased by 14 times. nations working to develop their economies in a sustainable manner and can exacerbate Increased flows of international trade and existing problems. Unfortunately, in the context investment are driving the phenomenon of of countless other priorities demanded by the “globalization” - the rapid growth and integra- liberalisation process, many developing coun- tion of markets, institutions and cultures. The tries lack the capacity to institute the neces- speed of change is too fast for many people to sary social and environmental policies needed make sense of. An escalating series of protests to facilitate and balance . at the WTO meeting in Seattle in 1999, the Washington IMF/ meetings in the Economists have begun to develop a broad spring of 2000, the July, 2001 G-8 meeting in theoretical framework for analyzing the trade Genoa and the Summit of the Americas meet- and sustainable development relationship. ing in in April 2001, illustrate the Economic integration has direct and indirect breadth and depth of concerns of a growing effects on environment and development. The but ill-defined constituency about the potential indirect effects are those that need the most impacts of an unfettered global marketplace. attention, and those that economists have As the decade closed, for a moment the focused most on. As an example of the former, process paused. Efforts to extend global trade a recent study of the increasing levels of trans- disciplines to the movement of , through portation due to the North American Free a Multilateral Agreement on Investment, and to (NAFTA) found that NAFTA further broaden the role of the WTO met with trade has directly contributed to air in resistance, and collapsed. Fundamental ques- the five key transportation corridors that link tions have been raised, and answers are being North American commerce. Such pollution is demanded. estimated to be 3 to 11 percent of all mobile source emissions in those For many environmentalists, each new initia- regions, and 5 to 16 percent of all particulate tive at promoting economic liberalisation raises matter emissions (NACEC, 2001b). A second questions about the potential impact on the direct effect is the introduction of alien invasive

Policy Matters 11, September 2003 5 Trade, Biodiversity and Environment: Crafting the link

species through trade. Again, the example of ized by globalization. In each instance, more NAFTA is telling, where increased trade in sustainable practices - both socially and envi- alien- has been found to have ronmentally - in these two countries have been “decreased biological diversity that cost North displaced because the higher pollution costs of America millions of dollars” (NACEC, 2001a). synthetic fibres and pesticide-intensive agricul- Economic integration can also have indirect ture were not internalised in the of their effects on sustainable development. developed country trading partners. Such Economists have outlined four mechanisms changes in Mexico may cause social displace- whereby trade and investment liberalisation ment, dramatic losses in genetic diversity, have indirect effects on environment and higher levels of migration from rural areas, and development: scale, composition, technique, increased pressure on , , and and regulatory effects. Scale effects occur . when liberalisation causes an expansion of Technique effects, or changes in resource economic activity. If the nature of that activity extraction and production technologies, can is unchanged but scale is growing, then pollu- potentially lead to a decline in pollution per tion and will increase along unit of . The liberalisation of trade and with output. Ever-increasing levels of investment may encourage the transfer of dioxide emissions due to the expansion of the cleaner technologies to developing countries. world in the 1990s are often cited as In 1990 foreign direct investment (FDI) flowing examples of scale effects. to the developing world was US$44 billion, but Composition effects occur when increased reached over US$650 billion in 1998 - while trade leads nations to specialise in the sectors official development assistance continued to where they enjoy a . hover at close to US$50 billion annually. It is When comparative advantage is derived from argued that these foreign investors often set differences in regulatory stringency (i.e. the up operations with modern technologies and pollution-haven effect), then the composition management systems that are more advanced, effect of trade will exacerbate existing environ- and less polluting, than those that exist locally. mental and social problems in the countries This possibility of an intriguing “win-win” with relatively lax regulations. If “dirty” or solution has its limits. Of all FDI flows in 1998, “socially irresponsible” industries begin to con- only 25 percent went to the developing world. centrate in nations with standards that are rel- Moreover, three nations - China, Mexico, and atively weak, it is feared that a “race to the Brazil - received almost half of the developing bottom,” in standard-setting will occur. world’s share. These figures suggest that many By and large there has not been the broad of the world’s poorer nations will not benefit shift of dirty production that many had predict- from the possible transfer of cleaner technolo- ed. However, there is a great deal of anecdotal gies through FDI. Moreover, massive capital and more recent empirical evidence that sup- flows to the developing countries are not a ports this hypothesis, thus not ruling out that sustained guarantee; such flows have proven pollution havens could occur. Others have sug- to be erratic and volatile over time. There is gested that perhaps we should be looking for also evidence that sometimes FDI comes in the pollution havens in the developed world, not form of outdated, environmentally harmful the poorer nations. Economists such as James . Boyce and Alejandro Nadal have shown how The fourth mechanism whereby trade and sustainable jute production in Bangladesh and investment liberalisation affect environment corn production in Mexico have been jeopard- and development is referred to as the regula-

6 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

tory effect. For developing countries, economic between trade, environment, and development integration can crowd out the creation of - the so-called environmental in development-friendly policies and institutions. which first things get worse, then they get bet- The World Bank has estimated that the aver- ter. Early studies suggested the “turning point” age developing country needs to spend at which economies would begin to get more US$150 million to implement the requirements environmentally benign was a per capita for just three WTO agreements - the equiva- income of approximately US$ 5,000. These lent of one year’s development budget for the early studies were falsely generalised by policy- world’s poorer nations. In a discussion of these makers who prescribed that the environment results, Dani Rodrik notes that such could wait, since trade-led economic growth commitments entail costly trade-offs in the would eventually (and naturally) result in envi- realm of fiscal and . ronmental improvement. The economist Lyuba Zarsky discusses how More recent studies have called into question economic integration leaves developing coun- both the specific findings and the broad gener- tries’ social and environmental policies “stuck alisations of this early work. Among a number in the mud.” She notes that the constraints of of the limitations he identifies, Stern shows competitiveness hinder the capacity and will- that such relationships were found to be true ingness of nations (especially developing coun- only for a limited number of and tries) to impose any cost on themselves or on countries, namely localised air pollutants in domestic producers. Moreover, she adds that OECD countries. Secondly, the range of “turn- the introduced policies will be only those that ing point” estimates are now thought to fall are in force for primary competitors. For devel- between US$ 5,000 and US$ 100,000, depend- oped nations, she argues that competitiveness ing on the , indicating that environ- pressures create a “regulatory chill,” whereby mental degradation could occur for decades such nations fail in raising the level of stan- before “turning” around - if it ever does. dards for fear of to poorer nations The challenge is to link trade policy with more lax standards. with the design of proper social and envi- This contrasts sharply with the broadly ronmental policies, which will help trade accepted argument that as economic liberalisa- facilitate sustainable development, not tion increases income levels, newly affluent cit- hinder it. There are a number of innova- izens will demand a cleaner environment. tive ways for governments, industries, David Vogel has noted that, in the case of the and citizens to successfully link social formation of the EU at least, trade liberalisation and with trade poli- has strengthened the ability of nations to pro- cy. tect environmental and social standards. Whether in the form of international treaties, Importantly, however, he acknowledges that national and local legislation, or “” this did not happen automatically. According to and voluntary standards, a growing number of Vogel’s analysis of the EU, a positive regulatory scholars are beginning to argue that sustain- effect can occur, when powerful (often corre- able development policies can enhance com- lating with wealthy) nations prod their trading petitiveness. Michael Porter has shown that partners to strengthen their policies in the inte- regulation-inspired to decrease envi- gration process. ronmental degradation can lead to reduced Some have argued that these effects (scale, costs and therefore increased competitiveness. composition, and technique) might combine to Environmental regulation can lure firms to seek form an inverted U-shaped relationship ways of increasing resource and

Policy Matters 11, September 2003 7 Trade, Biodiversity and Environment: Crafting the link

therefore reduce the costs of inputs. Such tered marketplace. “innovation offsets” can exceed the costs of Many private firms are also setting their own environmental compliance. Therefore, the firm internal policies for environmental compliance. leading in introducing cleaner technologies into The automobile manufacturer, DaimlerChrysler, the production process, may enjoy a “first- has begun requiring all of its suppliers, many mover advantage” over those industries in the of them from the developing world, to receive world economy continuing to use more tradi- third-party environmental certifications. Many tional, dirtier production methods. point to these efforts, in addition to those of Rhys Jenkins (1998) has offered a synthesis citizens and governments, to urge developing of the , arguing that regula- countries to make and sustainable tion is more likely to lead to “innovation off- development a “rallying call.” sets” under three conditions. Note that each condition requires a firm to have substantial market power in an industry in which there is Kevin Gallagher is a GETI Steering Committee member and research associate at the Global Development and Environment substantial innovative activity. First, because Institute at the Fletcher School of Law and Diplomacy and Tufts cost reductions are more likely to occur where University.1 new clean technologies are developed rather Notes than in industries that adopt end-of-pipe solu- 1 This article is adapted from the introduction of International tions, the level of R&D is likely to be a factor in Trade and Sustainable Development, edited by the author and determining the impact on competitiveness. Jacob Werksman, and available through Earthscan Publications. Second, innovation offsets are more likely in industries or firms that have the ability to References Boyce, J. “ The Globalization of ,” in International absorb environmental costs, which is most Trade and Sustainable Development (edited by Kevin P. Gallagher often determined by profit margins and firm and Jacob Werksman). Earthscan, 2002. size. Finally, they are more likely in firms that Jenkins, R (1998) “Environmental Regulation and International Competitiveness: A Review of the Literature”, INTECH Working have the ability to pass increased costs on to Paper #9801, Maastricht, United Nations University. consumers in the form of higher prices. NACEC, 2001b North American Commission for Environmental Cooperation, www.cec.org. Creative policy does not have to be designed NACEC, 2001a North American Trade and Transportation by government. Advocacy have Corridors: Environmental Impacts and Mitigation Strategies, used certification processes to reward firms Montreal, NACEC. producing and trading goods with high social Nadal, A. (2000). The Environmental and Social Impacts of Economic Liberalization on Corn Production in Mexico. World Wide and environmental standards in the production Fund for Nature, Oxfam. processes. Through such efforts, the Porter, M. “Towards a Reconception of the Environment- Council has certified 60 million Competitiveness Relationship.” in International Trade and Sustainable Development (edited by Kevin P. Gallagher and Jacob acres of forest between 1995 and 2001, Werksman). Earthscan, 2002. for more than five percent of the Rodrik, D. (1997). “Trading Illusions,” Foreign Policy. May/June. world’s working forests. Working on the Vogel, D (1997) Trading Up: Consumer and Environmental demand side of the equation, advocacy groups Regulation in a Global Economy, Cambridge, Harvard University Press. set up market campaigns to pressure firms to Zarsky, L. (2002). “Stuck in the Mud? Nation States, Globalization, buy these products. Indeed, some retail giants and the Environment.” in International Trade and Sustainable are now actually seeking to participate in these Development (edited by Kevin P. Gallagher and Jacob Werksman). processes. When governments or citizens’ groups recognise more sustainable practices in the developing world, there are avenues to gain market access for production processes that would be deemed inefficient by an unfet-

8 Policy Matters 11, September 2003 Macroeconomic policies and the environment Alejandro Nadal

condition the choices of all economic agents, Introduction whether they operate in the sphere of financial and monetary variables (such as the stock Macroeconomic policy is not neutral when it exchange or banks) or in the so-called real sec- comes to the environment. It can impose eco- tors of an economy (agriculture, industry and nomic stagnation, aggravate inequality and put services). Thus, through a complex chain of additional pressure on the environment. Or it can causality macroeconomic policies have critical contribute to reckless growth patterns that rely implications for the and on unsustainable natural resources usage rates. a country’s base. In other words, if macroeconomic policy allocates However, the systematic study of the linkages adequate resources to redress market failures, it between these policies and environmental vari- may go a long way in promoting sustainable ables has been rather neglected. development. If, on the contrary it fails to This may be due to the fact that The restrictions on address them, it may become one of the most macroeconomic theory remains in credit, and the dras- powerful forces behind social disruption and envi- a state of flux (Blanchard and ronmental deterioration. tic reduction (and Fischer 1989) after the long con- In the past few years, the environmental impli- troversies detonated by the sometimes downright cations of trade liberalization, an important critique of withdrawal) of State macroeconomic policy, have been recognized and standard macroeconomic theory, support for rural pro- have been the object of an important analytical the comeback of the new classi- effort. However, trade liberalization is only one cal theories and the survival of ducers, aggravate the aspect of macroeconomic policy-making. It coex- the Keynesian paradigm in the plight of entire popu- ists with policies that regulate the more recent open economy mod- and credit, as well as those that determine fiscal els. Or, to put it in terms of a well lations and induce ( and non tax) revenues and public expendi- known textbook (Dornbusch, them to increase tures. It also coexists with the elimination of con- Fisher and Startz 1998), macro- pressure on the envi- trols on capital account transactions (at the inter- economic theory is rather untidy national level) and domestic financial deregula- at the edges. Unfortunately, the ronment. tion. These components of macroeconomic policy edges are rather broad and the are the main determinants of growth or stagna- untidiness sometimes dominates the entire field. tion, investment and consumption patterns, as If macroeconomic theory has difficulties solving well as income and wealth distribution. In fact, its main theoretical problems, it is only natural the management of restructuring under an open that its impact on the environment remains economy regime is even more seriously affected obscured by the confusion at the more theoreti- by these policies than by .1 cal level. deals with such phenomena as This paper provides an overview of how the and demand, growth, reces- two main components of macroeconomic gover- sions, the rate of and the rate of unem- nance, monetary and fiscal policies, may affect ployment. It is also concerned with the external the environment. The analysis takes into consid- accounts of an economy, such as the trade bal- eration the context of deep financial liberalization in which macroeconomic policy design and imple- ance and a country’s .2 mentation takes place. The paper’s final section Macroeconomic policies affect all dimensions of is devoted to some concluding remarks about an economy because they deal with strategic 3 prices such as the exchange and interest rates, future avenues for research. or the evolution of real . These key prices

Policy Matters 11, September 2003 9 Trade, Biodiversity and Environment: Crafting the link

Monetary Policy and Financial Deregulation would drop, investment would increase, and In 1973 the world saw the demise of the greater efficiency in resource allocation would be Bretton system and its system of fixed attained since capital would be directed to higher exchange rates, which allowed countries to pur- productivity sectors and long term . sue full policy objectives. Spurred by Growth would follow as the allocative powers of these policies, growth rates increased without markets were unleashed in a context of financial parallel in during the period stability. 1945-1965, supporting rapid In this context, the main (even the sole) objec- in the world economy. But the development of tive of was controlling inflation- the Eurodollar market across the North Atlantic ary pressures. The dominant approach in anti- marked the beginning of enormous pressures on inflationary policies was to restrict aggregate fixed parities (especially on the dollar price of demand, and for monetary policy, this involved in gold) and led to abandoning the Bretton Woods most contexts restricting the money supply and system and to the opening of financial markets. curtailing credit. Another instrument used to limit Unpredictable changes in exchange rates became was to contain real wages: in everyday events. many developing countries where stabilization Under the regime of fixed parities, exchange and structural adjustment programs were rate was squarely supported by the public imposed as a result of negotiations with the IMF, sector. When this system disappeared, the risk indexing wages to expected (but not actual) stemming from exchange rate adjustments had inflation led to significant losses in real wages.6 to be endured by private sector agents.4 Thus, Frequently, inflation was controlled at the cost although flexible exchange rates brought about of reducing growth, augmenting new opportunities for profits, they were accom- and inequality.7 The combination of inadequate panied by new hazards. In response new finan- growth rates and the unfavorable evolution of cial instruments had to be created and regulatory real wages led to increased poverty levels. In barriers removed. Latin America, this explains why up to sixty per- The move towards international and domestic cent of the does not meet minimum financial deregulation was actively promoted by calorie and protein requirements. In Mexico, offi- international financial institutions created by the cial figures show that more than fifty percent of Bretton Woods accords, the International the population below the poverty line. In Monetary Fund and the World Bank. As a result other regions of the world, in Africa and Asia, a of this process, capital flows increased exponen- majority of the population lives in dismal condi- tially. In 1977 daily cross border foreign tions and suffers chronic undernourishment. exchange trading was 18 billion dollars; in 1989 Under these conditions, incentives increasing these daily transactions had increased to 590 bil- natural resources usage rates become a matter lion dollars. By 2000 the amount of daily transac- of or death. This puts pressure on bod- tions represented a staggering 1.6 trillion ies and aquifers, forests, grasslands, and genetic dollars.5 resources, and is a complex phenomenon. In Once financial deregulation had taken a firm many regions, as poverty and migration under- hold, it became customary to consider that mon- mine the social tissue and weaken collective etary policy had to adopt a passive posture. The institutions, such things as relevant policy purpose and raison d’être of mon- overgrazing and worsen. In other etary policy was macroeconomic stability, espe- cases, poverty can also degrade the capacity of cially in so far as the evolution of the general producers to develop and manage their crop (inflation) was concerned. At the inter- genetic resources. The restrictions on credit, and national and domestic levels, the rationale of the drastic reduction (and sometimes downright financial deregulation was that interest rates withdrawal) of State support for rural producers, both stemming from macroeconomic policies,

10 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

aggravate the plight of entire and From the point of view of revenues, the redis- induce them to increase pressure on the environ- tributive implications of are also of ment. strategic importance. However, the neoliberal macroeconomic policy package was completed Fiscal policy and the environment with the view that tax reductions were desirable to spur investment. Although this naïve view From the viewpoint of fiscal revenues and pub- (inherited from supply-side economics) has not lic expenditure, the era of deregulated capital fulfilled its objectives, it has remained in place as flows and trade liberalization posed new chal- a proven recipe. Typically, the IMF and the World lenges. According to the dominant view in Bank have recommended developing countries to macroeconomic policy-making, fiscal deficits need rely more on on consumption (such as the minimization in order to attain macroeconomic value added tax). Indirect taxes treat with equal stability and growth. This line of thought pressure unequal income and wealth strata, assumes that if the fiscal deficit is out of control, increasing inequity. the government must finance it through new The combination with Macroeconomic policy for open emissions of fresh money or through the domes- falling real wages is a tic or international capital markets with negative powerful generator of economies during the globalization economic effects. inequality and pover- of the economy (under what has The standard wisdom in macroeconomics is ty. been called the Washington that if the deficit is monetized (i.e., if the central Since the central Consensus) was supposed to lead bank simply emits more bank notes to cover the policy objective was deficit), inflationary pressures will ensue. the elimination of fis- the world economy to greater sta- Although this is not always the case, the accept- cal deficits, and rais- bility, growth and efficiency gains. ed view is that inflation is always caused by the ing direct (income) expansion of the money supply in response to taxes was discour- fiscal needs. However, fiscal deficits can be a aged, the adjustment had to come through cuts powerful tool for financing the launching of in public expenditures. Fiscal policy is probably State-owned firms, or they can serve to develop the most important instrument for State-led infrastructure and productive R&D and other development processes, but reducing expendi- technology-intensive initiatives. Although these tures curtails this possibility. Social investment in investments do not necessarily lead to greater , health, housing and education is of inflation, the slogan became widely accepted. critical importance in redressing inequality and If, on the other hand, the government decides market failures, as well as for enhancing human to finance the deficit in the domestic capital mar- capital. Fiscal expenditures are also crucial in the ket this puts pressure on the . In this realm of transport and telecommunications infra- case, when the deficit is large, absorbing credit structure. Both social and competitive- from the capital market contributes to interest ness are at stake here. rate increments and a process in At a time where State support is required to which resources are moved away from productive meet the challenges of structural adjustment in investments. The process leads to slower growth the context of deep financial and trade deregula- and greater inefficiency. Once again, this is only tion, restricting public expenditures is not the true in the case of full employment; where best policy. In many instances, trade liberaliza- resources are not fully utilized, increased fiscal tion has been rapidly implemented without the expenditures can augment income and the level required investments ensuring an orderly transi- of . The expansion in savings permits tion to new economic structures. A good example financing larger fiscal deficits without crowding is found in trade liberalization in Mexico’s agricul- out the private sector. In spite of this important tural sector, where investments were needed to caveat, the easy slogan against fiscal deficits has redress negative income and wealth effects. But been widely accepted as a scientific truth. given the fiscal imperatives, the investments in

Policy Matters 11, September 2003 11 Trade, Biodiversity and Environment: Crafting the link

We should not expect much hydro-agricultural infrastructure promised during mote productive invest- in terms of economic good the NAFTA negotiations never materialized. As a ment. However, real result, the loss of value in land assets of agricul- gross domestic capital health from this model of tural producers was not compensated and the formation rates actually open economy. comparative advantages that were supposed to decreased during the exist could not be exploited. The objectives of a period in which financial liberalization was fully restrictive fiscal policy led to greater rural poverty implemented. At the world level, real gross and the structural weaknesses of the sector have domestic investment dropped from 6% in 1966- worsened. Poverty in the rural sector has led to 1973 to 2.2% in 1974-1979. This rate increased greater pressure on land, water and genetic marginally to 2.8% in 1980-1989, and then resources.8 dropped to 2.7% in the period 1990-1996. It dropped to even lower levels in the years preced- ing the current . The OECD countries Concluding Remarks did not escape this syndrome: the corresponding rates dropped from an annual average of 6.3% Macroeconomic policy for open economies dur- in 1960-1973 to 1.5% between 1973-1979. The ing the globalization of the economy (under what improvement in the eighties (with a 2.4% rate) has been called the Washington Consensus) was was not enough to recover the levels of the six- supposed to lead the world economy to greater ties. Furthermore, between 1989 and 1998, the stability, growth and efficiency gains. Following rate dropped to 1.7%. the Kuznets curve hypothesis, this would lead to a significant improvement in environmental Financial liberalization was also meant to lead health. However, the macroeconomic policy mix to a decrease in real interest rates. Once again, associated with financial and trade liberalization this did not happen: in the G-7 countries, aver- has not offered good results. age long term interest rates were 2.6% in 1959- 1970, 0.4% in 1971-1982, 5.6% in 1982-1989, Greater volatility in financial markets has domi- and 4% in 1990-1997. nated the economic as international financial crises followed in rapid succession. The Finally, as a result of this poor performance, really bad news was that by the end of the unemployment rates increased under the regime nineties, it became that greater volatility of deep financial liberalization. For the OECD had not been the price for improved economic countries, during the period 1960-1973 the aver- performance in terms of growth. Growth rates age unemployment rate was 3.2%. This rate were slower in the entire world and by regions increased to 5% for 1973-1979 and to 7.4% for during the halcyon days of the Washington 1979-2000. At the same time, the rate of labor Consensus. For the world economy, GDP growth productivity fell from 4.6% during 1960-1973 to was 4.9% between 1950-1973, then slowed 1.7% between 1973 and 1997. down to 3% between 1973 and1992, and to Can the dominant model of macroeconomic 2.5% between 1991-1998. The current recession policy making in the context of financial deregu- will bring this rate to lower levels. lation work in the future and contribute to sus- Growth rates in Western Europe were 4.7% in tainable development? This remains an open 1950-1973 and 2.2% in 1973-1992. In Latin question. From the purely economic standpoint, America, GDP growth attained a rate of 5.3% en the model appears to have several important 1950-1973, and this fell to 2.8% in 1973-1992. built-in contradictions between policy objectives The rest of the decade saw extremely sluggish and instruments.10 For example, although flexi- growth and a drop in per capita GDP in most of ble exchange rates are considered a key element the region. In the case of Africa, growth reached in balancing external economic relations, there 4.4% during 1950-1973, and then fell to 2.8% in are built-in rigidities that prevent timely 1973-1992.9 exchange rate adjustments (for example, capital flows and anti-inflationary objectives lead typical- Financial liberalization was supposed to pro- ly to exchange rate overvaluations). Another

12 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

example is provided by the need to sterilize some tions of the exchange rate (as the demand for instruments denomi- nated in the domestic increased). In turn, this helped of the incoming capital so that money supply reduce inflationary pressures, albeit at the cost of further deterio- remains stable; while this helps reduce inflation- rating the trade balance (as exports and became more ary pressures, it distorts the role of the interest expensive and cheaper, respectively). rate as a key adjustment variable governing capi- 8 For a detailed analysis of how this is leading to the loss of corn genetic resources in Mexico (the center of origin of Zea mays), see tal flows. These and other contradictions affect Nadal (2000). Another example of how the same fiscal policy the economic performance of the entire policy restrictions led to of natural resources in Mexico package. The verdict is that we should not can be found in oil production. Since 1982, crude production and exports became one of the main sources of fiscal revenues. expect much in terms of economic good health Revenues accruing to PEMEX were siphoned systematically to meet from this model of open economy. Sustainable the government’s needs to internal and external debt. This development will not emerge from the economic resulted in a marked decline in investments needed to modernize machinery and equipment, as well as for exploration. Reserves model based on financial deregulation and dropped as usage rates increased dramatically and there was restrictive macroeconomic postures. greater stress on the company’s performance. All of this led to increased carelessness in extractive activities and greater environ- mental damages in the country’s main oil producing regions. Alejandro Nadal is a member of the CEESP and the GETI 9 Steering Committee. Dr. Nadal is Professor of Economics and Only Asia was able reach higher growth rates during the Senior Fellow at the Center for Economic Studies and Coordinator nineties than in the previous twenty years (6% versus 5%). But of the and Technology Program at El Colegio de México. Asian countries maintained an approach of State intervention in the development strategy. 10 Notes For a detailed analysis of these contradictions see Nadal (2001). 1 This is not to say that trade policies are unimportant, but these other macroeconomic policies condition the coverage and References rate of trade liberalization and not the other way around. One indi- cation of the above is that trade liberalization has been less of an Blanchard, Olivier Jean, and Stanley Fischer (1989) engine of globalization than financial flows. One of the myths of Lectures on Macroeconomics, Cambridge, Massachusetts: The globalization is that trade has increased as a proportion of GDP. MIT Press. [650] This is not so for the world as a whole. Consider the following Bradford, David F., Rebecca Schleickert and Stephen H. Shore data. And it is also true for the groups of countries. (2000) 2 Macroeconomic policies deal with such variables as monetary “The Environmental Kuznets Curve: Exploring a Fresh aggregates and fiscal revenues and expenditures, the exchange Specification”, NBER Working Paper Series, Working Paper 8001, rate and the rate, as well as regulatory aspects of the finan- November. [40] cial (banking and non banking) sectors. 3 In this paper I do not examine two issues important from the Eatwell, John and Lance Taylor (2000) macroeconomic perspective, the so-called Kuznets curve hypothesis Global Finance at Risk. The Case for International Regulation. relating per capita income and , and the : The New Press. [258] development of green national accounting. Both themes already Grossman, Gene M., and Alan Krueger (1995) attract considerable attention as the growing body of literature attests. The Kuznets curve hypothesis is a very general device and “Economic Growth and the Environment”, Quarterly Journal of must always be approached with caution. A limitation that has not Economics (CX-2) May. [353-377] been well analyzed in the literature is that as income improves in a Hecht, Joy E. (2000) country, domestic environmental indicators may very well improve as the hypothesis predicts. However, the environmental footprint of “Lessons Learned from : Findings from that country’s multinational firms in other parts of the world can Nine Case Studies”, Washington, D.C.: IUCN, The World leave behind widespread environmental damages. The classic refer- Conservation Union. [vi + 42] (Available in .pdf format at ence here is Grossman and Krueger (1995), and a recent contribu- www.iucn.org/places/usa. tion is Hecht (2000). Nadal, Alejandro (2000) 4 See Eatwell and Taylor (2000) and Tirole (2002). The trend The Social and Environmental Consequences of Trade towards globalized, highly interdependent financial markets owes Liberalization in Mexico’s Corn Sector. Gland: WWF, WorldWide more to the forces of speculative capital and the move towards Fund for Nature. [xii + 130] deregulation than to the in telecommunications and transportation that the naïve view of globalization sometimes uses —- (2001) to explain the shaping of the economic landscape during the last “Contradicciones del modelo de economía abierta”, in Calva, J.L. twenty years. (editor), Desarrollo sustentable con equidad. México: Juan Pablos 5 The data come from the Annual Reports of the Bank for Editores. [83-112] International Settlements (BIS). The ratio of foreign exchange trad- Tirole, Jean (2992) ing to world trade was 2.4/1 in 1977. By the end of the nineties, this ratio was 70/1. Financial Crises, Liquidity, and the International Monetary 6 The anti-inflation toolbox included the overvaluation of the System. Princeton: Princeton University Press. [151] exchange rate, a point to which we return below. 7 The flow of incoming capital led in most cases to overvalua-

Policy Matters 11, September 2003 13 Interlinkages between trade, investment, poverty and biodiversity: perspectives and concerns of the least developed countries Atiq Rahman

national conservation laws and policies. Trade The greatest challenge facing the planet today liberalisation can also increase exploitation of natural resources and exacerbate the associated is the rampant poverty of at least one third of negative impacts on biodiversity. Despite this, a the global population. After sixty years of devel- growing number of developing countries and opment efforts the world has still not seen a Least Developed Countries (LDCs) look to trade significant reduction in the number of poor. The and investment as a central part of their devel- 49 countries termed as Least Developed opment strategies (IIED and DFID, 2002; UNC- Countries (LDC) hold a large amount of the TAD, 1999; IISD and UNEP, 2000). worlds poorest, which mainly base their liveli- hoods on biological resources. Many of them Biodiversity makes up the structure of the live in non-formal economies and a large part of ecosystems and habitats that support essential their existence, activities and transactions often living resources, including , fisheries and do not enter magnetised formal economies. forests. It helps provide for basic human needs However, the fact that the poor living in infor- such as food, shelter, and medicine. It compos- mal economies often not benefit from changes es ecosystems that maintain in the air, in the formal economy, does not immune them enrich the , purify the water, protect against from the traumas and shocks of the formal and storm damage and regulate climate. economy. The emerging global regimes, particu- Biodiversity also has recreational, cultural, spiri- larly being promoted by and through the World tual and aesthetic values. Maintaining biodiver- Trade Organisation (WTO), face the challenge sity and access to it, while obviously a planetary of threatening many of the practices of the , is crucial for the poor. The World poor, particularly farmers who depend on bio- Health Organisation (WHO) has estimated that logical and natural resources for a living. 80 percent of Africa’s population uses traditional medicine, derived from local varieties, for The interlinkages between trade, investment, their primary health needs. Wild plants, in field poverty and biodiversity are multiple, complex and forest, make a significant contribution to and very crucial in the unequal but globalised the diet of many poor communities. In many world. The world has seen fundamental but developing countries, poor communities are pervasive changes in the last 50 years. The able to draw at least half their food from forest trends toward globalisation have been driven in products, and consequently have never faced part by new technologies and in part by famine (Koziell I. et al., 2001). reduced barriers to international trade or trade liberalisation and investment flows. However, The WSSD in Johannesburg recognises that globalisation trends have increased global globalisation, open market and interdependence inequality; and the benefits of growth have among the regions and countries offer many been unevenly spread and skewed in favour of opportunities and challenges for trade, invest- the developed northern countries. Further, in ment, poverty alleviation and environmental many cases trade and investment destructed conservation. Serious challenges remain, includ- the ecology, biodiversity and livelihood of mil- ing financial crisis, insecurity, poverty, exclusion, lions of poor particularly in the least developed inequality within and among the societies and and developing southern countries. Linkages regions. Many optimistic commentators saw the between trade policy and the conservation or WSSD outcomes as a strong signal to govern- loss of biological resources proliferate in an ments to integrate sustainable development increasingly global marketplace. International considerations into WTO negotiations. Others, trade policies can undermine national and inter- however, noted that the conference was unlikely

14 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

to have a significant influence on the Doha sector by the non- resident rich and power elites Round as the implementation plan essentially in the coastal region of Bangladesh is one of the repeated commitments made at the WTO classical examples of such unsustainable trade Ministerial Conference in Doha. Nevertheless, and investment regimes. with the recognition of trade as a ‘means’ of Unfortunately, most of the multinationals and implementing a wider sustainable development global financial institutions such as the World objective, the trade agenda has now become Bank, the International Monetary Fund (IMF), more political and better integrated in the glob- or the Asian Development Bank (ADB), have al agenda (BRIDGES, Post Johannesburg very often supported the commercial production Summit Issue, September 2002). and high technologies. As a result, a small sec- tion of people, mainly big merchants, local The question is how trade could be put to agents, few government officials, who control work in favour of social development, poverty the production, processing and exporting of alleviation, and environmental conservation have been greatly benefited. than merely economic growth? How can nega- The process not only disadvantaged the poor in tive environmental and social impacts from terms of their loss of livelihood and reduced trade and investment be minimised and positive access to natural resources and productive effects be encouraged through enhancing assets, but also eroded their capacity and skills poverty alleviation, the poor’s rights and conser- in relation to gaining sustainable livelihood, vation efforts particularly in the southern coun- resources management and conservation of bio- tries? diversity. Plantation of exotic tree species in the Madhupur forest in Bangladesh, dislocating Linkages between Trade, Poverty, indigenous people could be an example of such Environment and Biodiversity bad investment, where few corrupt government Trade and environment are directly interrelat- officials and local power elites played a key role ed, because all economic activities are based on in an ADB supported programme. environmental resources, economic and social capitals. It is the basis for all primary input i.e., Population, Poverty, Biodiversity and metal, , food, forest, and fisheries and Development linkages for the to process them. Due to weak legal and institutional structure and lack of There are at least two major issues related to good governance, unfair trade and investment the population, environment and development in LDCs over-exploit the natural resources base nexus. In the first instance, one can reasonably and destruct the bio-resources in those coun- ask if population pressures have not added to tries. the stress on natural resources prompted their The emerging global market forces, technolog- overuse and a subsequent decline in the pro- ical innovation and commercial interest encour- ductivity of those resources, just at a time age mono-cropping. High technical input and when increased demand for development and huge investment, supported by commercial inter- higher levels of production has grown, thereby est in agriculture and other farm level production exacerbating the problem of overuse and deple- have often destroyed local knowledge and local tion of a finite resource base. Secondly, are resources management practices. This process there not definite limits or at least natural seriously affected the natural resources bases resource related constraints to continue popula- and degraded bio-resources. This process also tion growth and development? Even if the dislocated millions of marginal and poor people from their traditional occupation and thus affect- answer is yes to this question, the socio-political ed their livelihood resulting in landlessness, and management realities make it very difficult poverty and impoverishment. Rapid expansion of to contain and manage population growth in shrimp farming and huge investment in shrimp most part of the Asia Pacific region.

Policy Matters 11, September 2003 15 Trade, Biodiversity and Environment: Crafting the link

The linkages between population, poverty, remained almost constant in the past decade biodiversity and development must be consid- (Poverty , 2002). The majority of poor peo- ered in the context of the people and available ple live in Sub-Saharan Africa, South Asia and the natural resources. In the first case, it is evident Pacific, Eastern Europe and Central Asia, Latin that the extremely high population density of a America and the Caribbean. The poor depend on country such as Bangladesh has contributed to natural resources to manage their livelihood the intense use of forests, fisheries and to a portfolios. Any degradation and loss of access to certain extent even soil and . A natural resources deprives them of their liveli- majority of in many parts of Asia hood potential. Despite all the technological and pacific region are already without sufficient economic achievements, there are over one bil- areas of land to raise enough food to meet their lion people who live on less than US$ 1 a day. needs. For example fuel stocks have been Another billion live on less than US$ 2 a day. depleted and diminished to the point where These are the people who are most vulnerable to over 84 percent of the total domestic energy natural disasters, health hazards and economic requirements must be met by crop residues and downturn. dung, only 16 percent are met by fuel wood. The physical environment provides services to Particularly, when considering the projected the population. People develop specific social population levels of the year 2000 and beyond, systems, institutions and technologies to inter- it does appear that population density has act with the environment to gain livelihood sup- clearly outstripped the potential for sustained ports. The absence or denial of these basic domestic energy consumption from existing environmental services constitutes absolute sources of supply. poverty. Unequal access to basic necessities and other environmental resources is the foundation Global Picture of Poverty, Poor’s of relative poverty. In addition to being exclud- Livelihood and Biodiversity ed from access to basic resources, the poor are In September 2002, when the world leaders also most likely to be subjected to the degrad- gathered in Johannesburg for the World Summit ing or polluting impacts of the consumption pat- on Sustainable Development (WSSD), the total terns of others. Where local sustainable pat- wealth of the planet was never any greater. terns of agriculture are diverted to monoculture Simultaneously, the number of people below poverty line and the extent of environmental for the global market, the breaking of traditional degradation facing them were never greater. fertility cycles is associated with negative However, the majority of the world poor live in changes in social structures and economic rela- LDCs and developing countries. The WSSD Plan tionships. The poor have been systematically of Implementation (2002) and the UN supplying their share of resources for environ- Millennium Declaration have emphasised pover- mental and global benefits but are continually ty alleviation as a cross-cutting issue. The stat- disadvantaged due to structured societal disem- ed goal is to “halve, by the year 2015, the pro- powerment and are thus being forced to move portion of the world’s poor whose income is less than US$1 a day and the proportion of people towards more environmentally vulnerable areas. who suffer from hunger and, by the same date, to halve the proportion of people without Why Biodiversity is so important? access to safe ”. The unfortunate Society’s growing consumption of resources corollary is that even in its intentions and decla- and increasing populations have led to a rapid rations, the global community has condemned half of the global poor to live in poverty even loss of biodiversity, an erosion of the earth’s nat- after 2015 (Rahman A, in UPDATE, 4/2002). ural systems capacity to provide essential goods and services on which human communities According to a recent World Bank report, more depend. Human activities have raised the rate than 23 percent of the live in of extinction to 1,000 times its usual rate. If this extreme poverty and the number of poor people

16 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

continues, the Earth will experience the sixth sources through for instance planting multiple great wave of extinctions in billions of years of crops, staggering food production throughout history. Already, an estimated two of every three the year, or engaging in alternative income-gen- bird species are in decline worldwide, one in erating activities, such as collection of non-tim- every eight plant species is endangered or ber forest products. The availability of diverse threatened, and one-quarter of mammals, one- resources also allows different genders, cultural quarter of amphibians and one-fifth of reptiles or age groups to engage and benefit from dif- are endangered or vulnerable. Also in crisis are ferent activities. This is especially important as forests and fisheries, which are essential biologi- it can help reduce or conflict that cal resources and integral parts of the earth’s liv- might otherwise occur if each group had to ing ecosystems. Forests are home to 50-90 per- compete for the same resources – as is indeed cent of terrestrial species, provide ecosystem the case in many parts of the world where services such as carbon storage and flood pre- diversity and the choices it supports have vention, and are critical resources for many lin- become scarce. There are many other notable guistically and culturally diverse societies and benefits that biodiversity offers – and some are millions of indigenous people. However defor- also highly under-appreciated by the public as estation continues. Over-fishing, destructive fish- well as policy-makers such as the ecosystem ing techniques and other human activities have services that sustain society itself. also severely jeopardized the health of many of the world’s fish stocks along with associated Food Security marine species and ecosystems. Over one billion Human society is highly dependent on genetic people, mostly in developing countries, depend resources, including those from wild and semi- on fish as their primary source of animal protein. domesticated sources, for the productivity of its There is often confusion as to why biodiversity agriculture, livestock, and fisheries. These has become a focus of attention through the resources also provide communities with an establishment of the Convention on Biological adaptation capacity so varieties can be created Diversity. Why not simply pay attention to natu- that best cope with changing local conditions. ral resources – surely that is enough? But biodi- Biodiversity is also a source of alternative food versity is so much more – it encompasses all products during periods of . living natural resources, and harbours the processes and interactions within and between Health Improvements them, and the ecosystems within which they Biodiversity is a source of the invaluable infor- fall. Thus biodiversity forces a more holistic and mation and raw materials that underpin medici- more comprehensive thinking about natural and nal and health care systems, both for the ‘infor- agricultural systems, than does a singular focus mal’ sector which meets local health care needs on natural resources management. of some 60 percent of the world’s people, and There are also other reasons why biodiversity the ‘formal’ sector which derives a majority of should not be overlooked. For instance biodiver- the world’s modern drugs from biodiversity. sity in any one location, at any specific time Poor people also suffer most when water and provides a range of resources and services that air are scarce or polluted as well as from dis- provide people with choice. Choice is important eases associated with disrupted ecosystems. because it gives people options. For instance, Further, a variety of food sources support better as biodiversity provides ‘replacements’, it allows nutrition and therefore improved health. resource users to switch from one resource to another, if the first becomes scare, or if market Reduced Vulnerability fluctuations demand changes. Access to diverse Poor people are most often exposed to, and species enables the diversification of livelihood least prepared to cope with, unpredictable

Policy Matters 11, September 2003 17 Trade, Biodiversity and Environment: Crafting the link

events such as fluctuations in access to food or , other grow in higher altitudes, and other resources, and to environmental some produce late in the season, others early. shocks and risks. Ecosystem degradation exac- The free exchange of this knowledge, as well as erbates the frequency and impact of , local sale and exchange of seeds, has been an , landslides, forest fires and other natural essential aspect of food security among the hazards, and can intensify competition and the potential for conflict over access to shared poor. In the developing word, only 10 per cent resources such as food and water. of seed is bought commercially, and many poor farmers buy seed only every five years. Thus it Ecosystem Services is usually the rural poor in developing countries Forests, wetlands, coastal ecosystems, provide - indigenous peoples and resource poor farmers essential services that contribute in numerous who know most about age-old, time tested ways to the productive activities of rural and seed varieties, medicinal plants and other useful urban poor people, including through the gener- biological resources, whether cultivated or wild. ation of water, cycling of nutrients, replenish- Research has shown that both men and women ment of , prevention of erosion, etc. play important and distinct roles in maintaining These services are public goods, providing indi- biodiversity. In many countries, women do rect values that are not traded in the market much of the seed and seed selection, place but are vital to the livelihoods of all peo- ple (Koziell I et at., 2001). particularly for food crops (Sreenivasan G, 2002). Biodiversity and Intellectual in While geography and favour the South Tropical and Sub-tropical Countries in matters of biodiversity, the agro and pharma- The Asia -Pacific is the largest of all the bio- ceutical that require knowledge of geographic regions and includes about 35 per- and access to genetic resources for ‘product cent of the world’s total land surface. Forests development’ are overwhelmingly based in the and wooded land of the region comprise about North. One of the chief ways corporations have 17.7 percent of the world’s forest cover. Asia tried to secure this access is by extending the holds 30,629,000 hectares of resource and use of rights (IPRs) into the anthropological reserves or 8.5 percent of the realm of living things. Intellectual property rights world’s 358,840,000 hectares. Its coastline include patents, copyrights and trademarks, stretches to about 163,609 kilometers which is whose purpose is to ensure that creators of intel- 28 percent of the world’s total. The combination lectual property receive adequate recognition of high population density and growth, rapid and ‘protection’ in the market place to ensure industrialisation and urbanisation, and poverty returns for their investment in research and has taken its toll on the region’s natural development. The WTO Agreement on Trade- resource base, accelerated environmental Related Aspects of Intellectual Property Rights degradation and led to a substantial increase in (TRIPs) regulates and establishes rules for the pollution. Other significant environmental prob- use and trade of intellectual property rights. lems include caused by defor- Many developing countries and LDCs consider estation and inappropriate agricultural practices, the TRIPs Agreement unbalanced, as they water loss, and mangrove clearance for aqua- accuse it of favouring developed countries and culture. transnational corporations. At the WSSD the Agricultural plants in the South, developed by representatives from LDCs and NGOs criticised farmers over thousands of years, have been the TRIPs agreement on the ground that it bred and adapted to suit location conditions. imposes costs on developing countries in the For example, of the hundreds varieties of corn form of more expensive agricultural input, drugs grown in Mexico, each has unique characteris- and foreign technologies without producing tics and features: some more adaptable to frost long-term gains in areas like trade and invest-

18 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

ment to offset these costs (BRIDGES, decade ago. The LDCs always suffer from trade September 2002). imbalance. They low price primary com- modities based on natural resources and The current WTO rules are influenced too high price finished product from the industri- heavily by the powerful trading nations, and alised countries. multinationals and trade liberalisation has not yet benefited the LDCs. The TRIPs agreement In today’s global competitive environment, obliges countries to provide patent protection LDCs are at a disadvantage because the com- for inventions. Developing countries had until petitive edge is determined, more than anything the year 2000 to bring legislation into place to else, by access to knowledge in both production assure this; to least developed countries the and marketing. Thus natural resource endow- deadline is the end of 2005. Article 27.3(b) of ments, cheap labour or other aspects of static the TRIPS agreement requires countries to pro- comparative advantage have now become sub- vide patent protection for certain lower life ordinated to the knowledge-based dynamic forms: micro organisms, non-biological and comparative advantage. Knowledge is the foun- micro-biological processes. It allows countries to dation for production innovation, which in turn exempt from patentability higher life forms of largely determines the competitiveness of prod- plants and animals, as well as “essentially bio- ucts. For LDCs, the major elements of the struc- logical processes for the production of plants or tural weaknesses that underlie their poor pro- animals”. But the article requires that if patent ductive capacities and competitiveness are sup- protection is not afforded for plant varieties, ply-side constraints, including: some other “effective” specially designed (sui - the lack of linkages within and between pro- generis) system for IPRs must be provided, or ductive, service and infrastructural sectors, some combination of a patent and a sui generis which limits the potential for specialisation system. Thus, the TRIPS agreement does not and gain in productivity; provide any guarantee or ensuring - insufficiently developed human resources, that the poor share in billions of dollars that which lead to a scarcity of managerial, entre- may be made from the South’s biological preneurial and technical skills; resources or the application of traditional knowledge. Most importantly, TRIPs reduces the - shortcomings in production units related to farmers access and control over agricultural weak technological capability and adaptive resources including seeds, which are essential research; for their traditional food production. - deficiencies in the physical infrastructure (e.g. transport, power and storage facilities) The Trade Scenario in LDCs and such other support services as telecom- munications, financial services and other LDCs are identified as the weakest segment of technical support service institutions, particu- the international community in terms of eco- larly for making input and outputs; and nomic and social development. The precarious condition of these countries is manifested - the inability of LDC economies to generate through the abject poverty of their people as adequate resources for investing in all allevi- well as the inadequate economic, institutional ating the above constraints in order to and human resources. The countries are partic- enhance productive capacity. The expected ularly ill equipped to develop their domestic levels of financial and technical support from economies and to ensure an adequate standard the international community that were meant of living for their populations. These economies to complement domestic resources have, in are also acutely vulnerable to external shocks turn, not materialised; and natural disasters. Currently, there are 49 - lack of proper governance structures, institu- LDCs (UNCTAD/LDC’99) as against 42 about a tional weakness, poor accountability, trans-

Policy Matters 11, September 2003 19 Trade, Biodiversity and Environment: Crafting the link

parency in decision making have thwarted to aggravate the problem. This means that LDCs the economic growth and welfare of the peo- are trapped in a vicious circle whereby the exist- ple; ing production structure can generate little diver- - lack of proper integration of natural resource sification and export earnings in the absence of management and environmental considera- new investment. But this requires substantial tions into development planning has threat- amounts of foreign exchange and imports. ened many of the natural resource sectors Export growth is thus constrained by the low including pollution, poor and availability of imports, which cannot be increased low sustainable development and human because of inadequate export earnings and cap- development indicator. ital inflows. Furthermore, the generally low GDS rates mean that the capacity of LDCs as a whole Impact of Trade Liberalisation and to mobilise internal resources for development is Globalisation in LDCs extremely low.

LDCs have generally failed to derive appropri- Conclusion: Searching for Solutions and ate benefits from the ongoing processes of lib- Establishing Positive Linkages eralisation and globalisation. The social tensions and sometimes resultant violence which afflict The above analysis leads to the following solu- several LDCs are caused, in part at least, tions; because of poor governance and by increasing - Trade should create wealth and well-being deprivation and inequality. The economic struc- for people tures of these countries are dualistic and poorly integrated, and development interventions quite - Trade and investment to be integrated in often bypass the majority of the people who development strategies still derive a livelihood from low-productivity tra- - Sustainable trade and investment can reduce ditional sectors. poverty Most of the founding fathers of the independ- - New investment for enhancing social capital ence movements and important leaders of Asia and biodiversity conservation Pacific LDCs failed to fulfil their high and lofty The UNCED suggested making promises to their respective nations and have in trade and environment mutually supportive for some cases no capacity to govern effectively. achieving sustainable development for the glob- This costs the people of Asia Pacific LDCs seri- al community. The Agenda 21 stresses that in ous deprivation resulting in poor quality of life order to accelerate economic growth, poverty and physical and material insecurity. Despite eradication and - par- different stages of democratisation, the suffer- ticularly in developing countries - there is a ing, rights and concerns of the people are still need to establish macroeconomic conditions not the highest on the agenda of the govern- and to create institutions both in developed and ments of the day. Power often concentrated to developing countries. Other Multilateral the elite rather than good governance is often Environment Agreements such as the the motivating and moving spirit of the politics Convention on Biological Diversity (CBD) also of many of these countries. highlighted the rights of the owners and users The problem with LDC exports as a source of of biodiversity, who are mostly poor. Recent investible resources is that these countries’ rela- global initiatives lack concrete commitments on tive export prices are subject to a secular down- finance and clear timeframe. Many of the so- wards trend. Therefore, a greater export drive on called emerging out of WSSD are the part of LDCs, within the framework of estab- mostly old, ineffective, failed or limited initia- lished concentrated production structures tends tives of the private organisations and interna-

20 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

tional agencies repackaging in WSSD language. ciples of human rights, labour and environmen- tal principles if done properly can offer such an The WSSD Plan of Implementation calls on opportunity. The role of the private , countries to support the creation and explana- investment supported by governments and tion of domestic and international markets for international financial organisations are para- goods and services mount. The multinationals alone will not be able including organic products. But the great disap- to address these adequately. Small and medium pointment was the absence of new benchmark, sized enterprises and socially responsible organ- target or timelines in the areas addressed in the isations must be integral part of such initiatives. action plan (BRIDGES, September 2002). The civil society can play a watchdog, service The poorest communities and families are delivery, awareness and demonstration and often in the non-formal and non-monetised modeling, research and advocacy and bridging economy. To eke out a living they depend on roles. managing often precarious livelihood options. By increasing the purchasing power of the Their limited product-base needs to enter the poor a new market and economy where fair market chain. Furthermore, their product base trade can play a key role will be created. By must be broadened in varieties, numbers and unshackling the poor’s market capacity a virtu- period of use and availability. ous cycle can be initiated as opposed to a The poorest are most vulnerable to the impact vicious cycle of increasing poverty and environ- of international trade, trade related intellectual mental degradation. This offers one of the best property rights regimes, industrialised countries strategies for reaching the Millennium import needs for higher quality constraints and Development Goal and make globalisation work certification phyto-sanitary requirement etc. for both the poor and the environment. Further the private sector investment is con- fined to larger markets and communities with high entitlement and purchasing power. Atiq Rahman is GETI Vice Chair and Executive Director of BCAS, Bangladesh; Internet: http://www.bcas.net; email: If the Millennium Development Goals are to [email protected] be achieved, all efforts must be made to extend development to the poorest parts of the global References community. This expansion of services must be BRIDGES, “A Debatable Outcome for Trade and Sustainable Development” BRIDGES Monthly between Trade and Sustainable re-thought so that a new market emerges in Development, Year 6 No. 6 the poor economies, particularly in the LDCs so IISD & UNEP, Trade and Environment: A Handbook, that this new economic resources can be International Institute for Sustainable Development, Winnipeg, tapped by the investors. The greedy traditional . high profit, high investment and low social Koziell, I. and Saunders J. (eds.) Living of Biodiversity: exploring responsibility world which created the poverty, livelihoods and biodiversity issues in natural resource management. International Institute for Environment and Development, London, is not the answer. UK, 2001. A new regime of socially responsible and envi- Poverty Newsletter, “Draft World Development Report 2003: ronmentally sensitive private sector, particularly Sustainable Development in a Dynamic Economy” 42 (6), 2002. social entrepreneurship has to be encouraged. Rahman, A., “Poverty and Environment Linkages”, UPDATE Newsletter of the International Human Dimensions Programme on There are many examples across the world par- Environmental Change, 4, 2002. Available at Internet: ticularly amongst progressive NGOs and Civil http://www.ihdp.uni-bonn.de Society activities that point towards this direc- UNCTAD, The Least Developed Countries 1999 Report, United tion. Nations Conference on , Geneva, 1999. The new initiative under the UN Global Compact responding to the nine universal prin-

Policy Matters 11, September 2003 21 Environment at Cancún: issues in the current trade round Ricardo Meléndez-Ortiz

cal indications. But whether or not ministers On 14 November 2001, after many hours of highlight environmental concerns at Cancún it is crucial to continue and advance the discussion continuous debates during which environment on how the mandated trade and environment orbited the halls as a divisive issue, the WTO’s negotiations will impact on the work of the biodi- 142 Members launched the ninth round of nego- versity and conservation communities. As such it tiations of the multilateral trading system. The is imperative to further untangle and define the outcome, termed The Doha Development multifaceted interlinkages between trade and Agenda, came in the form of a Ministerial in order to feed innovative Declaration, which defined areas for collective and operational solutions into the multilateral study and negotiation and established a negoti- trading system. ating infrastructure and terms, and a Decision on Implementation-related Issues and Concerns Cancún will provide an important opportunity containing almost 50 paragraphs detailing work for civil society organisations, policy makers and or changes in specific provisions of the WTO other stakeholders to review progress made on Agreements where developing countries had the Doha environment mandate since November been seeking resolution or re-balancing.1 At the 2001. WTO’s Fifth Ministerial Conference in Cancún, This note will give a brief update on the trade Mexico, in September, environment issues will no and environment discussions at the WTO since doubt again find their way into ministerial discus- Doha and highlight what can be expected from sions. The ongoing talks on reductions in fish- Cancún. eries subsidies, the relationship between multilat- eral environmental agreements and WTO rules — Sustainable Development and Inclusion of in particular between the Convention on Environment Biological Diversity (CBD) and the WTO In the Doha outcomes, sustainable develop- Agreement on Trade-related Aspects of ment, broadly understood, as well as environ- Intellectual Property Rights (TRIPs) — liberalisa- ment in more specific terms, was for the first tion of environmental goods and services, market time given prominence in the works of the WTO- access issues, and observer status for MEA sec- GATT system. In addition to preambular lan- retariats will provide grist to the Cancún trade guage reiterating the commitment of the WTO to and environment discussions. sustainable development as an objective of its Despite the multifaceted Doha environment operation and reaffirming Agenda 21 language mandate, however, the environmental debate is on the mutuality of trade and sustainable devel- likely to be less visible than other negotiating opment, the Committees on Environment (CTE) issues, which Members have identified as more and Development (CTD) have been given a pressing. This is not least because most environ- unique opportunity to mainstream sustainable ment discussions are yet at the ‘examination’ development concerns in the WTO negotiations. stage, and face no significant deadlines in the Under paragraph 51 of the Declaration, the two lead-up to or at Cancún. Instead, trade ministers Committees are charged with a monitoring and are expected to focus on issues that have missed prescriptive role to identify and debate develop- deadlines, such as agriculture, intellectual prop- mental and environmental aspects of the negoti- erty & health and special and differential treat- ations “in order to help achieve the objective of ment (S&D), or for which Cancún-relevant time- having sustainable development appropriately lines exist, such as the so-called Singapore reflected”. To date, however, this opportunity has issues2 or the multilateral system for geographi- gone largely unused. The CTE and the CTD con-

22 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

Whether or not ministers highlight environmental concerns at Cancún tinue to have diffi- of the relationship between MEAs and WTO it is crucial to continue and culties in determin- rules; the definition of rules on the use of ecola- ing the approach to belling; and the inclusion of the precautionary advance the discussion on how the take and thus no principle in the WTO and in trade policy formula- mandated trade and environment progress has been tion. There are also elements of what can be negotiations will impact on the made to meaning- described as a “surfacing southern agenda on fully put the man- trade and environment”, that is the environmen- work of the biodiversity and con- date into action. It tal policy-related demands that developing coun- servation communities. appears unlikely at tries have been advancing in WTO forums other this stage that any than the CTE or at a political level. Members would have the political will to push for an approach that would allow the two Building mutually-supportive trade and Committees to effectively operationalise the environment regimes paragraph 51 mandate. Para. 31(i): Relationship between existing WTO Also unprecedented for the multilateral trade rules and specific trade obligations set out in system is a mandate in the Declaration for the Multilateral Environmental Agreements (MEAs). WTO to work with non-governmental “relevant international environmental and developmental Of all Doha trade and environment issues, the organizations” (e.g. IUCN; ICTSD; WWF). This is WTO-MEA relationship issue has garnered most a highly unusual decision for a body charac- attention and discussion among Members. There terised for its obstinacy to remain isolated from are no deadlines mandated for Cancún under other global governance processes. In addition, paragraph 31(i), and the EC, which continues to although some Member countries had pushed for push for a wide interpretation of the mandate, is an early “positioning” of the WTO with respect to hoping to avoid any further discussions at the the World Summit on Sustainable Development Ministerial meeting and move directly into the (WSSD), the trade community was merely visible next negotiating phase following Cancún. in the lead up, or at the summit. But still the However, at Cancún, the issue is likely to be negotiations on the trade-related aspects of the raised by civil society groups, who have repeat- Plan of Implementation were one of the most edly expressed concerns that the outcome under contentious. Several summit participants high- 31(i) could establish a hierarchy in international lighted a number of provisions that could directly trade and environment regimes by placing WTO influence the trade negotiations, while others rules above MEAs. These groups can be expect- pointed to the outcomes of the Summit as a ed to push the EC to avoid any such outcome strong signal to negotiators at the WTO to inte- and pursue related discussions on the MEA-WTO grate sustainable development considerations in relationship in forums outside the WTO. the negotiations. So far, the interaction between the Plan of Implementation and the Doha round Para. 31(ii): Procedures for regular information of trade negotiations, as well as the interaction exchange between MEA Secretariats and the rel- between the WTO and relevant international evant WTO committees, and the criteria for the environmental and developmental organisations granting of observer status. has left a lot to be wished for. The assumption here is that the regular infor- mation exchange would lead to a strengthening Negotiations on Trade & Environment of the interaction between MEA secretariats and In addition to the broader sustainable develop- the WTO, for whatever that is effectively worth. ment aspects, environment made it into the While no concrete decisions have yet been operational segments of the Declaration and the taken, a number of suggestions have been Decision from two perspectives. There are ele- made. These include regularisation/institutionali- ments of the EC agenda3 which seek clarification sation of existing MEA information sessions

Policy Matters 11, September 2003 23 So far, the interaction between the Plan of Implementation and the Doha round of trade focused on parties of key MEAs such as the US in the cases negotiations, as well as the interaction specific top- of the CBD, the Basel Convention and the Kyoto ics, Protocol. All in all, the language is drafted in between the WTO and relevant international enhanced such a form that possible outcomes of negotia- environmental and developmental organisa- co-operation tions on environment issues are shifted away tions has left a lot to be wished for. at the from rule changes and towards clarifications or national level footnotes to existing rules. between trade and environment officials and at the international level between MEA and WTO Fisheries subsidies Secretariats. So far, MEA Secretariats were not Members’ agreement to conduct negotiations allowed to follow para. 31(ii) negotiations, this on clarifying and improving WTO disciplines on has raised concerns with regards to how they fisheries subsidies, “taking into account the are supposed to establish a system of informa- importance of this sector to developing coun- tion exchange if they were not allowed in the tries” was pushed in the CTE through a ‘Friends room. of fish’ group of countries, in particular by Peru, The question of observer status for MEA secre- Philippines, Iceland and the US, as well as by tariats awaits official resolution at the level of the several environmental NGOs (most conspicuous- WTO General Council, where it is blocked due to ly, WWF) who have repeatedly pointed to fish- political considerations. As with para. 31(i), there eries subsidies as one of the main factors con- is no specific deadline for Members to meet on tributing to over-fishing. Engaging countries in para. 31(ii) with regards to Cancún. A proposal the WTO on immediate negotiations “to clarify of the EC, again as a demandeur in this area, and improve” rules in this regard, is from a sus- that the CTE recommend that Ministers in tainable development perspective, the best result Cancún consolidate the ad hoc invitations on this controversial and complex area. The extended to various MEAs and UNEP to the spe- straightforward application of disciplines on sub- cial sessions was rejected by several Members, sidies on fisheries, which was an alternative that including the Philippines, Malaysia, Pakistan and remained open to countries to use for many Egypt, and no consensus could be reached on years, would have generated the sort of tension how to unblock this debate in the CTE. that comes with using trade rules for environ- It is important to note that the para. 31 man- mental purposes, without an adequate support date has been qualified in a typical trade policy framework. “constructive ambiguity” such that negotiations In the lead-up to Cancún, talks on fisheries on (i) are “limited in scope to the applicability of subsidies remain blocked, as the ‘Friends of Fish’ such existing WTO rules as among parties to the group continues to face opposition from Japan MEA in question” and that work under (i) and (ii) and Korea in its efforts to tighten fisheries subsi- “shall not prejudice the WTO rights of any dies disciplines. At Cancun, ministers will take Member that is not party to the MEA in ques- stock of progress thus far in this area; they are tion”. This is language, which has prompted likely to conclude that the first phase, consisting some observers, notably , to caution of clarification of the issues, has been complet- the further strengthening of the so-called “chill- ed, and move to the next phase — negotiations. ing” effect of WTO rules on the use of trade At this stage, delegates do not foresee fisheries measures by MEAs and become a disincentive for subsidies to gain much attention in Cancún, but countries to sign on to MEAs. On the other hand, to move with the rest of the Rules issues in developing countries’ long-standing reservations accordance with the overall package (see article and defiance to a clarification seem to be prop- 1.7 this volume for more details on the WTO erly appeased with the language on preservation fisheries negotiations.) of rights. However, this affirmation of rights, pre- cluding the reach of the clarification exercise, would seem to strengthen the position of non-

24 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

Agriculture Relationship between intellectual property and biodiversity The Doha mandate refines the mandate for negotiations on agricultural policy reform and in The Declaration instructs the TRIPs Council to so doing recognises “development needs, food continue the 27.3 (b) review, originally to be security and rural development” policy objectives have been finalised by 2000, and to “examine of developing countries. Moreover, it confirms the relationship between the TRIPs Agreement “that non-trade concerns will be taken into and the Convention on Biological Diversity” and account in the negotiations”. All this is trade jar- “the protection of traditional knowledge”. The gon that includes measures and policies for envi- CBD issue has been a long-standing demand of ronmental purposes in the area of agriculture. Brazil and , principally, exposing divergent “Non-trade concerns” is a technical term used to views on how to tackle it. Mainly Peru, some cover approaches to agricultural policy such as Central Americans and most recently Switzerland “multifunctionality” (recognized in Agenda 21), a and Norway have demanded references to tradi- battle horse of the EU to keep its Common tional knowledge. Agriculture Policy (CAP) structures. “Non-trade Since Doha and in the lead-up to Cancún, concerns” is also used by a number of other momentum has been building to address these developed and developing countries to cover issues, driven from both inside and outside the concerns such as food security, biodiversity con- WTO. Developing countries are hoping that these servation, landscape preservation and other issues, which also form part of the ‘outstanding aspects of rural environmental management and implementation issues’, remain high on the TRIPs development. WTO Members continue to dis- Council agenda and that their proposal for agree on how such concerns should be taken requiring disclosure of origin and evidence of into account, including how to deal with subsi- benefit-sharing and prior informed consent in dies linked to environmental programmes and patent application would be discussed and compliance with environmental standards. adopted as part of the Doha round of trade The success of the Doha negotiations is widely negotiations. Given the already very heavy agen- seen to hinge on Members’ ability to reach an da of the Cancún meeting and the large number agreement in Cancún on the agriculture negotiat- of other development-related issues and dead- ing modalities after having missed the 31 March lines still outstanding — including TRIPs & health deadline. Countries remain at an impasse on — the TRIPs-CBD related issues might not fea- how to proceed. While the EU, after long and ture at the top of developing countries’ list of pri- difficult internal discussions, finally agreed on a orities. The EC is unlikely to raise these issues, reform of the CAP, the Commission is unwilling to waiting instead for the developing country use the leeway it has gained unless they are demandeurs to push the debate. However, even sure to receive something in exchange, in partic- if no significant progress can be made in ular concessions from the US to reduce its agri- Cancún, developing countries remain confident culture spending, as well as agreement from the that there will be further room for debate and Membership on other agriculture-related agreement at a later stage in the Doha round. demands, such as extended protection for geo- graphical indications, precaution, and food- Environmental goods and services labelling. Members’ ability to move on a variety of issues at Cancún will be contingent on how far Paragraph 31(iii) calling for the “reduction or, the two key players in the debate — the US and as appropriate, elimination of tariff and non-tariff the EU — can garner the political will to over- barriers to environmental goods and services” come their significant differences on agriculture, responds to a long-standing demand of the US, and the reaction of other Members to a possible helped by the requirement of developing coun- bilateral EU-US deal. tries such as India to move forwards on the transfer of environmentally sound technology.

Policy Matters 11, September 2003 25 Trade, Biodiversity and Environment: Crafting the link

A first step, and a step which should have The exact meaning of this mandate, for the envi- tions” ronment, still needs to be assessed. results in been taken long ago, is to seek more clar- benefits ity on the Doha mandate. for the Environmental goods: The fundamental dilem- environment, development and trade. The ma for Members here is how to balance the need typical examples used to illustrate such situ- to include products of export interest to develop- ations are fisheries subsidies and the reform ing countries within the category of environmen- of agricultural policies. Although this item tal goods while avoiding criteria based on provides an important entry point for both process and production methods (PPM), which the environmental community and for devel- many developing countries remain wary of. While oping countries to raise their sustainable a number of proposals have been submitted, development concerns, the debate has so far negotiators seem to be keenly awaiting a Kenyan progressed at a slow pace. Much room submission on environmental goods, in which remains for stepping up efforts to actively Kenya is expected to elaborate on its previous steer the discussions towards outcomes that references to organic agricultural products as reflect and balance the needs and priorities goods of export interest to developing countries. of developing countries and environmental While most countries do not appear to expect concerns. any significant outcome by Cancún, many hope that the forthcoming Kenyan proposal might help (ii) Environment-related provisions of the TRIPs to kick-start efforts by developing countries to Agreement. Left open, as it is, it provides move beyond general statements towards ample scope for the review of all aspects of engaging in a substantive and proactive manner TRIPs from an environmental perspective. So in this area to ensure that their interests are far, however, discussions here have largely reflected (see article 1.7 for more details of the mirrored those at the TRIPs Council. discussion). Members generally agreed that the key aspects of the debate on the CBD-TRIPs Environmental services: Currently, most of the relationship were being dealt with appropri- negotiations are at a ‘bilateral’ request-offer ately by the TRIPs Council (or even outside stage. The general feeling within trade-circles the WTO) and the CTE should avoid duplicat- seems to be that not much can be expected in ing work. environmental services by Cancún. However sev- eral observers from the civil society and acade- (iii) Labelling requirements for environmental mia are developing strategies and recommenda- purposes. A difficult discussion tied to the tions for how developing countries on how to issue of PPMs and precaution, which devel- best position themselves in the negotiations on oping countries have so far not felt comfort- environmental services (see article 3.1). able enough raising or discussing. The EC is the great demandeur here and even though Mandate of the Committee on Trade and it wanted negotiations out of Doha, this Environment compromise result in the form of highlighting attention in the CTE, is probably closer to Members agreed to emphasise, and re-focus, what was possible at the time. The issue is work in the CTE to concentrate primarily on not expected to attract much attention in three of the ten items in its agenda, with a view Cancún and has no priority status. to identifying possible areas of negotiation (“any need to clarify relevant WTO rules”) before the Members have thus far declined to ‘fast Fifth Ministerial meeting: track’ any of these issues to a negotiating level, and the report to the Ministerial meet- (i) Possible triple-win outcomes of trade liberal- ing is primarily a report of discussions thus ization: Instances where “elimination or far at the CTE. reduction of trade restrictions and distor-

26 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

Technical Assistance and Capacity Building past thirteen years, this is what was feasible at this stage. More ambitious movements need to Finally, technical cooperation and assistance address systemic and structural failures such as drip from the agreements in Doha. UNEP is the asymmetry in negotiating capacity between recognised for the first time as a WTO partner, developed and developing countries; real-world albeit not an exclusive one. Presumably, MEA shortcomings, such as the asymmetry in environ- secretariats — as mentioned before — are recog- mental and sustainable development manage- nised as “other intergovernmental environmental ment capacity between countries at different lev- organizations”, also for the first time. And, as els of development; or the limited or non-exis- stated above, Ministers have encouraged “efforts tent participation of non-trade and non-state to promote cooperation between the WTO and actors in the formulation of trade policy. relevant international environmental and devel- However, even the existing opportunities provid- opmental organizations” in contrast to the above ed by the Doha mandate have so far gone large- “inter-governmental environmental organiza- ly unused and the agenda in front of us as we tions”. go into Cancún is challenging and daunting. The Despite valuable efforts to try and correct ball to a great extent is now with entities like some of the past shortcomings in the WTO’s IUCN to use the entry points provided by the technical assistance and capacity-building work, Doha mandate to prove that the multilateral assistance, including that related to trade and trade system can be made better for all environment, still remains essentially standard- Members and the environment. A first step in ised. There is a need to move away from the this direction, and a step which should have approach of ‘one-off’ seminars and workshops been taken long ago, is to seek more clarity on towards a more durable and lasting inter-action the Doha mandate. To seek clarity both with which contributes to building local capabilities in regards to specific terms, such as environmental developing countries and is more responsive to goods and services, but also clarity with regards the diversity of recipients’ needs and to their dis- to what enhanced trade liberalisation in these tinct and diverse trade and environment policy sector means for biodiversity and conservation, agendas and strategies. To be effective, this in particular in developing countries. The conser- approach also entails broadening the target audi- vation community and other civil society group- ence beyond government officials to other rele- ings are in a position to contribute to the discus- vant stakeholders. Such efforts need to be com- sions at the WTO - and they urgently need to plemented by a greater coordination of capacity make use of this position to ensure that trade building activities of other relevant organisations liberalisation takes sustainable development in this area, thereby making the WTO part of a objectives into account. wide network of institutions all acting within their priorities, capabilities and resources. Ricardo Meléndez-Ortiz is CEESP Vice Chair and Chair for the Conclusion Working Group on Environment, Trade and Investment, he is also the Executive Director for the International Centre for Trade and The Doha mandate on trade and environment Sustainable Development (ICTSD). For more information please see Internet: http://www.ictsd.org; email: [email protected] is a rich programme; one that explicitly recognis- es and contains the elements to make operative Notes the objective of sustainable development. In 1 All final documents and key negotiation drafts can be found at unprecedented form in multilateral trade, it the front page of http://www.ictsd.org. A diary of negotiations, places development and environment at the cen- with brief analysis and context setting, the BRIDGES Daily Update, tre of the multilateral trade system. One could can also be retrieved from ICTSD’s website. 2 argue for more forceful language and for a bet- Singapore issues cover investment, competition policy, trans- parency in government , and . ter articulation and implementation of develop- 3 The EC has been the lauder and clearest demandeur of inserting ment and also of the environment concerns. environment in the WTO, and has been practically isolated in this However, for an observer of the system for the endeavour since Seattle.

Policy Matters 11, September 2003 27 Native seeds: humankind patrimony essential for the cultural and ecological integrity of peasant agriculture Miguel A. Altieri and Clara I. Nicholls

Ecological and cultural diversity in tradi- tional agriculture One of the salient features of traditional farm- ing systems throughout Latin America is their high degree of biodiversity. These traditional farming systems have emerged over centuries of cultural and biological evo- As peasants directly link to lution and represent accu- the market economy, eco- mulated experiences of peasants interacting with Figure 1. This is my quinoa! (Courtesy Grazia Borrini- nomic forces increasingly the environment without Feyerabend) influence the mode of pro- access to external inputs, capital, or scientific knowl- The existence of such genetic diversity has duction characterized by edge (Chang 1977, Grigg special significance for the maintenance and genetically uniform crops 1974). Using inventive self- enhancement of productivity of agricultural crops and mechanized and/or reliance, experiential knowl- in developing countries characterized by variable edge, and locally available agro- and heterogeneous environments. agrochemical packages. resources, peasants have Such diversity provides security to farmers often developed farming against diseases, pests, droughts and other systems that generate sustained yields (Harwood stresses and also allows farmers to exploit the 1979). In Latin America alone, more than two full range of agroecosystems existing in each and a half million hectares are under traditional region but that differ in soil quality, altitude, agriculture in the form of raised fields, polycul- slope, water availability, etc. A wide variety of tures and agroforestry systems, documenting the plant species represent an important resource successful adaptation of a set of farming prac- for subsistence farming communities as they tices to difficult environments (Altieri 1991). It is form the foundation to sustain current produc- generally accepted that these microcosms of tra- tion systems and biological systems essential for ditional agriculture offer promising sustainable the livelihoods of local communities (Clawson, models for other areas as they promote biodiver- 1985). Folk crop varieties, also known as lan- sity, thrive without agrochemicals, and sustain draces or traditional varieties, are also valued by year-round yields. Many of these traditional farmers because of the cultural values with agroecosystems, still found throughout the which they are imbued, such as their symbolism Andes, Meso America and the lowland tropics, in religious ceremonies or their use as gifts in constitute major in-situ repositories of both crop weddings or rewards in community work proj- and wild plant germplasm. These plant ects. At the same time such folk varieties are resources are directly dependent upon manage- extremely important for ment by human groups; thus, they have evolved industrial agriculture The proponents of the in part under the influence of farming practices because they contain a Green Revolution assumed shaped by particular cultures and the forms of vast amount of genetic progress inevitably required sophisticated knowledge they represent (Klee, diversity, including traits 1980). It is no coincidence that countries con- needed to adapt to evolv- the replacement of local taining the highest diversity of plant forms also ing pests, and changing crop varieties for improved contain the greatest number of ethnic groups. climates and . ones...

28 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

Biodiversity loss is expected to be aggravated by the technological evolution of agriculture based on because it will not spread rapidly, or because it emerging biotechnologies. will increase our maize biodiversity,are complete- ly disrespectful and cynical.” Although these traditional varieties are consid- ered as part of the common heritage of The green revolution and peasant crop humankind, they have been subjected by many diversity western organizations to a processes of appro- priation (biopiracy) without properly rewarding As mentioned earlier, traditional agroecosys- rural com- tems are the result of munities The development and commercialization of these technologies are increas- a complex coevolu- that served ingly concentrated and under the control of a few corporations. tionary process as stewards between natural and of this patrimony . The perception of folk vari- social systems, which eties as “raw material” to be freely used for the resulted in ingenious strategies of ecosystem breeding of modern crop varieties and now appropriation. In most cases the indigenous transgenic varieties directly collides with indige- knowledge behind the modification of the physi- nous notions of intellectual property rights (IPR), cal environment is very detailed. Ethnobotanies leading to conflicts with indigenous communities and folk taxonomies are perhaps the most com- who claim rights of control over their own folk plex of all forms of indigenous knowledge varieties against those of industrial-world plant (Brokenshaw et al., 1980). The ethnobotanical breeders or corporations (Cleveland and Murray, knowledge of certain campesinos in Mexico is so 1997). This is a relevant consideration in the elaborate that the Tzeltal, P’urepecha, and context of Mexico and the Andean region where Yucatan Mayans can recognize more that 1200, important indigenous movements (i.e. 900 and 500 plant species, respectively (Toledo Zapatistas, Ecuadorian and Bolivian Indian et al. 1985). Throughout the region there are movements) have a very different view of the several systems in which farmers plant multiple value and proper use of genetic resources. When varieties of each crop, providing both intraspecif- such farmers share seeds with outsiders it can- ic and interspecific diversity, thus enhancing har- not be assumed to be because of lack of a con- vest security. For example, in the Andes, farm- cept of IPR in their folk varieties, but may ers cultivate as many as 50 potato varieties in rather reflect an implicit assumption that those their fields and near Ayacucho, indigenous peo- who receive the seeds will treat them with the ple from Quispillacta maintain an average of 11 same respect as the farmers who gave them and crop species and 74 ecotypes within their small not use them for commercial purposes. plots (Brush, 1982). The resulting genetic diver- Manipulation of these folk varieties by plant sity heightens resistance to disease that attack breeders or molecular biologists from public and particular strains of the crop, and enables farm- private institutions comprises a direct violation of ers to exploit different microclimates and derive any implicit IPR right with indigenous farmers. multiple nutritional and other uses from genetic This has been strongly manifested by various variation within species . Mexican peasant unions in a recent statement There is no doubt that traditional agroecosys- denouncing the contamination of local varieties tems are complex; much of this complexity is by transgenic crops in the Sierra Juarez de Oaxaca (Gonzalez 2002): ”The contamination of In the meantime, the public sector is increasingly with- our traditional maize undermines the fundamen- tal autonomy of our indigenous and farming drawing from being a major provider of research and communities because we are not merely talking extension services to rural communities. about our food supply; maize is a vital part of our cultural heritage. The statements made by due to the fact that crop genetic resources are some officials that contamination is not serious more than just a collection of alleles and geno-

Policy Matters 11, September 2003 29 Trade, Biodiversity and Environment: Crafting the link

Revolution assumed progress and achieving development in traditional agroecosystems as inevitably requiring the replacement of local crop varieties for improved ones, and that the eco- nomic and technological integration of traditional farming systems into the global system is a posi- tive step that enables increased production, income and commonly well being (Wilkes and Wilkes, 1972). But as evinced by the Green Revolution integration meant to peasants more problems than benefits as the Green Revolution Figure 2. Me, my child and the landscape.... involved the promotion of a package that includ- (Courtesy Grazia Borrini-Feyerabend) ed modern varieties (MVs), fertilizer and irriga- tion, marginalizing a great number of resource- types of native crops and wild relatives, but that poor farmers who could not afford the technolo- also include ecological interactions such as gene gy. In areas where farmers adopted the pack- flow via cross-pollination among crop popula- age, the spread of MVs greatly increased the use tions and species, and human selection and of pesticides, often with serious health and envi- management guided by systems of knowledge ronmental consequences. Moreover, increased and practice associated with genetic diversity, uniformity caused by sowing large areas to a especially complex folk taxonomies and skills to few MVs increased risk for farmers. Genetically select varieties adapted to heterogeneous envi- uniform crops proved more susceptible to pests ronments. Today it is widely accepted that and diseases, and also improved varieties did not indigenous knowledge is a powerful resource in perform well in marginal environments where its own right and is complementary to knowl- the poor live. The net result was genetic erosion edge available from Western scientific sources. and this replacement of folk varieties also repre- Agronomists, other scientists, and development sents a loss of cultural diversity, as many vari- consultants have struggled to eties are integral to religious or community cere- It is under these condi- understand the complexities monies. tions of systemic market of local farming methods and their underlying assumptions. failures and lack of public Transgenic crops and the integrity of Unfortunately, more often native crop diversity external assistance that than not, they have ignored Concerns have been raised about the local skills and resources traditional farmers’ rationales and imposed conditions and introduction of transgenic crops may replicate or associated with biological technologies that have dis- further aggravate the effects of MVs on the and cultural diversity rupted the integrity of native genetic diversity of landraces and wild relatives agriculture. in areas of crop origin and diversification and should be available to therefore affect the cultural thread of communi- rural populations to main- Part of the problem arises ties. The debate was prompted by Nature’s con- from the fact that the associ- troversial article reporting the presence of intro- tain or recover their pro- ation of genetic diversity with gressed transgenic DNA constructs in native duction processes. traditional agriculture is per- maize landraces grown in remote mountains in ceived in development and Oaxaca, Mexico (Quist and Chapela 2001). scientific circles as negative, and thus linked to Although there is a high probability that the underdevelopment, low production and poverty. introduction of transgenic crops will further Many people involved in international agriculture accelerate the loss of genetic diversity and of view on-farm conservation of native crop diversi- indigenous knowledge and culture, through ty as opposite to agricultural development mechanisms similar to those of the Green revo- (Brush, 2000). The proponents of the Green lution, there are some fundamental differences

30 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

in the magnitude of the impacts. The Green conditions, etc) could be traded for transgenic Revolution increased the rate at which modern qualities which may not be important to farmers varieties replaced (Jordan, 2001). Under this scenario risk will Utimately, if biodiversity conser- folk varieties, with- increase and farmers will lose their ability to out necessarily adapt to changing biophysical environments and vation is indeed to succeed among changing the genetic produce relatively stable yields with a minimum small farmers, the process must be integrity of local of external inputs while supporting their commu- linked to rural development varieties. Genetic nities’ food security. erosion involves a Most scientists agree that teosintes and maize efforts that give equal importance loss of local varieties interbread. One problematic result from a trans- but it can be slowed to local resource conservation and genic maize-teosintle cross would be if the crop- and even reversed wild relative hybrids would be more successful food self-sufficiency and some through in-situ con- by acquiring tolerance to pests (Ellstrand, 2001). servation efforts level of market participation. Such hybrids could become problem weed upset- which conserve not ting farmers’ management but also out-compet- only landraces and wild-weedy relatives, but also ing wild relatives. Another potential problem agroecological and cultural relationships of crop derived from transgenic crop – to – wild gene evolution and management in specific localities. flow is that it can lead to extinction of wild Examples of successful in-situ conservation have plants via swamping and outbreeding depression been widely documented (Brush 2000). (Stabinsky and Sarna, 2001) The problem with introductions of transgenic crops into diversity regions is that the spread of Creating against homogeniza- characteristics of genetically altered grain to tion local varieties favored by small farmers could dilute the natural sustainability of these races In today’s globalized world, technological mod- (Nigh et al 2000). Although many proponents of ernization of small farms, through monocultures, biotechnology believe that unwanted gene flow new varieties and agrochemicals is perceived as from GM maize may not compromise maize bio- a critical prerequisite for increasing yields, labor diversity (and therefore the associated systems efficiency and farm incomes. As conversion from of agricultural knowledge and practice along with subsistence to cash agricultural economy occurs, the ecological and evolutionary processes the loss of biodiversity in many rural societies is involved) and may pose no worse a threat than progressing at an alarming rate. cross-pollination from conventional (non GM) As peasants directly link to the While in the eyes of seed. In fact some industry researchers believe market economy, economic that DNA from engineered maize is unlikely to forces increasingly influence the development special- have an evolutionary advantage, but if trans- mode of production character- ists, marginal rural genes do persist they may actually prove advan- ized by genetically uniform crops communities represent tageous to Mexican farmers and crop diversity. and mechanized and/or agro- But here a key question arises: Can genetically chemical packages. As adoption failure in economic engineered plants actually increase crop produc- of modern varieties occurs, lan- development; to tion and, at the same time repel pest, resist her- draces and wild relatives are agroecologists they bicides, and confer adaptation to stressful fac- progressively abandoned, tors commonly faced by small farmers? becoming relics or extinct. represent success in Thermodynamic considerations suggest they Greatest loss of traditional vari- relation to diversity cannot; traits important to indigenous farmers eties is occurring in lowland val- (resistance to drought, food or fodder quality, leys close to urban centers and conservation. maturity, competitive ability, performance on markets than in more remote intercrops, storage quality, taste or cooking areas (Brush, 1986). In some areas, land scarci- , compatibility with labor ty (resulting mostly from uneven land distribu-

Policy Matters 11, September 2003 31 Trade, Biodiversity and Environment: Crafting the link

tion) has forced changes in and agricul- diverse material, geographically isolated from tural practices resulting in the disappearance of any possibility of cross fertilization or genetic habitats that formerly maintained useful non- pollution from uniform transgenic crops. These crop vegetation including wild progenitors and islands of traditional germplasm within specific weedy forms of crops (Altieri et al., 1987). agroecological will act as extant safe- guards against the potential ecological failure The above situation is expected to be aggra- derived from the second green revolution vated by the technological evolution of agricul- imposed in the margins. ture based on emerging biotechnologies whose development and commercialization is increas- In-situ conservation and rural develop- ingly concentrated and under the control of a ment in GMO-free peasant agriculture few corporations, regions As globalization leads to greater accompanied by the increased withdrawal Given the above described destructive trends, homogeneity between and within of the public sector as many scientists and development workers have societies, the “difference” that major provider of emphasized the need for in-situ conservation of remains within marginal environ- research and exten- local crop genetic resources and the environ- sion services to rural ments in which they occur (Prescott-Allen and ments (e.g., landraces free from communities (Jordan, Prescott-Allen 1981). Maintenance of traditional transgenic contamination) com- 2001). The social agroecosystems is the only sensible strategy to prises one of the greatest impacts of local crop preserve in-situ repositories of crop germplasm. shortfalls, resulting Any attempt at in-situ crop genetic conservation resources of poor farmers. from genetic uniformi- must struggle to preserve the agroecosystem in ty or changes in the which these resources occur. In the same vein, genetic integrity of local varieties due to genetic preservation of traditional agroecosystems can- pollution, can be considerable in the margins of not be achieved isolated from maintenance of the developing world. In the extreme periphery, the socio-cultural organization of the local people crop losses mean ongoing ecological degrada- (Altieri and Merrick, 1987). Ultimately if biodi- tion, poverty, hunger and even famine. It is versity conservation is indeed to succeed among under these conditions of systemic market fail- small farmers, the process must be linked to ures and lack of public external assistance that rural development efforts that give equal impor- local skills and resources associated with biologi- tance to local resource conservation and food cal and cultural diversity should be available to self-sufficiency and some level of market partici- rural populations to maintain or recover their pation. production processes. Preservation efforts should be linked to an Diverse agricultural systems and genetic mate- overall rural development agenda that focuses rials that confer high levels of tolerance to on conservation opportunities rather than exclu- changing socio-economic and environmental sively on possibilities to enhance production. In conditions are extremely valuable to poor farm- this case, the primary aim of traditional agricul- ers, as diverse systems buffer against natural or ture shifts to one which focuses on productive human-induced variations in production condi- forms of conservation targeting those popula- tions (Altieri, 1995). Impoverished rural popula- tions most at risk from poverty and food insecu- tions must maintain low-risk agroecosystems rity and, that are least able to benefit from agri- that are primarily structured to ensure cultural modernization, but rather may suffer the security. Farmers in the margins must continue unintentional consequences of intensification to produce food for their local communities in such as genetic pollution. The idea is to design the absence of modern inputs, and this can be sustainable farming systems and appropriate reached by preserving in-situ ecologically intact technologies aimed at upgrading peasant food locally adapted agrobiodiversity. For this, it will production for self-sufficiency by incorporating be necessary to maintain pools of genetic native crops and wild/weedy relatives within and

32 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

around production fields to complement the vari- Brokenshaw, D.W., D.M. Warren and O. Werner. 1980. Indigenous Knowledge Systems and Development. University ous production processes (Altieri and Merrick, Press of America, Lanham. 1987; Brush, 2000). Brush, S.B. 1982. The natural and human environment of the While in the eyes of development specialists, central Andes. Mountain Research and Development 2:14-38. Brush, S.B. 1986. Genetic diversity and conservation in tradition- marginal rural communities represent failure in al farming systems. J. Ethnobiol. 6:151-167. ; to agroecologists they Brush, S.B. 2000. Genes in the field: on-farm conservation of represent success in relation to diversity conser- crop diversity. Lewis Publishers, Boca Raton, Fl. vation. It is precisely this ability to generate and Claveland, D.A. and S.C. Murray. 1997. The world’s crop genetic resources and the riphts of indigenous farmers. Current maintain diverse crop genetic resources that Anthropology 38: 477-492. offers “unique” niche possibilities to marginal Clawson, D.L. 1985. Harvest security and intraspecific diversity farmers that can not be replicated with uniform in traditional tropical agriculture. Econ. Bot. 39:56-67. and highly productive systems in the more favor- De Grandi, J.C. 1996. El desarrollo de los sistemas de agricul- able . As globalization leads to greater tura campesina en America Latina. Serie FAO-Gestion de Sistemas de Explotacion homogeneity between and within societies, the Agricola #12. FAO, Rome. P83. Division, Santiago. “difference” that remains within marginal envi- Ellstrand, N.C. 2001. When transgenes wander, should we ronments (i.e.landraces free from transgenic worry?. Plant Physiology 125: 1543-1545. contamination) comprises one of the greatest Gonzalez, A.R. 2002 Contaminacion de maizes natives por tran- genicos en la Sierra Juarez de Oaxaca, Mexico. UNOSJO, S.C. resources of poor farmers. Such “difference” can www.rafi.org be strategically utilized by exploiting unlimited Jordan, C.F. 2001. Genetic engineering, the farm crisis and world opportunities that exist for linking traditional hunger. BioScience 52: 523-529 agrobiodiversity with local markets, but also with Nigh, R, C. Benbrook, S. Brush, L. Garcia-Barrios and R. Ortega- tourist and international markets, as long as Packa 2000. Transgenic crops: a cautionary tale. Science 287:1927. these activities are carefully planned in participa- Ortega, E. 1986. Peasant agriculture in Latin America. Joint ECLAC-FAO Agriculture tory modes and remain under grassroots control. Prescott-Allen, R. and C. Prescott-Allen. 1981. In situ conserva- tion of crop genetic resources: a report to the International Board Basing a rural development strategy on tradi- for . IBPGR, Rome. tional farming and ethnobotanical knowledge not Pretty, J. 1995. Regenerating agriculture. World Resources only assures continual use and maintenance of Institute. Washington, DC. valuable genetic resources but also allows for Quist, D and I.H. Chapela. 2001. Transgenic DNA introgressed the diversification of peasant subsistence strate- into traditional maize landraces in Oaxaca, Mexico. Nature 414: 541-543. gies including links with external markets (Alcorn Richards, P. 1985. Indigenous Agricultural Revolution. Westview 1984, Caballero and Mapes 1985). But in order Press, Boulder. for peasants to have a truly competitive edge, Stabinski, D. And N. Sarno. 2001. Mexico, centre of diversity for they will need to be able to produce “unique” maize, has been contaminated. LEISA magazine 17: 25-26. agricultural crops (i.e. GMO free) for niche mar- Rissler, J. & M. Mellon (1996). The Ecological Risks of Engineered Crops. Cambridge: MIT Press. kets. Such “uniqueness” is also crucial for the Robinson, R.A. (1996). Return to Resistance: Breeding Crops to maintenance of the stability of their local farming Reduce Pesticide Resistance. Davis: AgAccess. systems in times of uncertainty. Toledo, V.M. 1980. La ecologia del modo campesino de produ- cion. Antropologia y Marxismo 3: 35-55. Toledo, V.M., J. Carabias, C. Mapes, and C. Toledo. 1985. Miguel A. Altieri and Clara I. Nicholls are at the Department of Ecologia y Autosuficiencia Alimentaria. Siglo Vientiumo Editors, , Policy and Management, University of Mexico City. , Berkeley Tripp, R. 1996. Biodiversity and modern crop varieties: sharpen- ing the debate. Agriculture and Human Values 13: 48-62 References Wilkes, H.G. and K.K. Wilkes. 1972. The green revolution. Altieri, M. A. 1995. : the Science of Sustainable Environment 14:32-39. Agriculture. Westview Press, Boulder. Altieri, M. A., M.K. Anderson, and L.C. Merrick. 1987. Peasant agriculture and the conservation of crop and wild plant resources. J. Soc. . 1:49-58. Altieri, M.A. and L. C. Merrick. 1987. In situ conservation of crop genetic resources through maintenance of traditional farming sys- tems. Economic Botany 4:86-96.

Policy Matters 11, September 2003 33 Agroecology: rescuing organic agriculture from a specialized industrial model of production and distribution Miguel A. Altieri and Clara I. Nicholls

for the past six years. But are these new Organic farming is a production system organic farmers and associated industry follow- ing the original precepts of the pioneers? Or is whose objective is to sustain agricultural pro- organic farming being incorporated into the ductivity by avoiding or largely excluding syn- systems of intensified production, finance, thetic fertilizers and pesticides. The original management and philosophy that guided organic farming empha- distribution typical There is no question that demand sized the use of resources found on or near of conventional the farm. These internal resources include for organic food is increasing, but agriculture? Is solar or wind energy, biological pest controls, it seems confined to the rich and organic agriculture and biologically fixed nitrogen and other nutri- replicating the especially to populations of the ents released from organic matter or from soil conventional reserves. The idea was for organic farmers to industrialized world. model that it so rely heavily on the use of crop rotations, crop fiercely opposed? residues, animal manures, legumes, green manures, off-farm organic wastes and aspects of biological pest control to maintain soil pro- Realities attempting against organic ductivity and tilth, to supply plant nutrients, farming and to regulate insect pests, weeds, and dis- There is no question that demands for organ- eases. Original adherents to the movement ic food is increasing, but seems confined to the were typical small and/or family farmers, grow- rich and especially to populations of the indus- ing diverse enterprises for the local markets, trialized world. As Third World countries enter who envisioned farming as a way of communi- the organic market, production is mostly for ty life closely linked to the rhythms of nature. agroexport and thus contributing very little to Thanks to the pioneering efforts of these the food security of poor nations. As organic farmers and the advocacy work of many products are increasingly traded as internation- organic agriculture promoters, organic farming al , their distribution is slowly is now widespread throughout the world and is being taken over by the same multinational growing rapidly. 3.5 million hectares are under corporations that dominate conventional agri- certified organic farming in Europe. In culture. Locally owned natural food stores and Germany alone there are about 8,000 organic organic brands are becoming consolidated into farms occupying about 2 percent of the total national/international chains. . In Italy organic farms number It is possible that some of the above prob- around 18,000 and in Austria about 20,000 lems could have been minimized ,if the organic organic farms account for 10 percent of total movement would have not disregarded three agricultural output. In North America about 1.1 important factors that now have come back to million hectares are certified organic with haunt them: 12,500 organic farmers in the USA doubling the organic acreage between l992 and l997. In The size of farms to be certified: By not 1999 the retail organic produce industry gener- limiting the maximum amount of land that a ated US$ 6 billion in profit. In California particular farmer or company could certify as organic are one of the fastest-growing organic, now big corporations have joined the segments of the agricultural economy, with fad and are displacing small organic farmers. retail sales growing at 20-25 percent per year In California over half of the value of organic

34 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

production was repre- sented by 2% of the growers who grossed over US$ 500,000 each. Growers grossing $10,000 or less com- prised 75 % of all grow- ers and only 5 % of the sales. The consolidation of multiple farms, pack- ing plants, and regional hubs under a single cor- poration requires the adoption of conventional big business practices. This system is excellent for consolidating wealth and power at the apex Figure 1. Inter-ccropping increases ecosystem stability and reduces vulnerability to of a pyramid, but it is pests. antithetical to the goals of community and local especially when they saw only higher costs as control that were part of the original inspiration a result. Such standardization process proved of the . As it is already being particularly culturally and economically inap- observed, once bigness dominates the organic propriate to small farmers in the developing industry, local community values are inevitably world whose farming rationale is rooted in bio- left behind, while targeting niche yuppie mar- diversity and traditional knowledge. In fact kets. many people in the south perceive organic Solidarious and flexible certification stan- standards as an imposition and as a form of dards: The movement was quick to develop from the north. Now standards rules that sought to standardize practices that are under threat and as organic standards inevitably vary by farm or region. The high erode, marketers will replace organic food with variability of ecological processes and their a perception of organic integrity created interactions with heterogeneous social, cultural, through advertising and political control of reg- political, and economic factors generate local ulatory agencies as is happening in the USA. organic systems that are exceptionally unique. As a consequence many farmers are opting out When the heterogeneity of these systems is and together with consumers, many are creat- considered, the inappropriateness of standard- ing their own standards and solidarious certifi- ized technological recipes or blueprints cation procedures as well as more locally cen- tered marketing strategies. As Third World countries enter becomes obvious. Many guidelines proved Social standards: Most certification proto- the organic market, produc- unworkable for some cols did not include social considerations to tion is mostly for export and farmers for technical distinguish organic produce. For this reason thus contributing very little to reasons. Some farmers today in California it is possible to buy organic were offended at being produce that may be environmentally produced the food security of poor told to alter their on- but at the expense of the exploitation of farm- nations. site proven methods, workers. There are no major differences in liv-

Policy Matters 11, September 2003 35 Trade, Biodiversity and Environment: Crafting the link

highly dependent on external (organ- ic/biological) inputs to subsidize functions of pest control and soil fer- tility. Adoption of such practices but that leaves the monoculture intact does little to move towards a more productive redesign of farming sys- tems. Farmers following this regime are trapped in an input substitution process that keeps them dependent on suppliers (many of a corporate nature) of a variety of organic inputs, some of questionable effec- Figure 2. “No-till” conservation farming in Brazil. tiveness and environmental sound- ness. Clearly, as it stands today, ing conditions, labor practices or pay for a “input substitution” has lost its “pro- farmworker working in an organic versus a sustainability” potential. It is precisely the conventional farm operation. Might this be a heavy use of these inputs that has been the reason why for example in California the target of organic farming detractors (the United Farmworkers have not wholeheartedly biotech industry) who accuse organic farmers endorsed organic farming? There is no ques- of promoting insect resistance due to continual tion, organic agriculture must be both ecologi- use of Bt sprays, of contaminating soil and cally and socially sustainable. For this to hap- water with copper sulphate and eliminating pen organic techniques must be embedded in beneficial insects with rothenone and other a social organization that furthers the underly- non selective botanical insecticides. ing values of ecological sustainability. Ignoring It is important however to emphasize that the complex social issues surrounding commer- only a minority of organic farmers, but that cial and agroexport oriented organic agriculture control large tracts of land and amaze much is undermining the original agrarian vision of capital, follow the input substitution model. organic farming. Most small and medi- um size farmers still Input substitution Are these new organic farmers feature legume based and associated industry follow- Structurally and functionally speaking, large- rotations, application scale commercial organic farms do not sharply of compost and a ing the original precepts of the differ from conventional homologs (Table 1). series of diversified pioneers? Or is organic farming The most important difference between these cropping systems such being incorporated into the sys- types of agriculture is that organic farmers as cover crops or strip avoid the use of chemical fertilizers and pesti- cropping, including tems of intensified production, cides in their farming operations, while conven- crop-livestock mix- finance, management and dis- tional farmers may use them extensively. tures. Research tribution typical of conventional However a large number of organic farmers do shows that these sys- use modern machinery, recommended com- tems exhibit accept- agriculture? mercial crop varieties and adopt monocultures. able yields conserve Due to their inherent low levels of functional energy, protect the soil while inducing minimal biodiversity, these simplified systems lack natu- environmental impact. A recent study in ral regulatory mechanisms and therefore are Washington State revealed that organic apple

36 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

orchards gave similar apple yields than conven- Agroecological principles to improve farm tional and integrated orchards. Moreover, the performance can be applied by way of various organic system ranked first in environmental techniques and strategies. Each of these will and economic sustainability as this system have different effects on productivity, stability exhibited higher profitability, greater energy and resiliency within the farm system, depend- efficiency and lower negative environmental ing on the local opportunities, resource con- impact. straints and, in most cases, on the market. The Is organic agriculture replicating the con- Despite the ultimate goal of agroecological design is to ventional model that it so fiercely opposed? benefits, integrate components so that overall biological such farm- efficiency is improved, biodiversity is pre- ing systems can evolve beyond their present served, and agroecosystem productivity and its status if guided by agroecological principles. self-sustaining capacity are maintained.

The key challenge for the 21st century Agroecological conversion organic farmers is to translate ecological princi- ples into practical alternative systems to suit The monoculture nature of organic farms can the specific needs of farming communities in be broken by adopting diversification schemes different ecoregions of the world. Examples that feature optimal crop/animal assemblages, already abound; according to researchers at which encourage synergisms so that the agroe- the University of Essex who examined 208 cosystem may sponsor its own soil fertility, nat- agroecological projects implemented in the ural pest regulation and crop productivity. This developing world, about 9 million farming system redesign involves the transformation of households covering about 29 million heaters agroecosystem function and structure by pro- have adopted sustainable agricultural systems. moting management guided to optimize A major strategy followed by these farmers in processes such as nutrient cycling, organic the design of a more matter accumulation, biological control of pests was to restore agricultural diversity in time and and constancy of production. space by following key agroecological guide- lines. Some worldwide examples include: Promotion of biodiversity within agricultural systems is the corner- stone strategy of system redesign, as research has demonstrated that: - Higher diversity (genetic, taxo- nomic, structural, resource) within the cropping system leads to higher diversity in associated biota - Increased biodiversity leads to more effective pest control and pollination - Increased biodiversity leads to tighter nutrient cycling - Increased biodiversity minimizes risks and stabilizes productivity Figure 3. Another kind of inter-cropping.

Policy Matters 11, September 2003 37 Trade, Biodiversity and Environment: Crafting the link

and Sudan grass (Sorghum vulgare sudanese), both impor- tant fodder plants; these are planted in a border around the maize. Two excellent borer-repelling crops which are planted between the rows of maize are molasses grass (Melinis minutifo- lia), which also repels ticks, and the legumi- nous silverleaf (Desmodium). This plant can also suppress the parasitic weed Figure 4. Growing organic tomatoes in Costa Rica. Striga by a factor of 40 compared to maize - Increase species diversity in time and monocrops; its N-fixing ability increases soil space through intercropping. In Africa, fertility; and it is an excellent forage. As an scientists an intercropping system which uses added bonus, sale of Desmodium seed is two kinds of crops that are planted together proving to be a new income-generating with maize: a plant that repels these borers opportunity for women in the project areas (the push) and another that attracts (pulls) - Encourage presence of flowers and them. The push-pull system has been tested other vegetation in annual cropping on over 450 farms in two districts of Kenya systems to enhance habitat for natural and has now been released for uptake by the enemies. Several researchers have intro- national extension systems in East Africa. duced flowering plants as strips within crops Participating farmers in the breadbasket of as a way to enhance the availability of pollen Trans Nzoia are reporting a 15-20 percent and nectar, necessary for optimal reproduc- increase in maize yield. In the semi-arid tion, fecundity and longevity of many natural Suba district plagued by both stemborers enemies of pests. Phacelia tanacetifolia and striga a substantial increase in milk yield strips have been used in wheat, sugar beets has occurred in the last four years, with and cabbage leading to enhanced abundance farmers now being able to support grade of aphidophagous predators especially syr- cows on the fodder produced. When farm- phid flies, and reduced aphid populations. ers plant maize, napier and desmodium together, a The key challenge for the 21st century organic farmers is to translate ecological prin- return of US$ 2.30 for every dollar invested is made, as ciples into practical alternative systems to suit the specific needs of farming communi- compared to only $1.40 ties in different eco-regions of the world. obtained by planting maize In England in an attempt to provide suitable as a monocrop. Two of the most useful trap overwintering habitat within fields for aphid crops that pull in the borers’ natural enemies predators, researchers created “beetle banks” are napier grass (Pennisetum purpureum)

38 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

sown with perennial grasses such as Dactylis while conserving and regenerating soil in steep hillsides. In southern Brazil no The major constraints to the spread of truly sustainable forms of farming are les than 50 thousand farmers use a the powerful economic and institutional interests that are trying to de-rail mixture of cover crops that provide a thick mulch allowing grain production and control the organic industry and its regulations. under no-till conditions but without dependence on herbicides. glomerata and Holcus lanatus. When these - Enhance landscape diversity with bio- banks run parallel with the crop rows, great logical corridors, vegetationally diverse enhancement of predators (up to 1500 bee- crop-field boundaries or by creating a tles per square meter) can be achieved in mosaic of agroecosystems and main- only two years. taining areas of natural or secondary - Diversification of perennial systems vegetation as part of the agroecosys- with agroforestry designs including the tem matrix. Several entomologists have use of cover crops in vineyards and concluded that the abundance and diversity orchards. In such systems the presence of a of predators and parasite within a field are flowering undergrowth enhances the biologi- closely related to the nature of the vegeta- cal control of a series of insect pests. The tion in the field margins. There is wide beneficial insectary role of Phacelia flowers to acceptance of the importance of field mar- enhance parasitism f key pests in apple gins as reservoirs of the natural enemies of orchards was well demonstrated by Russian crop pests. Many studies have demonstrated and Canadian researchers more than 30 increased abundance of natural enemies and years ago. In California organic vineyards, more effective biological control where crops the incorporation of flowering summer cover are bordered by wild vegetation from which crops (buckwheat and sunflower) leads to natural enemies colonize. Parasitism of the enhanced populations of natural enemies armyworm, Pseudaletia unipunctata, was sig- which in turn reduced the numbers of nificantly higher in maize fields embedded in leafhoppers and thrips. a complex landscape than in maize fields sur- - Increase genetic diversity through vari- rounded by simpler habitats. In a two year ety mixtures, multilines and use of local study researchers found higher parasitism of germplasm and varieties exhibiting hor- Ostrinia nubilalis larvae by the parasitoid izontal resistance. Researchers working Eriborus terebrans in edges of maize fields with farmers in ten townships in Yumman, adjacent to wooded areas, than in field interi- China, covering an area of 5350 hectares, ors. Similarly in Germany, parasitism of encouraged farmers to switch from rice rape pollen beetle was about 50% at the monocultures to planting variety mixtures of edge of the fields, while at the center of the local rice with hybrids. Enhanced genetic fields parasitism dropped significantly to diversity reduced blast incidence by 94% and 20%. increased total yields by 89%. By the end of One way to introduce the beneficial biodiver- two years, it was concluded that fungicides sity from surrounding landscapes into large- were no longer required. scale monocultures is by establishing vegeta- - Intensify use of green manures for soil tionally diverse corridors that allow the move- fertility regeneration and soil conserva- ment and distribution of useful arthropod bio- tion. In Central America about 45,000 fami- diversity into the center of monocultures. lies using velvet bean tripled maize yields Researchers in California established a vegeta- tional corridor which connected to a riparian

Policy Matters 11, September 2003 39 Trade, Biodiversity and Environment: Crafting the link

forest and cut across a vineyard monoculture. and family operated, biologically and culturally diverse, humane, and socially just? Is it possi- Major changes must be made in policies, institutions, markets ble to replace the industrial agriculture model with a new vision of farming deeply rooted in and research to scale-up organic agriculture. the original precepts of organic agriculture? The corridor allowed natural enemies emerging Surely, technological or environmental inten- from the riparian forest to disperse over large tions are not enough to disseminate a more areas of otherwise monoculture vineyard sys- agroecologically-based agriculture. There are tems. The corridor provided a constant supply many factors that constraint the implementa- of alternative food for predators effectively tion of sustainable agriculture initiatives. Major decoupling predators from a strict dependence changes must be made in policies, institutions, on grape herbivores and avoiding a delayed markets and research and development agen- colonization of the vineyard. This complex of das to make sure that agroecological alterna- predators continuously circulated into the vine- tives are adopted, made equitably and broadly yard interstices establishing a set of trophic accessible, and multiplied so that their full ben- interactions leading to a natural enemy enrich- efit for sustainable food security can be real- ment, which in turn led to lower numbers of ized. It must be recognized that major con- leafhoppers and thrips on vines located up to straints to the spread of truly sustainable form 30-40 m from the corridor. of farming are the powerful economic and institutional interests that are trying to de-rail Moving ahead and control the organic industry and its regula- tions. A key agroecological strategy to move farms beyond organic is to exploit the complementar- The evidence shows that throughout the ity and synergy that result from the various world there are many organic agricultural sys- combinations of crops, trees, and animals in tems that are economically, environmentally agroecosystems that feature spatial and tem- and socially viable, and contribute positively to poral arrangements such as polycultures, agro- local livelihoods. But without appropriate policy forestry systems and crop-livestock mixtures. and consumers support, they are likely to In real situations, the exploitation of these remain localized in extent. Therefore, a major interactions involves farming system design challenge for the future entails promoting insti- and management and requires an understand- tutional and policy changes to realize the full ing of the numerous relationships among soils, potential of a truly organic approach. microorganisms, plants, insect herbivores, and Necessary changes include: natural enemies. But such modifications are - Increase public investments in agroecological not enough to achieve sustainability as it is research methods with active participation of clear that the livelihood of farmers organic farmers, thus replacing and the food security of communities Existing subsidies and policy top-down transfer of standard- is a much more complex problem incentives for conventional ized technology model with par- determined by economic, social and chemical approaches must be ticipatory technology develop- political factors. How can organic ment and farmer centered farmers produce enough food in eco- dismantled. research and extension empha- logically, environmentally and socially sizing principles rather than sustainable ways without adopting a special- recipes or technological packages. ized industrial model of production and distri- bution? How can advocates of organic farming - Changes in policies to stop subsidies of con- promote an agriculture that is local, small-scale ventional technologies and to provide support

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and incentives for agroecological approaches. sumer and labor groups around the world and - Appropriate equitable market opportunities with the anti-globalization movement and also including fair market access and expand local conquer political representation at local-region- farmers markets and CSAs with pricing sys- al and national levels so that the political will is tems accessible to all present in municipal or state governments to Corporate control - Create policies that intervene Table 1. Characteristics of Conventional and Organic the market by opening oppor- Farming over the food system, tunities for local organic pro- including the organic ducers (i.e. ordinances that CHARACTERISTICS CONVENTIONAL ORGANIC mandate that all food served Petroleum industry must also be High Medium –high in school and university cafe- Dependency challenged. terias should be organic) Medium -high, usually Labor Requirements Low, hired hired - Democratize and provide flexibility to the certification process, encour- Management Intensity High Medium –High aging emergence of solidarious and locally Intensity of Tillage High Medium –High adapted certification Plant Diversity Low Low-medium - Include farm size and social-labor considera- tions in organic standards, and limit certifica- Crop Varieties Hybrids Hybrid or open pollinated tion to operations that leave a large ecologi- cal footprint. Source of Seeds All purchased Purchased, some saved In summary, major changes must be made in Integration of Crops policies, institutions, markets and research to None Little (use of manure) and Livestock scale-up organic agriculture. Existing subsidies Dependence of exter- and policy incentives for conventional chemical High Medium-high nal inputs approaches must be dismantled. Corporate IPM, biopesticides, some control over the food system, including the Insect Management IPM-Chemical biocontrol organic industry must also be challenged. The strengthening of local institutional capacity and Weed Management Chemical, tillage Cultural control, tillage widening access of farmers to support services Antagonists, horizontal that facilitate use of accessible technologies Chemical, vertical Disease Management resistance, multilane cul- resistance will be critical. Governments and international tivars public organizations must encourage and sup- Chemical, fertilizers Microbial biofertilizers, port effective partnerships between NGOs, Plant Nutrition applied in pulses, organic fertilizers. Semi- local universities, and farmer organizations in open systems open systems order to assist and empower organic farmers Large-scale sprinkler Sprinkler and drip irriga- Water Management to achieve success. There is also need to tion increase rural incomes through local and equi- implement and expand the goals of a truly sus- table market opportunities emphasizing fair tainable organic agriculture. trade and other mechanisms that link farmers and consumers more directly. The ultimate challenge is to scale-up forms of organic agri- Miguel A. Altieri and Clara I. Nicholls are at the Department of culture that are socially equitable, economically Environmental Science, Policy and Management, University of viable and environmentally sound. For this to California, Berkeley. happen, the organic movement will have to engage in strategic alliances with peasant, con-

Policy Matters 11, September 2003 41 Greening trade in the Americas Carolyn Deere The FTAA fails to provide a comprehensive development framework that addresses the integration economic priorities of all countries or the In November 2003, governments from across of economies need for differentiated timelines, obligations the Western Hemisphere will meet in Miami for at vastly and commitments, and for capacity building the third Summit of the Americas Trade different Ministerial. The official goal will be to advance for its weaker members. stages of negotiations for the completion of a Free Trade development. Beyond some minor concessions Area of the Americas (FTAA) by 2005. and assistance for smaller economies, the FTAA The last Summit of the Americas Trade fails to provide a comprehensive development Ministerial in Quebec City in 2001 was accompa- framework that addresses the economic priorities nied by protest about the anticipated social and of all countries or the need for differentiated environmental fallout of the proposed FTAA. The timelines, obligations and commitments, and for public concern should not surprise us. The capacity building for its weaker members. Western Hemisphere is host to some of the On the political front, the FTAA faces several world’s poorest countries, the greatest extremes challenges. Most governments in the Hemisphere of income inequality and serious environmental view international trade agreements that expand threats. Among the most pressing challenges are market access and foreign investment as a criti- natural disasters, deforestation, biodiversity loss, cal component of their development strategies. over fishing, erosion and air and . Yet many of these governments are now actively This dwindling of the region’s natural resource resisting the negotiation of what is increasingly base threatens the long-term viability of develop- seen as a mercantilist agreement designed to ment strategies dependent upon it. As countries advance the U.S. interests over the development prepare for the Miami talks, we can thus expect priorities of less powerful countries in the region. ongoing public pressure to ensure that any Indeed, recent talk of a shift toward an “FTAA- regional policies respond directly to these social lite” provides evidence of the discomfort among and environmental challenges. many governments with the pace and scope of At the first Summit of the Americas in Miami in negotiations. At recent informal discussions 1994, governments acknowledged the intersec- among ministers of North and Latin American tions of their social, economic and environmental countries, governments conceded for the first priorities, calling for progress on all three policy time that they may need to scale back the ambi- dimensions.1 The ongoing negotiations for a new tious scope of the FTAA negotiations. The pro- trade agreement for the Americas offer govern- posed “FTAA-lite” approach, which will be dis- ments an opportunity to refocus attention on this cussed at the Miami Ministerial in November, original vision of a hemispheric integration would likely still cover the same nine negotiating process to advance both development and envi- areas, but the commitments and disciplines ronmental protection. However, fraught with con- would not aim for the WTO-plus standards origi- ceptual and political problems, the current FTAA nally envisaged (BRIDGES, 2003). negotiations stand poised to squander that possi- Governments across the Americas also confront bility. political pressures from powerful groups within On the conceptual front, the FTAA negotiating their countries calling on them to rethink their framework fails to expressly or coherently approaches both to economic development and address either development or environment pri- to international trade agreements.2 National leg- orities, despite the fact that each of the countries islatures are becoming increasingly engaged on in the Americas has a clearly articulated set of trade issues. Debates in several national parlia- priorities on each front. The FTAA proposes the ments, for example, reveal increasing concern

42 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

about the potential impact of free trade agree- and then provide a series of policy recommenda- ments on national policy independence, social tions.5 The good news is that governments in indicators and environmental goals. The Canada- the region have dealt with the environment Costa Rica Free Trade Agreement, for example, before. Some countries, such as Chile, have faced considerable opposition from legislators shown a willingness to lead in putting forward a when it was presented to parliament for ratifica- constructive environment agenda, and several tion in 2002. Similarly, the Brazilian elections in models for progress exist.6 late 2002 brought a significant group of FTAA- skeptics into the Brazilian congress and govern- Inescapable Linkages ment (Anderson & Cavanagh, 2002) Together with civil society organizations and a growing International trade and investment inescapably number of academics, some legislators are call- affect the environment and environmental regu- ing for a more careful approach—one that pro- lation. Where they promote economic growth vides countries to properly assess what is in the and industrialization without adequate strategies best interests of national sustainable develop- to control pollution and manage natural ment.3 As anticipated by economic theory, trade- resources, trade and investment liberalisation can induced economic growth and structural changes lead to more pollution and resource consump- produce distributive impacts—some industries, tion. In this regard, the increasing number and workers and sectors gain, others lose—over both scale of pollution-spewing maquiladoras along the short and the long run. Societies are increas- the US-Mexico border provides a clear example ingly arguing that they need time and “policy of such “scale effects” and the risks that unso- space” to manage these distributive impacts. phisticated and unmanaged trade liberalisation can pose. Absent attention to trans-boundary On the environment front, the FTAA’s failure to pollution and the management of environmental incorporate environmental issues is largely due to resources, trade policy and expanding liberalisa- resistance from some key developing countries in tion can lead to irrational economic outcomes. the region. 4 Most commonly, developing country Common resources, such as fisheries and the governments fear protectionist misuse of envi- atmosphere, will be overexploited. Similarly, fail- ronmental provisions in ways that will diminish ures to “internalize” will distort eco- their producers’ competitiveness and access to nomic competition and generate air- and water- markets. On the other hand, some civil society pollution spillovers that will be costly in economic groups and legislators call for adjustments to the terms as well as in political, environmental, and FTAA negotiation process to address explicitly human terms. In such circumstances, countries environmental concerns. Increasingly, however, may decide to liberalize at a slower pace to avoid there is a call for the FTAA negotiations to be resource overexploitation or severe economic and abandoned altogether in favor of a fairer and social dislocations that could lead to environmen- more comprehensive approach to integration— tal damage. one that truly takes development, social and But trade can also be environmentally positive. environmental objectives as the end goals. It can be a useful mechanism for the transfer of The purpose of this article is to set out some of pollution-control devices. In some cases, an envi- the critical environmental elements that should ronmentally sensitive trade strategy will argue for be incorporated into any future trade agreements rapid liberalisation, perhaps to improve access to in the region. While a full discussion of the criti- technologies that facilitate cal development dimensions of trade agreements processes and more efficient use of natural is beyond the scope of this article, I do, wherev- resources. To the extent that engagement in er possible, locate the discussion of environment international trade spurs economic growth, it can issues within the context of development priori- help governments generate resources to dedicate ties. I begin with an overview of some of the key to enhanced environmental protection. In some dimensions of the trade and environment link circumstances, growth-enhancing trade may help

Policy Matters 11, September 2003 43 The good news is that governments in the alleviate income poverty and the transparently, thoughtfully, and systematically, or region have dealt with ecological degradation that often they can do it in an unstructured and ad hoc the environment accompanies it. fashion. This kind of refined and sophisticated trade policy requires structural analysis, careful Trade agreements also affect before. Some coun- decision making, and active implementation. In the environment insofar as coun- 1994, the NAFTA directly addressed a series of tries, such as Chile, tries accept “disciplines” that environmental concerns both in the agreement constrain their regulatory free- have shown a willing- and in an unprecedented “side agreement” on dom. There is the possibility that ness to lead in putting 7 trade commitments may be the environment. More recently, the Mercosur forward a constructive invoked to “trump” or challenge agreement among the Southern Cone countries environment agenda, environmental rules and pro- incorporates a number of significant environmen- grams with respect to pollution tal dimensions. Similarly, the Chile-Canada Free and several models for control, management of natural Trade Agreement, the U.S-Chile Free Trade progress exist. resources and sanitary stan- Agreement and the Chile-Costa Rica Free Trade dards, through cases brought Agreement all boast several significant improve- under dispute-settlement procedures. Some eco- ments on NAFTA’s treatment of the environment. nomic integration initiatives, such as those None of these approaches is without flaws, but advanced within the , involve the they do provide a baseline from which to build. harmonization of standards, including environ- mental laws and regulations. Such broad-based Linking Trade and Environment in the collaboration could strengthen environmental- Americas protection efforts. However, many environmental- This section sets forth recommendations for a ists fear that such policy coordination will trans- serious but carefully circumscribed strategy of late into downward harmonization at the lowest folding environmental considerations into trade common denominator or some other low level. arrangements. The recommendations that follow Well-structured provisions of trade agreements fall into three broad categories: also have the potential to yield environmental gains. Where government subsidization results, Process-Oriented Commitments for example, in overexploitation of energy, agri- culture, forestry, fisheries, and water resources, Governments involved in trade negotiations in trade agreements may commit governments to the Western Hemisphere should make a number reducing the harmful subsidies. of procedural commitments to ensure that envi- ronmental issues are fully considered. Both the At the same time, environmental policy can sig- negotiations and the implementation of any nificantly affect international trade flows. Public resulting agreements should be conducted with a health rules, air and water emission limits, food framework of open dialogue and thorough safety standards, regulations, debate both at the national and regional levels. labeling and requirements, and other In the context of ongoing FTAA negotiations, environmental policy demands channel—and may governments should: constrain—market access, particularly for goods - Commit to addressing trade and environmental and services from developing countries. Rather issues expressly. than avoid these issues, governments need to - Create a transparent process work together to develop ways to distinguish to fold environmental sensitivi- There is no substitute legitimate domestic standards from unfairly dis- ty into the FTAA analysis and guised barriers to trade and to build the capacity negotiations. for strong national of developing country producers to meet those - Abolish the FTAA’s existing but environmental pro- legitimate standards. entirely ineffective Committee grams as a way to In short, the choice is not whether to address on Civil Society. In its place, trade and environment issues but how to address governments should create a reduce trade-environ- them. Governments can develop policies overtly, Regional Civil Society Forum ment tension.

44 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

engaging local, national, and regional NGOs, effects from strengthened economic integration community-based groups, and representatives across the hemisphere8. of business in an ongoing process of discussion - Establish an Environment Negotiating Group on a range of public interest issues relevant to composed of qualified government officials that trade policy (environmental, labor, social priori- would ensure that pollution and resource man- ties, human rights, etc) and devising policy pro- agement issues are systematically addressed in posals and alternatives. The forum would the FTAA negotiation process. include formal mechanisms for periodic consul- - Establish a high-level Trade and Environment tations with government officials on substantive Advisory Group that would meet regularly with topic areas and an annual meeting. representatives of the nine FTAA negotiating Representatives at the regional Forum could be groups and the proposed Environmental drawn from national consultation processes Negotiating Group (see below). The Advisory (Lucas 2000). Group would consist of a rotating group of - Maintain regular contact with civil-society around 30 advisors selected from the countries organizations as well as small and medium size of the hemisphere. , workers organizations and informal - Each of the FTAA’s nine existing negotiating sector enterprises at the national level to com- groups should take up environmental concerns plement the existing engagement with repre- by drawing from environmental reviews, sup- sentatives of the community of larger business- port from the proposed Environment Negotia- es. Trade ministries should also engage in con- ting Group, the advice of a Trade and Environ- sultations with non-trade ministries at the ment Advisory Group (see below), and input national level in the development of trade poli- from civil-society organizations (see Box 1 for cy. examples).9 - Conduct regular briefings on issues under nego- tiation to inform the public and to elicit analy- Environmental Provisions within Trade ses and options on how best to address these Agreements issues - Conduct environmental reviews of the potential Certain elements of the trade-environment rela-

Box 1. Examples of development-ffriendly environmental elements for negotiations Examples of development-friendly environmental elements for negotia- tions - Negotiate toward zero tariffs on environmental goods (e.g., to promote trade in pollution-control and clean-energy technologies) and services. Negotiators could consider expanding the definition of environmental goods and services to promote market access for goods and services produced in an environmentally-friendly manner (sustainably harvested Market Access Negotiating forestry products) or which have provide complementary environmental Group benefits (ouputs of agriculture production methods that help preserve genetic diversity). - Pursue the elimination of trade-distorting and environmentally damag- ing subsidies in natural-resource sectors such as energy, water, agricul- ture, fisheries, and forest products.10 - Advance measures to coordinate health, plant-health, and environmen- tal standards and rules in order to facilitate agricultural trade flows. Agriculture Negotiating - Develop transition strategies for the communities likely to be affected Group by economic restructuring due to trade, and mechanisms for conserving genetic resources and diversity (e.g., native crop varieties).

Policy Matters 11, September 2003 45 Trade, Biodiversity and Environment: Crafting the link

Structure investment rules to: - Stimulate efforts to control pollution and to manage natural resources sustainably. Investment Negotiating - Stipulate a series of base-line environmental requirements to be met Group by foreign investors in all projects. - Avoid NAFTA-style expropriation provisions. - Promote transparency and public access to information in investment dispute proceedings. Establish a structure for settling environment-related disputes that would - Promote the use of supportive policy measures to directly address environment issues in lieu of trade sanctions. - Ensure access to scientific and technical expertise. Dispute Settlement - Commit to balancing trade goals and the environmental aims and Negotiating Group principles enumerated in international environmental agreements as well as domestic laws. - Promote transparency and public access to information in dispute proceedings. - Ensure that FTAA intellectual property standards do not exceed WTO requirements contained in the TRIPs Agreement. - Provide countries options to develop sui generis systems for the pro- tection of plant varieties and traditional knowledge. - Include provisions to promote transfer of technologies (particularly environmental technologies). - Include requirements related to disclosure of information about the Intellectual Property origin of genetic resources referred to in patent applications. Negotiating Group - Include requirements for full consideration of prior art in patent examinations. -Preserve the right of countries to exclude “living organisms” from patentability (including genetic resources, biological processes, animals, and micro-organisms).

tionship are so tightly intertwined that they , and the Basel Convention should be dealt with in the main text of any as well as regional and bilateral environmental trade agreement. Here, the NAFTA experience is agreements, should be expressly acknowl- particularly instructive. Despite the controversy edged. about many aspects of the NAFTA, there is a - Provide for deference to national environmental strong case for using several NAFTA-like provi- standards, as long as they reflect legitimate sions as a minimum foundation. For example, environmental policy making and are applied agreements should include provisions that: non-discriminatorily to both domestic and for- - Make clear that trade commitments and rules eign products. do not overrule existing international environ- - Place the burden of proof on the party that mental agreements. Other international stan- challenges another party’s environmental or dards, including provisions for trade measures health measures. as enforcement mechanisms in international - Discourage countries from lowering environ- agreements such as the Montreal Protocol, the mental standards or relaxing environmental Convention on International Trade in enforcement in efforts to enhance competitive

46 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

advantage or attract foreign investment. environment provisions that were not in the - Establish a dispute-settlement process that pro- NAFTA but which address sources of ongoing vides ready access to environmental, scientific, trade-environment tension. Specifically, it would and technical expertise. be useful to: - Refine the environmental “exceptions” clause In other critical regards, some of NAFTA’s that is found in the NAFTA (and in article XX of should not be replicated in the hemispheric con- the General Agreement on Tariffs and Trade text. In particular, negotiators should eliminate (GATT)). These clauses state that environmen- the threat of environment-based trade sanctions tal measures that restrict trade have to be jus- 11 from future agreements. One alternative tified in terms of whether they are “necessary”. option to consider is the process established in The word “necessary” should not be interpreted the Canada-Chile Free Trade Agreement’s parallel in ways that present an insurmountable hurdle environmental agreement whereby accusations of to legitimate environmental policies and stan- environmental non-compliance are first dards.13 addressed through dispute resolution and dia- - Recognize that environmental standards related logue. Another model to consider would be the to production processes and methods (PPMs) NAFTA’s draft environmental provisions as of can be legitimate. If they derive from interna- 1993 (before the sanctions provisions were tional, regional, or bilateral environmental added) emphasizing dialogue and disclosure of agreements, or if they address issues that have weak performance. trans-boundary effects with measures that are On the other hand, those aspects of the NAFTA proportionate to the environmental harm in with specific implications for environmental regu- question and are applied lation, such as its Chapter 11, ought to be con- non-discriminatorily, PPMs The choice is not whether to siderably rethought.12 Many developing countries should be considered address trade and environ- and civil society groups have deep concerns legitimate (Deere, 1999). ment issues but how to about existing proposals to integrate investment - Declare eco-labels to be into trade agreements. Many governments agree consistent with the terms address them. Governments that agreements on investment could be useful. of the trade agreement can develop policies overtly, However, they emphasize that NAFTA-style subject to specific disci- transparently, thoughtfully, investment agreements seem overwhelmingly plines so long as such focused on protecting the interests of interna- labels are not arbitrary and systematically, or they tional investors, rather than balancing these with (i.e., lacking a scientific can do it in an unstructured other development policy objectives (such as the basis or applied discrimi- and ad hoc fashion. fostering of local industry and employment and natorily) or a disguised competition). NAFTA’s provisions on expropriation barrier to trade, even if have generated particular resistance from the they address production processes and meth- environmental community as well as some local ods. governments. In future agreements—where investment issues feature—governments should Environmental Parallel Track ensure that they eliminate provisions for expro- There is no substitute for strong national envi- priation claims by investors when environmental ronmental programs as a way to reduce trade- standards are realigned. The general principle environment tension. With this reality in mind, should be that governments are free to revise governments across the Americas should ensure their regulatory standards without compensating that environmental officials are part of a collabo- those whose economic position is adversely rative effort to strengthen environmental per- affected. Claims for compensation should be formance within each country and across shared extremely limited. borders. Specific and Finally, regional trade agreements in the cooperation initiatives and institutions in the spir- Americas could be strengthened by adding new it of those that accompany NAFTA are necessary

Policy Matters 11, September 2003 47 Trade, Biodiversity and Environment: Crafting the link

counterparts to the commitments being made for Public Participation in Decision-Making for deeper economic integration.14 Sustainable Development (developed by the OAS in response to a mandate from the 1996 In the FTAA context, and in keeping with the Bolivia Summit of the Americas on Sustainable 1994 Miami Declaration of the Summit of the Development). Americas, governments should commit to a par- - Financing to ensure that adequate resources allel track of environmental negotiations (led by are available to build the necessary environ- environmental agencies with the participation of mental infrastructure at the local, trade and other officials) focused on significantly provincial/state, and national levels across the improving attention to environmental issues aris- hemisphere. Environmental bonds or other ing in the context of regional economic integra- innovative financing approaches, such as tion. The goal of an ultimate agreement would national Environment Funds, could be an be to support environmental cooperation for important addition to an overall infrastructure improved national and regional environmental initiative. results, with clear points of intersection with the trade negotiations, the ultimate trade agree- - Private-sector environmental cooperation and ments, and the implementation of the economic transfer. Options integration strategy. include efforts to strengthen implementation of environmental management systems (such as The key functions of the agreement would be ISO 14000) and private sector engagement in to advance: national systems for environmental certification - Environmental data gathering and analysis to and accreditation. Governments should also enable more rigorous decision-making. work to leverage private-sector financing for Difficulties comparing existing data across the environment through strategic partnerships. countries combined with methodological chal- - Environmental reviews of trade agreements, lenges of linking environmental data with eco- including clear mechanisms for the provision of nomic data to show cause-effect relationships technical expertise and advice as well as finan- limit governmental capacity to identify optimal cial assistance to governments as they under- strategies for preventing and addressing envi- take both prospective and retrospective envi- ronmental challenges. ronmental reviews of trade policy options. - Capacity building, coordination, policy Several institutional forms to facilitate these exchange, and sharing of “best practices” functions are possible. One compelling option among national and inter-governmental envi- could be the establishment a Hemispheric ronmental institutions and initiatives. For exam- Environmental Commission (HEC) which could ple, integrated common border plans designed build on but be more flexible than that of the to jointly manage shared natural resources NAFTA’s North American Commission for (especially fisheries and forests) and to prevent Environmental Cooperation. With a modest com- and address pollution spillovers should be mitment of resources and official time and ener- undertaken wherever trans-boundary issues gy, governments could leverage a lean, decen- arise in the Americas. tralized public policy “network” of existing nation- - Environmental compliance and public participa- al environmental institutions, the secretariats of tion. To support governments’ efforts to moni- multilateral, regional, and bilateral environmental tor compliance with environmental legislation, agreements (e.g., UNEP’s Regional Office for governments should also provide a NAFTA-like Latin America), and other relevant regional procedure for citizen submissions and inde- organizations (the Economic Commission for pendent investigations relating to compliance Latin America and the Caribbean, the NACEC, the with the environmental provisions of the FTAA. OAS Trade Unit, and the Division of Integration, In designing public participation strategies, Trade and Hemispheric Issues of the Inter- governments can seek guidance from 1996 American Development Bank). The priorities of Inter-American Strategy for the Promotion of the Commission should be shaped by an annual

48 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

A carefully con- meeting of regional environmen- rently an independent consultant on trade and sustainable develop- structed trade and ment issues and a DPhil candidate in International Relations at tal ministers (building on existing Oxford University. She was formerly Assistant Director of the Global environment agen- annual meetings of the region’s Inclusion program at the Rockefeller Foundation. environmental ministers hosted da, respecting the Notes by UNEP (UNEP, 2000)). The HEC 1 The Miami Declaration specifically states: “Social progress and legitimate goals of should also meet on a periodic economic prosperity can be sustained only if our people live in a both trade policy basis on substantive issues with healthy environment and our ecosystems and natural resources are whatever secretariat emerges for managed carefully and responsibly. . . . We will advance our social and environmental the FTAA. Both groups should be well-being and economic prosperity in ways that are fully cognizant policy, must and charged with jointly gathering of our impact on the environment.” For the complete text of this can be developed in and responding to input, issue declaration, see http://www.ftaa-alca.org. identification, and analysis on 2 See Anderson & Cavanagh (2002) for an overview of the State the Americas. trade and environment issues of Play on negotiations. Mackay (2002) also presents an overview from the FTAA’s aforementioned of some of the challenges facing governments. high-level Trade and Environment Experts 3 See, for example, Hemispheric Social Alliance (2002). Advisory Group and Regional Civil Society Forum. 4 Traditionally, Mexico has led the opposition to trade and envi- ronment issues (see, for example, de la Calle, 1999). The appoint- ment of Victor Lichtinger (former Executive Director of the NAFTA’s Moving Forward Commission for Environmental Cooperation) as Minister of the Trade policy making occurs under conditions of Environment is boding well for a more sympathetic Mexican dispo- uncertainty and inevitably requires complex sition toward environmental issues. tradeoffs among goals. While factoring environ- 5 The recommendations set forth in this article draw extensively mental variables into the calculus complicates the from Deere & Esty (2002). process, there is no reason why economic and 6 See, for example, Matus and Rossi ( 2002), Segger et al (2000). environmental performance cannot advance in 7 The North American Agreement for Environmental Cooperation tandem. A carefully constructed trade and envi- (NAAEC),provides a plan for US-Mexico-Canada environmental ronment agenda, respecting the legitimate goals cooperation and also establishes the North American Commission of both trade policy and environmental policy, for Environmental Cooperation (NACEC), an ongoing mechanism for must and can be developed in the Americas. addressing trade and environment issues. It remains unclear how The recommendations set forth in this article— strongly the Bush administration will take up and advocate environ- including an express ex ante approach to envi- mental considerations in the trade context. But the history of ronmental issues, a commitment to dealing with NAFTA, WTO, and fast track negotiations in the US strongly signals that no US administration will succeed in expanding external trade core trade-environment links in the trade agree- relations without significant concessions to domestic environmental ments, a focus on institutionalizing environmental constituencies. cooperation, creation of mechanisms to promote 8 The EU, Canada, and the US have each developed methodolo- broad public dialogue, funding for environmental gies for, and implemented, environmental reviews of several trade infrastructure investments and addressing prob- policy initiatives. For more information on the European efforts, see lems of capacity—should be incorporated as mini- the ’s official page on trade issues: mum requirements in whatever trade agreements http://europa.eu.int/comm/environment/eia/sea-studies-and- emerge in the region. The recommendations can reports/ sea_approach.pdf. The Canadian Ministry of Foreign Affairs be integrated into the FTAA process as well as and International Trade has released several documents regarding into the network of bilateral and sub-regional its methodologies and conclusions (2001). A useful starting point trade negotiations under way in the Hemisphere for information on the US process is the Clinton administration’s (such as the Central American Free Trade Executive Order 13141 on environmental reviews of trade agree- Agreement (CAFTA)). If the FTAA process floun- ments. The NACEC is also conducting considerable analytical work ders, the same trade and environment principles on methodologies and has commissioned a number of reports ana- will be relevant to new efforts to create a new lyzing the environmental impacts of NAFTA (NACEC 1999). Finally, the World Wildlife Fund has played an important role in stimulating more balanced, transparent, and fair approach to discussion of methodologies for assessment. The WWF recently economic integration. released its report of an International Experts Meeting on Sustainability Assessments of Trade Liberalisation (2000). In 1999, Carolyn Deere is a GETI Steering Committee member and is cur-

Policy Matters 11, September 2003 49 Trade, Biodiversity and Environment: Crafting the link

the NACEC released three case studies of environmental impacts of Trade Area of the Americas. Institute for Policy Studies: the NAFTA. A further 14 case studies were commissioned and pre- Washington, D.C. sented at a NACEC Trade and Environment Symposium held in Audley, J. 1997. and Global Trade: NAFTA and the Future of . Georgetown University Press. October 2000. The NACEC’s work takes both a sectoral approach Audley, J. and E. Sherwin. 2002. “Politics and Parallel (e.g., agriculture, electronics, energy, tourism) as well as an envi- Negotiations: Environment and Trade in the Western Hemisphere”, ronmental media approach (e.g., water, forests). The NACEC, a Working Paper #25. April 2002. direct institutional product of the NAFTA, has generated significant Audley, J. 2001. “Back to the Bad Old Days of NAFTA.” Paper presented at NWF/Yale Center for and Policy research on methodologies for environmental reviews. In 1999, conference on “Trade and Environment in the Americas: Lessons NACEC officials commissioned a series of trade and environment Learned from the NAFTA,” April 2000; revised April 2001. Available case studies to evaluate the analytical framework it developed at http://www.ycelp.org. (NACEC 2000). A landmark North American symposium in 2000 on Brack, D. 2001. “Environmental Treaties and Trade: Multilateral Environmental Agreements and the Multilateral Trading System.” In the NACEC’s methodology underscored the need to make progress Trade, Environment and the Millennium, ed. G. Sampson and W. in the fine-tuning of the analytical framework, but also highlighted Chambers. : UN University Press. the potential of environmental reviews as a tool for integrating BRIDGES. 2003. “Latin America: Ministers Consider an FTAA- environmental sensitivity into the trade policy making process. Lite”, BRIDGES, No. 5, June 2003, p21. 9 The FTAA’s Trade Negotiations Committee (TNC) has divided Canadian Ministry of Foreign Affairs and International Trade. 2001. Framework for Conducting Environmental Assessments of negotiations among nine FTAA negotiating groups that have specif- Trade Negotiations. Ottawa: DFAIT. ic mandates from ministers and the TNC to negotiate text in their CIEL et al. 1999. Investment Agreement of the Americas: subject areas. They were established for market access; invest- Environmental, Economic and Social Perspectives. Center for ment; services; ; dispute settlement; agri- International Environmental Law, Instituto del Tercer Mundo, and Preamble Center. culture; intellectual property rights; subsidies, antidumping and Deere, C. & D. Esty. 2002. Greening the Americas: NAFTA’s ; and competition policy. The negotiating Lessons for Hemispheric Trade, MIT Press: Cambridge. groups meet regularly throughout the year. For further information Deere, C. 1999. Ecolabelling and Sustainable Fisheries. Rome on the FTAA negotiating process, see http://www.ftaa-alca.org. and Washington: FAO and IUCN. de la Calle, L. 1999. Presentation at WTO High Level Symposium 10 Interest in the environmental and trade impacts of “perverse” on Trade and Environment. Available at http://www.wto.org. subsidies is high. For a review of the scale and scope of perverse Esty, D. 1994. Greening the GATT: Trade, Environment and the Future. Washington: Institute for . subsidies in agriculture, fossil fuels/nuclear energy, road transporta- Hemispheric Social Alliance. 2002. The Free Trade Area of the tion, water and fisheries, see Myers 1998. In working to reduce Americas Exposed: Civil Society Critique of the Official Draft Text. harmful subsidies, governments must bear in mind that the Discussion Draft #1. www.asc-hsa.org. removal of subsidies may be a necessary but not sufficient condi- Lucas, N. 2000. “Some Issues for Consideration on Participation.” tion for improved environmental management, that some subsidies Paper presented at Washington conference on “The FTAA and the Environment: What Can We Learn from the NAFTA Model?” may help promote transitions to more environmentally sound Mackay, D. 2002. “Challenges Confronting the Free Trade Area of modes of production, and that some subsidies may be important in the Americas”, FOCAL, June 2002. developing countries for food security and livelihoods, particularly Mann, H., and M. Araya. 2002. “An Investment Regime for the on a short-term basis. Americas: Challenges and Opportunities for Environmental 11 This recommendation does not imply, however, that trade Sustainability.” In this volume. Mann, H., and K. von Moltke. 1999. NAFTA’s Chapter 11 and the measures for environmental purposes should not be pursued in Environment: Addressing the Impacts of the Investor-State Process other contexts. The of trade measures to promote compli- on the Environment. Winnipeg: International Institute for ance with the provisions of several multilateral environmental Sustainable Development. agreements has been repeatedly demonstrated (Brack 2001). John Matus, M., and E. Rossi. 2002. “Trade and the Environment in the FTAA: A Chilean Perspective.” In this volume. Audley (1997, 2001) presents useful information on the debate Myers, N. 1998. Perverse Subsidies: Tax $s Undercutting Our around sanctions, and the case for moving beyond them in the Economies and Environments Alike. Winnipeg: International context of trade agreements. Institute for Sustainable Development. 12 For more information about investment provisions in the NACEC. 1999. Assessing Environmental Effects of the North NAFTA, GATT and FTAA regimes, see CIEL et al. 1999, Mann and American Free Trade Agreement (NAFTA). An Analytic Framework (Phase II) and Issue Studies. Environment and Trade Series no. 6, von Moltke 1999, and Mann and Araya 2002. North American Commission for Environmental Cooperation. 13 For a discussion of the issue in the GATT realm, see Esty Segger, M., M. Munos, P. Meirles, J. Taurel, and V. Paul. 2000. 1994. Trade Rules and Sustainability in the Americas. Winnipeg: 14 See also Audley and Sherwin (2002) for a set of recommen- International Institute for Sustainable Development. dations from a similar perspective. WWF. 2000. Report of International Experts Meeting on Sustainability Assessments of Trade Liberalisation. Gland: World Wildlife Fund. References Anderson, S. & J. Cavanagh 2002. State of Debate on the Free

50 Policy Matters 11, September 2003 How a positive and cooperative attitude towards ecolabeling could help unlocking the debate on PPMs – and be a contribution to biodiversity protection Nicola Borregaard

Sanitary and Phytosanitary Standards (SPS) and A small cocoa cooperative in Ghana is interest- the Agreement on Technical Barriers on Trade (TBT), the second category is not. Ecolabeling is ed to produce organic cocoa as the farmers have especially relevant in the second category. The heard about the win-win opportunities this could first three of the second category often fall into provide them with. A domestic market for the Multilateral Environmental Agreements (MEA), organic cocoa does not exist. There are no spe- whereas the last is, in general, not regulated cial government incentives to embark on the through any multilateral, bilateral or international conversion of production. About the international agreement of any sort. market little is known. Premium prices might exist, but the range of prices is not clear. Market In the mid to late nineties there was a very outlets are rather different from the conventional lively debate on non-product related PPMs in the outlets and contacts do not exist yet. World Trade Organisation2, in several interna- Certification procedures are rather complex and tional organizations, such as the above-cited the cooperative would have to certify with an OECD or UNEcoSoc3, as well as in more aca- international certifier that is recognized in the 4 importing countries. Special tariff treatment is demic circles . not granted to the organic products. Finally, the The main issues raised in this debate referred cooperative decides not to go ahead with con- to the need for harmonization of PPM measures, version, given that there are too many obstacles the need to analyze economic instruments and and too few incentives for doing so. their role in PPMs, the need to establish financial This is a very real case. It is the modern face and technical assistance to help countries attain of great part of the debate on a conflictive topic environmentally sustainable PPMs, as well as the in international trade, closely related to environ- need to pay more attention to eco-labeling sys- ment: PPMs, or processes and production meth- tems. ods. Following this debate there has hardly been any progress towards an international agreement The PPM debate on how to deal with PPMs, which have basically been regarded as new means to discriminate According to an OECD study on PPMs,1 these against developing country exports, evoking refer to “the way in which products are manu- strong reactions whenever they have been men- factured or processed and natural resources tioned. The well-known tuna-dolphin case (ref.) extracted or harvested.” The same document on US import restrictions designed to impose also elaborates the following categories of PPMs: particular techniques on the fishing of tuna the first category relates to product related beyond the limits of US territory in order to mini- PPMs, and the second to non-product related mize the by-catch of dolphins, has become a PPMs. The latter category also holds four differ- sort of straightjacket to the PPM debate. ent subcategories, including those where the PPMs relate to a transboundary pollution, to Labelling and PPMs migratory species and shared living resources, to a global concern, or finally to environmental and Voluntary environmental certification and eco- other effects limited to the territory of the coun- labeling, particularly in the area of natural try applying the PPM. resource extraction and management, have been the market´s answer to avoid the lengthy and Whereas the first category would be regulated frustrated discussions in the WTO. Every year under WTO, specifically the Agreement on many additional ecolabeling schemes enter the

Policy Matters 11, September 2003 51 Trade, Biodiversity and Environment: Crafting the link

One should proceed by ask- ing questions such as market, by now about a 2% of world trade is in The lack of evaluations on whether such issues as the so called “green products”, not including ISO the environmental or supervision, the rules on 14000 certification. In 2001 85 million hectares social benefits of ecola- of forests were certified in sustainable manage- beling; even though there transparency, participation ment, representing about a 10% of productive might be consensus on and information, and the forests.5 The market of organic products was in the overall positive question of mutual recogni- 2001 estimated to lie around US$20 billion, with effects, there is still little expected annual growth rates of 5-10% over the understanding on the tion and harmonization can magnitude of environ- next decade.6 For the year 2000 it is estimated and should be left in the mental effects as well as between 40 and 60% of tourism was nature- the distribution of the pri- hands of private institutions related, some of which was officially labeled eco- vate benefits, both impor- or whether there is a need tourism. There is also increased reference and tant points regarding the encouragement towards the use of ecolabeling for multilateral government design and principles of schemes in multilateral environmental agree- the system as well as the intervention? ments such as CBD, RAMSAR and others. important reference Whereas the OECD guidelines to the use of points for an increased marketing of the PPMs were directed at policy makers, today, schemes most non-product related PPMs are managed not Finally, there does not seem to be a single and by policy makers but by the private market. simple answer to the question of how to best Concern about market access problems related regulate ecolabeling and market access – differ- to these labeling schemes is similar to the one ent cases vary , but a lot can be learnt from expressed concerning non-product related PPMs case studies that show how ecolabeling practices in general. can be improved. This concern is based on: The market can no longer be ignored, neither The lack of guidance and directions on good can the problems related to this extremely practice regarding issues such as transparency, dynamic and (economically, environmentally and participation and effects on third parties. possibly socially) promising market segment be Information being minimal and very dispersed, disregarded. A commitment towards fostering so that information costs to the individual pro- sustainable development prescribes progress on ducer are extremely high. the above-mentioned aspects. The complexity of certification procedures; most developing countries lack institutional structures Time to get involved and take decisions to adopt domestic certification schemes; the vast amount of different certification systems makes Today, on a multilateral scale and within the mutual recognition and harmonization essential WTO, the debate on PPMs has a re-opened, this for developing country producers´ participation; time in fact looking specifically at ecolabeling, in criteria often reflect developed country realities the context of the new WTO Doha round, stipu- only. lating in paragraphs 31-33 of the Declaration dis- The necessity of institution and capacity building cussions on “the effect of environmental meas- in different ways in order to assure that also ures on market access, especially for developing smaller producers in developing countries can countries”, as well as on environmental labeling participate in the schemes. requirements“. The Committee on Trade and The lack of cooperation between countries, and Environment (CTE) is to look at the impact of between different stakeholders along the supply eco-labeling on trade and examine whether chain, especially with regard to capacity and existing WTO rules stand in the way of eco- institution building (the dissemination of good labeling policies. Parallel discussions are to take practice examples, promotion of products, prod- place in the Committee on Technical Barriers to uct design, etc.). Trade (TBT) “In conducting its work on the

52 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

issues mentioned above, the Committee on Finally, harmonization and mutual recognition Trade and Environment should identify any WTO might be something that can be dealt with in the rule that would need to be clarified.” respective already existing private bodies such as associations or private certification systems. WTO negotiators as well as international and The first steps taken in this direction in recent national, governmental and non-governmental years, include discussions under the Global organisations, will have to think thoroughly Environmental Labeling Network, discussions in about how to confront this issue – on the one the forestry sector between the large certifica- hand progress is necessary, but on the other tion schemes, discussions between the hand, the issues should be dealt with and International Federation of Organic Agriculture brought under the auspices of the most ade- Movement, IFOAM, and national organic labeling quate fora and institutions. One should proceed schemes, furthermore discussions between envi- by asking questions such as whether such issues ronmental labeling schemes and fair trade label- as the supervision, the rules on transparency, ing, will have to be strengthened and pursued participation and information, and the question more vigorously. of mutual recognition and harmonization can and should be left in the hands of private institutions The first sector that would benefit in the devel- or whether there is a need for multilateral gov- oping world from progress in this area would be ernment intervention? If the latter is the case, the natural resource sector, including a wide then in which form and function? As a control range of products and producer groups such as body within WTO? As a cooperative or assistance Ghanaian cocoa producers7, Chilean organic body under one of the UN agencies? Should wine producers8, Colombian cut flower produc- there be a split of different functions between 9 different agencies and how could cooperation ers , or wood products from sustainably man- between these be arranged? aged forests in Guatemala10. Several of the issues at stake might be WTO What seems clear is that one institution alone related. For example, the Doha mandate cannot solve this issue and coordination between includes negotiations on the reduction or elimi- the various actors involved seems essential. nation of tariff and non-tariff barriers to environ- Cooperation between the WTO, United Nations mental goods and services. The final definition Agencies, and private institutions is an impera- of environmental goods and services might well tive to unlock the debate on PPMs and - include several labeled products which are pro- ing. Doha offers an opportunity to initiate this duced in an environmentally-sound manner. Even coordinated action if enough space is left and though the identification of these products and resources are provided for this cooperation to the recognition of the labeling schemes might be happen. carried out under private institutions, this special NGOs such as IUCN, with a background in tariff treatment would be subject to WTO rules. international trade and sustainability, will have to Also, rules on government procurement policies, participate in the discussion and confront the dealt with under the WTO´s Committee on questions raised above, from an NGO perspec- Government Procurement, can become an issue tive, contributing to an expansion of sustainable in ecolabeling schemes. production and exports, safeguarding both, the Other issues such as cooperation, information environment as well as social concerns. exchange or even guiding principles of good Specifically, they confront for example the ques- practice might be dealt with under the auspices tion of whether and how to put stronger pres- of a United Nations Agency, such as UNEP or sure for obtaining observer status in the WTO´s UNCTAD, or a combination of these, or alterna- CTE. IUCN will also have to be clear about tively through concerted action between bilateral potential effects of ecolabeling and PPMs on bio- donor agencies and non governmental institu- diversity protection, and will have to consider, tions.

Policy Matters 11, September 2003 53 Trade, Biodiversity and Environment: Crafting the link

amongst others, what its role in TRAFFIC implies cultura of participatory governance, PolicyMatters 10, CEESP, September 2002 in this context. ICTSD (1998) Eco-labeling and certification. www.ictsd.org/pubs/recommandr/ecolabelling.pdf Lind, S.N. (1996) “Eco-Labels and : Nicola Borregaard is GETI Steering Committee Member; and Avoiding Trade Violations while Regulating the Environment” 8 Executive Director, Recursos e Investigacion para el Desarrollo INTERNATIONAL LEGAL PERSPECTIVES 113. Sustenable (RIDES); email: [email protected], Internet: OECD (1997) Processes and production methods (ppms): www.rides.cl Conceptual framework and considerations on use of ppm-based trade measures. Paris Notes OECD (2000) NGO consultation. Joint Working Party on Trade and Environment. COM/ENV/TD/M(2000)83. Paris 1 See OECD (1997) OECD and World Bank Institute (2002) International Workshop on 2 Market Incentives for Biodiversity Conservation and Sustainable See for example WTO (1998) th th 3 Use. Seminar Dakar, Senegal, 25 -27 of June 2002 United Nations Economic and Social Commission for Asia and the Sampson,G. (1999) World Trade Organisation and agreements to Pacific (1997) deal with the environment in: 4 See for example Lind, S.N. (1996) http://www.geic.or.jp/interlinkages/docs/Sampson.PDF 5 See FAO (2001) United Nations Economic and Social Commission for Asia and the Pacific (1997) TRADE EFFECTS OF ECO-LABELLING, Proceedings of 6 See Willer and Yussefi (2001) a seminar held in Bangkok, 17-18 February 1997, New York: United 7 See for example OECD and WBI (2002) Nations, 164 p. 8 For a discussion of this case see Borregaard et al. (2002) WILLER H Y YUSSEFI M (2001) “Organic Agriculture Worldwide, 9 See WTO (1998) Statistics and Future Prospects” 10 WTO (1998) Environmental Labels and market access: case study See Finger-Stich (2002) on the Colombian flower-growing industry. WT/CTE/W/76 and G/TBT/W/60. Geneva References: WTO (2001) Symposium on issues confronting the world trading Borregaard,N., Dufey,A., Geisse,G., Ladron de Guevara,J. (2002) system – summary reports by the moderators. 6th and 7th July, Green Markets – often a lost opportunity for developing countries? Geneva IISD, CIPMA, RIDES. Santiago WTO (2001) The Doha Declaration explained. FAO (2001), “State of the World´s Forest 2001” http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm Finger-Stich,A. (2002) Community forest concessions in the Mayan reserve of Guatemala – Certification, legitimacy and the

Reflecting sustainable development in standard-setting and implementation: towards a balanced and differentiated approach By Mahesh Sugathan

From an environmental perspective, production Standard-setting and implementation is an and process standards that regulate production methods are more significant than those that important component of any sustainable devel- regulate final products. ‘This is because the way opment strategy. Standards especially environ- a product is produced is one of the three central mental standards that regulate production questions for an environmental manager: how it processes or products lay down benchmarks or is made, how it is used and how it is disposed objective criteria that provide measurable indica- 1 tors of progress along a sustainable development of.’ The environmental impact of a final product trajectory. Standards are, amongst others, used may only be on the territory where the product for regulating technical, health, safety and envi- is consumed, i.e only at the stage of disposal as ronmental performance. compared to the more far-reaching effects in terms of resource-depletion and/or pollution that

54 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

In the application of a stan- a production-process menting a set of multilaterally acceptable envi- may involve. ronmental standards dealing with the issue of dard as well as in the formula- International trade Process and Production Methods (PPMs). rules set by the WTO tion of standard-related rules, This article argues that the key to addressing rules however permit a conflict may arise between these concerns lies in two areas: a) the process Member states only to of standard-setting themselves and b) in the the different components of set standards affecting nature and provision of technical assistance that final products, rather sustainable development, may be required to meet these standards. The than the production namely the economic, social article also argues that policy-making in these processes themselves. two areas could in turn be governed by a set of and environmental. One of the reasons for cross-cutting principles. These would include this limitation is under- seeking to balance all elements of the sustain- standably, a suspicion among many developing able development equation - the environmental, countries that economically powerful countries, social and economic aspects. Moreover it would during the standard-setting process could suit- include the concept of Conditional Differentiation ably twist process and production standards to applying either with respect to the stringency of reflect their own environmental priorities. the standard, or in the provision of technical Developed countries could also set standards in assistance. a way which benefit their own domestic indus- tries or create competitive disadvantages, for Standard setting and technical assistance: industries in developing countries lacking the Balancing the elements of sustainable technical and financial means to comply with development them and maintain cost-competitiveness at the Integrating sustainable development into same time. Process and production based envi- Standard-setting ronmental standards, if incorporated in WTO rules could, according to developing countries, In the application of a standard as well as in enable economically powerful Member states to the formulation of standard-related rules, a con- enforce standards formerly under the sole man- flict may arise between the different components date of domestic environmental law and domes- of sustainable development, namely the econom- tic authority. This could be made possible ic, social and environmental. A well-known through trade measures embodied in the WTO example is the apparent conflict between protec- dispute settlement system where developing tion of natural resources such as forests and countries would have little choice but to comply. maintaining the livelihoods of people dependent on the forest for economic sustenance. Another It is obvious that while many developing coun- example would be measures aimed at the pro- tries would have no reason to object the attain- tection of health that might conflict with the eco- ment of higher environmental standards per se, nomic viability of an industry and consequently their fear is that these might come at a cost-in employment. Hence terms of job losses and economic growth. This any setting of standards then raises the question how such fears on Harmonised environmental stan- should take these other implementation of genuinely desirable environ- aspects of sustainable dards to tackle environmental mental standards can be allayed. Before looking development into at this with respect to process and production problems, must make their account to the maxi- methods, it might be worthwhile to take a criti- mum extent possible. objective mandatory, while giv- cal look at how environmental and other product Sometimes an accurate ing enough flexibility to coun- standards are set and applied as well as at WTO and timely estimation rules governing the provision of technical assis- tries to decide how the objec- of its impact on liveli- tance. Plugging the weaknesses in the system hoods, exports cannot tives are to be achieved. will help ensure credibility and remove the fears be done especially if and suspicions now present amongst many the need for the standard is urgent. In such developing countries on formulating and imple- cases technical and financial assistance will have

Policy Matters 11, September 2003 55 Trade, Biodiversity and Environment: Crafting the link

a greater role to play. A proper understanding of environmental The standard should also not upset the technical and financial capabilities of the sphere differentia- countries for which these standards would have tion is reflected in other elements of the sustainable the greatest impact is also important. the principle of development equation such as income common but dif- growth, competitiveness and liveli- Addressing sustainable development needs ferentiated in Standards-related Technical assistance responsibilities, in hoods. This implies for instance, that Principle 7 of the In the case of technical and financial assis- if a country signs on to an agree- 1992 Rio tance, consideration of all the elements of sus- ment providing for differentiated Declaration on tainable development would be important. In Environment and standards, the levels of obligations it some cases, technical and financial assistance Development. could focus on enabling a developing country to assumes will also increase with levels achieve a desired level of health or environmen- Where the of economic development. tal protection. This might enable the country to nature of the achieve the desired level with a minimum of problem requires harmonized standards in impact on other sustainable development indica- terms of objectives and/or processes tors such as exports or livelihoods. However in other cases achieving a desired level of protec- In the standard-setting process, differentiation tion even with technical assistance might still could be made conditional upon the urgency of result in negative impacts on other sustainable the problem to be tackled. Environmental protec- development indicators. For example, technical tion is a good example. For trans-boundary assistance for forest conservation and re- problems of a serious nature for instance, some afforestation schemes could result in increasing degree of harmonization of standards including forest cover over a period of time but could also process and production methods may be neces- mean that populations dependent on logging sary in the absence of evidence that different would lose opportunities to benefit from exploit- techniques suited to differences in geography ing timber resources in that area. Should multi- and development would not result in the desired lateral or bilateral technical assistance then also environmental objective. Otherwise, harmonised take the form of safety nets, to enable occupa- environmental standards to tackle environmental tionally displaced people, to help earn alternative problems, must make their objective mandatory, livelihoods that are less or not environmentally while giving enough flexibility to countries to demanding, or train them in more sustainable decide how the objectives are to be achieved. techniques of wood-harvesting? Or should such In all cases where harmonisation of standards safety nets be the sole right of national govern- is needed, whether in terms of process or objec- ments? Raising resources for such broad-reach- tives, but especially in terms of process, techni- ing technical assistance to address all the ele- cal assistance must be made obligatory. In par- ments of sustainable development will be a chal- ticular, if developing countries would need tech- lenge. However, it may become essential espe- nical assistance to comply with these standards. cially in situations where there is a negative cor- Differentiation can then occur in the levels of relation between two or more of elements of technical assistance depending on the needs and sustainable development. capabilities of the countries concerned. Conditional Differentiation in standard-set- In a nutshell, where the same level of environ- ting and technical assistance mental protection or the same environmental objective is the target, differentiation may apply Differentiation is an important principle widely only to the methods needed to do so or in the accepted in both international trade as well as in level of obligatory technical assistance. environmental policy-making. Within internation- al trade rules these are reflected in the WTO Where the nature of the problem allows provisions providing for Special and Differential for differentiated standards in terms of treatment for developing countries. Within the

56 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

objectives and/or processes. with levels of economic development. This level must then be defined by a set of economic indi- A different situation arises when the problem cators, which would include not only per capita sought to be addressed by the standard, is not income but also human and social development of an urgent nature or is not of a global magni- indicators. tude. In such cases differentiation in the levels of protection should be considered. Many prob- Differentiating standards however implies that lems might require a gradual transition from one these must be sustainable for example in terms standard to another, as income levels and of future impact on the environment. Where resources available to the country increases. these are perceived to be unsustainable, despite Such standards should as far as possible be evo- a developing country’s inability to pursue such lutionary in that as a country develops economi- standards, technical assistance must be provided cally, the level of standards prevailing are raised so that the countries can evolve to the next or higher. But as far as a country remains at a cer- higher levels of protection. tain stage of economic development, the stan- dard it meets must be one attuned to its capabil- Mahesh Sugathan works with Economics and Trade Policy Analysis, at the International Centre for Trade and Sustainable ities and resources. The standard should also not Development (ICTSD); email: [email protected]; Internet: upset other elements of the sustainable develop- http://www.ictsd.org ment equation such as income growth, competi- tiveness and livelihoods. This implies for Note 1 instance, that if a country signs on to an agree- Environment and Trade: A Handbook, IISD and UNEP, 2000. p.34 ment providing for differentiated standards, the levels of obligations it assumes will also increase

Getting to green: overcoming obstacles to liberalizing environmental goods and services under the WTO Nicola Borregaard, Annie Dufey and Kevin P. Gallagher1

ministerial declaration does not clearly define Introduction: Environmental Goods and what environmental goods and services are. Thus, controversy starts over how to define the Services and the Doha Round goods and services under negotiation. The proposal to liberalize markets for environ- Several intergovernmental organizations such mental goods and services has become one of as OECD/Eurostat, APEC and UNCTAD have each the more controversial issues to confront the elaborated separate but similar definitions of WTO since the Doha Round officially commenced environmental goods and services, including also in late 2001. Paragraph 31(iii) of the Doha to some extent cleaner technologies, and activi- Ministerial Declaration calls for negotiations on ties to prevent environmental damage. With the the liberalization of environmental goods and exception of UNCTAD, which includes environ- services. Environmental goods will be negotiat- mentally preferable products (EPP) within its def- ed under the Negotiating Group on Non-agricul- inition, all of them only consider those EGS in tural Market Access. Negotiations regarding which developed countries are net exporters. At environmental services will be negotiated under the level of individual countries, they have also the Council for Trade in Services (CTS). The expressed different shades of opinion on the

Policy Matters 11, September 2003 57 Trade, Biodiversity and Environment: Crafting the link

definitional aspects of EGS,2 ranging from nar- reach US$ 640 billion in 2010 what represents rower definitions to broader ones. In general, an annual growth rate of 8 percent. Such growth countries support the definition of APEC/OECD would place the environment industry at roughly on environmental goods and the EC´s definition the same size as the pharmaceuticals or infor- related to environmental services. Colombia is mation technologies industries4. Revenues gen- one of the few developing countries that, erated from the provision of services account for besides taking position at the WTO, has elabo- 50 percent of the market, while the remainder is rated its own definition of EGS which also divided between equipment sales and the sale of includes . environmental resources, such as water or ener- 5 The CTE Special Session (CTESS) has acted gy . as a forum for attempts to address definitional The environmental industry is dominated by and other issues in parallel to the negotiations developed country firms. Indeed, OECD country themselves. Pursuant to the single undertaking firms represent over 90 percent of the market6. agreed to in Doha, negotiations on both environ- The US is the world´s biggest producer and con- mental goods and environmental services must sumer of these products, and is the third largest be completed by January 1, 2005. net exporter after Germany and Japan. The Dating back to the Uruguay Round negotia- world market is characterized by a few dominant tions, environmental issues have long been a multinationals in sectors, mostly from the devel- source of tension between the developed and oped countries but including some developing developing nations. In general, developed coun- countries firms7. try proposals to incorporate environmental issues into trade negotiations have been perceived by A glance at future projections for the EGS mar- developing countries as a means to further ket reveals the negotiating positions of the restrict developing country access to developed developed world. The current market for EGS in country markets. Negotiations over environmen- the developed world is close to saturation, while tal goods and services in the WTO offer an the market in the developing world is growing opportunity to move beyond traditional environ- rapidly. In spite of the importance of industrial- mental conflicts. On the other hand, if the ized countries in the EGS market today it is in negotiations are not conducted in a more open, developing countries and economies in transition multilateral, and accommodating manner, they where the market grows fastest. On an annual could exacerbate existing tensions to a point basis, the developed country market for EGS is beyond which they can be repaired. projected to grow at less than one percent per year. In the developing world however, EGS This briefing describes some of the more tech- markets are projected to grow by 8.6 percent nical issues that surround these debates, offers a per year. Indeed, these trends have already range of solutions to the current gridlock, and begun, the average growth between 1998 and outlines suggestions for future research. 2000 in Asia was 12 percent, 10 percent in Latin America, and 8 percent in Africa the Middle East of Benefits and Costs of and Eastern Europe. Global annual growth dur- Liberalization ing this period was estimated at 3 percent8. The EGS Global Market Although 90 percent of the market for EGS now resides in the developed world, more than half Regardless of how they are defined, environ- of the market will be in the developing world by mental goods and services are a large and grow- 2024. Thus, it should come as no surprise that ing part of the world economy. Even defined in the industrialized countries, looking for new mar- the narrowest of terms, the industry grew 14 ket opportunities, are now pushing for market percent between 1996-2000, reaching US$ 518 liberalization. Tariffs applied to environmental billion3. Indeed, the market is expected to goods by industrialized countries are relatively

58 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

low, in most cases not exceeding 3 percent. In countries. Thus, the most important environmen- contrast, tariffs applied by developing countries tal benefits are the roll-out of clean water and are much higher, often surpassing 30 percent9 waste collection services; reductions of wastage and/or inequitable access to scarce water; Whereas the developed countries stand to gain increased availability of drinking water; use of most from the liberalization of traditional EGS, waste recycling to create alternative source of developing countries could emerge as winners if energy12, among others. Furthermore, a wide the regime for the sustainable consumer goods range of fastest growing industrial sectors in mentioned above (environmentally preferable developing countries could benefit from products (EPP) such as enhanced market access including pulp and organic products, sus- If -grown coffee, which is paper processing, steel smelting and refining, tainable forest prod- 13 less environmentally harmful ucts, sustainable fish- energy, , textiles and footwear . Also, an than its conventionally grown eries, and sustainable important sub sector of the EGS is related to counterparts, was deemed to be tourism) was liberated. FDI14. In addition, in case of a wider definition For many of these of EGS industry – i.e. including EPP - market dif- a different product, countries products and services, ferentiation and liberalization can have environ- like Mexico would have a clear the developing coun- mental benefits, help sustainable development comparative advantage in such tries potentially display and foster clean production. Furthermore, the comparative advan- inclusion of sustainable products could send a coffee production. tages – especially if powerful policy and market signal to consumers such goods and servic- and producers about the significance of this es are deemed to be different products from their EGS15 “like” equivalents. In other words, if shade-grown coffee, which is less environmentally harmful than The Potential Costs of Liberalization its conventionally grown counterparts, was deemed to be a different product, countries like On a global scale, the traditional EGS market is Mexico would have a clear comparative advantage rife with externalities (both positive and nega- in such coffee production. tive) and market imperfections. Because of this, many nations across the world have inserted a Potential Benefits of Liberalization number of policy interventions that are often justified from national development perspectives. Liberalization of EGS can create win-win out- The following is a list of concerns that will arise comes10. The removal of trade barriers could if such interventions are lifted in the name of improve efficiency in the allocation of resources, trade liberalization in the sector on a global foster technology transfer and international com- scale: petitiveness, enhance opportunities for market The definition problem: there is no definition development and perhaps attract foreign direct nor any internationally agreed criteria to classify investment. In addition, although developed environmental goods. Environmental services are countries dominate the traditional EGS industry, defined in the Services Sectoral Classification List some developing countries are already including (W/120), which is criticized for being too narrow environmental services within their export since it only includes servic- 11 supply ; thus trade liberalization could also es. Proposed definitions of EGS involve those improve their market access. From an environ- EGS in which industrialized countries have a mental point of view, the reduction of tariffs and strong export advantage. Developing countries other trade barriers could enhance market have done very little work on defining a conven- access to environmental technologies, which are ient definition. Besides the need for analyzing important elements to alleviate and prevent definitions which would represent developing environmental problems, especially in developing country interest as well, there are additional def-

Policy Matters 11, September 2003 59 Trade, Biodiversity and Environment: Crafting the link

initional challenges to confront such problems as a competitive disadvantage for their products, it multiple use, dual motivation and embedded would also create an incentive to evade pollution technologies, among the most relevant. The lack regulations. of a custom code in the Harmonized System to The public good problem: In the environmen- identify environmental goods is an additional tal services sector, trade and investment arises 16 problem . from deliberate decisions of governments to The subsidies problem: almost all industrial- open up service provision to private actors, and ized countries subsidize selected productive sec- to undertake trade and investment liberalization tors and support export development, especially to permit and encourage the participation of for- 20 also in environmental/sustainable products.17 eign private actors . Public , in particu- Grants and favorable interest loans for the pro- lar, considering water as private good or water motion of cleaner technologies are also common distribution as a private service is relevant given that practically all countries -industrialized and practice18. In contrast, subsidies for environ- developing- have stipulations regarding govern- mental goods and services in developing coun- ment participation in that market and/or are tries are very limited and not systematized. inclined to prefer domestic, usually, local suppli- Thus, for developing countries EGS trade liberal- ers. Waste water treatment and solid waste dis- ization implies direct competition with highly posal are also sectors that present important subsidized products from industrialized countries. trade barriers. In addition, in the case of non If the issue of subsidies was included in the dis- traditional environmental goods, government cussion, developing countries might, on the procurement can be used for protectionist or dis- other hand, risk concessions on the basis of the criminatory purposes, for instance, the directives infant industry argument. of some European governments to procure only The export credit problem: the existence of from certified national producers of forest goods, tied credits and incentives linked to export pro- in detriment of certified foreign producers. motion policies is a common practice in industri- The certification problem: the way in which 19 alized countries . Even though such a practice consumers identify sustainable products and helps to promote technology transfer, it can also services is through eco-labeling. Developing lead importing countries to adopt inappropriate countries have little and mostly unsuccessful technologies, and sets a scenario of unfair com- experiences with national certification systems petition for developing countries´ exports in the due to the complexity of certification procedures respective technologies. and the lack of institutional structures and The competition problem: The global EGS capacity building to create effective domestic market is dominated by a handful of multination- certification schemes. Thus, in practice they al firms from the industrialized countries. In have to opt for international schemes of certifi- other words they are . Thus, trade cation whose criteria often reflect industrialized liberalization could lead to a further concentra- countries’ reality only, involve higher certification tion of this global market. There could be two costs -especially relevant for smaller producers- subsequent ramifications that would detriment and create foreign dependence. In addition, the developing countries. First, in the short term oli- vast amount of different certification systems gopolies from the industrial economies could makes mutual recognition and harmonization lower their prices and wipe-out their developing essential for developing countries. country EGS competitors. Second, in the face of The PPM problem: Linked to non-traditional oligopolistic pricing, developing country firms in goods and services, and certification, the prob- pollution intensive sectors such as pulp and lem of lack of clarity of regulation of PPMs at the paper or steel may eventually face higher prices international level should be mentioned. The for pollution abatement technology. Not only inclusion of these goods and services in the EGS would this put these developing country firms at definition implies that the whole issue of PPMs

60 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

has to be discussed in WTO, given that these be “traded” within the EGS negotiations, and goods and services then are classified according could be traded across the Doha negotiations as to the way in which they are produced (or car- a whole: ried out, in the case of services). Invigorate the CTESS to convene developing In addition to these specific problems, perhaps country working groups to define EPP related one of the most cumbersome facts is that the EGS so that they may be considered alongside EGS debate is subject to numerous issues that the current APEC and OECD definitions for tradi- go far beyond the scope of any one Committee tional EGS. CTESS, perhaps co-convened by in particular. This requires a high degree of coor- UNEP in a participatory manner, should also dination among different Committees, issues and address labeling issues related to broadening the expertise. The lack of coordination could definition of EGS to include EPPs. In this context inevitably lead to inefficiencies in the results of the topic of production process methods (PPMs) the liberalization process. will have to be discussed. Given that most devel- oping countries have, in the past, rejected this Getting to Green: Creating Value for the discussion, the subject has to be presented from WTO Negotiations a completely reversed perspective, that is here it Thus, as they are currently structured, the EGS is dealt with positive differentiation of products negotiations are far from a straightforward “win- with preferential treatment. A precedent has win” scenario for the developing countries. If been set in this context by the European Union the negotiations remain a discussion over the with the inclusion of products from sustainably liberalization of end of pipe technologies in the managed forests in its Generalized System of global economy and if they are concentrated Preferences (GSP). mainly on issues of definition, because of the structure of EGS markets, the developing coun- Safeguard Against Unfair Competition tries stand to lose an emerging and potentially In order to gain access to developing country lucrative market while subjecting their EGS markets the industrialized nations need to economies to the potential of higher costs for demonstrate that it is not their intention to wipe- environmental protection abatement strategies. out competition on a global EGS scale, but that We offer the avenues that are both intra-EGS in the spirit of the WTO, they will eventually and inter-Doha approaches to overcoming cur- enhance competition by creating a more level rent gridlock. It should be stressed that the playing field for these goods and services. The negotiations are not about deregulating an following are proposals that could add value to unwieldy industry on a global scale, but about the negotiations within the Negotiating Group on re-regulating it. Non-agricultural Market Access and the CTS: Broaden Definition Slower tariff phase-outs for selected develop- ing countries. Many nations, such as India, Broadening the definition of EGS to include Brazil, and Mexico have emerging industries in EPPs gives many developing countries something many of the more traditional EGS sectors. A to bargain with during the negotiations. slower phase-out for such countries would allow Currently, many nations are poised to simply developing country firms more time to gain a reject or accept traditional EGS liberalization foothold in their own countries by gaining access without any of their concerns being addressed. to other countries that will be liberalized on a A broader definition will not only add value to faster timetable. Fairly simple metrics could be the CTS and the Negotiating Group on Non- invented to allocate which countries could get Agricultural Market Access, but could add value longer phase-outs (such as those countries to other important areas across the entire WTO where national firms have a large share of the negotiations themselves. This end, the CTESS domestic market and that are beginning to should be reinvigorated; EPP liberalization could export).

Policy Matters 11, September 2003 61 Trade, Biodiversity and Environment: Crafting the link

Preferential tariffs for sustainable products ized oligopolies to raise prices above their mar- from developing countries. It would improve ginal cost in the medium term and would result its market access and also would send a positive in welfare losses to developing country markets. sign for environmental policy in the sense not The developed countries could agree to EGS only economic factors matters. However, it also specific clauses that safeguard against such pos- represents a problem because puts sustainable sibilities. The topic of tied aid could also be producers in disadvantage in comparison to tra- raised in this context. ditional producers in developed countries, for example, in case of organic production. Also, it Trade Across the Doha Negotiations implies competition with highly subsidized pro- Themselves duction from developed countries. In addition, it Although a more cumbersome option, trading requires discussing the PPMs issue at the WTO. across the WTO regime could be an option to Capacity building so that developing country ensure the elimination of barriers for EGS in the firms can participate in reducing the barriers to global economy. Although many developing entry into the global EGS market. Developed countries stand to lose by the reduction of tariffs countries could offer to support developing in traditional EGS, many of the same nations country efforts to reduce the transaction and stand to gain significantly from reductions in informational costs of entering global markets by agricultural subsidies. Thus, an option could be conducting workshops and training programs for to proceed with the EGS negotiations under a developing country firms. A fund could be creat- fairly narrow definition of EGS after a major ed for developing country capacity building at commitment is made by industrialized nations to UNCTAD, UNIDO, or UNDP. Also technical assis- agree to reduce agricultural subsidies and that tance (for instance, for the elaboration and such a commitment would be reflected in culmi- implementation national certification systems) nation of the entire round of negotiations pur- can be negotiated in a quid pro quo to subsidies suant to the single undertaking. Under such a to sustainable production or EST technologies in scenario the developing countries would essen- industrialized countries. tially be giving up their ability to develop a com- parative advantage in traditional EGS in Green light subsidies could be enacted to give exchange for enhancing their comparative domestic firms in developing countries the ability advantage in agricultural products. Such a route to pay for new EGS technologies without losing may take the pressure off the need to differenti- their competitive edge. During the Uruguay ate among developing country agricultural prod- Round’s Subsidies and Countervailing Measures ucts. In addition, the net gains in welfare terms (SCM) agreement, nations made provisions from such a trade would be beneficial from a where 20% of the cost of adaptation of existing developing country perspective. facilities to new environmental regulations were permissive as subsidies. These provisions are Take a more incremental approach now defunct under a sunset clause. However, given that many WTO nations had agreed to this The argument could be made that EGS liberal- previously, the language of these portions of the ization may not be ready for the WTO. Perhaps SCM could be used as a starting point for EGS EGS liberalization would be more appropriate for negotiations to the same end. bilateral or regional agreements as sort a “test- ing ground” before implementing before dis- -like provisions could be incorporat- cussing them at the WTO level. ed into the EGS negotiations to ensure that developed country oligopolies will not lower their Nicola Borregaard is GETI Steering Committee Member; and prices in the short term to gain access to devel- Executive Director RIDES. Annie Dufey works within the Research oping country markets and thereby put domestic branch of RIDES and Kevin Gallagher is also a GETI Steering Committee Member and research associate at the Global firms in developing countries at a competitive Development and Environment Institute at the Fletcher School of disadvantage. Doing so would allow industrial- Law and Diplomacy at Tufts University.

62 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

Notes Dynamic Non-Member Countries”, OECD, Paris, 1998. 2 See the made at the WTO by different mem- 14 “Bienes y Servicios Ambientales: Una Definición desde la ber states available at www.wto.org/onlinedocument. Perspectiva Latinoamericana”, Borregaard N., Dufey A., Guzmán Z. 3 “Environmental Good and Services: An Assessment of the RIDES-FLAA, Quito, (forthcoming). p.46 Environmental, Economic and Development Benefits of Further 15 “Trade Preferences and Environmental Goods”, Vaughan V., Global Liberalization”, OECD, 2000, Paris. p.7. Trade, Equity and Development, Carnegie Endowment for 4 S/CSS/W/38 “ from the European Communities International Peace, April 2003. p.1 and their Member States” GATS 2000: Environmental Services. 16 However, Vaughan (2003) p.3 remarks that in January 2002 5 UNCTAD (1998). p.6 the World Customs Organization released revised HS codes, includ- ing for the first time stand-alone criteria covering environmental 6 OECD (2000). p.7 issues. 7 “A Primer on Environmental Goods and Services: Definitional 17 For example, Borregaard et al (2002) estimate that subsidies Challenges to the Negotiation for Further Liberalization”, Chaytor B. to organic production in the EU can reach twice the size of the RSBP, 2002. p.2. already significant subsidies in the respective conventional product 8 UNCTAD (1998) p.6 market. 9 “Future Liberalization on Environmental Goods and Services: 18 “Future Liberalization on Environmental Goods and Services: ensuring environmental protection as well as economic benefits”, ensuring environmental protection as well as economic benefits”, OECD, Paris, 1999 OECD, Paris, 1999 10 OECD (2000) 19 OECD (1999) states between 1992 and 1996 the 11 Latin American countries such as Brazil, Chile and Argentina Development Assitance Comitte of the OECD (DAC) donors extend- are providing environmental services to other Latin American coun- ed $22.7 billion to water and water treatment projects, renewable tries. See Borregaard N., Dufey A. Guzmán Z, (forthcoming) and general environmental protection. About one quarter 12 WT/CTE/W/172 “Environmental Good and Services: An of this amount went as tied aid or partially untied aid. Assessment of the Environmental, Economic and Development 20 “Environmental Services: the “win-win” role of trade liberal- Benefits of Further Global Liberalization”, Information Note by the ization in promoting environmental protection and economic devel- OECD Secretariat. opment”, OECD, 2000, Paris 13 “Cleaner Production and Waste Minimization in OECD and

Subverting subsidies: could the WTO help alleviate the global fisheries crisis? Hugo Cameron

wide, the result of both growing demand and When European explorers reached the north- enhanced fishing capacity that has fuelled a dra- matic increase in fisheries extraction, imports east coast of North America in 1497, they report- and exports. The situation is underpinned in ed that the fish were plentiful enough to scoop many cases by subsidies and other supports esti- up in baskets and so numerous they could slow mated at US$ 15 billion annually that have not a ship. Five hundred years later, the Atlantic cod only sent the wrong price signals to the global off Newfoundland, Canada, had col- market for fisheries products, but have also lapsed, devastating the local economy and raised global fishing capacity 30 to 100 percent marine ecosystem. Poor beyond what is needed for efficient harvesting. was a major culprit, but so was Canada’s fish- Subsidies that promote overcapacity and artifi- eries subsidy programme. Begun in the 1960s, cially lower prices can also hurt the competitive- by the late 1980s government support had ness of many developing countries - particularly helped building a fleet that was five times bigger those without the means to subsidise themselves than that required to fish at sustainable levels: - where local and artisanal fishing is a major neither the cod nor the regional economy have employer. It is worth noting that leaders at the 1 since recovered . World Summit on Sustainable Development The northwest Atlantic fishery is not an isolat- (WSSD) last September further endorsed elimi- ed case. Fish stocks are in steep decline world- nating certain types of fisheries subsidies2.

Policy Matters 11, September 2003 63 Trade, Biodiversity and Environment: Crafting the link

However, the jury is not out on the fisheries now slowing as upper limits are being reached. subsidies case, which as of November 2001 Trade accounts for a significant and rising pro- forms part of wider negotiations on ‘clarifying portion of this activity. Annual total value of and improving’ rules governing subsidies at the imports and exports ranges from US$ 55 to 60 3 (WTO) . Talks on the billion. In 1996, 40 percent of fish and fish prod- issue remain stalled, with some countries - pri- ucts were traded, and exports have risen five- marily Japan and South Korea - disputing that fold since 1960. Close to half of all exports subsidies necessarily lead to . Further, derive from developing countries, where in some WTO members from developing countries have cases fish products represent up to 80 per cent yet to fully assess the impact stronger WTO fish- of total exports5 (Dommen and Deere, 1999). eries subsidies disciplines might have on their The primary importers of fish and fish products economic development aspirations. are the US, Japan and the EU, which together The WTO’s fisheries subsidy mandate has account for three quarters of total imports. attracted much attention from environmental However, as Graph 1 demonstrates, the increase groups and others as a potential ‘win-win-win’ in fish harvesting and trade has not come with- situation: good for environment, good for devel- out a significant cost to marine resources. opment and good for trade. What prospects does the Doha mandate hold for dismantling perverse fishing subsidies that negatively impact the marine environment and development con- Graph 1: Decline in Biomass (Species and Regions). cerns? The following paragraphs will attempt to Source: Myers and Worm, "Rapid worldwide depletion of shed some light on the debate around fisheries predatory fish communities", in Nature, 15 May 2003. subsidies and the course that WTO Members have set in agreeing to revisit the rules around them. They will also examine the fisheries sub- sidy issue from a broader, sustainable develop- ment perspective to ensure an outcome from the Doha negotiations that balances economic devel- opment priorities with social and environmental goals.

Trading, but for how much longer? There is general agreement that the world’s fisheries are facing a crisis engendered by com- mercial fishing. A recent report in Nature maga- Graph 2: FAO Fisheries Department (2002), The State of 4 zine shows alarming declines of larger fish World Fisheries and Aquaculture, FAO: Rome. species — many of which are heavily traded — in many ocean regions (see Graph 1), creating potentially serious consequences for marine ecosystems (Myers and Worm, 2003). According to the UN Food and Agriculture Organization (FAO, 2002), 6 percent of global fish stocks are depleted, 15 percent are overfished and 50 per- cent are fully exploited, while only 3 percent are slowly recovering. This is attributed to rapid growth in marine fisheries production, which increased from 20 million tonnes in 1950 to over 120 million tonnes in 1997, though this trend is

64 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

A kettle of fishing subsidies A number of developing countries also use domestic government support to develop or The WTO has been mandated to tighten its maintain their fisheries sectors, to mixed effect. subsidy rules in general, and on the fisheries Some export-oriented fisheries subsidies in sector in particular. However, as years of heated developing countries can bring about negative debate in the WTO over agricultural subsidies long-term consequences from both a develop- have shown, subsidy reform can be politically ment and an ecological perspective. A series of difficult. There can be a wide diversity in types case studies undertaken by the UN Environment of subsidies, and governments often differ on Programme (UNEP) in amongst others, the effects they have, especially on foreign Argentina, and Senegal, show that while subsi- economies and . Fisheries subsidies dies helped to boost exports in the short term are no exception. Indeed, it is the highly com- (i.e. by 478 percent in Argentina between 1985 plex of the fishing industry, and and 1995), they also led directly to fishing vessel the difficulty in regulating fishing practices and overcapacity, depleted fish stocks and diminish- defining what constitutes a WTO-inconsis- ing annual catches (UNEP, tent subsidy that has put fishing subsidies The WTO has been mandated to 2002). The UNEP reports also on the Doha. tighten its subsidy rules in gen- demonstrate that short-term Support for fisheries can take many gain derived from trade- forms, including tax exemptions on fleet eral, and on the fisheries sector enhancing policies can be renewal, provision of infrastructure, price in particular. However, as years substantially offset by long- supports, and financial assistance for of heated debate in the WTO term costs in the form of access to foreign . By lowering fisheries depletion and loss of costs of entry, so-called perverse fisheries over agricultural subsidies have income and employment for subsidies can contribute to overcapacity shown, subsidy reform can be local fishermen7. and overfishing by attracting more fisher- men into an already-full industry or by politically difficult. Subsidies may not always helping fishermen remain in the industry play a harmful role from an ecological or social perspective. At a recent even if fish stocks are declining (Porter, 1998)6. meeting of least-developed country trade minis- Spanish fishing subsidies for trawler renewal, for ters in Dhaka, Bangladesh, officials affirmed that instance, have contributed to building an overly subsidies could play an important role in eco- large fleet that has drawn the anger of many nomic development and poverty alleviation pro- countries - including Argentina, Canada, Chile grammes. As such, they proposed that subsidies and Peru - upset at Spanish vessels taking fish required for development, diversification and from within or just beyond their boundaries. upgrading infant industries in the least-devel- Most fisheries subsidies originate in developed oped countries not be subject to penalties under countries that can afford them, thereby often the WTO dispute settlement (Dhaka Declaration, disadvantaging those developing countries who 2003).8 cannot, for example by undermining market access for developing country fisheries products Countries also use subsidies directed at moving or by displacing more sustainable local produc- their industry towards a more sustainable fishing tion in poorer states with subsidised imports. As approach, such as restoring the ecology of local such, reducing production-oriented subsidies by fisheries, and supporting small-scale or artisanal richer nations could hold positive development fishing practices. Some Pacific Island states, implications, much as dismantling agricultural which are highly dependent on fish for employ- subsidies in the North holds the potential for lev- ment and food, make use of fisheries subsidies elling the uneven playing field in agricultural to promote localisation of their fleets, thereby trade between developing and developed coun- enabling coastal communities to support them- tries. selves in the face of (more heavily) subsidised and more efficient foreign fleets. Some of these

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countries have voiced concern that their support industry12; and (3) non-actionable, i.e. either to the fishing sector could be prohibited if non-specific subsidies or specific subsidies that stricter disciplines on fisheries subsidies were meet certain policy objectives, such as assis- agreed on at the WTO. tance for research activities or disadvantaged regions, or adaptation of existing facilities to Fish, friends and the WTO new environmental requirements, within certain In the leadup to the WTO’s fifth Ministerial limits. However, the provisions outlining this lat- Conference in Cancun, Mexico in September, ter group of specific subsidies (SCM Article 8) talks on clarifying and improving disciplines in expired in January 2000, and a subsequent the WTO’s Agreement on Subsidies and review process was conducted without any deci- sion being reached on maintaining or amending Countervailing Measures (SCM)9 are at an the provisions. impasse. The debate is characterised by different points of view between a group of fish-exporting Friends of Fish countries (the ‘Friends of Fish’), on the one hand, and Japan and South Korea, on the other. The Friends of Fish - including Argentina, With its recent agreement on a new Common Australia, Chile, Ecuador, Iceland, New Zealand, Fisheries Policy, the European Union has moved Peru, the Philippines and the United States - more towards the approach of the Friends of who are the primary demandeurs in the push to Fish. While Cancun is unlikely to resolve the reform the SCM, argue that further clarification issue, the Ministerial will provide an opportunity of the subsidies code is needed for two reasons. for trade ministers to take stock of progress in First, in addition to the standard market distor- the fisheries subsidies talks and perhaps provide tions addressed by existing SCM rules, fisheries much-needed momentum. Indeed, they are like- sector subsidies can also distort access to fish- ly to conclude that the first phase, consisting of eries resources, making it difficult to determine clarification of the issues, has been completed, which industries have been affected and by how and move to the next phase - negotiations10. much. Second, they argue that the heteroge- neous nature of fisheries products, and the eco- So what exactly are WTO members bargaining nomic structure of the fisheries industry, make it over? Essentially, the negotiations launched in more difficult to identify the type of market dis- Doha could potentially make a significant contri- tortions at which SCM disciplines are directed. bution to achieving sustainable development. If Further, the Friends of Fish say that the poor the talks are to be successful, and lead to an quality of fisheries notifications under the SCM outcome supportive of sustainable development, agreement (which requires Members to notify all countries must ensure that development factors, specific subsidies to the WTO), and the inacces- such as those raised by LDC ministers in Dhaka sibility of information on government pro- that call for spaces for development policy, are grammes in the fisheries sector, have made it considered together with economic and environ- difficult for researchers to develop authoritative mental interests. assessments of the level of transfers13. As a result, the Friends have proposed creating a The Agreement on Subsidies and negotiating ‘platform’ that builds on fisheries Countervailing Measures subsidies categorisations already developed in As it currently stands, the Agreement on other organisations14. This would enable Subsidies and Countervailing Measures (SCM) Members to look specifically at different cate- sets conditions on three types of subsidies: (1) gories of subsidy, their nature and impacts as prohibited, i.e. primarily subsidies for exports well as how they are addressed under existing and for use of domestic over imported goods; WTO disciplines. (2) actionable i.e. not prohibited per se but To this end, Chile — supported by the other which maybe are specific11 and cause injury or Friends of Fish — in June 2003 submitted a pro- ‘serious prejudice’ to a trading partner’s

66 Policy Matters 11, September 2003 Trade, Biodiversity and Environment: Crafting the link

If the talks are to be success- posal calling for a “red continue to resist efforts at eliminating tariffs on ful, and lead to an outcome light” category in the marine products. Many observers credit the lack supportive of sustainable SCM that would ban “all of movement on the issue to the continuing development, countries must fisheries subsidies of a resistance of these countries to SCM reform. commercial nature, ensure that development fac- directly geared towards The EU lowering costs, increas- tors, such as those raised by The European Union, which has traditionally ing revenues, raising supported the Japan-Korea stance, is taking a LDC ministers in Dhaka that production (by enhanc- less defensive position on fisheries subsidies ing capacity), or directly call for spaces for development since the introduction of its Common Fisheries promoting overcapacity policy, are considered together 16 and overfishing”. Chile Policy in January 2003 . Motivated by rapidly with economic and environ- suggested classifying all declining stocks of cod and hake in the eastern mental interests. other fisheries subsidies Atlantic; pressure from domestic and internation- that did not fall into this al environmental groups; and by the Doha nego- class into an “amber light” category, provided tiations, the EU in agreeing its new policy faced they are notified to the WTO. Such an approach up to strong pro-subsidy lobbies from Spain, would be similar to the amber, blue and green Portugal, Greece and France. However, many box method used in the WTO agriculture talks to environment and development non-governmental classify various levels of trade-distorting agricul- organisations (NGOs) say the new subsidy policy tural support. is too little, too late, and will continue to deplete threatened stocks. Despite their nickname, it should be noted that the main concern of the Friends of Fish remains Danger zone, but toward a solution? economic: reductions in overall subsidies to the global fishing sector would likely mean better From a conservation and social development conditions for their relatively efficient fishing perspective, the WTO talks represent two dan- industries. As such, their position needs to be gers. First, if due to entrenched positions there weighed carefully against global environment is no agreement at all on curtailing fisheries sub- and development priorities. sidies at the end of the Doha round, global fish stocks could well be worse off. Second, if agree- Japan & Korea ment is reached that does not adequately bal- ance concerns raised by developing and least Japan and South Korea, which maintain signifi- developed countries (especially those highly cant subsidy programmes for their fishing sec- dependent on fisheries) and by groups working tors15, argue that fisheries subsidies should not on fisheries conservation, a final agreement be treated in a special way at the WTO in terms might prove little more than a tool to further of trade-distorting effects. Questioning the link- open market share for countries with more com- ages between fisheries subsidies and over- petitive fishing industries. A well-balanced agree- exploitation, they say that poor fisheries man- ment could help put urgent pressure on govern- agement, coupled with increasing world demand ments, as in the European case, to phase out for fishery products, is the root cause of declin- their subsidy programmes or move them in a ing world fisheries resources. They see subsidies more sustainable direction, while also taking into rather as a potential instrument to reduce capac- account the special situation of poorer countries. ity, for example through vessel buy-back pro- grammes. As major importers, they are motivat- Article 8 ed not only by political resistance to subsidy One way forward could be for countries to reductions, but also by domestic market struc- revisit the provisions of the expired SCM Article ture and food security concerns. Tokyo’s and 8, on non-actionable subsidies. Venezuela has Seoul’s stance also extends to market access recently attempted to kick-start debate around negotiations under the Doha round, where they

Policy Matters 11, September 2003 67 Trade, Biodiversity and Environment: Crafting the link

this point, arguing in a December 2002 submis- ations. sion to the WTO that “non-actionable subsidies Through wider consultation processes, coun- might be one of the tools needed to implement tries could use the Doha negotiations to make a certain development policies in the framework of compendium of all fisheries support mechanisms the multilateral trading system, under which a - much along the lines proposed by the Friends country can promote the transformation of its of Fish - and ultimately determine those that economic fabric, including production diversifica- should be phased out and those that might be tion and increased value-added output, in a sus- included into a renewed Article 8 as ‘non-action- tainable manner consistent with its national eco- able’, based on sustainable development criteria. nomic and social policy objectives”. Australia, a Such an approach could not only help the WTO member of the Friends of Fish, has since move towards its objective of sustainable devel- responded somewhat favourably to the opment, but could ultimately help take some Venezuelan proposal, saying it “sees merit” in heat off of threatened global fish stocks. discussing non-actionable subsidies within the context of the SCM Agreement. Hugo Cameron is Director for Trade and Environment at the International Centre for Trade and Sustainable Development The Article 8 discussion could point the way (ICTSD). Email: [email protected]; Internet: http://www.ictsd.org toward addressing some of the complexities around fishing subsidies, for instance by listing Notes 1 and debating allowable subsidies that achieve In April 2003, Canada’s Fisheries Minister officially closed the Atlantic cod fishery, saying that the fish were at “historically low legitimate long-term development goals. Talks levels and show no signs of imminent recovery despite a decade of here could borrow an idea from the agriculture severe conservation measures.” Globe & Mail (24 April 2003): negotiations and consider a ‘development box’ of Toronto. 2 The WSSD Plan of Implementation signed in Johannesburg subsidies that provide developing countries ade- affirmed the importance of eliminating subsidies that contribute to quate policy space to support local fishing indus- illegal, unreported and unregulated fishing and to over-capacity, tries, within sustainable limits. The SCM already while “completing the efforts undertaken at the WTO to clarify and improve its disciplines on fisheries subsidies”. acknowledges that “subsidies can play an impor- 3 According to para. 28 of the WTO’s Doha Ministerial tant role in the economic development pro- Declaration, WTO members “... agree to negotiations aimed at clar- grammes of developing country Members”, and ifying and improving disciplines under the Agreement ... on Subsidies and Countervailing Measures, while preserving the basic provides special and differential treatment to concepts, principles and effectiveness of these Agreements and these countries, consisting primarily of longer their instruments and objectives, and taking into account the needs implementation deadlines. Clarification could of developing and least-developed participants. In the initial phase of the negotiations, participants will indicate the provisions, includ- help to operationalise these provisions around ing disciplines on trade distorting practices, that they seek to clarify fishing sectors in developing countries. and improve in the subsequent phase. In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the impor- Balanced approach depends on process tance of this sector to developing countries. We note that fisheries subsidies are also referred to in paragraph 31 [Trade and While the WTO may have a mandate to allow Environment].” for the “optimal use of the world’s resources in 4 Myers and Worm (15 May 2003), “Rapid worldwide depletion accordance with the objective of sustainable of predatory fish communities”, in Nature: London. 5 Dommen and Deere (1999), Fish for Thought, ICTSD: Geneva. development,” it is questionable whether it has 6 Porter, Gareth (1998), Fishing Subsidies, Overfishing and the competency to fully balance economic, envi- Trade, Environment and Trade Series No. 16, UNEP: Geneva. ronmental and social objectives. As such, 7 UNEP (2002), Fisheries Subsidies and Trade Liberalization, involvement of trade policy-makers with those UNEP Briefs on Economics, Trade and Sustainable Development, UNEP: Geneva. who can bring these perspectives to light is 8 Dhaka Declaration (2 June 2003), Second LDC Trade Ministers’ essential. Many civil society groups have urged a Meeting: Dhaka, Bangladesh. multi-stakeholder process supported by research 9 Slotted to finish on 1 January 1995, the subsidies negotiations and assessment that reflects the diversity of the form part of a much larger ‘single undertaking’ package comprising a wide range of other rules-based and market access talks that will debate on fisheries subsidies and helps lead necessitate a number of tradeoffs across different areas before a trade policy-makers to conduct informed negoti- final agreement can be reached.

68 Policy Matters 11, September 2003 Environment and Trade Regimes: Relations and Linkages

10 The Chair of the Rules Negotiating Group, which is where 14 This could include the FAO’s Committee on Fisheries (COFI), fisheries subsidies talks are being undertaken, is preparing a com- which coordinates action on fisheries subsidies among related pilation document of all issues and proposals tabled so far, which intergovernmental institutions and analyses the impacts of fisheries could serve as the basis for the next phase of work post-Cancun. subsidies on the sustainability of marine resources, on alleviating 11 A governmental program is specific if it is granted selectively poverty and on fostering food security. The COFI has identified four to an enterprise or a group of enterprises. Thus if it is generally subsets of fisheries subsidies; of which Set 2 corresponds most available for all sectors of the economy, it is not specific and there- closely to the WTO definition of a subsidy that could be successful- fore not a subsidy. Benitah, Marc (23 September 2002), “Canadian ly challenged under dispute settlement. Namely, Set 2 subsidies softwood lumber: What is the exact significance of the recent include all interventions by government, regardless of whether they Canadian victory before the WTO?”, available at http://csf.col- involve financial transfers, which can potentially reduce costs orado.edu/forums/itcp/2002/msg00011.html. and/or increase revenues of producers in the short term. 15 12 According to the WTO, serious prejudice may arise in any Japan spends USD2.5 billion and South Korea USD400 million case where the effect of the subsidy is to displace or impede annually on their fishery sectors. It should be noted that although exports to the subsidising country Member; displace or impede part of the Friends of Fish group, the US still spends approximately exports to a third country; cause significant undercutting, suppres- USD 1 billion to support its fishing industry. sion, or depression of prices, or loss of sales; or result in an 16 In its 2003 Common Fisheries Policy, the EU agreed to focus increase in the subsidising Member’s world market share for a pri- more on the sustainable exploitation of living aquatic resources mary (see based on sound scientific advice and on the precautionary http://www.wto.org/english/thewto_e/whatis_e/eol/e/wto04/wto4_ approach, as well as on sustainable aquaculture. To tackle the 34.htm#note1). overcapacity of the European fishing fleet, subsidies for the renew- 13 Submission from Australia, Chile, Ecuador, Iceland, New al of fishing vessels are being phased out and will only be available Zealand, Peru, Philippines and the United States (24 April 2002), until the end of 2004. BRIDGES Trade BioRes (23 January 2003), The Doha Mandate to Address Fisheries Subsidies: Issues, Volume 3 Number 1, ICTSD: Geneva. TN/RL/W/3, WTO: Geneva.

Section II: Environment and Trade Regimes: Relations and Linkages

CITES 30th anniversary: is there still a future for the world’s wild animals and plants?

Willem Wijnstekers

This year, the international community com- memorates the 30th anniversary of the creation of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), concluded in Washington on 3rd March 1973. In those thirty years, such as rhino’s, elephants, whales, sea turtles, has been recognized as one of the most impor- tigers and sturgeon. These and other issues dif- tant human goals and CITES has developed into fer greatly from the problems that led the 1963 an agreement of growing importance, becoming IUCN General Assembly to call for the adoption by far the most effective international legal of an international convention on trade in rare or instrument in the area of . threatened species or their skins and trophies, The number and shape of burning issues has which in 1973 became CITES. differed greatly over these thirty years and of CITES has set an effective platform on how we course the most publicised issues come to mind

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CITES has a visible and posi- tive impact on wildlife con- have to treat wild fauna united by a common vision: global wildlife con- and flora in international servation. However, their decisions were not servation, on poverty reduc- trade in every part of the often accompanied by the provision of adequate tion and on sustainable world. CITES is well-placed financial resources at the national and interna- to contribute to the conser- tional levels. The budgetary decisions do not development and is there- vation of a wide range of show how serious we take the conservation of fore worth investing in. plants and animals through our priceless wild fauna and flora. They do not its rigorous system of trade show how serious we take this Convention and permits and certificates, its ability to limit com- the role it could play in the future for the con- mercial trade when it proves detrimental to a servation and management of wildlife in wildlife- species, and its support to national conservation producing developing countries. and enforcement departments in developing In the absence of the necessary core funding, countries. CITES will not be able to fully exploit its great However, the lack of financial resources for potential. In addition, we seriously risk to let wildlife conservation is a serious concern. There down — not only the many animal and plant is a very worrying and growing gap between the species we appear to attach such great impor- increasing number of activities and results that tance to — but we also risk to let down the the international community expect from wildlife- developing world in its struggle to conserve producing developing countries and the means wildlife from the many threats it faces. that are made available to fulfil these expecta- What has not been tackled so far, or at least tions. There is no compensation for the global insufficiently, is how CITES can be used in rela- benefits provided by these countries. tion to international trade in species of high eco- When talking about the availability of financial nomic value such as the timber trade and com- resources, one must mention the apparent lack mercial fisheries. Where the latter is concerned, of political priority given in many wildlife produc- I am glad we have made excellent progress con- ing and wildlife consuming countries to CITES cerning the conservation of sturgeon and the matters in general. CITES Management and reduction of illegal trade in caviar. This clearly Scientific Authorities are in many cases worse of shows how CITES can have a positive effect and than their colleagues in other government I hope this success will reduce the suspicion and departments and lack the most basic resources. doubts of people involved in commercial activi- The lack of means to attend important meetings ties of this kind and size. It is also highly signifi- is but one symptom of this problem. There is a cant that after 10 years of discussion, the Parties major task for all of us, including non-govern- to CITES agreed in Santiago (2002) to regulate mental organizations and the media, to increase the trade in Latin American mahogany. The well awareness among politicians and the general tested control measures developed under CITES public that CITES has a visible and positive will undoubtedly prove invaluable for discourag- impact on wildlife conservation, on poverty ing illegal trade. This decision will also benefit reduction and on sustainable development and is local and indigenous communities who have lost therefore worth investing in. Yes, there is a out to the illegal traders. price. If the global community wants wild ani- Another truth, perhaps better understood now mals and plants of the developing world to be than formerly, is that the proper functioning of shared resources and if it wants them to be a CITES depends on understanding, cooperation shared responsibility then the bill for their man- and mutual respect between the different agen- agement and conservation needs to be shared cies involved in the regulation of trade and envi- as well. ronment. Different bodies and institutions do of At our latest Conference of the Parties course have different contributions to make to (Santiago, 2002), I remember very well looking the functioning of CITES. Most important is the out at delegates from 160 different countries, all contribution of parliaments and central govern-

70 Policy Matters 11, September 2003 Environment and Trade Regimes: Relations and Linkages

ments at the national level. We look to them to So we may commemorate today, but we also do, and encourage others to do, everything pos- should challenge ourselves, for there is much sible to eliminate the social and economic condi- more to be done. If the Convention is going to tions that favour unsustainable trade and com- keep its promise to future generations, a high mission of wildlife crime, as well as to allocate level of commitment at all levels of governments the necessary funds to act on it. will be needed to strengthen the capacity of CITES authorities to enforce existing wildlife laws In this regard, the CITES Secretariat prepared and to educate people to halt consuming illegal and submitted a paper on economic incentives wildlife products. and trade policy to our latest Conference of the Parties (Santiago, 2002). The Conference con- The best manner to celebrate is to continue cluded its deliberations on 15 November 2002 our work for the conservation of world’s priceless with the adoption of Decision 12.22 on this mat- wild fauna and flora and to launch an ter (for an in-depth article on the decision please International Wildlife Day (3rd March). This day see xxx, this issue). I would like simply to draw will become an important one for the conserva- your attention to the first paragraph of this tion of the world’s wild animals and plants, for Decision, directing the CITES Secretariat, in col- raising global awareness for wildlife issues in laboration with the Parties that wish to partici- general and as a for raising public aware- pate, and with IUCN, ICTSD and others to: ness for nature conservation. “organize a technical workshop on wildlife My wish for the future of CITES - if it can only trade policies and economic incentives applicable be a single one - is that it gets the high priority to the management of and trade in CITES-listed it deserves, on the long list of environmental species, in particular in order to develop a issues individual countries and the international methodology to review those policies and to community have to cope with. make targeted recommendations on the use of those incentives”. Willem Wijnsteekers is Secretary General at CITES. Email: [email protected].; Internet: http://www.cites.org

CITES: the next 30 years and the road ahead1 Juan Carlos Vasquez

2003 is an important year for the Convention Wild fauna and flora in their many beautiful on International Trade in Endangered Species of Wild Fauna and Flora (CITES). This year marks and varied forms provide numerous goods and the 30-year anniversary of its adoption. During services, both marketed and non-marketed, the past three decades CITES has been regulat- which have significant aesthetic, scientific, cul- ing trade in wild fauna and flora, including par- tural, recreational and economic values. The rots, crocodiles, butterflies, sturgeons, seahors- international wildlife trade, both legal and illegal, es, spiders, cactus, orchids, several carnivorous is a major economic activity and it is estimated plants — as well as the most familiar gorillas, to be worth billions of dollars annually and elephants, leopards, tigers and bears - whose involves millions of specimens of wild plants and survival could be threatened if trade was not animals every year (commercial fishing and the strictly regulated. timber trade aside).

Policy Matters 11, September 2003 71 Some important things that CITES has been learning during these 30 years are: first, interna- tional wildlife markets do not work well if they are not structured. In this sense, the overex- ploitation of wildlife species under unregulated trade conditions must be recognized as a failure of the market, e.g. the decline during the 90’s of sturgeon populations in the Caspian Sea after the Soviet Union collapse. Secondly, the duality between trade and conservation is a false dilem- ma. Trade is not only a threat but also an oppor- tunity. In certain cases, well regulated trade may Figure 1: “...In the face of increasing human pressures offer the best potential for conserving CITES-list- on wildlife populations, the isolation of economic ed species in the long term. It is therefore cru- variables from biological, political, institutional and cial that the international community transcend social settings appears inadequate.” Vicuñas. (Courtesy the polarisation of ideas around these two con- Heinz Plenge) cepts. Thirdly, CITES rules are not isolated vis-à- vis the international (environmental) law system Much of the time CITES was fumbling in the and are affected by previous and ongoing politi- dark, mainly because the issues covered by the cal negotiations in other fora as well as by the Convention concerns a dynamic world, one of different interests of developing and developed continuous change - not only in terms of the sta- countries. In this sense, CITES rules do not exist tus of the species populations but also change in as a separate, free-standing concern in a hypo- the economic structure and behaviour of human thetical “CITES unplugged world” disconnected beings. The world has changed a great deal since of the global realities. CITES was adopted. International trade has grown dramatically over the past few decades as In the face of increasing human pressures on new rules governing economic relations entered wildlife populations, the isolation of economic into force and improved transport has made it variables from biological, political, institutional easier to ship wild animals and plants and their and social settings appears inadequate. The products anywhere in the world. In the new glob- international community has already recognized al age, borders have opened up, trade barriers that there is an interdependence of economic- have fallen and information speeds around the policy-biological and social factors. One of our world at the touch of a button. There is therefore main challenges in CITES is to create a structure a lot more to do in order to incorporate the new that integrates all these factors as well as realities into the CITES regulatory system. encompasses a built-in flexibility so that it can adjust to the tensions, strains, and unanticipated But despite such uncertainties, sometimes circumstances of tomorrow. resulting from simply not having enough knowl- edge, the Convention has evolved a set of for- In the next paragraphs, we will introduce two mal and informal regulations that make it possi- elements for an integrated approach that may ble to have clear rules for ensuring that interna- contribute to achieving this ambitious goal. It tional trade in wild fauna and flora is not detri- includes the use of well-targeted economic incentives (EIs) based on a thorough analysis of mental for the survival of the speices2. CITES the underlying socio-economic causes for species regulations have been flexible, efficient and uni- loss. versally followed3. Thus, adaptive efficiency is certainly its main strength and constitutes an Regulations have to be complemented by important contribution to the global debate on incentives the relationship between trade and environment. Since the objective of CITES is to conserve

72 Policy Matters 11, September 2003 Environment and Trade Regimes: Relations and Linkages

biotic resources, through regulating trade in cer- achieve its final goal which is wildlife conserva- tain species of wild fauna and flora, economic tion. Each Party decides how and to what extent and trade-related issues are intrinsic to the to incorporate those incentives, in accordance Convention and trade measures are essential to with its institutions and its legal system. achieving its objectives. However, an unfortunate In order to encourage the adoption and imple- misconception is that economic issues should not mentation of EIs, the CITES Secretariat prepared be taken into account when it comes to wildlife a paper on economic incentives and trade policy conservation. that was submitted to the 12th meeting of the Yet economics plays a crucial role in wildlife Conference of the Parties (Santiago de Chile, conservation because human economic behav- November 2002). Basically, the paper was divid- iour affects species survival, and hence the ed in four inter-connected components: the use understanding of the relationships between eco- of economic incentives to ensure that wildlife nomic and scientific aspects of wildlife conserva- trade is carried out in accordance with the provi- tion is essential in achieving the CITES objec- sions of the Convention; the design of national tives. wildlife trade policies; the nature of the relation- ship between CITES and the World Trade Although CITES has engaged in using balanced Organisation (WTO); and the use of stricter packages of measures, including both incentives domestic measures under Article XIV of the and various forms of trade facilitating and Convention. Additionally, the paper proposed a restricting regulations, the measures it has draft resolution and a draft decision containing adopted have so far been mainly focused on some specific activities. command and control regulations aimed at con- trolling international trade in listed species. Generally, the discussions at the CoP reflected a positive attitude towards EIs. Major preoccupa- However, over the past two decades, particu- tions concerned the relationship between CITES 4 larly after the Bruntland Report (1987) , there and the WTO and the application of stricter has been an increased recognition that economic domestic measures, rather than the use of EIs incentives could make an important contribution themselves. The Conference of the Parties con- to achieving environmental goals. If properly cluded its deliberations on 15 November 2002 chosen, designed and implemented, economic with the rejection of the proposed Resolution incentives (EIs) will contribute to the protection owing to the concerns about the stricter domes- and use of wild fauna and flora in a sustainable tic measures. However Parties adopted the and efficient manner. Nevertheless, it is worth to Decision on “Economic Incentives and Trade emphasize that if discriminatory or not well Policy”. designed, these incentives could negatively affect market access or reduce economic wel- The adoption of this decision follows from the fare. Strategic Vision through 2005 agreed by the Parties at the eleventh meeting of the Bearing in mind that EIs have limitations and Conference of the Parties (Nairobi, 2000). The should not be seen as a panacea, Strategic Vision stresses the impor- Parties should consider using eco- CITES rules do not exist as a tance of the economic dimension nomic incentives and remove or separate, free-standing con- and recognizes the need for “eco- mitigate harmful/negative incentives cern in a hypothetical “CITES nomic incentives to ensure that when developing national or region- wildlife trade is carried out in a al strategies for the conservation unplugged world” disconnect- responsible and sustainable man- and non-detrimental trade of ed of the global realities. ner”. wildlife. If incentives for public and private and maintenance of I would like to draw your attention their habitat are established to complement to the first paragraph of this Decision, directing wildlife trade regulations, CITES will better the CITES Secretariat, in collaboration with the

Policy Matters 11, September 2003 73 Environment and Trade Regimes: Relations and Linkages

Decision 12.22 on Trade Policy and Economic Incentives The Secretariat should, contingent on the availability of external funding and in collaboration with the Parties that wish to participate and with CBD, FAO, Fauna and Flora International, ICTSD, IFC, IUCN, OECD, TRAFFIC, UNEP-ETB, UNCTAD-BIOTRADE, the World Resources Institute, the World Bank and WTO:

a) organize a technical workshop on wildlife trade policies and economic incentives applicable to the manage- ment of and trade in CITES-listed species, in particular in order to develop a methodology to review those poli- cies and to make targeted recommendations on the use of those incentives; b) report at the 49th meeting of the Standing Committee the findings and recommendations of the work- shop; c) invite Parties to inform the Secretariat, on the basis of the results of the workshop, if they wish to be included in the trade policy review; d) conduct, in cooperation with the Parties, a review of their national policy regarding the use of and trade in CITES-listed species, taking into account economic incentives, production systems, consumption patterns, mar- ket access strategies, price structures, certification schemes, CITES-relevant taxation and subsidy schemes, property rights, mechanisms for benefit sharing and reinvestment in conservation, as well as stricter domestic measures that Parties apply or are affected by; e) compile and synthesize the information provided by the Parties, and produce a report analysing the eco- nomic impacts of wildlife trade policies in terms of socio-economic and conservation benefits and costs, eco- nomic value, levels of legal and illegal trade, improvement of the livelihood of local communities, and the role of the private sector involved in wildlife trade; f) report at the 13th meeting of the Conference of the Parties on the progress made with regard to the implementation of this Decision; and g) prepare and submit a project proposal to the Global Environment Facility, and other funding institutions and development agencies, to seek financial support to prepare the trade-policy reviews in the selected coun- tries, in the context of their national and regional strategies for biodiversity conservation.

Parties that wish to participate, and with the issues, within the wider perspective of national IUCN and its commissions, ICTSD and others to wildlife trade policies. The first issue is how eco- organize a technical workshop on wildlife trade nomic incentives can contribute to the effective policies and economic incentives. implementation of CITES. The second relates more broadly to national wildlife trade policies What is the purpose of a technical work- (national frameworks for the use of economic shop? incentives and other policy instruments as a kind of policy package for wildlife management), The overall objective of a three-day workshop to building on the recognition that many countries be held in Geneva from 4 to 6 November 2003 is do not have such integrated policies in place to develop specific economic tools for effective when establishing wildlife harvest and trade reg- wildlife conservation strategies. ulations, and therefore lack a coherent approach The aim of the workshop is therefore practical to management of the wildlife trade. in nature: to provide the Parties with a practical This implies the consideration of other inter- methodology for reviewing, designing, imple- connected components, namely the analysis of menting and assessing national wildlife trade the relationship between such trade policies and policies on the one hand and for identifying and the conservation of wild fauna and flora; and the implementing targeted economic incentives in strengthening of strategic partnerships and sus- the context of those policies on the other hand. tained exchange of information with the interna- The workshop is intended to address two

74 Policy Matters 11, September 2003 Environment and Trade Regimes: Relations and Linkages

tional organizations mentioned in the Decision is sustainable and in compliance with Article 12.22. IV of the Convention; b) promote the recovery of Appendix-I species Methodology so that they may no longer meet the criteria The Secretariat plans to prepare two back- for inclusion in Appendix I; ground papers, one describing a methodology to c) create mechanisms whereby direct and indi- design and implement targeted economic incen- rect economic benefits and income derived tives that are or could be applied to the wildlife from trade in CITES-listed species can be trade, and the second on the different types of reinvested by authorities and other benefici- national wildlife trade policies that have been aries in management and conservation of established by CITES Parties and the ways for- these species and their habitats; ward to develop integrated management sys- tems for wild fauna and flora with a focus on 10 d) halt, if not reverse, the decline of certain mega-biodiversity countries. populations of CITES-listed species; and Workshop participants will include a represen- e) encourage CITES authorities to work with tative from a mega-diverse country; CITES sectoral ministries and agencies responsible Parties as well as strategic partners identified in for trade to promote harmonious coexistence Decision 12.22. It will draw on independent and mutual supportiveness of the objectives experts including national park planners and of both CITES and the World Trade ranchers. The workshop furthermore aims to Organization. bring together a wide range of stakeholders to The findings and recommendations of the secure a rich exchange of experiences, perspec- workshop, which will be reported to the 50th tives and inter-linkages with similar processes. meeting of the Standing Committee, are not The case studies to be used in the workshop will expected to provide a comprehensive economic be those mandated by the Conference of the analysis of incentives for wildlife Parties under several Resolutions and Decisions, conservation but rather identify- If properly chosen, namely regulation of trade in sturgeons, ele- ing more practically oriented phants, freshwater turtles, sharks, seahorses, tools and approaches that will designed and imple- vicunas, mahogany, devil’s claw, aloe products be appropriate for the present mented, economic and Guaiacum species, as well as nation-wide and future needs of the State incentives (EIs) will significant trade reviews. members of CITES. The Relevant Economic incentives in CITES might Standing Committee will decide contribute to the pro- be classified in two orders: the road ahead. It is however tection and use of wild important to keep in mind that 1. Those directly related to trade such as: fauna and flora in a CITES cannot prevent the loss hunting licenses, CITES permits and certificates, of species and their habitats by sustainable and effi- quotas, labelling, community revenue sharing, itself. CITES should be viewed harvesting fees, fines for illegal behavior. cient manner. as only one part of a compre- 2. Those related to wildlife management and hensive set of tools for the conservation of our conservation such as: property rights, land use priceless wild fauna and flora. policies, agricultural subsidies. The workshop will focus on the first category Juan Carlos Vasquez is Legal and Trade Policy Officer at the but when feasible draw on the interactions CITES Secretariat; email: [email protected]; Internet: between the two categories. In particular it is http://www.cites.org expected that the workshop will focus on: Notes a) help ensure that trade in Appendix-II species 1 This article is based on a paper on Economic Incentives and Trade Policy submitted by the CITES Secretariat to the 12th meet-

Policy Matters 11, September 2003 75 Environment and Trade Regimes: Relations and Linkages

ing of the Conference of the Parties to CITES (Santiago de Chile, have not yet been met for the majority of the population. Funding November 2002) and Decision 12.22 adopted by the Parties at that allocations for wildlife conservation activities are thus likely to be meeting. limited in light of pressing, and sometimes conflicting, development 2 see W. Wijnstekers, The Evolution of CITES: A Reference to needs from other economic sectors. Some Parties have advocated the Convention on International Trade in Endangered Species of that a mechanism of payments from the consumer to the producer Wild Fauna and Flora (6th ed., 2001). countries should be developed to facilitate conservation strategies, increase compliance and strengthen enforcement efforts. 3 To March 2003, 161 Countries are members to the Convention 4 and implement the contracted obligations with different levels of Bruntland, G (ed) (1987). : The World compliance and enforcement. Effective implementation of the Commission on Environment and Development, Oxford: Oxford Convention implies important transaction costs that require addi- University Press. In 1987 the United Nations Commission on tional financial resources, and a commitment from both the private Environment and Development ( the Bruntland Commission) drew and public sectors to fund necessary activities. CITES is a low attention to the fact that economic development often leads to a national priority in some countries, given the fact that basic needs deterioration, not an improvement, in the quality of people’s lives.

Applying socio-economic considerations in domestic biosafety frameworks: the international legal context Matthias Buck

of intellectual property rights” associated with Most of the debate on the risks to biodiversity LMOs. Intellectual property rights may threaten the ability of indigenous and local communities and health associated with the use of living to engage in traditional planting and harvesting modified organisms (LMOs) – particularly in agri- practices, or undermine markets for traditional culture – has so far centred on adequate risk products. In the debate on adequate biosafety assessment and procedures, frameworks, this broader set of issues is gener- and on the role of precautionary measures in the ally referred to under the rubric of “socio-eco- light of scientific uncertainty. While risk assess- nomic” considerations. ment, risk management and precaution lie at the heart of domestic biosafety frameworks, such The aim of this note is to identify the legal frameworks need to take on a broader perspec- space under international law for applying tive in order to be effective. They have to “socio-economic” considerations in domestic account for different levels in the capability of biosafety frameworks. The most important inter- administrative and scientific institutions to assess national agreement in this context is the and manage risks associated with LMOs. They Cartagena Protocol on Biosafety. The Cartagena also need to be sensitive to the indirect impacts Protocol interacts with a range of other interna- of the use of LMOs on efforts to conserve and tional and regional instruments, such as various sustainably use wild and agricultural biodiversity. agreements governed by the World Trade There is a clear link, for example, between more Organization, ongoing work in the FAO/WHO intensive agricultural practices and the increasing Codex Alimentarius Commission on foods derived marginalisation of small-scale farmers which hold from biotechnology, or the recently concluded important traditional knowledge on the conserva- International Treaty on Plant Genetic Resources. tion and sustainable use of agricultural and wild In the following I will first provide an overview biodiversity.1 In this context, effective biosafety of the requirements on domestic biosafety frameworks should also address the “economics frameworks set out by the Cartagena Protocol

76 Policy Matters 11, September 2003 and the way in which Article 26 of the Protocol refers to socio-economic con- siderations. I will then highlight the relevance of this provision for the operation of the Cartagena Protocol itself and discuss its implications for the international trade law obligations of Parties. I conclude that, by acknowledging the relevance of socio- economic considerations in domestic biosafety frameworks, the Cartagena Protocol has opened a window of opportunity, to address the potentially negative effects the use of LMOs might have on the ability of relevant stakeholders to conserve and sustain- Picture 1: Women working in rice fields, Nepal....”This might in turn ably use existing biodiversity. This undermine the ability of farmers to continue cultivating traditional applies in particular to biodiversity rich plants and result in a loss of plant species as well as traditional knowl- developing countries, especially edge on their cultivation”. (Courtesy UNDP Nepal) regarding the value of biodiversity to The Cartagena Protocol on Biosafety: An indigenous and local communities. Using this Overview2 window of opportunity in a meaningful way requires urgent work in two areas: First, there is The Cartagena Protocol on Biosafety (CP) was a need for a “bottom-up” case-study based ana- adopted by the Conference of the Parties to the lytical process to demonstrate clear links CBD as a supplementary agreement to the between the use of LMOs, impacts on biodiversi- Convention on Biological Diversity on 29 January ty and the socio-economic environment relevant 2000.3 It will enter into force on 11 September for the conservation and sustainable use of bio- 2003. Its main aim is to protect biodiversity from diversity. This process should at minimum the potential risks posed by living modified involve biodiversity stakeholders and experts on organisms (LMOs) resulting from modern socio-economic issues. It would provide the biotechnology. While the Protocol primarily basis for developing a set of operational guide- applies to transboundary movements of LMOs, lines for the application of socio-economic con- their transit, handling and use, the ability of siderations in the context of domestic biosafety Parties to take informed decisions on the import frameworks. Second, it is crucial to initiate a of LMOs, in line with the minimum standards political process to build ownership for emerging established by the CP, hinges on the existence of concepts. This might include working with effective domestic biosafety frameworks. The national ministries and with delegates at interna- main international mechanism to support Parties tional negotiations and drawing together differ- in this regard is an extensive international sys- ent constituencies from the environmental, tem of information exchange, the so called development and business communities. „Biosafety Clearinghouse“. In both areas, IUCN can and should play a key role, given its unique ability to gather and syn- thesise “on the ground” experience and to feed Decisions on the import of LMOs based on it into relevant international and regional policy- , risk management and networks. precaution Decisions on the import of LMOs are to be based on a “scientifically sound” risk assess- ment. To this end, the CP, in its Annex III, sets

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By acknowledging the relevance out detailed principles of socio-economic considerations dures, the CP establishes an international and methodological in domestic biosafety frameworks, mechanism to facilitate the exchange of scien- requirements for tific, technical, environmental and legal infor- assessing the risks the Cartagena Protocol has mation and experience with LMOs, the so associated with the opened a window of opportunity, called “Biosafety Clearing-House”.4 The deliberate release of to address the potentially nega- Biosafety Clearing-House will contain i.e. sum- LMOs into the environ- tive effects the use of LMOs might maries of risk assessments or environmental ment or their use as reviews of LMOs. It will furthermore list com- food or feed or for have on the ability of relevant petent national authorities for operating the processing. stakeholders to conserve and sus- import provisions of the Protocol, relevant Case-by-case orient- tainably use existing biodiversity. national laws, regulations and guidelines for ed risk assessments implementing the Protocol and information result in risk profiles of particular LMOs for spe- required by the Parties for the operation of the cific environmental contexts. The CP requires Protocol’s import procedures. Parties to address such risks in the context of risk management mechanisms, measures or strategies in order to prevent adverse effects of Procedures for deciding on the import of LMOs on biodiversity or health. Risk manage- LMOs ment may include efforts to prevent unintention- Domestic biosafety frameworks and informa- al transboundary movements of LMOs or moni- tion provided through the Biosafety Clearing- toring and observation obligations commensurate House are the foundation for the effective opera- with the life-cycle of LMOs before these are put tion of the CP’s import procedures. The CP sets to their intended use. out an Advance Informed Agreement Procedure Permeating the CP are references to the pre- (AIA-Procedure) that in principle, applies prior to cautionary principle. These emphasise that lack the first transboundary movement, transit, han- of scientific certainty due to insufficient informa- dling and use of all LMOs which may have tion and knowledge regarding the extent of adverse effects on the conservation and sustain- potentially adverse effects of a LMO on biodiver- able use of biodiversity or health. The aim of the sity or health, does not prevent a Party of import AIA-Procedure is to ensure that countries are from taking a decision with regard to the import provided with the information necessary to make of that LMO in order to avoid or minimise such informed decisions before agreeing to the import potential adverse effects. The precautionary of LMOs into their territory. It includes the principle expresses a basic choice to act pru- requirement of prior notification, minimum dently under conditions of scientific uncertainty. requirements on the information provided by the Its effective application requires that scientific exporter, and – in general – written consent by uncertainties are made explicit in risk assess- the Party of import. The CP stresses the right of ments. Consequently, the risk assessment provi- importing Parties to apply a precautionary sions of the CP underline that a lack of scientific approach in taking its decision. Significantly, it knowledge or scientific consensus, should not be also allows the Party of import to require the interpreted as indicating a particular level of risk, exporter to carry out the necessary risk assess- an absence of risk, or an acceptable risk. ment or, alternatively, to impose the costs of the risk assessment on the notifier. The latter opens the possibility for countries, which lack an effec- Information exchange through the tive domestic biosafety framework to mandate Biosafety Clearing-House an independent public or private institution to conduct the risk assessment. To support the establishment and operation of domestic biosafety frameworks and to facilitate Certain categories of LMOs are, however, the operation of the Protocol’s import proce- excempted from the application of the AIA-

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Procedure. This is the case for LMOs in transit, this aspect of the CP to obligations resulting LMOs destined for contained use, and, most from international trade law. importantly, LMOs intended for direct use as (1) Type of Impacts: As a starting point, it is food or feed, or for processing (LMO-FFPs). At important to stress that Article 26 only allows to present, LMO-FFPs make up the bulk of LMOs take into account those socio-economic consider- traded internationally. In this regard, the CP sets ations which arise from the impact of LMOs on out a simplified procedure, which essentially the conservation and sustainable use of biodiver- constitutes a mechanism for information sity. Clearly, potential changes in biodiversity, exchange through the Biosafety Clearing-House: particularly in agriculture, which might result Parties are required to notify their domestic from the use of LMOs, and ensuing negative authorisations for LMO-FFPs through the effects on, for instance, the livelihood of farmers Biosafety Clearing-House and to make copies of who rely on the continued existence of tradition- any national laws, regulations and guidelines al crops are within the scope of this wording. An applicable to their import available. impact to be considered in this regard might, for instance, be the large scale replacement of agri- cultural land used for traditional agriculture by The Scope for Socio-Economic intensive agriculture using LMO-crops. Considerations under the Cartagena Furthermore, Article 26 explicitly mentions the Protocol possible consideration of negative impacts result- Article 26 CP explicitly states that: ing from the use of LMOs on the value of biodi- “1. The Parties, in reaching a decision on import versity to indigenous and local communities. under this Protocol or under its domestic meas- It is less clear, whether some more indirect ures implementing the Protocol, may take into socio-economic impacts resulting from the use of account, consistent with their international obli- LMOs can also be considered. Potentially rele- gations, socio-economic considerations arising vant cases include the loss of viable markets for from the impact of living modified organisms on traditional products as a result of the import of the conservation and sustainable use of biologi- LMO-FFPs. This might in turn undermine the cal diversity, especially with regard to the value ability of farmers to continue cultivating tradi- of biological diversity to indigenous and local tional plants and result in a loss of plant species communities. as well as traditional knowledge on their cultiva- 2. The Parties are encouraged to cooperate on tion. Significantly, Article 26 does not qualify the research and information exchange on any term “impact” to only “direct impacts”, so there socio-economic impacts of living modified organ- might be some scope for considering this broad- isms, especially on indigenous and local commu- er and more indirect type of impacts. nities.” What emerges from the wording of Article 26 While the relevance of socio-economic consid- CP, however, is the need to demonstrate clear erations is explicitly recognised in Article 26, its and strong links wording provides only limited guidance on exact- between the use of What emerges from the wording of ly how such considerations can be taken into LMOs, impacts on Article 26 CP, however, is the need account. Further work is needed to put this biodiversity and the aspect of the Protocol into practice. socio-economic to demonstrate clear and strong environment rele- links between the use of LMOs, In this regard, three areas merit closer scruti- vant for the conser- ny: (1) The type of impacts potentially to be vation and sustain- impacts on biodiversity and the included under the rubric of socio-economic con- able use of biodiver- socio-economic environment relevant siderations, (2) procedural entry points for invok- sity. This requires a for the conservation and sustainable ing socio-economic considerations in the imple- wide-ranging effort mentation of the Protocol, (3) the relationship of use of biodiversity.

Policy Matters 11, September 2003 79 The stronger the demonstrable linkages between the use of to gather and synthese relation to international trade law, given that LMOs, impacts on biodiversity and case-studies on the restrictions on the import of LMOs might be use of LMOs in specific regarded as barriers to free trade and could pos- socio-economic considerations contexts and ensuing sibly be challenged under agreements of the arising from this impact are, the consequences for the WTO-regime. ability of societal better the chances that measures Article 26 CP itself provides guidance on how groups to conserve the relationship between socio-economic consid- taken to implement Article 26 CP and sustainably use erations under the CP and other norms of inter- biodiversity. Such will be regarded as in accordance national law is to be addressed: Parties may take effort would also raise into account socio-economic considerations in with international trade law the relevance of Article ways “consistent with their international obliga- 26 paragraph 2 of the should a dispute arise. tions”. Parties thus have to ensure that the invo- Protocol which encour- cation of socio-economic considerations is in ages Parties to cooperate on research and infor- accordance with their obligations under WTO- mation exchange on socio-economic impacts of law. Further guidance is provided by the CP’s LMOs. Ideally, Parties would be able to turn to a preambular paragraphs, which call for the estab- database of case-studies – publicly accessible lishment of a “mutually supportive” relationship through the Biosafety Clearing-House – to back between the CP and international trade agree- their invocation of socio-economic considerations ments. This language calls on Parties of the CP when reaching a decision on the import of to approach interactions between both regimes LMOs. with the aim of safeguarding both the integrity (2) Entry points to take into account socio- of the Protocol and the rights and obligations of economic considerations: Parties may take Parties under international law on trade. socio-economic considerations into account when If socio-economic considerations under the CP “reaching a decision on import under this were taken into account in the context of risk Protocol or under its domestic measures imple- assessment, risk management or precaution, menting the Protocol”. This wording effectively their legality – from a WTO-law perspective – leaves it to the discretion of Parties when and in would most likely be assessed under the what type of procedure to apply socio-economic Agreement on the Application of Sanitary and considerations. Phytosanitary Measures (SPS Agreement). One might contemplate addressing socio-eco- The SPS Agreement requires its Members to nomic considerations in risk assessment proce- take into account “relevant economic factors” dures by, for example, enriching these with when assessing risks to animal or plant life or assessments of the potential consequences of health and determining the measure to be the use of LMOs on the biodiversity available to applied for achieving the appropriate level of local and indigenous communities. As part of 5 their overall risk management strategies, Parties sanitary or phytosanitary protection. At first might decide to keep areas with indigenous reading this seems more narrow than the CP, communities that hold important traditional which allows taking into account socio-economic knowledge on biodiversity, entirely free of LMOs. considerations. On the other hand, the CP is At last, it seems important to explore the scope more specific than the SPS Agreement as it lim- for addressing socio-economic considerations in its socio-economic considerations only to those invocations of the . arising from the impact of LMOs on biodiversity. (3) Relationship to obligations resulting These textual differences reflect broader differ- from international trade law: As pointed out ences between objectives and the regulatory in the introduction, the CP interacts with a range approach of the SPS Agreement and the CP. The of other international and regional instruments. objective of the SPS Agreement is to avoid that Its most important implications, however, arise in SPS-measures create unnecessary barriers to free trade. While the agreement stresses the

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right of Members to protect human, animal or assessment, risk management and precaution, plant life or health through SPS-measures, it one thing seems clear: The stronger the demon- takes a science-based economic approach to strable linkages between the use of LMOs, assessing costs and benefits of SPS measures. impacts on biodiversity and socio-economic con- The CP, in contrast, primarily aims to ensure that siderations arising from this impact are, the bet- the transfer, handling and use of LMOs does not ter the chances that measures taken to imple- have adverse effects on the conservation and ment Article 26 CP will be regarded as in accor- sustainable use of biodiversity. It also lays out a dance with international trade law should a dis- science-based approach to managing risks relat- pute arise. ed to LMOs. However, by doing so it places a At last, the strong preference of the SPS greater emphasis on precaution and explicitly Agreement for SPS measures taken according to allows considering values of a non-material qual- 7 ity, such as the (traditional, spiritual) value of international standards should encourage biodiversity to indigenous and local communities. Parties to the CP to seek recognition for opera- tional guidelines concretising Article 26 of the Another difference exists with respect to the Cartagena Protocol as “international standards” strength of obligations: the SPS Agreement under the SPS Agreement.8 requires its Members to take economic aspects into account when determining the appropriate Conclusions level of sanitary or phytosanitary protection, whereas the CP merely authorises its Parties to Article 26 of the Cartagena Protocol authorises invoke socio-economic considerations arising Parties to take into account socio-economic con- from the impact of LMOs on biodiversity. This is siderations arising from the impact of LMOs on interesting, because if measures to avoid risks biodiversity when deciding upon the import of associated with the use of LMOs also qualify as LMOs. Given its broad wording, Article 26 largely sanitary and phytosanitary measures under the leaves it to the discretion of Parties when and SPS Agreement, the latter would – at least with how to apply socio-economic considerations. respect to economic aspects – actually broaden Most likely, such considerations will become of the range of necessary factors to be considered relevance in the areas of risk assessment, risk in risk assessment procedures. management and precaution. When invoking socio-economic considerations, Parties have to Overall, it is important to stress that despite ensure that their obligations under WTO agree- these differences, there is no open incompatibili- ments are not violated. At least on an abstract ty between the SPS Agreement and the CP with level of analysis it seems that despite differences respect to the type of factors potentially to be in detail, there are no open incompatibilities considered in risk assessment, risk management between relevant provisions of the CP and of or precaution. It should therefore be possible to WTO law. Remaining uncertainties will substan- invoke socio-economic considerations under the tially be reduced, however, if it is possible to CP consistent with the SPS Agreement, thereby document clear and strong links between the giving meaning to the call for establishing a use of LMOs, impacts on biodiversity and the mutually supportive relationship between the CP socio-economic environment relevant for the and international trade law. conservation and sustainable use of biodiversity. A more detailed and reliable analysis would By acknowledging the relevance of socio-eco- have to look at more specific (possibly hypotheti- nomic considerations in domestic biosafety cal) cases to determine the best approach of frameworks, the Cartagena Protocol has opened invoking socio-economic considerations in risk a window of opportunity to address the poten- assessment and risk management procedures tially negative effects the use of LMOs might 6 and in the context of precaution. Overall, how- have, on the ability of relevant stakeholders to ever, considering the heavy emphasis of the SPS conserve and sustainably use biodiversity. This Agreement on a science-based approach to risk applies in particular to biodiversity rich develop-

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ing countries. Notes 1 See for instance the case study Alejandro Nadal (2000), “The Using this window of opportunity in a mean- Environmental and Social Impacts of Economic Liberalization on ingful way requires urgent work in two areas: Corn Production in Mexico”, WWF International/ Oxfam GB. Available at: First, there is a need for a “bottom-up” case- . 2 IUCN‘s Environmental Law Centre and the Foundation for clear and strong links between the use of LMOs, International Environmental Law and Development (FIELD) have impacts on biodiversity and the socio-economic recently published, in cooperation with the World Resources environment relevant for the conservation and Institute (WRI), a comprehensive explanatory Guide to the Cartagena Protocol on Biosafety. The Guide is available online at: sustainable use of biodiversity. This process . should at minimum include biodiversity stake- 3 The Cartagena Protocol is available at: holders and experts on socio-economic issues. . 4 Its outcomes should be disseminated as part of Until the entry into force of the CP Parties agreed to develop the Biosafety Clearing-House during a pilot phase. See: the information-exchange under the CP. Ideally, . it would result in a set of operational guidelines 5 Economic factors named in Article 5 para. 3 SPS Agreement for applying socio-economic considerations in the include potential damages in terms of loss of production or sales in the event of the entry, establishment or spread of a pest or dis- context of national biosafety frameworks plus a ease, as well as the costs of controlling or eradicating a pest or database of case-studies – accessible through disease. the Biosafety Clearing-House - to back the invo- 6 Comparative assessments of the two agreements’ provisions on cation of socio-economic considerations when risk assessment, risk management and precaution have highlighted some differences but in general also scope for “mutually support- reaching a decision on the import of LMOs. ive” interpretations. The main problems exist in the area of precau- tion, because the wording of Article 5.7 of the SPS Agreement is Second, it is crucial to initiate a political more restrictive than precaution-related provisions of the CP. It process to build political ownership for emerging should be noted, however, that recent decisions by the WTO’s Appellate Body, have broadened the scope for enriching the inter- concepts. This should include working with pretation of WTO-law with principles and norms established in pub- national ministries and with delegates at interna- lic international law outside of the WTO-regime. As regards precau- tional negotiations and drawing together differ- tionary measures to prevent risks from LMOs, it seems that with entry into force of the Cartagena Protocol, it will be very hard, if ent constituencies from the environmental, not impossible to deny the firm recognition of the precautionary development and business communities. principle in international law, at least in the area of biosafety. 7 According to Article 3 para. 2 of the SPS Agreement, measures In both areas, IUCN can and should play a key which conform to international standards, guidelines or recommen- role, given its unique ability to gather and syn- dations are prima facie presumed to be consistent with the SPS thesise “on the ground” experience and to feed Agreement and the GATT 1994. 8 Significantly, Annex A No. 3 d) of the SPS Agreement states that it into relevant international as well as regional for matters not covered by standardising bodies explicitly men- policy-networks. tioned in the SPS Agreement (explicitly named are: Codex Alimentarius Commission, International Office of Epizootics, Time is somewhat pressing, given that the International Plant Protection Convention), the WTO’s Committee Intergovernmental Committee for the Cartagena on Sanitary and Phytosanitary Measures can endorse „appropriate standards, guidelines and recommendations promulgated by other Protocol, which serves as the interim working relevant international organisations open for membership to all body to prepare the first Meeting of the Parties WTO Members.“ to the Protocol, has not addressed the issue of 9 The Intergovernmental Committee for the Cartagena Protocol serves as the interim working body to prepare the first Meeting of socio-economic considerations in its substantive the Parties to the Protocol. In its deliberations, the issue of socio- work programme9. In addition, after entry into economic considerations has repeatedly been mentioned as an item which requires further consideration and research. However, it force of the Cartagena Protocol, the first two or has so far not been addressed in any substantive way. For informa- three meetings of the Parties will take decisions tion on the Cartagena Protocol and documents resulting from the that might fundamentally shape the direction the interim process before the Protocol’s entry into force consult:< http://www.biodiv.org/biosafety/ >. Protocol.

Matthias Buck is vice chair for legal affairs GETI; and associate fellow, Ecologic Institute for International and European Environmental Policy, Berlin, Germany. Email: [email protected]. His focus of work is International and European policy and law in the areas of environment, trade and investment.

82 Policy Matters 11, September 2003 Trade and investment implications of the Kyoto Protocol Lucas Assunção and Beatriz Garcia

The Kyoto Protocol (KP) adopted on 11 December 1997 marks the first step towards an international strategy to limit emissions and represents a major push towards the establishment of a multilateral regime on cli- mate change.1 The KP will enter into force once it is ratified by no less than 55 parties to the United Nations Framework Convention on (UNFCCC), which account in total for at least 55% of the total emissions of the greenhouse gases for 1990 of transport, industry, energy sectors and produc- the parties included in Annex I2. tion processes. Measures taken by Annex I coun- The Protocol’s ultimate objective is to achieve tries to meet GHG emission reduction targets will the reduction in the emissions of greenhouse affect the costs of production of traded products gases (GHG) by establishing quantified limitation and therefore their competitive position in the and reduction obligations to industrialized coun- world market. tries . . Both developed and developing coun- There are two possible scenarios. Firstly, a tries’ main objective, in the KP negotiations, was reduction in Annex I countries’ production of to create and effective multilateral system for GHG intensive products will potentially lower combating global warming and to ensure that their demand for industrial goods and services the Protocol would not hinder strong and grow- elsewhere and thereby decrease the growth of ing national economies and development claims. overall trade and investment. There could be, Developing countries were against taking emis- however, an incentive to the production of alter- sions commitments under the Protocol. Their native goods and services and to the use of opposition was based on the fact that industri- technologies requiring less GHG emissions. alised countries had a historical responsibility for Secondly, Annex I countries may demand more causing the doubling of GHG concentrations in industrial products from non-Annex I countries the atmosphere. Therefore, the Protocol sets up that are producing more cost effectively as they burden-sharing obligations, based on the princi- are not facing the Kyoto Protocol emission ple of common but differentiated responsibilities. reduction commitments. Developed countries finally agreed to reducing In any case, non-Annex I economies are likely their overall emissions of greenhouse gases by to be affected through their investment and at least 5percent below 1990 levels in the first trade linkages with Annex I regions. In the first commitment period from 2008 to 2012. These scenario, non-Annex I economies will be nega- countries are the only ones with quantified emis- tively impacted with an overall decrease in trade sion limitation or reduction commitments. . and investment. The GHG reduction policies in Developing countries have no international obli- Annex I countries will raise the prices of energy gations in the first commitment period. and hence the production costs of related sec- Policies aiming to prevent climate change will tors. On the one hand, import costs of Annex I certainly have a bearing on world trade. goods are projected to raise as a result of the Reducing greenhouse gas emission will affect higher production costs in these countries. On various sectors in the world economy, such as the other hand, exports from non-Annex I coun- tries are foreseen to decrease. In the second

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scenario, non-Annex I Parties are positively First, allows exchange of GHG affected in terms of trade due to greater emission reduction allowances among Annex I demand from Annex I countries’ for industrial Parties, enabling them to meet their commit- products and the resulting increase in exports. ments by selling or buying such titles. An Annex I country, which expects to emit more than its Generally, countries that export a large amount assigned amount, can thus buy the rights to of fossil fuels such as those within the emit GHG from another Annex 1 country that Organization of the Petroleum Exporting was able to emit less than its assigned amount. Countries (OPEC) will be the most affected due Second, entails collabora- to the lower Annex I fuel use. The Gross tion among Annex I Parties on projects to Domestic Product (GDP) of countries exporting reduce from a base- fossil fuels tends to decline as a result of the line scenario. The baseline attempts to estimate reduction in their exports. Regions that export what the future emissions levels would be if the more emission intensive goods other than fossil project intending to reduce GHG emissions fuels to Annex I countries, such as South Korea, would not be implemented. Emission reduction China, India and Brazil, are generally projected below the baseline creates a “surplus” and can to experience GDP gains as a consequence of be used in the form of credits, which are attrib- improved export competitiveness against Annex utable to the investing country. Third, the Clean I regions (Brown, 1999). Development Mechanism (CDM) will provide An important feature of the Protocol is incentives to Annex that it provides Parties with enough flexi- An important feature of the Protocol is I countries investing bility to choose between various policy that it provides Parties with enough in emission reduc- tools to meet their commitments. It speci- tion projects in fies emission reduction targets per country flexibility to choose between various developing coun- in the period between 2008-2012, but it policy tools to meet their commitments. tries. These projects does not specify which policy interventions It specifies emission reduction targets may generate must address a specific economic sector Certified Emission (for example, transport), a specific energy per country in the period between Reductions, being carrier (such as oil, coal or natural gas) or 2008-2012, but it does not specify divided between the a specific policy tool (say, a carbon or which policy interventions must address host country and the energy tax) (Assunção and Zhang, 2002). investor. The credit This allows countries to seek optimal ways a specific economic sector (for example, trading under the to achieve GHG emission reduction and transport), a specific energy carrier CDM is expected to adjust their climate change strategies to (such as oil, coal or natural gas) or a achieve the dual the circumstances and special features of objective of provid- their economies. specific policy tool (say, a carbon or ing cost effective energy tax) (Assunção and Zhang, compliance to Annex Using market mechanisms to meet I countries and at obligations 2002). This allows countries to seek the same time gen- The KP creates an opportunity for the optimal ways to achieve GHG emission erating resource use of market mechanisms towards the reduction and adjust their climate flows for sustainable achievement of its purposes, allowing change strategies to the circumstances development in non- States to fulfil their obligations with a cer- Annex I countries. tain degree of flexibility. Three “Kyoto and special features of their economies. The market mech- mechanisms” will assist Annex I Parties in anisms are impor- meeting their targets: emissions trading (KP tant because they minimise competitiveness loss Article 17), joint implementation between Annex or harmful impacts of GHG mitigation policies I Parties (KP Article 6), and the Clean and they make of GHG emissions control a Development Mechanism (CDM) (KP Article 12).

84 Policy Matters 11, September 2003 Environment and Trade Regimes: Relations and Linkages

source of profit (UNCTAD, 2001). Investment targets, the so-called “emissions leakage”, which flows are expected to derive particularly from is a potential consequence of the second sce- projects under the CDM. This is due to the fact nario described above. This could undermine the that Annex I countries are generally willing to actual effectiveness of action taken by industri- meet their GHG emissions targets extraterritorial- alised countries. ly so that their societies and economies are less affected. Non-Annex I States expect to benefit The future of the Protocol from the investments carried out by Annex I The non-participation of key States in the countries and the transfer of clean and modern Kyoto system, particularly the United States and technologies. Australia leave the magnitude of the emerging carbon market unclear. The United States avoids The Protocol and Environmental Protection the costs of mitigating GHG emissions and indi- There are several uncertainties associated with rectly subsidises its industry by rejecting the KP the market mechanisms created by the Protocol objectives. The competitiveness of American and with their impacts in terms of trade benefits products increases compared with those that and environmental protection. Investment flows have ratified the KP. The current U.S. administra- to developing countries under CDM projects tend tion position hinders for the moment the possi- to be geographically unevenly distributed, as bility of a strong carbon market and leads to the least developed countries tend to attract fewer continuing incidence of natural disasters (World investments. In addition, developed and devel- Disasters Report, 2002).3 Actually, without the oping countries’ priorities are not necessarily participation of the United States, negotiations compatible. Annex I countries expect to achieve for future commitments with more stringent tar- GHG emission reduction in the most cost effec- gets for developed countries and greater devel- tive way, through low-cost abatement projects in oping countries participation become less realis- non-Annex I countries. Low-cost carbon mitiga- tic. tion projects, however, will not necessarily con- tribute to the sustainable development in non- Despite the actual difficulties of implementing Annex I countries. Furthermore, the mecha- the Protocol’s objectives, there is very little nisms’ complex structures and formal require- doubt that the future will be carbon-constrained. ments to obtaining emission reduction credits Economic losses related to unabated climate could discourage private sector investment if not change have proved to be fairly high . Certainly, clearly established. the emerging carbon market does not in itself provide the solution for the fight against global Investment flows deriving from GHG emission warming; however, it plays the essential role of a reduction projects are not necessarily desirable propeller and catalyst for achieving the KP objec- from an environmental perspective. Projects that tives. are beneficial for carbon abatement are not nec- essarily so for sustainable development. For The scale of trade actually depends upon the example, in India the replacement of conven- implementation and outcomes of the flexibility tional energy technology with alternative tech- mechanisms, which are still to be refined. nology actually increased residual solid waste Positive effects of a future carbon market would (Austin, 1999). The flexibility mechanisms may be that constraints in GHG emissions could also affect the awareness of the need for struc- change industrial structures and induce innova- tural changes, particularly in current energy poli- tion in various ways, by stimulating growth of cies and industrialised countries’ life style. lower GHG-emitting industries (Brack, 1999). Moreover, there is a possibility that action to Financing provided particularly by the CDM could limit emissions in industrialised countries will make renewable options and clean technologies consequently lead to emission increases in coun- more competitive. This could, in addition, better tries not constrained by GHG emission reduction prepare developing countries to meet future obli-

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gations after the first commitment period. A Estonia, European Community, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, resilient and active carbon market would provide Lithuania, Luxembourg, Monaco, Netherlands, New Zealand, less costly solutions and finance for the achieve- Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, ment of GHG emission reductions and therefore, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom of Great Britain and Northern Ireland, United States of provide an incentive for countries to comply with America. the KP. 3 Changes in the sea level and temperature will trigger unpre- dictable changes in the frequency and intensity of extreme whether events such as cyclones and droughts. It is observed an a signifi- cant increase in the numbers of people reported affected by Lucas Assunção is Vice Chair for GETI and Coordinator, Climate weather-related disasters: from 275,000 in the 1970s, to 1.2 mil- Change and BIOTRADE Programmes – United Nations Conference lion in the 1980s to 18 million in the 1990s – a 65-fold increase. on Trade and Development (UNCTAD) – Geneva and Beatriz Garcia is consultant for the Climate Change Programme – UNC- References TAD. For more information please see Internet: http://www.unc- Assunção, L. and Zhang, Z.X., “Domestic Climate Change Policies tad.org and the WTO”, UNCTAD Discussion Papers, N. 164, 2002. Austin, D. et al, “How Much Sustainable Development Can We Notes Expect from the Clean Development Mechanism”, World Resource 1 By July 2003, 111 countries had ratified the Protocol. Institute, 1999, p. 7. Ratifications by Annex I countries accounted for 44.2% of that group’s carbon dioxide emissions in 1990 . The USA (36.1%) and Brack, D. et al, “International Trade and Climate Change Policies”, Australia (2.1%) have declared their rejection of the KP. Thus, in EARTHSCAN, 1999, p. 29. order for the KP to enter into force, Russia (17.4%) needs to ratify Brown, S. et al, “Economic Impacts of the Kyoto Protocol: it. Official pronouncements suggest that Russia is on track to ratify Accounting for the Three Major Greenhouse Gases”, ABARE, 1999, the KP in the coming months. The Kyoto Protocol includes six pp. 10-11 greenhouse gases, which are listed in Annex A: carbon dioxide International Federation of Red Cross and Red Crescent Societies, (CO2), (CH4), nitrous oxide (N2O), “World Disasters Report: focus on Reducing Risk”, 2002, pp. 83-105. (SF6), perfluorocarbons (PFCs) and hydrofluorocarbons (HCFCs). UNCTAD, “Greenhouse Gas Market Perspectives: Trade and Greenhouse gases, according to Article 1 of the UNFCCC, means Investment Implications of the Climate Change Regime”, 2001, p. 7. “those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and re-emit infrared radiation”. 2 Annex I Parties to the FCCC are Australia, Austria, Belarus, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark,

International processes on genetic resources and traditional knowledge: options and negotiation alternatives1 David Vivas-Eugui , Manuel Ruiz and Maria Fernanda Espinosa

second, ensuring the legal protection of tradition- Introduction al knowledge (TK), particularly in its relation to biodiversity and intellectual property (IP) (Articles The entry into force of the Convention on 10(c), 8(j)). Biological Diversity (CBD) in December 1993 Over the past ten years, discussions of both marked, the starting point for intense internation- these interrelated, yet distinct, issues have multi- al, regional and national processes addressing, plied. Extensive legal, policy, economic and scien- among others, two critical issues : first, the regu- tific debate has taken place in multilateral fora: lation of access to genetic resources and equi- The Convention on Biological Diversity (CBD), the table benefit sharing (Articles 1, 15, 16, 19) and Food and Agriculture Organisation (FAO), The

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United Nations Conference on Trade and to an end. At this time, countries will have to Development (UNCTAD), The United Nations decide on the ways and institutional frameworks Educational, Scientific and Cultural Organisation in which the discussions should continue. Some (UNESCO), The World Trade Organisation (WTO), countries believe that the Committee should con- The World Intellectual Property Organisation tinue in its current mode in order to allow coun- (WIPO), regional fora such as the Andean tries more time to consider their positions regard- Community of Nations (CAN), The Organisation of ing suitable systems for TK protection. Others African Unity, and the Pacific Island Forum; non- believe that it is time to change the mandate of governmental fora (e.g. the IUCN Global the Intergovernmental Committee from technical Biodiversity Forum), indigenous peoples organisa- and assessment work to a negotiation mode, tions, and many others. arguing that they are unwilling to spend more efforts on a process that has no mandate to In the case of the protection of TK, considerable advance towards adequate and clear solutions on progress has been made in the development of the relationship between genetic resources, intel- laws, treaty drafts, model laws and conceptual lectual property and the protection of TK and folk- documents. However, two key questions remain lore. open: first, ensuring an internationally recognised and sanctioned protection of TK, and second, The first part of this article provides a brief defining which intergovernmental institutional analysis of the existing fora and the opportunities framework should undertake the international they provide for the negotiation of effective TK policy process to pursue this end. protection and equitable benefit sharing arrange- ments. We will then move on to exploring differ- TK is not only a complex issue in itself. It can be ent institutional frameworks under which the addressed from different perspectives such as: negotiations on TK, Genetic Resources and IP conservation and sustainable use (i.e. CBD), may take place and offer some procedural aspects social and cultural aspects (i.e. UNESCO), food when assessing the suitability of these different and agriculture (i.e. FAO), intellectual property options. The document ends with suggesting ele- (i.e. WIPO) and economic development (i.e. UNC- ments for a potential recommendation of the TAD, WTO). All these approaches are necessary Intergovernmental Committee to the WIPO pre conditions for developing sound and effective General Assembly. legal tools and instruments for TK protection. It is thus difficult to address and assess TK in an Existing Fora and Negotiation Arenas appropriate manner within the context of a single institutional framework, particularly at the inter- Different institutions and their specific fora, cur- governmental level. Formal mandates of these rently address similar issues regarding genetic international bodies, natural political trends, resources and the protection of TK. Even if they expertise and other factors determine the priori- do so from different perspectives and under dif- ties, the focus and the approach. Given this situ- ferent approaches, their activities and goals - ation and recognising the important advances and often overlap. In the case of international bodies progress made in each of these different institu- and intergovernmental fora, where formal negoti- tional frameworks (all have recognised the impor- ations take place, each has produced a wide array tance of TK), especially within the CBD and WIPO, of results in terms of: commitments, research the question of where can an interdisciplinary papers, information documents and work pro- (holistic), transparent, open, participatory, inter- grammes. In the following we will provide a brief national policy and legislative process take place, summary of the work, achievements and contri- is extremely relevant. butions of international institutions and intergov- ernmental fora for TK and genetic resources and In 2003, the initial mandate of the WIPO explore the opportunities for an international Intergovernmental Committee on Intellectual negotiating process to design and approve a legal Property and Genetic Resources, Traditional regime for the protection of TK: Knowledge and Folklore2 (IGCGRTKF) is coming

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The Convention on Biological Diversity and concerns of countries and indigenous and (CBD). The objectives of the CBD are: the con- other local communities on TK Protocols to the servation and sustainable use of biodiversity and CBD thus a Protocol in the area of TK protection ensuring an equitable sharing of benefits derived could be envisioned. The successful negotiation from access to and the use of genetic resources process of the Cartagena Protocol on Biosafety (ABS). Since its entry into force, ABS and TK and the Bonn Guidelines demonstrate the possi- have been considered as priority issues in the bilities of the CBD, in providing a suitable institu- Convention’s agenda. The need to regulate tional framework under which a policy process access to genetic resources, ensure benefit shar- could be undertaken. WSSD has called for a ing and protect TK has been addressed in vari- regime on benefit sharing to be developed under ous COP Decisions and Recommendations from the CBD. However, specific and comprehensive the Subsidiary Body on Scientific, Technical and guidelines as well as good reporting processes Technological Advices (SBSTTA). The Panel on could also serve to ensure an appropriate treat- Experts of Access and Benefit Sharing and the ment of TK. Ad Hoc Open Ended Working Group on Access and Benefit Sharing – which led to the adoption World Trade Organization (WTO). The of the Bonn Guidelines on Access to Genetic WTO, formed by parties to the General Resources and Benefit Sharing– have both made Agreement on Tariffs and Trade (1994), is in considerable conceptual contributions in many of charge of the administration of trade related the areas related to ABS and motivated further agreements and seeks to promote free trade policy/legal debates at national and international worldwide. The WTO, especially through its levels. The call of the Plan of Implementation Committee on Trade and Environment (CTE), that emerged from the World Summit on has occasionally addressed the experiences of Sustainable Development regarding the negotia- several country members with legislation in the tion of an international regime on benefit sharing 3 arising from the use of genetic resources has area of the protection of TK . created additional momentum for ABS negotia- The WTO has also addressed biodiversity and tions. The Ad Hoc Open Ended Intersessional TK related concerns in the context of the review Working Group for the Implementation of Article of the TRIPs Agreement regarding article 27.3.b. 8(j) was established to provide advice on the This article allows governments to exclude ani- application and development of legal and other mals and “essentially” biological processes from appropriate forms of protection for the knowl- patenting, but plant varieties have to either be eli- edge, innovations and practices of indigenous gible for patent protection, fall under a sui gener- and local communities embodying traditional is system, or a combination of both. The discus- lifestyles relevant to the conservation of biodiver- sion of Article 27.3.b, which began in 1999, also sity and recommend which of the work-plan included the pros and cons of plant variety protec- objectives and activities should be referred to tion systems, moral and ethical issues, TK and the other international bodies or processes and iden- rights of communities regarding genetic materi- tify opportunities for collaboration and coordina- als, and whether the TRIPS Agreement presents a tion with other international bodies or processes. conflict with the CBD. Paragraph 19 of the Doha Through Decision V/16 a specific Programme of Declaration of the WTO Ministerial Meeting Work on Article 8(j) was adopted by the CBD (2001), specifically addresses the need to assess COP. the relations between TRIPs, CBD and TK. Opportunities: The CBD has focused on TK as Opportunities: The discussions on TK issues at it relates to conservation and, sustainable use of the WTO have shown that it can recognise the biodiversity and access to and benefit sharing importance of TK but only strongly conditioned from the use of genetic resources. It has proven to trade rules and commitments. Negotiating to be a receptive forum to the considerations blocs and alliances could prevent “new” issues

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from disrupting or altering already set priorities and expertise and has influenced other process- in the trade agenda. Negotiating a TK protection es within WIPO (i.e Patent Cooperation Treaty regime within the WTO context would certainly negotiations) with relevant TK information. put TK in the spotlight but in terms of the WIPO´s overall experience and records in coor- process itself – even if this negotiating option dinating international negotiations on IP related was possible – trade considerations may prevail topics, may provide a good basis for any TK and affect substantive propositions. In this related process. However, the strong IP orienta- regard the WTO is perhaps not suitable for TK tion of WIPO and the leverage exercised by negotiations. Clear commitment to implement some nations and particular industries through- the Doha agenda and specific commitments by out the history of negotiating IP agreements, the WTO towards supporting work in other could limit the possibility of addressing this issue forums could certainly assist in the negotiation from a comprehensive and balanced stand. process for TK. United Nations Food and Agriculture World Intellectual Property Organization Organization (FAO): FAO is an international (WIPO): WIPO is a UN international organiza- specialised UN Agency. FAO´s mission is to raise tion in charge of the administration of a wide levels of nutrition and standards of living, to range of IP agreements and seeks to promote IP improve agricultural productivity, and to improve throughout the world. WIPO´s involvement in TK the condition of rural populations. Within this began in 2000 when its General Assembly decid- very broad mandate, FAO supports the develop- ed to establish the Intergovernmental Committee ment of particular projects and initiatives related on Intellectual Property and Genetic Resources, to the enhancement and preservation of TK, Traditional Knowledge and Folklore. The man- specifically as it relates to agriculture. date of the Intergovernmental Committee relates FAO´s relation to TK goes back to the early to three interrelated issues: the access to genet- 1980´s when the International Undertaking on ic resources and benefit sharing, b) the protec- Plant Genetic Resources was adopted (1983). The tion of TK and c) the protection of expressions issue of Farmers Rights – a key element for future of folklore. The overlaps with the CBD have lead discussions on TK – was extensively debated to a formal collaboration between the CBD and within FAO and formally recognised through FAO WIPO Secretariat through a memorandum of Resolution 5/89 and, more recently, through its understanding. International Treaty on Plant Genetic Resources The Intergovernmental Committee has had four for Food and Agriculture. During these discus- sessions in which Member States have discussed, sions, the questions on how to compensate farm- inter alia, legal, policy, economic and scientific ers and communities for their conservation efforts aspects related to TK, case studies on TK protec- (of plant genetic resources) and protect TK (in the tion, analysis of IP principles, and sui generis agricultural context) received great attention and alternatives for TK protection. Within this forum recognition. At present, FAO is pursuing a strate- the, probably, largest part of the substantive gic framework and a medium term plan, which debate has taken place. The range of documents include issues regarding ecological knowledge developed to inform these discussions has con- (knowledge of biodiversity gained through agri- tributed significantly to the literature and overall cultural practices), a critical factor of TK. 4 progress on TK protection . Opportunities: Over the past 20 years FAO has Opportunities: Over the past three years worked extensively on issues related to Farmers WIPO’s Intergovernmental Committee has Rights, which, to a certain degree, reflects many worked extensively on the analysis of different of the issues of the TK debates. However, the alternatives and proposals for the protection of focus on genetic resources related to food and TK. It has produced extensive documentation agriculture limits the scope of work on TK issues. The recent culmination of the FAO IT negotiation

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(after years of intense efforts) could also limit treatment of trade and development and the possibilities of short-term commitments by FAO. interrelated issues in the areas of finance, tech- The fact that Farmers Rights were excluded from nology, investment and sustainable development. the international context in the new FAO Treaty, At the “Sixth Session of the Commission on leaving the substantial development and imple- Trade in Goods and Services, and Commodities”, mentation to national policies and legislation, UNCTAD addressed the issue, raised by develop- could be a sign that under FAO auspices, an ing countries, that the TRIPS Agreement needed international TK protection mechanism could be to include the protection of TK and biodiversity. difficult to promote. Prior to this meeting, the Fifth Session focused on “Agreed recommendations on the sustainable use of biological resources: Systems and national United Nations Educational, Scientific experiences for the protection of traditional and Cultural Organization (UNESCO): knowledge, innovations and practices” UNESCO makes a concerted effort to address the (TD/B/COM.1/L.16 – 27/03/01). A press release cumulative body of knowledge, know-how, prac- in 2001 discussed the wide-ranging arguments tices and representation of local communities behind the need to protect TK in, “New avenues worldwide. Some of the organization’s activities needed to protect traditional knowledge, urge include research on traditional resource use in experts at UNCTAD meeting,” (TAD/INF/PR/068 land and water ecosystems, pursuing partner- – 03/11/00). UNCTAD also has papers available ships between indigenous and other local com- from its “Expert Meeting on Systems and munities and the multi-use of protected areas, National Experiences for Protecting Traditional cultural dimensions and the creation of an inter- Knowledge, Innovations and Practices in national normative instrument on the protection 5 6 of TK. Some of the recent developments of November 2000” UNCTADs Biotrade Initiative UNESCO´s work include discussions of knowl- also includes references on the need to protect edge systems at the UNESCO-ICSU World TK as it relates to trade in biodiversity and its Conference on Science (Budapest, June 1999), components (or ensure equitable benefit sharing the Indigenous Knowledge Side Event at from its use). Johannesburg in 2002, and UNESCO’s new inter- Opportunities: UNCTAD offers opportunities sectoral project launched in 2002-2003 on “Local and elements which may favour the positive pro- and Indigenous Knowledge in Systems in a tection of TK (although it might not be possible Global Society” (LINKS), along with an ICSU to actually negotiate an international regime report on science and TK in 2002. under its institutional framework). These are the Opportunities: UNESCO offers an interesting development perspective when addressing issues “neutral” forum where TK fits into the overall of political nature and the technical capacity to objectives of the organisation. UNESCO has also support the development of products and servic- a specific mandate to promote science education es of indigenous and other local communities. and culture. These objectives are directly linked UNCTAD can also assist in the identification of to issues of sustainable use of genetic resources market opportunities and ways to overcome and protection of TK. UNESCO is an organization existing trade barriers for biodiversity friendly with a leading experience on folklore issues and products and services. the cultural heritage of nations and humanity. Are there options for finding synergies regarding international processes? United Nations Conference on Trade and Development (UNCTAD): UNCTAD was estab- The section above shows that there is a prolif- lished in 1964 and aims at the development- eration of parallel processes with overlapping and friendly integration of developing countries into sometimes competitive mandates in the different the world economy. UNCTAD is the focal point international fora. These processes can encom- within the United Nations for the integrated pass discussions, analytical and technical work

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and sometimes negotiations. In some cases par- on genetic resources, intellectual property and allel processes are being coordinated and in other TK. Having or finding an adequate process and cases they simply run in parallel. Efforts to build synergic relationship among different internation- coherence and synergies on these issues have al organizations will have fundamental implica- been minimal to date. They have often lead to tions for countries, NGOs, indigenous and other confusion on where and how to address the local communities in WIPO’s Intergovernmental issues and how to avoid potentially counterpro- Committee. Processes per se are not objectives ductive or conflicting outcomes. For countries, a themselves. Processes are means for achieving proliferation of parallel processes can have nega- the various objectives sought by relevant actors. tive impacts on the defence of their interests due These objectives vary in range and substance and to lack of capacities and resources to follow them depend on whether we are dealing with the rela- effectively. Finding solutions to the relationship tionship between genetic resources and intellec- between genetic resources, intellectual property tual property or the protection of traditional and the protection of TK, seems to be a very com- knowledge or both. Different objectives do not plex task that cannot be resolved by isolated necessarily have to be contradictory. If adequate- processes. ly managed at the international level, they should be mutually supportive. In WIPO’s Intergovernmental Committee, some Members, Non-Governmental Organizations There is an urgent need to assess the suitabili- (NGOs) and indigenous and other local communi- ty of the various forums to deal with the rela- ties, have expressed doubts about whether the tionship between genetic resources, intellectual process alone can address all concerns over property, and the protection of traditional knowl- genetic resources, intellectual property and TK. It edge. Furthermore, one should assess the differ- seems overly ambitious that only one forum ent forums can complement each other in the addresses issues under discussion when they are effort to ensure the sustainable use of genetic interdisciplinary, systematically complex, subject resources, fair and equitable benefit sharing of to various bodies of international law and covered benefits and effective TK protection. by the mandates of various international organi- In the international arena there are useful expe- zations from different perspectives and mandates. riences with different level of cooperation or asso- These issues are interdisciplinary due to the vari- ciation seeking specific results whether normative ety of approaches, related bodies of knowledge or institutional. Box 1- Box 3 present some exam- and number potential uses; they are systematical- ples of successful precedents of cooperation at ly complex due to the close interactions with the the international level in areas of common compe- environment, biological and human diversity, as tence. well as various systems of values. As outlined above, various bodies of internation- All these precedents have shown that exis- al law have regulated directly or indirectly issues tence of cooperation and joint processes among

Box 1: An example of “joint” International rule making.

The Rotterdam Convention: UNEP/FAO. The Convention on Prior Informed Consent Procedures for Certain Hazardous Chemicals and Pesticides in International Trade (Rotterdam Convention) was created as a means to address the dramatic growth of chemical and pesticides production and trade in the past three decades, as well as the lack of adequate infrastructure and procedures when trading these chemicals. In response to these con- cerns, the Rio Summit called for the adoption of a legally binding instrument on PIC procedure by 2000. Consequently the UNEP Governing Council and FAO Council instructed their executive heads to initiate negotia- tions. In 1998 FAO and UNEP jointly formed the Secretariat for the convention during an interim period until the Convention enters in force. The Convention might be finally administered by an independent secretariat created by UNEP and FAO.

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Box 2: An example of a “joint” organisation The International Trade Center (WTO/UNCTAD). The International Trade Centre was created by the WTO and UNC- TAD to provide technical assistance for operational and enterprise oriented aspects of international trade. The ITC is not a rule making organization but a cooperation institution. It supports developing countries and countries with economies in transition, and particularly the , in the strengthening of their full potential for devel- oping export and import operations. It was created in 1964 and since 1968 was jointly administrated by the for- mer GATT and UNCTAD. It is also an implementation agency of UNDP.

Box 3: An example of inter-ssecretarial technical work and cooperation. UNESCO/WIPO Model law on expressions of folklore. Joint technical work by WIPO and UNESCO regarding expres- sions of folklore started in the late 1970’s. WIPO and UNESCO convened a Working Group in 1980 and 1981 to study the draft Model Provisions intended for national legislation that were being prepared by WIPO at that time, as well as possible international measures for the protection of works of folklore. The outcomes of those meetings were submitted to a Committee of Governmental Experts, convened by WIPO and UNESCO in 1982. This Committee finally adopted the “Model provisions for National Laws of Expressions of Folklore Against Illegal Exploitation and Other Prejudicial Actions” in 1982.

governments acting in various international shown that this type of can be man- organizations and secretariats are not only possi- aged by up to three international organizations. ble but also commonly used in areas where over- The work to be undertaken could go from joint dis- lapping mandates and competences exist. cussions to rule making processes (creation of soft law8 or international agreements) and implemen- Are joint international processes an option? tation of common obligations. In the case of the In 2003, the initial mandate of WIPO’s Intergovernmental Committee there are three pos- Intergovernmental Committee is coming to an sible tripartite inter-institutional joint partnerships end, and countries have to decide on where and these include the following constellations: i) WIPO, how the discussions should continue. This article CBD and FAO; ii)WIPO, CBD and UNESCO; iii) provides some options for finding synergies at the WIPO, WTO and CBD. The first tripartite inter- international level addressing aspects of genetic institutional partnership would emphasise issues resources, intellectual property and protection of regarding genetic resources and traditional knowl- traditional knowledge more comprehensively. One edge. The second would take the same issues but way to generate synergies at the international add a further balance by including some expres- level is to cluster parallel processes in a single joint sions of folklore. The third would add emphasis on process that may take a more comprehensive trade issues, and, if normative results are approach. achieved, they could be subject to the dispute set- Joint processes can have two formats: tlement of the WTO. In the event the process results in an international agreement, any member Inter-institutional processes of govern- of the three organizations could sign and ratify ments inside two or more international organiza- that agreement. This case could be similar to the tions acting together with the support of their processes of the Rotterdam and Rome respective secretariats or; Conventions. The results of the work under this Inter-secretarial processes7 composed by option could be administered and implemented by two or more secretariats of international organi- the secretariats of the three organizations or by a zations. new secretariat specifically created for this pur- pose. The main options for joint processes that have been identified are the following: Work in one central governmental forum with compatibility check by members of other interna- Inter-institutional processes tional organizations on potential results. Under this option one international organization, sup- Inter-institutional partnerships. Practice has ported by its secretariat, would carry out all the

92 Policy Matters 11, September 2003 Environment and Trade Regimes: Relations and Linkages work, whether it refers to a discussion or a nego- Secretariats on wetlands and biodiversity. The tiation. Once a particular result is close to being governing bodies of the two international organi- achieved, other pre-selected organizations with sations have endorsed this joint programme. common areas of competency could ask for the Joint technical work. Joint technical work has review of the potential results (i.e. a diplomatic been undertaken by secretariats of international conference) in case they believe there might be a organizations in many occasions. The technical direct conflict with their own agreements. This work could include preparations of joint model option has not yet occurred in practice. laws, documents, research, reports, etc. Examples Work in one central forum in coordination with of joint technical work are the model law and the the members of other international organizations. consultations processes prepared and organized This option would entail that members of one by WIPO and UNESCO. Joint documents have also international organization supported by its secre- been prepared in the context of the current debate tariat undertake the work in close consultation on trade and environment in the Committee on with the members of other international organiza- Trade and Environment of the WTO. Examples of tions, and reporting on those consultations. This these documents are: option would allow other organizations to give “Technical Assistance, Capacity building and their comments as the process advances. Results Enhancing Information Exchange”9 prepared with of the consultations would be non-binding. inputs by WTO, UNEP and Multilateral Nevertheless, the members of the central forum Environmental Agreements (MEAs) Secretariats in would display bona fide (in good faith) efforts to 2002 and; address comments and concerns presented by the “Compliance and Dispute settlement in the WTO members of other international organizations in and in MEAs”10, note by WTO and UNEP. areas of common competency. This option has not yet occurred in practice. Exchange of information. The exchange of infor- mation by secretariats is very common and can Work in one central forum and results adminis- take place on a formal basis through the creation trated jointly with other international organiza- of a particular mechanism or on an informal basis tions. Under this option members of one interna- through staff meetings of different secretariats. An tional organization carry out all the work and other example of this type of collaboration between sec- international organizations would only participate retariats can be found in the Memorandum of as observers. Once a particular result is agreed in Understanding between WIPO and CBD the central forum, it could be jointly implemented. Secretariat. Another example how international This solution is feasible when financial resources organizations, and more specifically MEAs and the need to be obtained from different sources to WTO, are negotiating procedures for regular infor- implement the results. IUCN is an example of an mation exchange is the case of the mandate of organization that implements common lines of paragraph 31(ii) of the Doha Ministerial action and cooperation activities decided by a Declaration. diverse constituency with funds obtained form var- ious sources, including private and public. Options for joint processes above presented above are just some of many possible procedural For initiating any of these joint processes there is blends that could be examined by WIPO mem- a need to obtain a specific decision from the high- bers in their effort to find adequate solutions to est decision making bodies in the respective issues surrounding genetic resources, intellectual organizations. property and traditional knowledge. Inter-secretariat processes Some procedural elements to be taken into account when approaching options for processes Joint programme of work. More than one regarding genetic resources, intellectual property International organisation can engage in joint and traditional knowledge. programmes of work in areas of common compe- tences. This is the case of the Programme of When member states are developing their Work between the Ramsar and the CBD national positions, they may wish to consider the following elements:

Policy Matters 11, September 2003 93 Environment and Trade Regimes: Relations and Linkages

The complex nature of TK and the disciplines ship between genetic resources, intellectual prop- required for a comprehensive understanding erty and TK; and the multiple fora and processes of its implications requires a multidisciplinary that are addressing these issues, it is urgent to approach for a suitable negotiation process. consider different scenarios and alternative institu- tional frameworks in which a comprehensive nego- Multidisciplinary in the case of genetic tiation process could be undertaken. This process resources and TK is a precondition for the should aim at establishing an international regime design and development of sound interna- for the protection of TK and regulating access and tional legally binding instrument. use of genetic resources. The different options The focus and mandates of existing interna- presented in this paper seek to establish coopera- tional organizations and institutional frame- tion and synergies among existing institutions in works may limit the possibility of this multi- order to join efforts and expertise and ensure that disciplinary approach. any international arrangement responds to the Countries may wish to consider the advan- complexity of the issue, and is consistent with the tages and disadvantages of existing institu- principles of sustainable development. tional frameworks before deciding about the most appropriate institutional arrangement David Vivas is Programme Manager, Intellectual Property, for an international negotiating process. Technology and Services at the International Centre for Trade and Sustainable Development (ICTSD) ([email protected]); Manuel Ruiz Objectives and history of results of previous is Programmes Director at Sociedad Peruanas de Derecho international processes could provide key Ambiental (SPDA) ([email protected]); Maria Fernanda information to assess and ensure that the Espinosa is the Advisor Indigenous Peoples and Conservation appropriate framework is chosen. Policy, Policy Biodiversity and International Agreements Unit, based in IUCN SUR([email protected])11. Indigenous and other local communities should, as title/rights holders, be part of Notes national delegations when initiating a negotia- 1 A more comprehensive version of this article was presented tion process. during an IUCN, ICTSD and SDPA informal dialogue held on 11 July 2003. The paper and more information on the dialogue is available Countries may wish to consider alternative at Internet: http://www.ictsd.org/dlogue/2003-07-11/11-07-03- approaches to a negotiation process (i.e. desc.htm 2 Hereafter the Intergovernmental Committee on Intellectual through individual processes, enhanced coop- Property and Genetic Resources, Traditional Knowledge and eration, or joint or tripartite institutional Folklore will be referred to as the “Intergovernmental Committee”. arrangements). 3 See : (Environment: Trade and Environment News Bulletins, TE/035 – 20 February 2001, Item 8 of “Trade-related aspects of intelltual property rights- TRIPs”). Conclusion 4 For a complete summary of the IGCsee: WIPO. Overview of Activities and Outcomes on the Intergovernmental Committee The different fora as well as regional and nation- WIPO/GRTKF/IC/5/12. al initiatives reveal the growing interest regarding 5 Papers available at www.unctad.org/trade_env/index.htm. the access to genetic resources and its associated 6 See www.biotrade.org traditional knowledge. Growing markets in biodi- 7 Some authors may call them inter agency processes, when versity related products require new and creative they occur in the framework of the United Nations. options in order to guarantee that access regimes 8 Soft law refers to non-binding bodies of rules that are designed to provide guidance and orientation. It has an important and benefit sharing arrangements are fair and value as precedent in the interpretation of law, i.e. recommenda- equitable and recognise the rights of countries of tions, guidelines, etc. origin and TK holder. 9 See WT/CTE/W/203, 2002. 10 See WT/CTE/W/191, 2001. WIPO’s Intergovernmental Committee has con- 11 The opinions given herein belong solely to the authors and do tributed significantly to technical, legal and policy not involve any of the organisations mentioned in this work. discussions and analysis. However, there is recog- nition that national measures and the use of exist- ing IP instruments and mechanisms (including the international IP system in general) are limited and fragmented. Given the complexity of the relation-

94 Policy Matters 11, September 2003 Section III: Regional and National Focus Environmental Services Trade, GATS and Human Development: Asian Experiences1 Sitanon Jesdapipat

tional architecture to accommodate increased Introduction competition, should commitments be made and implemented. Among others, enhancing new Human development is an important considera- competition between local and foreign firms tion for economic and social development, and must be conducted in a transparent and freeing environmental services trade should link accountable manner, keeping in mind also conse- to mechanisms which could deliver enhanced quent impacts on human development goals. human development - otherwise development will only be partially fulfilled and fall short of being Emerging Asia and Sustainable sustainable. Of particular concern is an assurance Development Agendas that free trade in environmental services would At the turn of the millennium Asia was project- not deprive the vulnerable groups of access rights ed to be the new economic powerhouse of the and, while not being made better off, that they world, to be led by China, providing a new would not be made worse off as a result of momentum for global economic growth as increased private sector roles in providing such growth elsewhere was waning. This projection is services. While maintaining the public provision of indeed an exciting one, if the environmental con- basic needs, including basic environmental servic- text is used to frame alternative future scenar- es such as clean water and , GATS com- ios. A reinvention scenario within which nations pliance in environmental services must not further fully implement Agenda 21 and other sustainable erode the ability of the public sector to continue development measures, for instance, would providing such basic services. The implicit private imply a sustainable development path for Asia, participation in providing environmental services while the business-as-usual scenario represents on commercial terms should become instrumental rather pessimistic outcomes for the environment, to further such capacity in expanding the cover- such as intensification of wastewater; solid age of services, improving its quality and encour- waste and trade-offs of emissions for moderniza- aging human development-based provision of tion and much-inspired improved standards of such services. living. Without more stringent measures for pop- The three countries (China, Pakistan and ulation control more Thailand) have similar priority environmental people will be chasing It is true that freeing interna- services sector, judged from prevalent environ- after increasingly fewer mental challenges and investment gaps. resources, whilst adding tional trade in goods and serv- Wastewater and solid waste are the two promi- more pollution of all could in some instances nent sectors that have been identified. Future forms to the ecological worsen the environment, but human development looks bleak in all countries, reservoir. Imagine, for if population pressure, prevalent poverty and example, what would trade also brings about capital environmental challenges are not addressed the state of environment for addressing the environmen- promptly and efficiently. The existing investment of Asia, and for the tal challenges. gaps provide a good opportunity for freeing world in fact, be if a few environmental services, allowing increased pri- hundred millions more vate sector participation. All countries, however, passenger cars are used in China in the next few need to reform and/ or rearrange their institu- years. Rapid, low quality growth of China

Policy Matters 11, September 2003 95 Regional and National Focus

Poverty has destined a large number of people of Asia to (already near two digit numbers) could be a by the same token is nightmare for both the local and the global envi- reducing wide-spread accept jobs opportunities ronment. absolute poverty, the pro- that pose high health risk; vision of basic needs and A moderate scenario might be more comfort- catching up with their to live in environmentally ing. It suggests “managed” and participatory counterparts in moderniz- unsound conditions, depriv- growth along side with improved environmental ing its standard of living. protection in Asia, especially among countries ing them the right to safe- Indeed for most of these that have the capacity to deal with the neces- countries, environmental guard for themselves human sary technological transition, to be imported into degradation, if ever men- Asia and locally bred by many excellent environ- development opportunities. tioned, is inevitable reali- mental technology centres in the region. ty induced by lack of no better choice. Somehow large investment gaps created by expanding demand and the declining role of For instance, the population pressure and the public funds have to be filled with foreign direct prevalence of absolute poverty are the two most investment from outside the region. This certain- visible drivers that could easily derail future sus- ly requires major institutional rearrangements - tainable development, and the economic leader- an action required by all three countries to cope ship of Asia (Table 1), if not properly and prompt- with increased and widespread pollution intensity ly addressed. They are the true dilemmas: Asia’s and external calls to liberalize trade in services. future is to be plagued with too many mouths to Despite their diversity, there is one common feed, and too poor to find better options for reality for Asian countries: all are facing a strong decent human quality. Though the large number and sweeping tide of globalization and pressure of population may enable China to gain compara- to develop sustainably. A pertinent question is tive advantage from labour-intensive production, what development strategy would assure “quality and secures huge domestic demand, the sheer growth” for emerging Asia, fulfilling, for instance, size of population requires high economic growth both environmental and human development to “take off” the economy. Though the massive goals. size of population of Asia signifies huge market potential for environmental services, future impli- There certainly are such options, and environ- cations for environmental services are even more mental services certainly have a crucial role to relevant as the population pyramid indicates high play. Studies indicated that pres- dependency ratios and the less ability of the pub- sures are akin to lic sector to continue fund projects. Alleviating poverty does not auto- rapid growth of matically turn Asia into an environ- China and Southeast Poverty has destined a large number of people Asian countries, and of Asia to accept jobs opportunities that pose mental haven, unless environmental there are opportuni- high health risk; to live in environmentally protection is an integral part of the ties for these coun- unsound conditions, depriving them the right to tries to solve the safeguard for themselves human development whole economic and social policies. problems in a drastic opportunities. Improved environmental services Hence, arresting environmental manner through sev- will also increase the general public welfare. But challenges becomes a sustainable eral measures if alleviating poverty does not automatically turn early actions are Asia into an environmental haven, unless envi- development norm, not an excep- taken (Economist, ronmental protection is an integral part of the tion for future development of 1998). Development, whole economic and social policies. Hence, emerging Asia. however, is a matter arresting environmental challenges becomes a of priority and choic- sustainable development norm, not an exception es, to be determined by nations themselves. For for future development of emerging Asia. most poor nations of Asia, development priority

96 Policy Matters 11, September 2003 Regional and National Focus

Table 1: Major of China, Pakistan and Thailand

China Pakistan Thailand Statistics 1998 2000 1998 2000 1998 2000 Population 981 (1980) 1,271 (2001) 83 (1980) 141 (2001) 47 (1980) 63 (2001) Average population growth (%) 0.9 (95/00) 0.7 (00/01) 2.4 (95/00) 2.2 (00/01) 1.0 (95/00) 0.8 (00/01) GNP (mil. USD) 923,560 1,062,900 61,451 61,000 131,961 121,600 GNP/cap 750 840 470 440 2,160 2000 GDP growth (%) 7.8 8.0 1.2 4.4 -10.5 4.6 Service sector growth (%) 8.3 9.5 1.6 4.8 -10.0 4.0 HDI 0.59 (1985) 0.72 (1999) 0.4 (1985) 0.5 (1999) 0.68 (1985) 0.76 (1999) Population in poverty (%) 3.1 (urban 1997) 3.7 (rural 1999) 32.2 na 12.9 na

Note: na = not available Source: www.adb.org

The sustainable development concept, which increase per capita income and investment in accentuates the needs to address poverty; protect development. Empirical evidences much precious environment; and sustain growth of China and Thailand have shown that trade to meet exploding population, becomes necessary has enabled high growth of national economies. for Asia, which actually established national (See Tables 1 and 2). Wherever share of trade in mechanisms to implement Agenda 21. GNP is low, such as the case of Pakistan, eco- nomic growth seems rather modest. But the There is also a growing consensus that trade environment could be worsened as a result of and investment regimes could be important increased trade. Thailand is such an example, instruments to realizing sustainable develop- followed by China at the present time. However, ment, as they expand the capital requirements if domestic measures to deal with environmental for development and sustaining growth. Over the problems are lagging, the situation of low-trade past decades, trade expansion has been faster countries could be worsened too. than GDP and population, enabling Asia to

Table 2: Trade Indicators and FDI of China, Pakistan and Thailand. Source: www.adb.org

China Pakistan Thailand Statistics 1990 2001 1998 2000 1998 2000 Trade as % of GNP 29.7 44.7 28.7 34.3 66.5 112.1 Trade balance 2.2 2.0 -4.6 -2.5 -11.8 2.7 FDI (billion USD) 3.5 38.4 0.2 0.3 2.4 3.4

Official ODA flows from all sources (billion USD) 2.4 2.8 1.5 0.7 0.5 1.1

Policy Matters 11, September 2003 97 Regional and National Focus

It is true that freeing international trade in assurance for upholding environmental integrity goods and services could in some instances at home and in the production and delivery worsen the environment, but trade also brings lines, while ascertaining niche markets for green- about capital for addressing the environmental er products. Consumers could make sound deci- challenges. Finding trade and environment syn- sions only when product prices include costs of ergies becomes thus necessary, and as the tradi- environmental services of those goods. And a tional government-financed investment for envi- private scheme stands a better chance of ration- ronmental protection becomes scarce as a result alizing such prices, than the government-funded of the global economic slump and the Asian ones, that fear political resistance of consumers financial crisis, the investment gaps would have or users. to be filled by non-government sources, as offi- In a nutshell, catching up on a new sustainable cial overseas development assistance is either development ban-wagon requires that Asia fulfils unchanged or drying up. Existing investment its very basic development challenges, while gaps signal the role of private sector finance that addressing to protect its own house in good could become prominent and promising (Table order. The sheer size of population and its 2). growth from the very large base implies two The non-government sector would have a dual connotations: that a paradigm shift in develop- role to play. On the one hand, it could bring in ment policies of Asian countries to harness best new technologies, more capital to invest in infra- environmental protection is most pressing; and structure and the operation of environmental that the capacity to deal with the environmental services facilities. Technology transfer becomes challenges be enhanced to quickly close the an integral part of such investments, and the pri- gaps between demand for and supply of envi- vate sector is normally quicker to respond to ronmental services. Expectations for greener technological change than the public sector. products and cleaner environment, enabled by Innovations, new production technologies and increased income per head resulted from high new social demand for green products and growth and innovations in environmental sci- sound environmental management systems pro- ences, are reasons for hope for Asia to choose vide a vast array of choice for investors, con- win-win development strategies that its fore-run- sumers and producers of environmental goods ners had so little of. Thus, sustainable develop- and services. New materials for packaging, vol- ment to be promoted in Asia will have to also meet human development criteria, not simply a China and Pakistan, and to a certain extent Thailand, seem to sustained growth and improved environmental have a positive outlook to environmental services trade liberaliza- protection. Human development contains four tion, although domestic laws and regulatory regimes need to be components: explored before a commitment is made. Basic human needs (i.e., food, clothing, housing, medicine and education). untary eco-labeling, ISO series of environmental Human rights. management systems and new directives from Employment and income equity, and; Europe are but a few examples that developing nations of Asia need to be aware of and consider Environmental quality. adopting, if market shares of its goods and serv- ices are to be maintained. Environmental Services and GATT The second role of the non-state entity is in Many observers fear that freer services trade consumption. The private sector in this capacity would fall short of bringing accompanying directs consumption patterns, products and pro- human development benefits. True, GATS is the duction processes. Today consumers and global new negotiation process that developing coun- market place looks beyond product quality to tries of Asia would have to learn to capture its

98 Policy Matters 11, September 2003 Regional and National Focus

One approach of assuring more benefits, and to reduce potential risks on human ter technologies, equitable sharing of benefits arising development goals. Studies of the three coun- which domestic from freer environmental services tries, namely, Thailand, China and Pakistan, did investors and gov- not reveal any strong pro-human development in ernments cannot trade is integrating human develop- their investment policies - not to mention that deliver. ment goals into the process of nego- little is known of GATS itself outside the circles However, whether tiating environmental services of few close observers of the WTO processes. GATS would benefit National policies often aim to solve environmen- under GATS. developing countries tal challenges in isolation of social goals. If free- in terms of technology transfer is debatable. GATS ing environmental services trade is to deliver determines that access to technology shall be on win-win outcomes for the environment and commercial basis, showing no contribution of human development, linkages between these GATS to facilitating technology transfer since services and human development must be iden- commercial transaction of technologies are tified and translated into policy prescriptions for already common practices. GATS negotiations and scheduled commitments. China and Pakistan, and to a certain extent Two major points of departure need to be dis- Thailand, seem to have a positive outlook to cussed further in this very strong, though not nec- environmental services trade liberalization, essarily direct, connection: although domestic laws and regulatory regimes Role of the State and that of the private sector need to be explored before a commitment is in providing environmental services and; made. High growth of China, to be accompanied by dramatic increases in all forms of pollution Mode of provision and basic assurance to safe- and wastes, will benefit from the massive inflows guard human development benefits for all. of foreign investment some of which will be con- The divergent responses to freeing environ- centrated on environmental services, which is mental services under GATS differ slightly across seen as a subset of environmental industry. the three studied Asian nations due to level of Pakistan, facing a large gap in environmental demand and supply, and historical background services amidst fiscal strap and low private sec- towards foreign presence, especially that of the tor investment, may not lose to trade in environ- private sector direction investment. The following mental service liberalization in the short-run. two major factors explain the above two depar- However, the long-run social welfare needs to be tures. assured of meeting marginal groups’ ill-pre- paredness in coping with new management and Countries that have traditionally been more open new prices to pay for the services. From to foreign presence, as seen in trade and Thailand’s example, full liberalization could free investment policies, would be more opt to wel- current monopolistic power, and could bring the coming free environmental services trade, nation more alternative management systems compared to countries that either had bad and better technologies. experience or that were less opened. Openness, however, does not automatically In conclusion, given quite common environmen- imply that foreign “invasion” is always positive- tal problems, in particular wastewater, solid ly perceived in countries. If environmental waste, hazardous waste and air pollution, these services trade would produce dual benefits for countries responded quite positively to freeing human development and the environment it environmental services trade. How to integrate would make liberalization more welcoming. human development concerns into national strategies is not clear, however. There are rooms Countries that have large domestic investment for countries to design win-win strategies. gap see freeing environmental services trade as instrumental to promoting more foreign direct investment and transfer of new and bet-

Policy Matters 11, September 2003 99 Regional and National Focus

Negotiating Win-Win Options for Asia A broad framework agreement on technology transfer and resources mobilization among The GATS preamble states, partly, that Asian countries. Members of GATS: Mode 4 horizontal commitments, with specific Wishing to establish a multilateral framework Asian MFN for priority sectors, especially the of principles and rules for trade in services with hazardous waste sub-sector. a view to the expansion of such trade under conditions of transparency and progressive liber- Countries could also agree upon a set of priori- alization and as a means of promoting the eco- ty human development goals and table a discus- nomic growth of all trading partners and the sion paper in GATS. The human development cri- development of developing countries (empha- teria suggested above could be used as a guid- sis added) ing “principle” to set these basic goals. The aim of the proposal is to streamline human develop- The above aim of freeing environmental serv- ment goals into shaping the negotiation on trade - while implying, implicitly and auto- scheduled commitments and the final commit- matically, that global welfare will be increased to ments. every nation’s common benefits - is to support development goals of nations. If freeing environ- Strategic Responses mental services is to serve an overall develop- ment goal, an integration of non-GATS goals There is a big assumption behind this theoreti- must be made to strike a balance. cal interpretation of free trade. The four decades of GATT/WTO history seems to reconfirm that Trade liberalization has certainly brought about free trade may guarantee global efficiency, but benefits and unwanted consequences to trading not necessarily global equity in distribution of partners. While drives to liberalize trade in envi- increased welfare from expanding trade. The ronmental services are strong, negotiators have question is: will free environmental trade under not paid sufficient attention to assessing what GATS bring about more equitable distribution of kind of liberalization would bring net positive increased economic welfare, if not, why not and returns to nations that are ill-prepared to cope how to assure more equitable gain? with more opened trade regimes. This is a nec- essary pre-condition for services trade negotia- One approach of assuring more equitable shar- tion in particular as environmental services relate ing of benefits arising from freer environmental closely and strongly with human development services trade is integrating human development goals. The assessment could be conducted with- goals into the process of negotiating environ- in two inter-connected frames: an overall assess- mental services under GATS, in particular at the ment with broad sustainable development objec- early stage of negotiating GATS and thereafter. tives; and a sub-sector specific exercise to gain The three countries responded to the above better understanding of vulnerability, potential question through a list of strategic responses, impacts and strategic optional responses of which are: countries, put in the context of human develop- Clarification of definitions for “environmental ment. This set of information will be useful for services”. positioning country negotiations. Sector-specific assessment of environmental A strategic approach to negotiating environ- services within the overall framework of GATS. mental services for Asia is to agree on a broad framework of scheduled commitments, and leav- Establish comprehensive data and information ing MFN and national treatment principles to systems for environmental services. nations to determine specific needs in respond- Provide opportunities for research on issues ing to freeing environmental services. The broad related to liberalization of environmental servic- framework of scheduled commitments may con- es on economic, social, developmental and tain the human development aspects, which con- environmental aspects of countries. tain, among others:

100 Policy Matters 11, September 2003 Regional and National Focus

Establishing an expert group to assist negotia- mental services liberalization; and (2) exchange tion, policy reform and to direct research to of information on national environmental servic- specific needs of users. es. This approach might reduce the transaction costs for negotiating environmental services Development of a national overall strategy to trade and implementation of commitments, if negotiation and implementation of final com- intra-ASEAN environmental trade eventually mitments, with a view, among others, to materialized. enhance human development goals. Explore a regional approach to negotiating and implementing environmental services commit- Sitanon Jesdapipat is a GETI Steering Committee Member and ments, based for example on existing econom- Ph.D. and is currently a consultant under the UNDP Lead Programme. Email: [email protected]. ic integration/ cooperation such as ASEAN Plus. Assess domestic institutional capacity and regu- Notes 1 latory regimes, with a view to make these This article synthesises technical support documents, covering China, Pakistan and Thailand, produced under the Asia Trade mechanisms transparent for services trade lib- Initiative of UNDP for environmental services under the General eralization. Agreement on Trade in Services (GATS) (for more information on the project see Internet: http://www.asiatradeinitiative.org/ The Reform current environmental policies to country studies are aimed at being used for GATS negotiation and for public consultation on sensitive issues that are matters to enhance the role of private sector in environ- assuring adequate attention given to human development of coun- mental protection, with a view to enhance tries. These studies narrate sustainable development programs, pri- competition and to internalize services costs ority environmental problems and current status of in-country envi- ronmental services, and negotiation positions of countries. There into goods and services (e.g., treatment costs were no systematic assessments of potential impacts of freeing into services of supply), with a environmental services trade on human development as such, but view of integrating human development goals the studies discuss focused areas of linkages between environmen- tal services and human development. into such policies for investment in environ- mental services. References Broaden the participation of the non-state entity, Asia Trade Initiative, United Nations Development Programme. 2003. Trade, Economic Growth, and Human Development: A including that of the civil society and private Primer. UNDP Document. sector, into the process of current negotiation, Economic and Social Council, United Nations. 2002. Economic, thereby creating and institutionalizing a forum Social and Cultural Rights: Liberalization of Trade in Services and Human Rights. Report of the High Commissioner. for public consultation on GATS, this include E/CN.4/Sub.2/2002/9, 25 June 2002. the provision of resources to sustain an inter- Economist. 1998. “A Survey of Development and the active communication among stakeholders par- Environment”, March 21st. ticipating in the dialogue. Jesdapipat, Sitanon. 2003. Regional Study on Trade in Environmental Services and Human Development: Perspectives Provide opportunities for capacity building that is from the Kingdom of Thailand. A research report submitted to Asia an integral part of current negotiation man- Trade Initiative. dates and in support of future implementation Hills, Peter. 2003. Regional Study on Trade in Environmental Services and Human Development: Case Study on the People’s of commitments. Republic of China and Hong Kong Special Administrative Region. A research report submitted to Asia Trade Initiative. Specifically, reform present investment policies to Qutub, Syed Ayub. 2003. Regional Study on Trade in sufficiently accommodate human development Environmental services and Human Development: Case Study on concerns. Pakistan. A research report submitted to Asia Trade Initiative. United Nations Development Programme; United Nations Finally, developing countries of Asia could seri- Environment Programme; World Bank and World Resources ously consider using a regional approach to Institute. 2000. World Resources 2000-2001: People and Ecosystems, the Fraying Web of Life. Washington, D.C.: World accommodating environmental services negotia- Resources Institute. tion, as mentioned above. In theory, ASEAN Plus United Nations Environment Programme. 2002. Global (i.e., ASEAN, China, South Korea and Japan) Environment Outlook-3. could be a good place to start, with strategic dis- United Nations. 2002. World Summit on Sustainable cussion with two aims: (1) intra-ASEAN environ- Development Plan of Implementation. Advanced unedited text.

Policy Matters 11, September 2003 101 China’s challenge for trade and environment as a WTO member Wanhua Yang

the state sector, under a set of rules and condi- China’s economic reform and open door poli- tions that are different from those in a real mar- ket economy. China’s efforts have been highly cies in the late 1970s have made remarkable successful and turned the country into the progress and transformed the country from a world’s seventh largest economy and second closed economy, into one of the most powerful largest recipient of foreign direct investment. and dynamic economies in the world. China’s However, after a period of rapid growth, China’s successful experience has demonstrated the economy has shown its weaknesses and barriers benefits that trade and investment liberalization to efficient utilisation of resources. Structural can bring. However, the fast-growing economy problems including the lack of integration among has been accompanied by many social and envi- business segments and among regions have pro- ronmental problems, including serious water and gressively worsened during the 1990s, leading to air pollution, solid waste accumulation, water a sharp slowdown in its economic growth. scarcity in cities, rural environmental deteriora- China’s development has now reached a stage tion due to urban expansion and intensive farm- which is calling for further reform and must be ing practices, deforestation, desertification and different from what prevailed in the past. biodiversity depletion. China’s entry into the World Trade Organization (WTO) marks another The WTO accession represents a persistent milestone for the country’s economic develop- and courageous decision by Chinese leaders to ment. It will be beneficial to both the country carry the economic reform forward. WTO mem- itself and to the rest of the world. The accession bership will require China to set out the rules for to the WTO not only helps China to carry its a market-based economy. It will eliminate unfair economic reform forward, but also opens a mar- treatment currently favouring state-owned firms ket of 1.3 billion people to the world. While and discriminating against foreign companies engaging in reforms of its legal reform and gov- and local entrepreneurs. It will also require ernmental administration to abide by the world China to open protected sectors to domestic and trade rules, China needs to address the issues foreign competition. In short, China’s WTO related to trade, environment and sustainable accession will ensure its continued restructuring development. of the economy. Further trade and investment liberalisation will require significant adjustments This paper outlines China’s challenges for trade by some segments of the economy, while stimu- and environment, challenges for environmental lating other segments and bringing positive ben- governance, and challenges for the Doha Round efits to the economy as a whole. However, reali- of trade negotiations in the light of the WTO sation of these gains will largely depend on accession. It concludes by identifying some China continuing and strengthening its economic major tasks China should take to address the reform. challenges it will face in the post-WTO accession era. Environmental challenges Challenges for Trade and Environment Wider market opening and significant structural changes after WTO accession will have substan- China’s key strategy to achieve what it has tial economic, social and environmental conse- achieved so far is to gradually move away from quences. The links between structural changes central planning and to progressively establish a in the Chinese economy and the environment limited market economy (so called “socialist mar- are incontrovertible. There are some main pres- ket economy”). The main approach has been to sures on the environment in several major sec- allow “non-state” enterprise development outside tors after WTO accession.

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In the energy sector, China relies heavily on vention such as procurement policy. Maintaining coal as its primary energy source providing such a government policy has led to high pro- about 75 per cent of China’s energy needs. Coal- duction cost, grain surpluses as well as serious burning is the main source of China’s air pollu- adverse environmental impacts. The increased tion. China is also the world’s second largest use of fertilisers, has been the main cause for emitter of carbon dioxide (CO2), contributing 14 the entrophication in many Chinese lakes and percent of the world’s total emissions. Other coastal areas. The overuse of pesticides has fur- problems China’s energy sector faces include thermore caused high pesticide residues in food out-of-date technologies, poor management and crops, which then affect human health. To imple- low energy efficiency.1 In addition, China’s ener- ment the grain self-sufficiency policy, China’s gy deficit sharply increased since the early trade policy sets up high tariffs for grain imports, 1990s. Being aware of the needs to improve its and encourages the import of fertilisers and pes- energy efficiency and to acquire external energy ticides, which contributes even more to environ- sources, China began a radical restructuring and mental pollution. As grain production costs in reform of the energy sector in the late 1990s, China are high, compared to the world market, with the aim to improve energy efficiency and to the wheat price is 30 per cent higher; maize 60 introduce a more market-oriented approach in per cent higher; and rice 10 per cent higher.2 the energy sector. Furthermore, due to the lack With the WTO membership, average tariffs for of technology and financial resources, China has agricultural products will be reduced and a tariff- tried to attract foreign direct investment to the rate quota system will be applied. The import of power generation sector. grain products, such as wheat, rice and cotton, Further trade and investment after WTO acces- will greatly increase as domestic products lose sion will widen the gap in China’s energy competitive advantages. It is expected that the demands and supplies. It will also have direct production of labour-intensive products, such as impacts, both positive and negative, on trade fruit, horticulture, and livestock will increase. and energy. Many of the environmental problems Meanwhile, if the Chinese government formu- China is facing can be addressed through tech- lates appropriate incentive policies to attract for- nology transfer. Trade and investment liberalisa- eign investment, proper guided use of foreign tion can facilitate technology transfer and attract investment would more foreign direct investment to fill in the promote sustain- Wider market opening and significant financial shortage. However, there will be a risk able agriculture structural changes after WTO accession of increased output, offsetting the gains and ecological will have substantial economic, social achieved per unit of output. Continuing growth conservation proj- will also require diversification of energy sources. ects. However, the and environmental consequences. The China has now become a net oil importer, and production of live- links between structural changes in could be a major importer in the world. The sub- stock can be a stitution of high pollution coal by other energy significant source the Chinese economy and the environ- sources will contribute to reducing environmental of solid and liquid ment are incontrovertible. pressures and “greenhouse gases” emissions. waste. Forestry is also one of the sectors that may With regards to the agricultural sector, China experience significant environmental impacts fol- has long maintained a national policy of grain lowing the WTO accession. By nature forests self-sufficiency. Although, a household responsi- involve many environmental issues such as soil, bility system (in which farmers lease the land, water, biodiversity, air, climate change, landscape decide how to operate the land and retain the and others. Due to the seriously degraded profits or losses) has been adopted since the ecosystem in China, the government has taken early 1980s and market forces have now largely tough measures to protect forest resources. It replaced government plan and targets, grain has thus launched some major production is still subject to government inter-

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Further trade and investment liberalisa- projects and issued a logging-ban in 1998. Since Further eco- tion will require more efforts to improve then, China has become a net importer in all nomic restruc- categories of major forest products, with nearly turing will also and upgrade its environmental legisla- half of China’s commercial wood products being affect other tion, to strengthen its environmental imported. WTO accession will have both positive industrial sec- and negative environmental impacts. The tors. Faced with standard-setting, to strengthen environ- changes in investment flows, the establishment stronger com- mental related trade rules including of new plantations and the restoration of forests, petition, those better control of hazardous chemicals imports of wood and wood products and encour- industries con- agement of transfer of pollution prevention tech- suming high and wastes imports, and to better man- nologies, will have positive impacts on the envi- energy and raw age the import of genetically modified ronment. The production of wood and fiber, par- materials, with products (GMOs) imports. ticularly the pulp and paper production, would low efficiency have negative environmental implications. It and producing heavy pollution will be forced to should also be noted that changes in other sec- phase out or make major adjustments. The tors such as agriculture, tourism and energy, will reduction of these sectors will positively influ- have an environmental impact. ence the environment. At the same time, the growth of other sectors is expected. These Another environmental issue closely linking include electronic, textile, leather, food process- with the increased import of agricultural and for- ing, and the tertiary industry including banking, est product is alien invasive species (AIS). With insurance, telecommunication, consulting and increasing international trading activities the tourism. Most of these industries are less pollu- increasing amount of introduced AIS could cause tion intensive and with highly efficient manage- serious impacts on the environment and on bio- ment systems. These trends will help to reduce diversity. the environment pressures. Yet, some of these In the automobile sector, the WTO accession industries such as textiles, leather and food pro- will have immediate and significant impacts on cessing can be major sources of pollution. This the economy and the environment. Tariffs for will require the strengthening of environmental cars will decrease from 80-100 percent to 25 regulations and their enforcement. percent, over the five years following WTO entry. In addition to the direct impacts, secondary Tariffs on auto parts will be cut to an average of environmental effects can also be expected. 10 percent within six years. Import licenses will WTO accession may lead to more migration from be phased out entirely five years after accession. rural areas to urban cities. This will result in an Distribution, retail and after-service will be increased demand for housing, local transport opened up immediately to foreign investment. and environmental services including wastewater Currently, there is only one car for every 100 treatment and garbage disposal. Environmental people in China. However, the demands for per- impacts will also vary from region to region. sonal cars are on the rise and might increase Environmental pressures are likely to increase in further as tariff reductions will greatly cut the central and western regions and decrease gradu- prices for cars. Positive environmental impacts of ally in eastern and coastal regions, due to the liberalising the automobile sector include the move of industrial activities from developed east- reduction in unit emission due to market compe- ern regions to central and western China. tition in technology, price and services and more efficient fuel consumption. Negative environmen- Environment-related trade challenges tal impacts could be the increase in aggregate emission as a result of the increased use of cars, The demand for “environmentally friendly” the increase in aggregate use of fuel, increased products in many international markets is on the air pollution and increased health problems, as rise. Higher environmental standards and man- well as increased pressures on land use. agement measures in these markets could become potential green barriers to the trade of

104 Policy Matters 11, September 2003 Regional and National Focus

developing countries. Compared with many tion control, land, forest, wildlife and marine pro- developed countries, there are certain disparities tection to various administrative regulations, in environmental standards for many Chinese standards and guidelines implementing these products. It is anticipated that with reduced laws. These laws and regulations contain a trade barriers, non-trade barriers including those range of command-and-control measures as well for the purpose for environmental protection, will as some economic incentives (such as pollution increase. China needs to monitor this trend, and charges and a network for administering, moni- develop appropriate strategies to address the toring and enforcing environmental policies). issue of market access. Although additional instruments to promote bet- ter compliance and effectiveness of environmen- However, stringent environmental measures in tal regulation and environmental agencies are international markets may also bring trade devel- needed, these existing measures have con- opment opportunities to China. They can accel- tributed to the reduction of environmental stress erate trade development in new areas, including in China. green products, environmental technology and equipment and environmental services. They can Further trade and investment liberalisation will encourage domestic enterprises to strengthen require more efforts to improve and upgrade its their environment management, to adopt new environmental legislation, to strengthen its envi- technologies and processes, to practice cleaner ronmental standard-setting, to strengthen envi- production, and to lower energy and raw materi- ronmental related trade rules including better al consumption. These developments are not control of hazardous chemicals and wastes only conducive to overcoming green barriers to imports, and to better manage the import of trade, but would also support China’s sustainable genetically modified products (GMOs) imports. development strategy. The WTO rules have provided the basic ground on which China can formulate its environmental China has adopted some new policies and policy at a level it deems appropriate. instruments to promote environmentally friendly investment and products. For example, the In improving its environmental policies and for- revised guiding principles for foreign investment mulating environment-related trade policies, include a principle to ensure China’s commit- China must ensure the consistency of its envi- ments to meet its international environmental ronmental regulations with WTO rules. Moreover, obligations and to give preferential approval to it also needs to review its existing environmental foreign investment supporting environmental laws and regulations in line with the abovemen- protection. Other instruments such as ISO 14000 tioned WTO principles. Currently the Chinese environmental management standards, ecolabel- State Environmental Protection Administration ing and green food labeling have also been has started an overall review of the Chinese adopted and widely encouraged. However, other environmental policy and regulations. This is a approaches such as promoting corporate envi- proper step in honouring its commitments to the ronmental responsibility and disseminating best WTO. environmental practices should also be encour- Transparency in rule-making is one of the most aged to promote environmentally friendly prod- important requirements under WTO rules. In its ucts and services. protocol of accession China agreed to publishing its laws and regulations and to provide a reason- Challenges for able commentary period before new measures Over the past years, China has established a are implemented. This includes environmental comprehensive set of laws and regulations for laws and regulations, trade laws and regulations, environmental protection, ranging from the con- environmental standards and other technical stitutional provisions concerning the environ- standards as well as sanitary and phytosanitary ment, the basic environmental protection law measures. To fulfil its WTO obligation on trans- and laws concerning air, water, solid waste pollu- parency, China established an official China-WTO

Policy Matters 11, September 2003 105 Regional and National Focus

China can play a significantly Notification and Information Enquiry Centre means that only under the Ministry of Foreign Trade and clear rules can important role in the new round of Economic Cooperation (MOFTEC) in December prevent unneces- trade negotiations and bridge the 2001 when it became a member of the WTO. sary trade obsta- differences between developed and The Centre aims to provide information on cles in promoting Chinese laws, regulations and measures con- its exports. Thus, developing countries. cerning trade in good and services, and customs clear environmen- and foreign exchange. tal rules may promote efficiency and remove con- straints on development. In order to make global- Challenges for Doha Negotiations ization work better for sustainable development and for developing countries, countries need to As a WTO member, China will participate in the have a more effective, open and accountable Doha Round negotiations to develop additional international system and to make WTO rules and trade rules addressing existing and new issues multilateral environmental agreements (MEAs) related to globalisation. China is expected to be more coherent. one of the key players in these negotiations and has the political and economic power, to be an Conclusions important bridge between developed and devel- oping countries. As shown above, China’s WTO accession will pose environmental challenges as well as provide The Doha Declaration includes a trade and envi- opportunities to improve current environmental ronment mandate for negotiations. However, conditions. It may provide the opportunity for developed and developing countries are divided in China to better use global capital and technology, the debate concerning trade, environment and and to better utilise domestic and international development. Developing countries largely do not resources through significant structural changes. support the inclusion of environmental or labour Stronger competition will force Chinese enterpris- issues. andInstead they call for the full implemen- es to upgrade their technology, improve their tation of the Uruguay Round Agreements, while a management skills and enhance their competi- growing number of developed countries, in partic- tiveness. The structural changes including moving ular Europe, are calling for strong environmental away from industries consuming high energy and measures and are in support of an environmental raw materials with low efficiency and heavy pollu- review of trade agreements. tion, to industries with high efficiency and low China proposes that the objective for the new pollution, will be extremely beneficial. However, round of negotiations should be to establish a fair all these gains will not be automatically achieved and rational international economic order, balanc- without adequate environmental policy and force- ing the interests of both developed and develop- ful enforcement. The following are some major ing countries. With respect to trade and environ- tasks for China when addressing trade and envi- ment, a coordinating group has been established ronment: comprised of officials from the Chinese Ministry of - Strengthening environmental governance: Commerce (formerly the Ministry of Foreign Trade China should seize the opportunity of its WTO and Economic Cooperation), the State accession and the potential “win-win-win” oppor- Environmental Protection Administration, and tunity for trade, environment and development. other departments in order to form an integrated Efforts should be made to ensure that China’s fur- negotiating position of the various government ther trade liberalisation is not achieved by sacri- stakeholders. However, China also needs to iden- ficing its environment. It should improve its tify its broader interests with regards to the envi- national and local mechanisms to implement its ronment and sustainable development. sustainable development strategy. Potential As a major exporter of manufactured goods, its adverse environmental impacts of further trade interests may be different from those of other liberalisation and increased investment should be developing countries. China’s export led growth closely monitored and assessed, in order to take necessary measures to minimise impacts. There is

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a need to improve China’s environmental legisla- tal management certification and eco-labeling, tion and at the same time to ensure that these additional instruments may include promoting are consistent with the WTO principles of non-dis- corporate environmental responsibility and dis- crimination and transparency. There is also a seminating best environmental practices. Efforts need to utilize more market-based instruments to should also be made to promote international avoid environmental problems that may be ampli- cooperation and to develop exchange mecha- fied due to market failures. Market-based instru- nisms on standard-setting, harmonization and ments can provide incentives to encourage envi- mutual recognition efforts. ronmentally friendly activities or disincentives to - Actively participating and contributing to WTO discourage pollution and inefficient energy use. trade negotiations: China can play a significantly Efforts should also be made to enhance environ- important role in the new round of trade negotia- mental institution building and enforcement. tions and bridge the differences between devel- - Making economic/trade policy and environ- oped and developing countries. However, effec- mental policy more coherent: To ensure mutual tive participation in the WTO negotiations needs supportiveness of trade, environment and devel- strong technical support. A great deal of efforts opment and to seize the “win-win-win” opportuni- therefore, needs to be made to enhance aware- ties, China needs to adjust its industrial policy to ness and understanding of the trade and environ- optimise its industrial structure; develop its high- mental relationship, the issues to be negotiated tech and tertiary industry; undertake technical and China’s interests in sustainable development renovation in its traditional industries and in the negotiations. It is in China’s interest to upgrade them to a new technology level that will support an open, fair and equitable international use national resources economically and efficient- trade regime that promotes free trade and sus- ly; and address environmental pollution problems tainable development. previously created by irrational industrial struc- ture. An integrated policy-making mechanism to Wanhua Yang coordinates IISD. Wanhua Yang coordinates IISD’s address trade, environment and sustainable work on the China Council project. She has a background in envi- development issues is needed. Successful policy ronmental law and international environmental policy. Before join- ing IISD, she worked for a provincial environmental research insti- coordination requires effective institutional coordi- tute and an organization under the National Environmental nation. It is therefore, important to establish an Protection Agency, now the State Environmental Protection effective coordinating body among relevant min- Administration, in China. istries and commissions, central and local govern- Notes ment agencies, in particular among those of for- 1 80% of soot and particulate, 90% of , 85% of eign trade, environment and quality control. Such carbon dioxide, 82.5 of carbon monoxide and 70% of nitrogen coordination will improve the environmental man- oxides are attributed to coal combustion. See Jin Yunhi and Liu Xue, Clean Coal Technology Transfer: Present Situation, Obstacles, agement system and actively use trade measures Opportunities and Strategies for China, report submitted by the to promote environmental protection and sustain- Working Group on Trade and Environment to the China Council for able development. International Cooperation on Environment and Development in 1999. - Addressing market access: To meet the 2 The average thermal efficiency of China’s power plants is only 25 to 29 per cent compared to rates of 35 and 38 percent in indus- increasing dements for environmentally friendly trialized countries. The energy generation of industrial boilers is 52 products and services in the international mar- per cent compared to 72 per cent, and household energy use is kets, China needs to update its environmental only15 per cent compared to 55 per cent. See Krzysztof Michalak, et al, “Environmental Priorities for China’s Sustainable standards, which are in disparity with major Development,” pp 581-622, China in the World Economy, OECD, importing countries of Chinese goods. There is a 2002. need to help domestic industries to strengthen 3 Hu Tao and Fanqiao Meng, “China’s Accession to WTO and Environmental Impacts on Agriculture,” pp89-93, Trade and their environmental management, improving their Sustainability: Challenges and Opportunities for China as a WTO technological renovation and management skills Member, International Institute for Sustainable Development 2002. and thus gaining to 4 Interview with Minister Xie Zhenhua, “Environmental Impacts and Challenges for China of WTO Accession”, China Environmental increase their share in environmentally conscious News, 27 November 2001. markets. The Chinese government has encour- aged industries to obtain ISO 14000 environmen-

Policy Matters 11, September 2003 107 Genetically modified soy in Argentina - challenges ahead Charles Benbrook and Heike Baumüller

from the positive synergy between the adoption The economic benefits following adoption of the of no-tillage (direct seeding) planting systems and planting of RR soybean varieties. Prior to genetically modified Roundup Ready (RR) soy- the introduction of RR soybeans, serious soil loss beans in Argentina and the remarkable expan- in the Pampas region was eroding the productivi- sion of soybean acreage and exports is the one ty of cropland and leading to serious adverse unequivocal national success story during a peri- environmental impacts. While some acreage was od of general decline devoted to no-till systems, weed control in such throughout Argentina’s Questions about the sustain- systems proved difficult and expensive. The economy. Enthusiasm for emergence of RR soybeans made no-till systems ability of soybean produc- the RR soybean system in far easier for farmers, requiring much less man- the country is near bound- tion, possible environmental agement attention and skill to profitably use RR less and those working in impacts of expanded produc- soybean technology. In addition, the planting of the Argentinean soybean RR soybeans has led to a shift from higher-risk tion or changes in the effica- industry, government offi- herbicides to glyphosate, one of the least toxic cials and agribusiness lead- cy of technology have been and environmentally benign herbicide options ers take great pride in their available to soybean growers. given little attention. involvement and contribu- tions to the soybean industry’s growth and pros- Some contributing factors perity. Questions about the sustainability of soy- bean production, possible environmental impacts While the use of RR soy in Argentina has led to of expanded production or changes in the effica- a 25 percent reduction in per hectare and per cy of technology have been given little attention. bushel costs of production, it is important to Also, as import regulations for genetically modi- note that this reduction is largely attributable to fied organisms (GMOs) are continuously being circumstances particular to Argentina and to RR tightened around the world, concerns have been soy. Farmers in Argentina have benefited from a raised on the impacts of these regulations on the substantial “windfall profit” by virtue of access to competitiveness of Argentinean soy in the inter- RR soybeans at little or national market place. no added cost. RR soy- While the use of RR soy bean seed available in in Argentina has led to Importance of RR soy in Argentina Argentina is highly price a 25 percent reduction competitive with farmers Remarkable growth in soybean production and in the US paying at least in per hectare and per income has been generated by the adoption of 35 percent more to plant RR soybeans in Argentina. The low-cost and rel- bushel costs of produc- RR varieties. This price ative ease of the RR soybean system led to a differential arises from tion, it is important to rise in the adoption of the technology from a from the fact that note that this reduc- few percent of the 6 million hectares planted in Monsanto does not have 1996 to almost 100 percent of the 10.5 million tion is largely attribut- patent protection for RR hectares grown in 2002. An estimated US$ 5 bil- soy in Argentina due to able to circumstances lion in economic benefits have flown from the mismanagement of the particular to Argentina technology, despite a world-market-driven, near issue (see Trigo et al, 50 percent drop in the price of soybeans and and to RR soy. 2002) and from lax 1 processed soybean products. enforcement of seed laws in Argentina. Because Much of the environmental benefits arising of the terms under which RR technology was from the use of RR soybeans in Argentina stem introduced into the country, Argentina’s farmers

108 Policy Matters 11, September 2003 Regional and National Focus

pay only a modest technology fee and have, in that soil compaction resulting from the shift to effect, captured the benefits of RR soybean no-till production systems is one of the major technology causes. Compaction retards without paying Inadequate attention has been directed toward other root development and reduces the usual share water infiltration and soil of the technolo- potential adverse impacts of such a high level of reliance on water holding capacity. These gy’s develop- no-tillage and RR soybeans in Argentina, such as weed changes in soil structure, in ment costs. A turn, exacerbate weather- second major shifts, resistance, emergence of new diseases or soil micro- induced variation in yields and economic factor bial community changes triggered by the RR soybean sys- can reduce the efficiency of contributing to tem. There is a strong need to increase research focus on nutrient storage and uptake. the cost reduc- Consequences include greater tion was the these potential negative effects. yield variability, less efficient relatively low fertilizer use, and ultimately, and falling price of Roundup (glyphosate) herbi- the need to break up compacted soil layers. cides, which fell by almost half from 1996 to While compaction will occur similarly if conven- 2001 from about US$ 5.60 per litre in 1996 to tional or RR soybean varieties are grown using about US$ 2.67 in 2001. This drop in price no-till, the introduction of RR soy has greatly resulted from the expiration of the Roundup simplified and consequently expanded the use of patent and the subsequent entry of new produc- no-till. RR soybeans and no-till systems have ers into the market. been used long enough in Argentina for com- paction problems to emerge. Without remedial Emerging challenges in the field management strategies, it is likely that the eco- nomic impacts of compaction will steadily wors- The shift to RR soybeans in Argentina has led en. to a doubling of the pounds/kilograms of herbi- cide applied per acre/hectare, compared to crop- There is little research or grower education land grown using conventional varieties. The underway in Argentina focusing on ways to man- number of herbicide applications per hectare has age compaction. Similarly, inadequate attention risen from about 2 to 2.3 as a result of planting has been directed toward other potential adverse RR soybeans. This far greater reliance not just impacts of such a high level of reliance on no- on herbicides in general in managing soybean tillage and RR soybeans in Argentina, such as weeds, but on a single herbicide, has markedly weed shifts, resistance, emergence of new dis- increased the odds that a number of problems eases or soil microbial community changes trig- will emerge. These include shifts toward weed gered by the RR soybean system. There is a species that are able to survive applications of strong need to increase research focus on these glyphosate, the emergence of resistance weed potential negative effects, even though it seems phenotypes and changes in soil microbial com- unlikely that such research will be undertaken in munities. The two former ecological adaptations the foreseeable future, given the dramatic cuts will tend to erode the efficacy of RR technology that have been made in publicly funded agricul- and increase its cost; the latter change could tural research throughout the country. increase plant disease and nutrient cycling and bioavailability problems. Emerging Challenges in the Marketplace Incrementally more nitrogen, phosphorus and Import regulations for GMOs are increasingly glyphosate have been needed each year to sus- being tightened around the world, raising con- tain yield levels on many of the fields planted to cern over export losses in key markets such as RR soybeans. The factors driving this slippage in the EU, Japan and Korea. The still pending finali- the efficiency of the RR system are not fully sation of the EU regulations on labelling and understood, although scientists strongly suspect traceability of GMOs and the looming US-EU

Policy Matters 11, September 2003 109 Regional and National Focus

trade dispute over the EU’s de facto moratorium It remains to be seen, however, how strongly on the approval of new GMOs and its proposed European consumers will demand the labelling of regulations further contribute to market uncer- meat from animals fed GM feed and whether tainty. Argentina along with the US, Canada, they will be prepared to bear any additional Australia and others have strongly criticised the costs. The extra cost of such meat will depend EU’s proposed labelling and traceability require- on the availability of competitively priced non- ments as unworkable, costly and unnecessarily modified feed. In this context, Brazil — as the trade-restrictive. Compliance with the regula- second largest soy producer after the US — will tions, these countries claim, would involve sub- continue to play a major role in shaping the stantive additional costs for segregating geneti- global market and establishing the terms of cally modified from non-modified products, mon- trade. If Brazil continues its efforts to preserve itoring a particular crop throughout the food GM-free status, exports from Brazil may come to chain, and testing for the presence of GM mate- be viewed preferentially by importers seeking rials. out non-modified feedstuffs. The extent to which these concerns are justi-

fied and how the regulations will impact Note: This article is based on research commissioned for the Trade Argentina’s agricultural exports remains uncer- Knowledge Network, a joint project by the International Institute tain. In the case of RR soy, the concern is not for Sustainable Development (IISD) and ICTSD. For further infor- mation, contact David Boyer ([email protected]) or see Internet: whether the EU regulations will block the import, http://tradeknowledgenetwork.net as RR soy was granted market approval (for import and processing into non-viable soya bean Charles Benbrook is a biotech analyst and consultant based in fractions only) in the EU in 1996. Instead, the Sandpoint, Idaho, email: [email protected]. Heike impacts of the EU regulations would stem from a Baumüller is working at the International Centre for Trade and Sustainable Development (ICTSD), her work focuses mainly on the possible loss in competitiveness and market interlinkages between international trade and natural resource access for Argentinean soy exports. management.

Given that almost all soy grown in Argentina in Notes 2002 is genetically modified, exporters could 1 Trigo, E., Chudnovsky, D., Cap, E. & Lopez, A. (2002) Los simply opt for labelling all exports as GM, there- trangénicos en la agricultura argentina - Una historia con final abierto. Libros del Zorzal. by avoiding the cost of segregation. This deci- 2 Reca, A. (2001) “Oilseed crushing industry in Argentina: sion will depend on the intended use of RR soy Increasing supplies, better margins & further restructuring”, (i.e. meal, oil or seed) and the export destina- Industry Note -Food & Agribusiness Research, Issue 028-2001, Rabobank International. tion. Argentinean soybean oil is primarily export- ed to India, Iran and South Africa2, all of which do not have labelling requirements for highly processed GMOs (as opposed to the EU which is considering the introduction of labelling for prod- ucts derived from but no longer containing GMOs, like soy oil). The main destinations for meal are the EU, Egypt, Malaysia and Thailand. While GM feed destined for the European market would need to be labelled under the proposed regulations, meat from animals fed on GM feed would not. Thus, if these regulations are adopt- ed, the impact on soy meal exports might not be significant, since the price of feed may remain the deciding factor for meat producers rather than whether the feed was genetically modified.

110 Policy Matters 11, September 2003 Globalisation’s Hidden Price Tag: The Economic Cost of Invasive Alien Species Kevin P. Gallagher.

There is widespread consensus that increased trade and investment flows can be beneficial to the world’s economies, when such flows are managed properly. Increasingly however, current and proposed trade and investment policies are coming under scrutiny for their failure to prevent some of globalisation’s unintended costs. One set of costs receiving growing attention are the unin- tended damages to ecosystems and economies that occur when non-indigenous species, com- monly referred to as “invasive alien species (IAS),” get introduced into ecosystems via the Figure 1. The Zebramussel - Dreissena polymor- acceleration of global trade. pha native to Easter Europe and the Balkans was introduced in the Great Lakes, United States in Although large sums of money are being spent 1988 and has since then caused sever damage to control them, IAS are triggering the extinction both ecologically and economically. of numerous species and damaging croplands that are essential to development across the environmental and economic costs of IAS in the globe. As will be shown below, at a minimum the United States. To estimate these costs, Pimentel economic costs of IAS to the world economy are and his team calculated the foregone revenues over US$100 billion. Many scientists and fair from losses in valuable cropland due to IAS, in trade advocates fear that the upcoming global addition to the control costs that many U.S. trade negotiations are on a collision course with agencies are already spending on an annual global efforts to eradicate and prevent the basis to eradicate the spread of IAS. Examining spread of IAS. The world trading system should thousands of IAS in the U.S., the Pimentel group support efforts to make trade more sustainable, found that the economic costs of IAS amount to not hinder them. US$ 137 billion on an annual basis. According to Pimentel, roughly 90 percent of IAS enter the U.S. through trade. Therefore, the trade-related The Costs of Invasives in the United States economic costs of IAS are approximately US$ 123 billion. Of these costs, the foregone losses According to IUCN, IAS are species that amount to US$ 104 billion and the control costs become introduced into a new ecosystem, then equal US$19 billion. spread in a destructive manner. For instance, a plant or weed that is transported into a new To weigh on the conservative side, and ecosystem can multiply out of control and because they are actual expenditures spent by endanger native species, threaten agricultural the U.S. government to prevent IAS from being resources, and cause unwanted health effects. destructive, this short article will highlight the Studies have estimated that close to 400 of the smaller control costs. The US$ 19 billion in IAS 958 species under the US Endangered Species control costs are 9 percent of annual agricultural Act are seen to be at risk because of competition production in the U.S., and 55 percent of annual with IAS. agricultural imports. A few examples can illus- trate the magnitude of these costs. Many IAS In a January 2000 article in the journal that enter the U.S. come in the form of plants, BioScience, noted scientist David Pimentel and mammals, and insects. Non-indigenous plants his colleagues published a study of the annual such as aquatic weed species like the hydrilla,

Policy Matters 11, September 2003 111 Regional and National Focus

water hyacinth, and water lettuce, are affecting to be addressed immediately. IUCN and others fishing and other water ecosystems, clogging have advocated a two-pronged strategy that waterways, altering nutrient cycles, and limiting focuses on global eradication and prevention. the recreational use of many U.S. rivers and Eradication strategies are fairly well defined and lakes. The United States spends US$ 100 million range from mechanical control methods such as annually to control aquatic weed species alone. removing IAS by hand or with harvesting vehi- This figure does not include the revenue losses cles (e.g., for water hyacinth), to the use of from IAS damage to these weeds. One estimate chemical and biological controls. Many of these has shown that the damage from the introduc- strategies are not as expensive as one might tion of hydrilla in just two Florida lakes cost US$ imagine. Indeed, according to the U.S. Office of 10 million per year in recreational losses. Technology Assessment, the benefit-cost ratio for Regarding insects, it is estimated that 95 percent controlling water hyacinth in the U.S. is 13.6 dol- of the 4500 that have been introduced into the lars to one. U.S. entered accidentally. One example is the Strategies for global prevention are less well imported red fire ant, which kills poultry chicks, defined, especially as the rules for global trade lizards, snakes, and ground-nesting birds. The are ever changing. There are currently no provi- state of Texas spends an additional US$ 200 mil- sions in world trade rules to prevent the spread lion per year in an attempt to control these ants. of trade-related IAS, nor is addressing IAS on A comprehensive study of the economic costs of the agenda for the new round of global trade IAS in the world economy does not yet exist. talks referred to as the Doha Round. The However, conservatively extrapolating from Agreement on Sanitary and Phyto-sanitary Pimentel’s study reveals that the global costs Measures (SPS Agreement), the Agreement on could be well over US$100 billion. If we assume Technical Barriers to Trade (TBT Agreeement), the ratio of IAS control costs in the U.S. to agri- and Article 20: General Exceptions, which pro- cultural production in the U.S. as a proxy for the tects the right of WTO members to take steps potential damages to world agriculture we can that are “necessary to protect human, animal, or multiply that ratio by world agricultural produc- plant life or health” have all been cited by advo- tion to estimate potential world damage costs cates as possible avenues through existing rules due to trade and IAS. World agricultural produc- where IAS could be addressed. To date, very lit- tion has averaged US$1.13 trillion annually over tle action has been taken on this front. the past five years. Economic damages due to IAS in the U.S. amount to 9 percent of U.S. agri- There is one international forum that is taking cultural production. Nine percent of world agri- IAS seriously, the Convention on Biological cultural production is US$106 billion –a plausible Diversity (CBD). The articles on In-situ conserva- projection for global economic damages due to tion in the CBD state that “each Contracting IAS. If world trade caused the number of IAS to Party shall, as far as possible and as appropriate: grow globally at a rate of 2 percent annually, (h) prevent the introduction of, control or eradi- these damages would grow by 50 percent in less cate those alien species, which threaten ecosys- than twenty years. Such estimates are decidedly tems, habitats or species.” These initiatives, and conservative. Indeed, if we used Pimentel’s esti- others like them, are of the utmost importance mate of revenue losses due to IAS as a share of to preventing the spread of IAS. Furthermore the U.S. agricultural production as a proxy for a International Maritime Organisation (IMO) is cur- global estimate, the total costs to the world rently working on developing draft regulations economy would be US$578 billion. for ballast water management to prevent the transfer of alien invasive species through ballast How to regulate invasive species - water. The organisation is planning to hold a attempts at the global level diplomatic conference on the adoption of new measures in 2004. These estimates, while speculative, illustrate the fact that the proliferation of IAS is both an This is one of many reasons why IUCN mem- ecological and an economic problem that needs bers should pressure the world’s governments to

112 Policy Matters 11, September 2003 Regional and National Focus

strike a proper balance between Multilateral Such a result would not only be detrimental to Environmental Agreements (MEAs) and WTO efforts to prevent the spread of IAS, but to the rules during upcoming WTO negotiations. Many effectiveness of numerous treaties such as are concerned that MEAs will become subordi- CITES, the Kyoto Protocol, and many others. nated under WTO laws. Indeed, last April delegates at the sixth Kevin Gallagher is a GETI Steering Committee member and Conference of the Parties of the CBD adopted 15 research associate at the Global Development and Environment guiding principles for the prevention, introduction Institute at the Fletcher School of Law and Diplomacy and Tufts and mitigation of the impacts of alien species. University. International Trade and Sustainable Development (co- edited with Jacob Werksman) is available through Earthscan. However, Australia and the US have since argued that the principle are not valid, based on con- References: cerns that the principles might result in conflicts Pimentel, D. et al (2000). “The Economic and Environmental with obligations under trade agreements in par- Costs of Nonindigenous Species in the United States.” BioScience v50 ticular the SPS agreement. A temporary resolu- tion has been achieved, but this is but one example of the potential ability of trade agree- ments to trump MEAs.

Trade and unsustainable growth: the myth of aquaculture in Chile Rodrigo Pizarro

lakes exist in conjunction with the availability of Chile today is the world’s second major salmon low wage employment. The result is an extremely competitive industry that can realistically project producer. If current production trends continue it a production of over one million tons of farmed will become the first. In the year 2001, 230 thou- fish by the year 2010, as well as gen- sand tons of salmon and 68 thou- Fish farming has been pre- erating jobs and income for one of sand tons of trout were produced, the poorest regions in Chile. mainly for export (500 thousand tons sented as the logical step of fish harvested). Chile has been so This is particularly surprising since successful and competitive in the from turning hunter-gathers Atlantic salmon is not only non-native world market that it has been investi- to farmers of the sea. A to Chile, but is not an endogenous gated for dumping by the USITC and way of conserving increas- species to the whole of the southern is currently under investigation by hemisphere. The story behind the the European Union. How did a small ingly threatened marine success of salmon-farming is used as country, where salmon is not a native ecosystems. an example of what free trade, eco- species, become such a major world nomic liberalization and horizontal player? incentives can do in an economy. Ultimately we have a concrete and specific example of the ben- The explanation lies in the intensive fish-farm efits of globalisation to a small developing econo- production in the southern regions of Chile where my. an immense coast line and pristine sweet water

Policy Matters 11, September 2003 113 explained by the paint used in the sea cages, but in lakes it can only be explained by the use of malachite green, a fungicide based on copper. Although malachite green is prohibited in Chile Figure 1. Atlantic Salmon there is wide evidence of its use2. Malachite green is used to control fungi by bathing the fish The environmental consequences of Salmon in this water-diluted substance although there are farming indications that malachite green may be a cancer- But, as always, with a deeper look, things aren’t ous and even toxic in large quantities. what they seem to be. Current production trends This is particularly worrying since salmon is not are clearly unsustainable since the competitive an endogenous species and is being reproduced edge of the Chilean salmon industry plainly lies in with intensive monoculture techniques. The water not internalising environmental and social costs. temperature of southern Chile is a few degrees Of the total revenue generated by the industry 57 higher than what the fish are used to in their percent go to material inputs, 31 percent to gross native waters. So without detailed studies it is profits and just 12 percent to wages. Moreover, really impossible to tell what the environmental most workers earn minimum wage, less than impact of this activity will be in the future. US$150 a month, around 75 cents an hour. A related issue to the exotic nature of salmon is Recently official statistics place the 10th region that when they escape, being a carnivorous and of Chile, where the main salmon activities take much bigger fish than indigenous species, the place, as the region with the least unemploy- impact on local fauna is significant and the deli- ment, but with the highest poverty. That is to say cate balance of biodiverse systems may be in generating jobs, at least for this industry, does danger. Also unaccustomed to the warmer water not necessarily imply getting people out of pover- caged fish generate a series of new diseases ty. Moreover, complaints concerning the compli- which current veterinary practices have yet to ance of labour legislation, unfair dismissal, and come to terms with. The generalized practice of other anti-union practices are common. the Chilean producers is the extensive use of However it is perhaps in the environmental antibiotics is a way of dealing with the problem. impact of the industry where the major questions The implications this may have on natural bacte- are being raised. In the case of Chile, despite ria and the effectiveness of antibiotics may be salmon farming being a major industry, only frag- enormous, eventually affecting human health. mentary studies exist of the environmental impact Although most fish farms fulfil current legisla- of fish farms, a preliminary study by Fundación tion in Chile, this is clearly insufficient, particularly Terram estimated that only the nutrients generat- alarming is that multiplicative effects of different ed by farm production (nitrogen and phosphorus) farms on a common ecosystems, or the chronic is equivalent to the untreated human waste of effects of permanent environmental damage nei- over 3 million people, three times more than cur- ther of which are considered. In addition, there is rent population of the regions where production no real capacity for enforcement or control of is carried out.1 current standards. And there is clear evidence of agency capture, recently the head of the regula- A more detailed study, where samples were tory agency resigned, among accusations of seek- taken, probably the first publicly available study ing salmon farm concessions while in office. of its kind in Chile, finds that in the fish farm areas significant amounts of nitrogen and phos- Salmon production - An efficient way of phate are present in the water column, a major using natural resources? fall in biodiversity and the systematic death or killing of sea lions. Particularly worrying is the evi- Even if one can disregard the local environmen- dence of copper found in the water column, tal impacts of an industry with the overused and which with regards to sea farming, can be technically inadequate argument of an environ-

114 Policy Matters 11, September 2003 Regional and National Focus

mental Kuznets curve. The process of globalisa- social costs. Otherwise a more socially and envi- tion and the increase in international trade, the ronmentally conscious consumer will inevitably main demand for Chilean salmon production, has make the industry pay the price of unsustainable generated an evidently illogical production production practices. process at a world level. Salmon are carnivorous On a world perspective, increasingly transna- fish requiring the consumption of three to five tional companies are becoming involved in the kilograms of wild fish to sustain themselves dur- Chilean production. The problem is that as envi- ing their lives. This implies that the industry takes ronmental standards are raised in developed approximately four fish, of equivalent protein countries, the inevitable consequence is that value, to turn it into just one going mainly to the more companies find their way to Chile, where higher income bracket consumer. The equivalent environmental standards are lower and thus on the mainland is rearing lions by feeding them expansion is limitless. Though many environmen- four cows! Does this make sense in a world tal issues are unquestionably local, in the case of where hunger remains a concern? Where does farmed fish and its impact on the world fisheries, this put the market economy which generates the the ultimate consequence of raising environmen- incentives to produce an evidently absurd result? tal standards may be to ensure the exhaustion of But there is more, wild fish stocks are being world fisheries. Therefore, it is not possible to depleted at alarming levels, threatening, not only seek to raise either the environmental or the an important protein source but also biodiversity. social standards without a world outlook. Fish farming has been presented as the logical No doubt civil society must be concerned with step from turning its local environment, but today these issues are hunter-gathers to farm- Though many environmental so complex, and the world so integrated, that an ers of the sea. A way issues are unquestionably local, international outlook is essential when developing of conserving increas- a more sustainable economic development model. in the case of farmed fish and ingly threatened marine We all have a responsibility in environmental con- ecosystems. However its impact on the world fish- servation; the issue is that we must see this fish farm demand is the responsibility in all its immensity including the eries, the ultimate consequence highest growing impact in all the corners of the world. of raising environmental stan- demand on wild fish dards may be to ensure the stocks, due to the associated production Rodrigo Pizarro is the Executive Director at the Fundación exhaustion of world fisheries. of fishmeal fo which Terram in Chile. Fundacion Terram is a non-profit organization Therefore, it is not possible to Chile is a major pro- founded in 1997 for the purpose of generating a proposal for sus- ducer. If current tainable development in Chile, email: [email protected]; Internet: seek to raise either the envi- www.terram.cl salmon production ronmental or the social stan- trends continue, all of Notes dards without a world outlook. Chilean fishmeal pro- 1 Buschmann, Alejandro, Impacto Ambiental de la Salmonicultura: duction will go into the El Estado de la Investigación en Chile y el Mundo. Terram salmon industry. A recent study estimated that Publicaciones. 2001. www.terram.cl/publicaciones 2 the of fish farms is up to Buschmann, Alejandro, Impacto Ambiental de la Salmonicultura en la X Región de Los Lagos en el sur de Chile. Terram 10,000 times the actual area used for Publicaciones, Executive report, English version. 2002. production3, precisely because of the high www.terram.cl/publicaciones

demand for fishmeal. 3 Folke, C.; Kautsky, N.; Berg, H.; Jansson, Å. & Troell, M., (1998), The ecological footprint concept for sustainable seafood produc- Conclusion tion: a review , Ecological Applications, 8 (suppl), S63-S71. Salmon farming is an important industry in Chile and will remain so in the future only if it truly commits itself to sustainable production process- es, fully internalising both environmental and

Policy Matters 11, September 2003 115 Working with smallholders towards achieving sustainable development: Foundation for the participatory and sustainable development of small farmers (PBA Foundation) Santiago Perry

ty of life of smallholders; ii) improving their This article will give a short explanation of the access to modern technological tools that pro- vide farmers with a more sustainable and com- activities of the PBA Foundation in participatory petitive productive activity. It is anticipated that research and development of smallholders in the the programme will benefit around 50.000 Atlantic Coast of Colombia. Moreover will it pro- farmer families that live in 155.000 hectares of vide some recommendations for further improv- land. ing the livelihood of smallholders in Colombia, and in other developing countries, through The smallholders of the Atlantic Coast are the action at the international level. soul of the Foundation as they have an active and vital participation in all phases and aspects The PBA Foundation and the sustainable of the PBA. In each geographical project zone development of smallholders the smallholders form Local Participatory Groups (LPG). These are responsible for carrying out the The Foundation for the Participatory and research, development and training activities Sustainable Development of Small Farmers (PBA within their own locations. Furthermore, they are Foundation) is a non profit entity, with the main responsible for the promotion and creation of objective improve the living standard and to smallholder enterprises, producing clean seeds overcome poverty amongst smallholders in and biological and organic inputs – Technology Colombia. It aims to achieve this objective Based Enterprises (TBEs) – and associative through the development and application of sus- enterprises for crop transformation and commer- tainable technologies. The foundation consists of cialisation. It is worth mentioning here that the Colombian Ministry of Agriculture and Rural women have an outstanding participation in Development as well as the National Planning these enterprises. Department, international research centres such as the International Centre for Tropical So far, more than fifty Local Participatory Agriculture (CIAT); Colombian research entities Groups (LPGs) have been formed and operate including Corporación Colombiana de investi- throughout the seven departments of the gación Agropecuaria (CORPOICA) and the Atlantic Coast.. Within the LPGs the producers Corporacion Nacional de Investigacion y elect the representatives for the Regional Fomento Forestal (CONIF); and national and Committee, which all in all is comprised of four- regional universities such as the Universidad teen representatives – two from each coastal Nacional, Universidad de Córdoba and department as well as project researchers. The Universidad de Sucre, as well as Local Regional Committee coordinates, approve and Participatory Groups, made up of smallholders prioritises the various projects submitted by the from the Colombian Atlantic Coast. LPG’s. Furthermore the farmers for the National Steering Committee are elected by the Regional With resources coming from the cooperation of Committee. the Ministry for Development Cooperation of the Netherlands government1 and with national The program focuses on participatory research, counterpart funds, the Foundation leads and car- development and promotion of cleaner and more ries out the Program of Agricultural sustainable production technologies, such as Biotechnology for small-scale producers. This production and planting of clean seeds in plan- program, which started more than five years tain, cassava and yam, as well as production and ago, aims at supporting farmers from the seven application of biological and organic inputs. The departments of the Colombian Atlantic Coast Foundation recently started working on organic region in i) improving living standards and quali- production, integrated management of soils and

116 Policy Matters 11, September 2003 Regional and National Focus

This program, which started more than water and the reducing or eliminating the use of chemical fertil- five years ago, aims at supporting farm- promotion and izers and other agricultural chemicals. In the ers from the seven departments of the implementa- efforts to reach this goal the Foundation has tion of agro- developed and adapted biologic fertilizers pro- Colombian Atlantic Coast region in i) forestry pro- duction techniques, organic fertilizers and biolog- improving living standards and quality of ductive sys- ical pesticides. All these developments have life of smallholders; ii) improving their tems. These been made in accordance to the characteristics activities are and needs of the different ecosystems and access to modern technological tools that briefly crops. The results obtained have been satisfacto- provide farmers with a more sustainable described in ry as the new techniques have resulted in and competitive productive activity. the following increasing yields and decreasing production paragraphs. costs. The Foundation is therefore working on scaling and widening these projects throughout the Caribbean Region, in such a way that they Production of plantain, cassava and yam may reach all the current Local Participatory clean seeds Groups and those that will be created during the The Foundation has developed participatory Program’s coverage expansion phase. methodologies and protocols required to produce clean and high quality plantain, cassava and yam Organic Production seeds. These production methods are based on plant tissue culture, multiplication processes As part of its effort in developing organic agri- under insect-proof nucleus greenhouses with culture systems, the PBA controlled environmental conditions and mass Foundation has recently The impact generated with local multiplication for the production of elite and developed a first cluster the new technologies in terms basic seeds. The last stages of the seed of organic plantain pro- improvement project are carried out in duction in one of the of yield and quality, leads us Technology Based Enterprises owned by organ- LPG’s. A training activity to foresee an increase in the ized smallholders and in local mesh-houses and will ensure that the smallholders’ production. To nurseries of the Local Participatory Groups. The organic plantain produc- immediate effect of the project is that farmers tion can be replicated prevent this increase from can get rid of their dependency on infected throughout the Atlantic causing difficulties in terms of seeds, plant seeds are free of pests and diseases Coast. This is part of the and substantially reduce – or eliminate – the use aim to reproduce proj- market commercialisation the of agricultural chemicals. Farmers thus not only ects, infrastructures and Foundation has assisted farm- obtain higher yielding and better quality crops, organic agriculture ers in the establishment of but preserve the environment and promote methodologies in many entrepreneurial activity. Furthermore, they pro- locations of the Atlantic strategic alliances of small- duce and sell clean and competitive seeds at the Coast, in plantain as well holder associations with same or lower prices than traditional seeds as in other crops. traders and processors. which often are infected and marked by low pro- ductivity. Due to the success of these projects it Soil and Water Sustainable Management is envisaged to enlarge the project geographical- ly to cover all smallholders in Colombia and not With regards to the sustainable management only those along the Atlantic Coast. of soil and water resources farmers have started to engage in low-tillage plowing, the use of cover crops and the use of organic fertilisers. Biological and Organic Input The first training activities for farmer leaders, As part of the integrated crops managment researchers and technicians have already started (ICM) project the foundation has also aimed at in three LPGs for demonstration purposes.

Policy Matters 11, September 2003 117 Regional and National Focus

Each year, industrialised countries would Development of agroforestry systems. dence in their contribute financial resources – equiva- capacity to Agroforestry systems contribute to environ- lent to a certain percentage of the test, experi- mental conservation and to the sustainable use ment and con- total support they grant their farmers and preservation of agricultural and forest biodi- tribute to solv- versity. With this in mind the PBA Foundation – and these resources would be used for ing their tech- started research, adaptation and promotion of direct support to those small farming nological prob- productive agroforestry systems. Furthermore lems. They communities in developing countries these systems are aimed at diversifying the pro- have learned duction options of smallholder farmers. This contributing to the preservation and/or to develop component is an essential part of the second improvement of plant genetic resources their own ini- phase of the programme as it to a high degree tiatives, initiate for food and agriculture. meets the needs and initiatives of smallholders. tests and trials, and enrich the processes and results of the Training for producers, researchers and research. Their experiments, among other pro- technicians. gresses, have led to an increase in the local effi- Besides the above-mentioned participatory ciency and scaling capacity in processes of seed research activities, the Foundation has carried development. For example, some LPGs are now out intensive training programmes with small- capable of multiplying Cassava super elite seeds holders, researchers and technicians. The train- as well as they have developed methods to pro- ing component included training in technical and duce organic fertilizers using larvae as degraders methodological aspects, entrepreneurial and and transformers of organic material for compost organisational issues as well as in personal production. growth (building values, self-confidence and, leadership). The objective is to improve the edu- Some challenges for the PBA Foundation cational level of farmers in order for them to be The impact generated with the new technolo- able to lead their own development processes. gies in terms of yield and quality, leads us to 123 technological training events have been car- foresee an increase in the smallholders’ produc- ried out so far, attended by more than four thou- tion. To prevent this increase from causing diffi- sand producers of which, one forth were culties in terms of market commercialisation the women. Foundation has assisted farmers in the establish- The joint work of technicians, researchers and ment of strategic alliances of smallholder associ- smallholders has demonstrated that research ations with traders and processors. Furthermore indeed can be oriented to developing technolo- farmers have been supported in building an ade- gies which improve production, and as a conse- quate infrastructure for the selection, dehydra- quence, also improve the living standards of the tion and primary processing of their crops, as smallholders. The project has also shown that well as in the diversification of commercialisation smallholders, instead of being reluctant to channels, which allows them to serve different changes, are eager to innovate when they know market segments. and understand the characteristics and advan- Through the above described activities, the tages of the technologies with which they have Foundation has shown to have an important been actively working. Thanks to the participa- impact in the economic, technological and social tion of farmers, the technologies generated and development of the smallholders of the the technologies obtained, are being adopted Colombian Caribbean Coast. This development rapidly without any particular technology-transfer process, which is participative and sustainable, is phase. now being led by the farmers themselves – Furthermore, the participatory methodology through the Local Participative Groups and the and training have allowed farmers to gain confi- Foundations Regional Committee. This is the

118 Policy Matters 11, September 2003 Regional and National Focus

only way through which their efforts in improv- international in scope, they do not receive any ing their own social and economic conditions can benefits. The implementation of internationally be realised. Furthermore the Foundation has binding mechanisms offering a sui generis sys- come closer to achieving its goals, namely to tem to protect their knowledge; the establish- eradicate poverty, preserve biodiversity and the ment of international mechanisms, which environment and to promote peace in Colombia. acknowledge their contribution to the preserva- tion and improvement of the above-mentioned However, the PBA Foundation, its projects and genetic resources; would contribute to improve the smallholders involved in these, still face their living standards and would encourage them important difficulties and challenges, which are to continue with what they do. worthwhile mentioning: One suggestion to how the playing field could 1) The subsidies granted for corn and other be leveled is to establish a mandatory compensa- crops in the industrialised countries generate a tion mechanism. This mechanism would entail disloyal competition to the farmers growing cas- that each year, industrialised countries would con- sava. These subsidies result in a decrease of tribute financial resources – equivalent to a cer- cassava prices, as most cassava on the global tain percentage of the total support they grant market is sold as animal feed and is thus com- their farmers – and these resources would be peting with the subsidies forage cereals. The used for direct support to those small farming elimination of subsidies in developed countries communities in developing countries contributing would allow Colombian farmers to improve their to the preservation and/or improvement of plant living standards and increase their income earn- genetic resources for food and agriculture. This ings. share could be established by agreeing to a per- 2) Organic product certification programs are centage of each developed country’s total support designed in such a way that the costs for imple- provided under the ‘amber’, ‘blue’ and ‘green’ menting them are too high for most smallholders boxes of the Agreement on Agriculture at the in developing countries to afford. The accept- WTO2. ance of equivalence in the ecological labeling systems; the establishment of expeditious mech- anisms of mutual recognition; the harmonization Santiago Perry is the Executive Director of the Foundation for the Participatory and Sustainable Development of Small Farmers. He is of technical regulations; the more transparent based in Bogota, Colombia. Email: [email protected] design of eco-labeling systems; taking into account the characteristics of developing coun- Notes tries and their smallholder producers; the inter- 1 Similar programmes, also supported through the Dutch govern- national technical cooperation and the enforce- ment exist in India, Kenia and Zimbabwe. 2 See: Perry, Santiago (2002), Integrating agriculture trade and agri- ment of the Good Management Code for environmental policy: Elements for a sustainable development-ori- Manufacturing; the adoption and enforcement of ented agenda in the context of WTO negotiations. the Agreement on Standards on Technical Obstacles to Trade; the implementation of volun- tary labeling schemes; all these initiatives if implemented would lead to an increased market access and export of the organic products pro- duced by the smallholder farmers of the Foundation. 3) The Foundation’s smallholders contribute to the conservation and improvement of the genet- ic base for food and agriculture and they are developing initiatives improving technological processes. Nevertheless, for the work that is

Policy Matters 11, September 2003 119 Flavouring exports - the pepper industry in Sarawak Niels Fold and Marianne Jacobsen

has an exciting history of ‘white Rajah’ rule Introduction since James Brooke was given the command of the territory by the Sultan of Brunei in 1846. Diversification of agricultural exports is crucial The Brooke family ruled the territory for about for most developing countries. The dependence a century until the Japanese invasion in World on a small number of food or fibre products War II. A major element in the Brooke regime increases the volatility and unpredictability of was to support and stimulate the indigenous export revenues both at national and farmer population to transform from subsistence pro- level. In the short term it is not possible to duction based on shifting cultivation into more compensate price slumps on dominant export commercialised farmers partly relying on crops and in a long term perspective, structural income from cash crops. Despite more than a overproduction of specific crops are difficult to century of persistent efforts, including institu- handle as no alternative export crops can be tional and infrastructural development, the mobilised at sufficient speed. Hence, various indigenous agricultural system was not sub- mechanisms for incorporating new crops in the stantially transformed. Thus, when Sarawak export portfolio are usually found in agricultural became part of Malaysia, most of the agricul- development strategies. tural goods for the international market (prima- There are, however, huge variations in differ- rily sago, rubber, and pepper) were produced ent farmers’ ability to embark on the cultivation by descendants of ethnic Chinese, who already of new crops, and the potential benefits of had settled as traders in Sarawak before the diversification are not evenly spread among dif- Brooke family arrived (Gin 1997; Reece, 1993). ferent types of farmers. The outcome for the The Malaysian Government developed a New individual farmer depends very much on his or Agricultural Policy (NAP) spanning from 1984 to her control over and access to resources, e.g. 1992, although the NAP has continued to con- finance, technology, land and labour. At the stitute the basis for agricultural development macro level, success or failure of diversification policies during the 1990s. The NAP focused objectives are also linked to the structural com- aggressively on turning the agricultural sector position of farmer types. For instance, if a into a modern, dynamic and commercially ori- region or country mainly consists of resource- ented sector, steering away from subsistence poor smallholders, a strategy trying to diversify agriculture based on . The goal agricultural exports by expanding the produc- was to increase productivity and output, and tion of crops requiring capital-intensive cultiva- revitalizing the agricultural sector by focusing tion would have small chances for success. In on the development of agro-industries and new addition, socio-economic differences exist even crops through in- among smallholders, and the consequences situ land develop- There are, however, huge variations in and potentials of agricultural diversification ment schemes, would differ according to the particular social subsidies, export different farmers’ ability to embark stratification of the rural setting in question. credits and exten- on the cultivation of new crops, and This article deals with the socio-economic sion services the potential benefits of diversifica- consequences of diversification initiatives in the (Joharie, 1994; tion are not evenly spread among dif- agricultural production of indigenous Bidayuh Sivalingam, 1993; farmers on Sarawak, Malaysia. Sarawak is one Fold, 2000). State ferent types of farmers. of Malaysia’s two regional states on Borneo and institutions such as the Department of Agriculture, the

120 Policy Matters 11, September 2003 Regional and National Focus

Department of Trade and the Farmers Organisations have been strengthened in order to initiate new policies and development pro- grammes. In the case of pepper, these institu- tions have been very important for the imple- mentation of various subsidy schemes and incentives for diversification into products with higher value-added and demanded by local agro-industries, i.e green pepper and creamy white pepper. In the next section of the article we list the different types of pepper cultivated in Sarawak. This includes some of the new niche-market types that have been promoted during the recent decade. Pepper is a traditional export crop and the diversification initiatives have focussed on stimulating production of new pep- Figure 1. A pepper piper nigrum branch with red mature berries and green immature berries. per products, each of them requiring different forms of processing. On the basis of findings in equipment two persons, as a rule of thumb, two villages (Jacobsen and MacDonald, 2001) can maintain and harvest a pepper garden with we then discuss the pepper farming strategies 700-800 vines. pursued by different socio-economic groups of farmers. The two villages are characterised by When producing black pepper the farmer specialising in two different speciality pepper harvests the pepper stalks 8-9 months after products, green pepper in Paon Rimu and the first flowering of the plant; frees the pep- creamy white pepper in Daha Kisau, respec- per berries from the stalks by manual or tively. Finally, we conclude on the socio-eco- mechanical threshing; and -dries the nomic sustainability of the pepper diversifica- berries on rattan mats for 3-4 days until they tion initiatives in relation to different types of are brownish-black. In order to ensure the uni- smallholders. form drying and colouring of all berries, they are raked over periodically. Finally, the farmer Cultivation practices and pepper products removes dust as well as empty and light berries. A pepper farmer can produce 33-37 kg Black and white pepper, produced by using of black pepper from 100 kg of newly picked cultivation practices introduced in 1850, make green pepper (Purseglove et al., 1981). up the largest share of the pepper produced by smallholders in Sarawak. The farmers cultivate White pepper is produced from mature (10 the pepper vine (piper nigrum) in gardens months old) pepper berries. After the berries varying in size from 100 to 3.000 vines. From have been harvested and freed from the stalk planting to the first harvest, which takes place they are put into jute bags and soaked in run- in the dry season between April and August, ning water for 1-2 weeks. The soaking process there is a time span of 2.5 to 3 years. Pepper initialises a bacterial rotting process whereby gardens in Sarawak require heavy use of fertil- the outer pericarp is removed from the core of izer and the plants are vulnerable to pests and the fruit,the berries are then washed several diseases, which explains the frequent and times to remove stalks and other unwanted abundant use of pesticides. Due to the heavy material. Finally the berries are sun-dried on labour requirements and the low technological rattan mats for 3-4 days following the same procedure of black pepper. A pepper farmer

Policy Matters 11, September 2003 121 Regional and National Focus

can produce 25-28 kg of white pepper from vate traders only operate with two grades. The 100 kg of fresh green pepper (ibid.). private traders sell the pepper to private As part of the government’s efforts to mod- Chinese exporters or to the Pepper Marketing ernise the agricultural sector, a number of sub- Board (a state institution), all of them located sidy schemes have been introduced to support in Kuching, the state capital. The exporters, the production of speciality pepper products. regardless of whether private or state con- One of these products is green pepper; the trolled, sell the pepper to a broker in Singapore other is creamy white pepper. or directly to an importer in the consuming country. The brokers and importers sell and Green pepper is easier to produce than black distribute the pepper to food manufacturers, and white pepper. The farmers simply pick the supermarkets and retailers in the end markets. immature pepper berries and collect them in More than 60% of the pepper from Sarawak is jute bags. At a factory, the green pepper traded directly from the exporter to the berries are cleaned, sorted and preserved in importer, implying that Singapore today only brine. Due to its high moisture content the handles 30-40% of the Sarawak pepper, com- weight of green pepper is three times more pared to 80% in the beginning of the 1980s. than black pepper and therefore the price per kg is approximately one-third of that for black Production of speciality pepper, such as pepper. However, as the green pepper is a creamy white pepper and green pepper, is niche product, prices are not as volatile as increasing in order to satisfy end-users with a black pepper prices, thereby providing a price- special need for non-traditional products. The stable alternative for the pepper farmers. majority of these end-users come from devel- oped countries and purchase the pepper direct- The creamy white pepper production is simi- ly from state institutions, in order to avoid pri- lar to the production of white pepper but cer- vate intermediaries. In Paon Rimu for example, tain criteria apply to the physical characteristics the green pepper is collected and bought at a of the berry: it must be more than 4mm in price set by the nearby, state-owned Instant diameter, have a uniform size and shape, and Quick Freeze factory (IQF), which processes should have a certain white-ivory colour. These the green pepper further into green pepper in specificities imply a need for more labour input brine and then sells it to a factory in Denmark, in the production: the berries have to be hand- supplying the European food industry. The picked, soaked in special tanks with clean run- ning water in order to ensure the right colour of Production of speciality pepper, such as creamy white pepper and green pepper, is the berries, and have to increasing in order to satisfy end-users with a special need for non-traditional prod- be sieved again after dry- ucts. The majority of these end-users come from developed countries and purchase the ing in order to select those of correct size. pepper directly from state institutions, in order to avoid private intermediaries.

The structure of Sarawak’s pepper chain farmers receive subsidies from the Department The smallholders in Sarawak can choose to of Agriculture and can choose to produce two sell their black and white pepper through state different grades of green pepper, grade SP or institutions, private traders or kampong cooper- grade D, depending on the maturity of the atives. The major part of the pepper farmers berry. In Daha Kisau, the creamy white pepper choose to sell their pepper to the private can only be sold to the local division of the traders. The state institutions pay a price Pepper Marketing Board. The Department of according to the quality of the pepper as they Agriculture in cooperation with the Board sup- operate with five quality grades, while the pri- ports the production of creamy white pepper

122 Policy Matters 11, September 2003 Regional and National Focus

by providing a pepper booster subsidy scheme scope of commercialisation and 2) the con- to active farmers and by paying a premium straints they face in the production of various price for the product. If the farmers receive the types of pepper. booster subsidy scheme, they are obliged to The group of smallholders with the lowest produce creamy white pepper from a certain cash-income use the lion’s share of their labour amount of their vines. time on subsistence production of rice and on other cash crops such as cocoa and rubber. Farming strategies in traditional and spe- Hence, diversification of cash income opportu- ciality pepper production nities is highly prioritised. The type of pepper Specialisation in green pepper produced depends primarily on the purchasing Paon Rimu is well connected to Serian, the prices, i.e. indirectly on world market prices. major town where the IQF factory is located by When prices are high, white pepper is pro- road. The smallholders of Paon Rimu produce duced because it yields the highest revenue. All rice for subsistence and pepper for cash smallholders in this group produce green pep- income; as well as rubber and cocoa on a per, mainly because they benefit from the sub- minor scale. For several generations the village sidy scheme and because it is considered as a has been provided with various subsidy stable price alternative to black and white pep- schemes promoting the production of cash per. Remarkably, this group does not claim to crops. Since 1996 a specific subsidy scheme suffer from labour constraints. for producing green pepper to the IQF factory The middle income group of smallholders has been allocated to the farmers. However, apply significantly different considerations the cooperation between the smallholders and when they decide their farming strategy. Main the IQF factory has not developed smoothly. concern is devoted to obtaining the highest Farmers complain that as the purchasing price output with the least input, taking into consid- of green pepper is too low it is not worthwhile eration the available household labour and to produce green pepper as compared to black world market prices. This implies that the pepper – even though they are obliged to sup- group only benefits insignificantly from the ply the factory after having benefited from the subsidy schemes as these tie them to produce subsidy scheme, the farmers sometimes refuse green pepper - which is not always the most to produce green pepper. profitable activity. On the other hand, this All the smallholders produce three types of strategy prevents them from receiving exten- pepper (black, white and green), all benefit sion services from the responsible state institu- from subsidy schemes, tion. Smallholders with a small and all sell their black The high income group is remarkably differ- pepper garden, no resources and white pepper to ent from the other groups. These smallholders private Chinese traders. are closely related to the extension services of to pay for non-household Nevertheless, there are the Department of Agriculture. Each of them labour and insufficient con- pronounced differences has specialised in one type of pepper (whether tacts to the extension serv- between the socio-eco- black, white or green) and has the cash avail- nomic groups of the vil- ability to hire non-household labour, which is ices risk to become margin- lage, divided according absolutely necessary in order to maintain the alised as they fall outside to the size of their pep- large pepper gardens. On the other hand, the the target group of the per gardens - a good large gardens are probably unsustainable in the proxy for available long run as they are heavily dependent on fer- Department of Agriculture. resources. Main differ- tilizers, prone to pests and diseases, which ences relate to 1) the often wipe out a whole production, and require

Policy Matters 11, September 2003 123 Regional and National Focus

This case of agricultural export diversifica- a very high input of pesticides. Besides, these although it tion seems to imply a process of economic farmers are dependent on one single cash crop would yield accumulation with increased socio-econom- and it will be difficult to adapt the production - a higher and their livelihood - in the case of a severe price. ic stratification and gradual erosion of drop in world market prices for a particular However, environmental sustainability. pepper product. these farm- ers do not find the extra workload worthwhile Specialisation in creamy white pepper – and have no access to other trade channels Turning to Daha Kisau, this village is located for high quality products. in a remote area with no easy access to road The middle-income group of smallholders also transport. The initial transportation of agricul- produce rice for subsistence but in addition tural products from the village takes place by most of them are engaged in relatively more boat on the Kisau River. Pepper production important cash crop production of pepper and took off in the early 1980s and the village cocoa. The majority of the pepper production is quickly specialised in producing white pepper. devoted to black pepper, but white and creamy The local specialisation in creamy white pepper white pepper are also produced. Part of the started in the mid-1990s when the responsible black & white pepper is of high grade quality state institutions identified the village as an and sold to state institutions although a signifi- ideal place: the pepper cultivars were fairly free cant part is sold to the local private traders as from pests and diseases and there was an repayment of loans. Due to rapid expansion of abundance of clean running water. Since then the pepper gardens in recent years, this group the village has been provided with subsidy of farmers have to hire non-household labour, schemes for the production of creamy white primarily Indonesian migrants. pepper, as well as for pepper production in The farmers with the largest gardens produce general. a relatively large quantity of creamy white pep- As in Paon Rimu, the smallholders living in per and qualify for the support under the sub- Daha Kisau have certain similarities and sidy scheme. They also produce high quality notable differences in their farming strategies. black and white pepper which is sold to state Black pepper accounts for the majority of the institutions in order to obtain the high grade pepper production for all farmers. Moreover the prices. This farming strategy requires a rather subsistence production of rice is an important large labour input, which is filled by hiring non- factor for most smallholders. On the other household (Indonesian) labour for the most hand, the social stratification of the groups demanding activities such as expansion of pep- implies that not all the groups are equally com- per gardens and the processing of creamy mercialised and meet different constraints in white pepper. These smallholders have access diversifying their pepper production. to resources to such an extent that they are The low-income smallholder households able to invest in their production in order to mainly produce low quality black pepper, which increase output and income. is the least time consuming and leaves time for subsistence production of rice. Furthermore, Conclusions these farmers have bought all necessary farm- The two speciality pepper products increase ing inputs from the private Bidayuh traders and the opportunities for the smallholders without pay back their loans in the form of their pepper forcing them to involve scarce resources in new harvest. Producing pepper of a high grade is and demanding investments. In addition, the not a major concern for these smallholders cultivation practices are basically unchanged: who use traditional production methods the same agricultural produce constitutes the

124 Policy Matters 11, September 2003 Regional and National Focus

basis for all the pepper products although har- production with other traditional crops such as vest time and simple primary processing differ fruit trees, cocoa, rice, rubber trees etc. which from product to product. In principle, the prod- in the long term may be considered as more uct portfolio of the smallholders is hereby environmentally sustainable. expanded at minimum costs and the depend- On the other hand, those households with ence on the price- volatile black and white pep- either sufficient resources to hire non-house- per is reduced at farmer level. At the macro- hold labour or with a sufficient amount of economic level, agricultural exports are diversi- household labour have better opportunities to fied by the addition of new and higher value engage in the production of speciality pepper. added products. However, both speciality prod- On the whole, a cycle linking resource-rich ucts are still niche products mainly in demand smallholders, subsidy schemes, more extension by the food industry in the industrialised coun- services, higher income and expansion of pep- tries and there is a limited demand for it on per gardens is likely to be established. As the the world market. It is also worth to remember study demonstrated, however, large pepper that prices are mutually related even though gardens are much more vulnerable to pest and the different pepper products to a certain diseases which sometimes wipe out the com- extent dominate their specific markets. plete basis for production. In terms of policy Besides, there are some local socio-economic implications, this case of agricultural export barriers for the expansion of the speciality diversification seems to imply a process of eco- products. Even though green pepper requires nomic accumulation with increased socio-eco- relatively less labour input than other pepper nomic stratification and gradual erosion of envi- products over the full production cycle, the har- ronmental sustainability. vest period requires more labour: green pepper has to be harvested within a time span of two to three weeks. Production of creamy white Niels Fold is Associate Professor at the University of Copenhagen, Department of Geography; email: [email protected]; Internet: pepper is also more demanding in terms of www.geogr.ku.dk. Marianne Jacobsen is IUCN Liaison Officer at the labour input than the traditional types of pep- International Centre for Trade and Sustainable Development; email: per. [email protected]; Internet: www.ictsd.org This reduces the possibilities for the poorer References Gin, O.K. (1997) Of Free Trade and Native Interests, the Brookes smallholders who do not control enough and the Economic Development of Sarawak, 1841-1941. Malaysia, resources to hire labour. Smallholders with a Kuala Lumpur: Oxford University Press. small pepper garden, no resources to pay for Reece, R.H.W. (1993) The Name of the Brooke, the End of White Rajah Rule in Sarawak. Malaysia, Kuala Lumpur: Ampang Press Sdn non-household labour and insufficient contacts Berhad. to the extension services risk to become mar- Jacobsen, M. & MacDonald, P (2001) Globalisation of the Pepper ginalised as they fall outside the target group Industry in Sarawak. Department of Geography, University of of the Department of Agriculture. Copenhagen, Denmark. Purseglove et al. (1981) Spices. In Tropical Agricultural Series, vol Furthermore, if the contractual requirements 1, 1981. Longman, London. to either the IQF factory or to the PMB are not Joharie, A.R. (1994) Future Trend and Direction of the Agricultural Sector in Malayisa. A Paradigm Shift. In Bujang H.B. & Hua S. A., fulfilled, the smallholder will not be able to par- Eds. (1994) Agriculture Commercialisation in Sarawak: in Search of ticipate in new pepper subsidy schemes. This a New Paradigm. (Pp.20-37). Malaysia, Kuching:Heng Sing Brothers Press, Sarawak. could eventually lead to even deeper marginali- Sivalingam, G. (1993) Malaysia’s Agricultural Transformation. sation of some resource-poor smallholders as Malaysia, Kuala Lumpur: Pelanduk, Petaling Jaya. only participants in the subsidy schemes Fold, N. (2000) Oiling the Palms: Restructuring of Settlement receive extensions services. However, the Schemes in Malaysia and the New International Trade Regulations. Journal of World Development, 28 (3), Pp. 473-486. smallholders that only produce the traditional black and white pepper tend to diversify their

Policy Matters 11, September 2003 125 Section IV: Trade and IUCN

Developing a strategic approach for IUCN’s engagement in trade Martha Chouchena-Rojas

measures. Furthermore, IUCN established TRAF- Why engage in trade? FIC with WWF to monitor wild species trade. IUCN was also one of the pioneers in linking con- IUCN – The World Conservation Union has servation to sustainable use and development been known for its work on biodiversity, including through landmark documents like “Caring for the the development of references and standards for Earth” and the “World Conservation Strategy”, the conservation of species, such as the Red List which highlight the importance of trade in the criteria and lists of species, and for the establish- conservation of biological diversity. ment and management of protected areas, The need to address trade was identified explic- including the IUCN categories and the UN lists of itly by IUCN members. In particular, Resolution protected areas. 2.33 adopted by the World Conservation IUCN has also been at the origin of the main Congress in Amman in 2000, urges IUCN to conservation conventions, including the “investigate the environment consequences of Convention on International Trade in Endangered trade liberalization and to widely disseminate Species of Wild Fauna and Flora (CITES) and the results and recommend actions; elaborate on a Convention on Biological Diversity (CBD), by model of dispute settlement and compliance for drafting early versions of these instruments and multilateral environmental agreements, which supporting their development and implementa- would also address trade and environment con- tion. Through its work at the global, regional and flicts; promote capacity building programs for national levels, IUCN has provided technical and developing countries so as to enable them to scientific analyses and advice to country Parties include environmental considerations in trade to these and other biodiversity-related agree- policies.” ments, e.g. the World Heritage Convention, A considerable amount of trade-related work Ramsar and the Convention on Migratory Species. has been done by the Union to implement this It has also provided a platform to bring the voic- mandate. Main achievements of IUCN include a es of governmental and non-governmental actors three year project funded by BMZ on the into formal negotiations and to find solutions to Convention on Biological Diversity and the contentious issues such as dams, ivory trade and International Trade Regime, which produced . Further to this, with thousands of important publications and case studies; work on projects at national and local levels IUCN has fisheries at global level and in IUCN regional contributed to the implementation of these policy offices in Eastern and Western Africa; national frameworks and to the advancement of conserva- level work in South Africa, Pakistan and Vietnam tion all over the world. This has included support- on issues such as fair trade in tourism and in pro- ing the development of national biodiversity and viding support to national governments on trade conservation strategies in more than 70 countries. policy. Also, IUCN was at the origin of the estab- Being a conservation organization, one could lishment of the International Centre for Trade and ask why IUCN should care about trade. In fact, Sustainable Development (ICTSD). the role of trade in conservation was recognised However, most of these efforts, with the excep- by the Union at a very early stage through its tion of the work on species trade, although very involvement in the development and implementa- successful, were developed as isolated initiatives tion of CITES, the first Multilateral Environmental that could not be mainstreamed into the IUCN Agreement (MEA) to successfully include trade

126 Policy Matters 11, September 2003 Trade and IUCN

programme to ensure continuity, capitalise on presence in the debates was an indication of its these efforts and effectively use the IUCN net- importance to achieve sustainable development. work of global programmes, regional and country This is further reflected in the offices and Commissions. fact that trade is included as Being a conservation one of the “Means of The need to develop a more strategic and Implementation” in the WSSD organization, one could longer term approach to engage in trade has Plan of Implementation. This become more important in the last few years, ask why IUCN should care process has confirmed the given that the main issues in IUCN’s conservation about trade. need for IUCN to engage agenda are being dealt with, and decided upon, more actively in trade issues if it is to achieve its outside the fora in which the organisation has tra- conservation agenda. ditionally operated. Access and Benefit Sharing (ABS) is an example of this trend. Although the Matching needs and opportunities concept originated within the framework of the CBD as its third objective – together with conser- While the need to address trade has become vation and sustainable use – the negotiations for more evident in conservation fora, new opportu- its implementation and operationalisation have nities and challenges for biodiversity conservation moved outside of the CBD to be addressed at and sustainable development have emerged in World Intellectual Property Organization (WIPO) the trade world and, in particular, at the Fourth and the World Trade Organization (WTO), espe- Ministerial Conference of the World Trade cially in the context of the Agreement on Trade- Organization (WTO) in Doha, Qatar, in November Related Aspects of Intellectual Property Rights 2001. The meeting’s outcome, which came in the (TRIPS) discussions. If IUCN wants progress on form of a Ministerial Declaration, a Decision on this issue, it cannot concentrate its work only in Implementation-related Issues and Concerns and the familiar territory of the CBD. a Declaration on the TRIPS Agreement and Public Health, defined areas for collective study and Trade matters are also becoming more and negotiation. Sustainable development and envi- more common ingredients of negotiations on con- ronment were for the first time given prominence servation issues such as invasive species by, in the work of the WTO system. This included a among other, the possible trade implications of reaffirmation, in the Declaration’s preamble, of the application of the precautionary principle and the commitment of the WTO to sustainable devel- risk management measures. This has resulted in opment, as well as the need for mutual support- a slowing down of progress in the context of the iveness between the aims of upholding and safe- CBD (independently of the procedural problems guarding an open and non-discriminatory multilat- encountered in the decision on this issue at the eral trading system and acting for the protection th 6 meeting of the Conference of the Parties) and of the environment and the promotion of sustain- even in pre-Rio conservation-oriented conventions able development. Furthermore, the Ministerial such as Ramsar. Again, IUCN cannot address Declaration encouraged efforts to promote coop- invasives, the second largest threat to biodiversi- eration between the WTO and “relevant interna- ty, if it does not address trade-related concerns. tional environmental and developmental organiza- Further, trade can have considerable impacts on tions”, such as IUCN. biodiversity conservation, as illustrated for exam- Importantly, WTO members agreed to launch ple in the impact of subsidies on agriculture or on negotiations on trade and environment, including fisheries on the conservation of biological diversi- the relationship between WTO rules and trade ty and on livelihoods. obligations set out in multilateral environmental The close relationship between trade and envi- agreements (MEAs), procedures for regular infor- ronment was clearly illustrated in the World mation exchange between MEA secretariats and Summit for Sustainable Development (WSSD) relevant WTO committees, criteria for observer process. Trade was one of the most controversial status and the clarification and improvement of and difficult themes in the negotiations but its WTO disciplines on fisheries subsidies. They also

Policy Matters 11, September 2003 127 Trade and IUCN

Trade matters are instructed the Council for Trade-related Aspects of within and outside the IUCN fami- Intellectual Property Rights (TRIPs) to examine, ly already established in the trade becoming common inter alia, the relationship between the TRIPS world, starting with CEESP, ICTSD ingredients of Agreement and the Convention on Biological and TRAFFIC, to seek added value negotiations on Diversity (CBD) and the protection of traditional and avoid duplication thus requir- knowledge and folklore. In addition, the ing a careful identification of its conservation issues Committees on Trade and Development and Trade appropriate niche in a competing such as the appli- and Environment were mandated to help achieve world. cation of the pre- the objective of having sustainable development Trade work needs to be main- appropriately reflected in the outcomes of the cautionary princi- streamed into the IUCN pro- negotiations. For the first time environment was gramme at global, regional and ple and risk man- placed on both the operational and the negotiat- national levels to ensure long ing agenda of the WTO. This creates great oppor- agement measures. term sustainability and the estab- tunities but also an important challenge to ensure lishment of policy-practice and global to local link- that the outcomes of these negotiations are sup- ages, which are a key competitive advantage of portive of biodiversity conservation and sustain- IUCN. able development. The group defined a goal for the biodiversity Developing a strategic approach for IUCN’s and trade strategic programme: “trade and work on trade investment modified to promote biodiversity con- servation and sustainable livelihoods,” and a pur- A decision was taken in the IUCN Secretariat in pose: “trade and investment policies and institu- early 2002 to approach trade in a more strategic tions at global, regional and national levels and integrated manner. Institutionally, this took informed, influenced and used to promote biodi- the form of the establishment of the Policy, versity conservation and sustainable livelihoods.” Biodiversity and International Agreements (PBIA) unit in IUCN headquarters in Gland. Its mandate It further identified IUCN previous, ongoing and is to address cross-sectoral agreements and planned work on trade from global thematic pro- processes such as the CBD and the World Summit grammes, Regional and Country Offices and on Sustainable Development (WSSD) and Commissions. Some preliminary areas of work processes in other sectors such as climate change were identified for which goals and objectives and trade, as well as enhance IUCN policy mak- were defined. ing procedures and systems. These areas have been further refined and pri- In order to develop the strategic approach in orities emerging for IUCN’s work include: substantive terms, PBIA convened a planning Trade measures to control alien invasive meeting in April 2002 with key components of species. IUCN involved or relevant to trade discussions and key partners such as CEESP, ICTSD and Intellectual property rights, access and bene- TRAFFIC. This work departed from the following fit sharing and conservation of biodiversity. principles: Mutual supportiveness between WTO rules IUCN does not intend to become a trade and MEAs. organization, but rather will focus on bringing Positive linkages between global and regional conservation into the trade world, drawing on trade and biodiversity rules. its core competencies and seeking to comple- ment them by addressing relevant issues in Market mechanisms, including subsidies. the intersection between biodiversity and Transparency in international trade policy trade. making relevant to biodiversity. The trade programme of work needs to be built With its broad membership of 79 states, 112 on previous and ongoing work in IUCN. government agencies, 760 NGOs and 37 affiliates, IUCN needs to work in partnership with actors its voluntary networks of some 10,000 scientists and experts from 181 countries, and its presence

128 Policy Matters 11, September 2003 Trade and IUCN in 42 countries, IUCN is well placed to provide a Environment Centre at WSSD, with its workshops bridge between the conservation and trade con- on equity, ethics, access and benefit sharing and stituencies by: alien invasive species. Furthermore IUCN-PBIA, together with CEESP-GETI, ICTSD and the GBF making available relevant information and build- Secretariat, is organising the Global Biodiversity ing capacity of its conservation community; Forum-18, prior to the WTO 5th Ministerial bringing its expertise in species and ecosystem Conference to be held in Cancun, Mexico on 10 - conservation and sustainable livelihoods into 14 September 2003. The overall objective of trade policy work through policy-practice linkages; holding the Global Biodiversity Forum from the 5- developing and advocating policy in the trade 7 September in Cancun is to provide a platform negotiations on key issues in the conservation for the trade and biodiversity communities, to agenda and in MEA’s negotiations on trade-relat- consider how the pursuit of their respective goals ed matters; and objectives might complement or hinder each other. Specifically, the meetings aim to: support developing linkages and synergies between poli- the biodiversity community in formulating the cies adopted at national, regional and global lev- trade-related aspects of their respective areas of els; work; facilitate the identification of openings for using its convening power to provide a platform the biodiversity community to effectively partici- to conservation and trade actors; and; pate and thereby integrate their concerns in the supporting the effective implementation of inter- international trade policy-making process; build national policy at national level through technical new and strengthen assistance, capacity building and the development existing networks Trade work needs to be main- among the trade bio- of local, national and regional networks and part- streamed into the IUCN pro- nerships. diversity communities; and develop concrete gramme at global, regional and With the support of an IUCN innovation fund, recommendations tar- PBIA has established a collaborative effort with geted at negotiators in national levels to ensure long term the IUCN Regional Offices of South America and Cancun and identify sustainability and the establish- Asia and with the CEESP Working Group on Trade follow-up activities. and Investment - GETI, to continue the develop- ment of policy-practice and global ment of IUCN’s programme of work, while start- These first steps in to local linkages, which are a key IUCN’s process have ing some strategic interventions. Ongoing and competitive advantage of IUCN. planned activities include: shown the potential the organization has Further development of the trade programme of to engage in trade in a more effective manner, work at global level and in two regions (South but have also shown the existing challenges to America and Asia), focusing on priority areas develop the necessary capacity to position the identified and linking this effort to the develop- Union in this competing world. The partnership ment process for the IUCN intersessional pro- between the Secretariat and Commissions, and in gramme to be submitted for approval to the next particular with CEESP-GETI, is essential to World Conservation Congress in 2004. Fund rais- achieve this goal and we thus look forward to ing proposals are being developed in this context. continuing our collaboration in order to respond Development of communication efforts to raise to our members’ requests, and more generally, to capacity and awareness in IUCN’s constituency, achieve our mission and conservation goals. especially through the partnership established with CEESP-GETI and ICTSD in the production of Martha Chouchena Rojas is the Head of the Policy, Biodiversity and International Agreements Unit based at IUCN Headquarters in the BRIDGES Trade BioRes. Gland and is responsible for leading cross-sectoral international agreements and processes and further developing the IUCN policy Targeted policy interventions to test IUCN’s system. Email: [email protected]. engagement with the trade constituency. This included the organization with CEESP-ICTSD of the Globalization and Equity day in the IUCN

Policy Matters 11, September 2003 129 LETTERS TO THE EDITOR

To the Editors,

Policy Matters 10– Article entitled “Water, power, and the crisis in the Levant” by Eric Garrett

I write as a former staff member of IUCN (from 1983-97) and as a Vice-Chair of CEESP to express my dis- may at the article cited above. I believe this article, and others of its ilk, have no place in an IUCN publica- tion and I deplore your poor judgement in including it in what is otherwise a very fine issue of our maga- zine. My problems relate both to the content and to the context. On the former, the article is a one-sided rant, first against Israel and then against the United States. We learn, first, that Israel has stolen most of the water and land from the Palestinians, and attempted unsuc- cessfully to seize more in Southern Lebanon. They have, further, destroyed most of what they couldn’t grab outright. We then learn that this is in large part due to the combined cynical support of an illegitimate US government (George Bush is a spokesman for “an illegitimate government”), its tame press, and the deliber- ately ignorant American public (“Americans … prefer a certain kind of ignorance”). I read the article carefully to see whether there was a paragraph, a sentence, a word, nay even a hint that the situation in the Levant was a tad more complex than the angelic Palestinians against the Luciferian Israelis, backed by the Great Satan itself. There was not one. Truly blessed is he who can see life in such simple terms. The article is rubbish, but so what? I would dismiss it as the ramblings of yet another American wrapped up in a guilt trip if it had not appeared in an IUCN publication. And especially in an IUCN publication pub- lished in Iran. This is not only very unfortunate judgment on your part, it casts suspicion on the excellent work done by our Commission throughout both the developed and developing world. As a Vice-Chair of this same Commission, I am embarrassed by this article, at its Manichaean world view and at the highly partisan political opinion that it reflects. I hope that this will prove to have been a once- off error.

Best wishes, Mark Halle ([email protected]), Vice Chair, CEESP (Working Group on Environment and Security)

To the Editors,

This letter responds to criticisms of an article penned by me and published in Policy Matters No.10. The article is titled: “Water, Power and the Crisis in the Levant”. I have been accused of writing rubbish, of being naïve, and of feeling in some way guilty that I am an American. I am also accused of pretending to be an American: the suggestion [set in a footnote and con- tained in a prior version of the letter to the Editors sent in by Mark Halle] was that I was probably from Iran. These insights might indicate an important point that is a labour to pin down: that even in elite, sophisticated circles where intellectual work is prized, a significant part of the truth is a personal matter. However, the main thrusts of the article I wrote are well accepted in some quarters. The establishment of the state of Israel was a politically anachronistic, forceful imposition of one cultural regime upon another.

130 Policy Matters 11, September 2003 It began with a struggle to establish itself, largely against the interests and in defiance of a pre-existing peo- ple, and now it is trying to survive the occupation. Some Zionist planners anticipated the expansion of the state to deal with the predictable consequences of continuing conflict and environmental stress, and the record reflects this. And once an established state, it simply seems to me either naïve or deceptive to dissociate Israel’s dependence on the strategic water resources around its recognized boundaries and the state’s decisions to gain control of these resources. I maintain that in looking beneath and alongside the many years of human conflict over establishing a Jewish state, one finds key drivers for the continuation of conflict. Most of these are demographic and resource-based drivers, with water being the critical issue that persists to haunt Israel’s viability as a state. Whatever our sympathies are, we should address this issue straightforwardly or Israel will not negotiate in good faith. The role of the United States in providing decisive sup- port or accommodation of Israel’s expansion, at the expense of local Arab populations, is also unequivocal. The rest of the narrative requires interpretation, context and many questions about perspectives and values. The article I wrote is not of an elegant nature, possess- ing flaws and indications of haste. There is certainly some measure of overreaching in style by the way I draw lines between things, which underlines an impatience with the need for airy diplomacy in the face of a growing crisis; in relation, I do emphasize the broad ignorance of and distor- tions to the TV-soaked US public, conditions that many influential groups and causes knowingly depend on. I made the mistake of placing David Ben-Gurion in the historical place of Chaim Wiezmann. I call Israel a theocratic state, which is too coarse to say but can be discussed if one allows for certain forceful implications of its very establish- ment, historically considered, as well as examining aspects of the regime and perhaps pondering the nature and ground of identity itself. I also called Israel’s military the fourth largest military force, when I should have substituted power for size, the latter being tagged to the number of soldiers and conventional arms. Let us agree then that the article has flaws. But if the crit- ics want to wave away the substance of the article and the major characterizations of power, motive, and consequence, A woman saves some oranges from a plantation then I have nothing to withdraw. destroyed by Israeli troops in Beit Hanoun in northern Gaza City, Tuesday 20 May 2003. Since the WSSD, the situations that alarm us have gotten Using bulldozers the Israeli troops uprooted worse. I feel an even greater need to draw lines between thousands of orange trees and other crops things in a way that jolts any complacency. And the critics before they pulled back to the edges of the town are no wiser for their insistence on good form. after a five day seizure in which at least eight Palestinians were killed and fifteen houses Eric Garrett ([email protected]), Evansville, IN, USA destroyed.

Policy Matters 11, September 2003 131 Dear Mark,

Thanks for your note. Your letter addresses two points: the “factual content” of the piece on the Levant and the wisdom of publishing the article itself. On the factual content of the paper, a person who did a Ph.D. thesis on water issues in the Middle East read the paper and had nothing to object. She actually added corroborating data. It is after checking with her that we decided to publish the paper. On the political interpretation we see a concurrence with editorials of progres- sive journals all over the world. On the wisdom to publish, we can only say that the piece on the Levant is a piece on an environmental subject of crucial relevance for that region. As the subject relates to broader environmental and peace issues, it is also a piece on a subject of crucial relevance for the world we live in. IUCN ought to be concerned, despite the legit- imate desire of not wishing to upset powerful members and/or donors. The IUCN Commission members have a tradition of free thinking and free speech and we hope you are not calling for some form of voluntary censorship, especially in a climate in which censorship is becoming every day more fashionable. What appears to you a Manichean view of the world is a legitimate view of the world, shared by many. Regrettably, after the Iraq war this view seems only to be painfully confirmed. We fully respect your desire for balance of opinions, however. As we mentioned to you right on the eve of your protest letter, you are warmly invited to publish in Policy Matters—which is your journal as much as the journal of all other CEESP members—a paper presenting facts that contradict or put in perspective the Palestinian dispossession of natural resource rights described in the piece on the Levant and/or its polit- ical interpretation. Our readers will surely appreciate your efforts. Note to the readers: The article “Water, power, and the crisis in the Levant” by Warmly, Eric Garrett is available online in Policy Matters No. 10, at Grazia Borrini-Feyerabend ([email protected]), Vice-Chair, CEESP http://www.iucn.org/themes/ceesp/pub- (Collaborative Management Working Group) and Taghi Farvar lications.htm#policy. ([email protected]), Chair, CEESP

Correction on Prajateerpu (Citizen’s Jury), Policy Matters No. 10 Mr. Nigel Cross, the former Executive Director of IIED has pointed out an error of omission in a note to the Editors of Policy Matters No. 10. We wish to point out to our Readers that a typographic error left out part of the sentence in line 6 of your edi- torial note on p 25 (PM 10). The sentence should have read: “...over 70% of the funding for IDS and 20% for IIED (with some key IIED programmes receiving up to 60% of their funds from DFID).” We apologize for this omission. We further re-affirm that this does not alter our analysis and substantive con- clusions in any way. For those readers interested in further information and analysis of the Prajateerpu saga and the donor pres- sures that took place, please refer to two peer reviewed articles in the international journal of Action Research: 1. Pimbert, M.P. and T. Wakeford, 2003. Prajateerpu, power and knowledge: The politics of participatory action research in development. Part I: Context, process and safeguards. Action Research, Volume 1, No. 2: pages185-207. 2. Wakeford, T. and Pimbert, M.P. Prajateerpu, power and knowledge: The politics of participatory action research in development. Part 2: Analysis, reflections and implications. Action Research (in press). Editors, Policy Matters No. 10

132 Policy Matters 11, September 2003 Network News

The working groups and members of the CEESP network have been busy since the last issue of Policy Matters (and Network News) which came out during the World Summit for Sustainable Development. In keeping with the new CEESP tradition of producing special issues of Policy Matters dedicated to important global policy fora, we bring you two special issues of Policy Matters back-to-back. This issue focuses on the WTO Ministerial in Cancun, Mexico, while Policy Matters 12, is a special issue for the World Parks Congress in Durban, South Africa. In order to cover as much of our activities over the last year as possible we have split “Network News” between these two issues. In this issue you will find the latest on the work of two of our Themes/Working Groups; those on Environment and Security, and on Environment, Trade and Investment. Policy Matters 12 will bring you news of the work of the Themes/Working Groups on Collaborative Management, Sustainable Livelihoods, and the joint CEESP-WCPA Theme on Indigenous and Local Communities, Equity, and Protected Areas.

CEESP at WSSD

CEESP events featured prominently during the busy and resoundingly successful programme of the IUCN Environment Centre in Johannesburg during the World Summit on Sustainable Development.

The five Themes/Working Groups of the IUCN Commission on Environmental, Economic and Social Policy joined forces with the greater IUCN community—and beyond—to realise a wealth of events. These ranged from theme days, such as “Globalisation with Equity” and “Human Security and Environment”, which includ- ed a multitude of events to internal planning meetings for such projects as the World Parks Congress 2003, the updating of the 1972 classic publication, The Careless Technology: Ecology and International Development, and discussion around a project to create a “red list” of endangered cultures that possessbio- diversity conservation heritage, as well as launching the publication/re-publication of a number of books. The mission of CEESP is rooted in the middle ground linking practice and policy, and between local commu- nities and global politics and its concerns were reflected in the programme of events: a dialogue with local communities—Local Voices, Global Choices (with the UNDP Equator Initiative); focus on the issue of com- munity conserved areas and co-management of natural resources for the World Parks Congress in 2003; a workshop on trade and intellectual property rights; and the launch of a major new publication, Conserving the Peace: Resources, Livelihoods and Security, which makes the case to policy makers that investment in environmental conservation could help attack the roots of conflict and violence. In addition to these initiatives, the Commission helped the IUCN team keep their finger on the pulse of the daily negotiations at WSSD, particularly on trade-related issues, through daily coverage bulletins. Working Group on Environment and Security (WGES)

WGES at WSSD In partnership with the IUCN Secretariat, we hosted a day-long session on E&S in Johannesburg on September 3, 2002, which retrospectively has succeeded in promoting our work, and forging new partner- ships with likeminded groups. Based on two years of research and consultations that culminated in the publi- cation of ‘Conserving the Peace: Resources, Livelihoods and Security’, our first book on the subject, which is becoming a standard reference in the field, being used in university courses at the University of Toronto, the University of Ottawa and the University of California-Irvine, among others.

Activities Climate Change Adaptation: An international task force of leading experts is working with support of the Swiss government to identify natural resource management tools that could reduce vulnerability to natural disasters through protection of natural ‘buffer‘ systems. Peace & Conflict Impact Assessment – Niger: We were invited by the Swiss government to take part in the assessment of a field project in the Sahel that addresses the latent conflict between pastoralists and

Policy Matters 11, September 2003 133 farmers through a number of different mechanisms. An Agenda for Environmental Cooperation and Security in SE Europe and Central Asia (UNEP, UNDP & OSCE): The ‘Environment for Europe’ Ministerial meeting was launched in Kiev and Prague on May 21, 2003, where a multi-agency environment and security initiative was launched by UNEP, UNDP and the Organisation for Security and Cooperation in Europe to address these concerns in the former Yugoslavia and the Central Asian states. IISD/WGES will act as secretariat/key advisor for environment and security issues. Keynote presentations by Klaus Töpfer, Mark Malloch Brown, and ministers from the Netherlands, Tajikistan and Serbia & Montenegro, as well as a video by TVE. Various advisory activities: WGES has also been active in various advisory capacities including: acting as an advisor to the UNEP Post Conflict Assessment Unit’s missions to Afghanistan, Iraq and the Occupied Territories of Palestine; participating in the agenda-setting for the OECD DAC (Development Assistance Committee) working group on Environment & Conflict, which will develop several activities in coming months; and participating in the steering group for the proposed Institute for Environmental Security (Netherlands). Impact assessment tools: ‘Conflict Impact Assessment tool for protected areas design’ development underway for launch at World Parks Congress, September 2003; and, launching an effort to integrate conflict sensitivity into environmental and social impact assessment in the extractives sector; this project launched with a meeting of senior practitioners from Shell, BP, Newmont, ERM in London at the Princess of Wales Trust on May 21. Making the Business Case for Conflict Prevention: On behalf of the , and Sustainable Development project (MMSD), we surveyed the business and conflict literature and staked out a ‘natural resources/livelihoods’ niche related to the extractive industries sector. Aware that business has played a key role in exacerbating conflicts in West Africa and Indonesia, we are now building on alliances made during the Global Compact’s conflict dialogue to launch new projects aimed at practical tools for business.

Publications - UN Global Compact ‘Conflict Guidelines for companies’ published and launched in Johannesburg December 2002. - Trade, Aid and Security: Elements of a Positive Paradigm. An overview of the links between trade in natu- ral resources, aid and conflict. Unstable aid flows, illicit trade in natural resources in exchange for arms, and unacknowledged costs of adapting to the international trade regime are together fuelling instability and inse- curity. Achieving sustainable development requires refocusing these regimes to support human security. - Conflict Risk and Impact Assessment (Project Briefing) - Integrating Resources-Livelihoods Perspective in Development and Conservation Practice - Environment & Security: Transforming Risks into Cooperation (Focus: Central Asia and South Eastern Europe): This report of the first phase of ENVSEC activities provides an overview of environmental concerns with security implications in Central Asia and South Eastern Europe, revealing many hot spots and areas of common interest. - Addressing Environmental Risks in Central Asia: Risks, Conditions, Policies, Capacities. This report assesses major environmental risks related to security and describes the socio-economic context and the institutional and policy framework available to address these in the five Central Asian countries. - Background Paper - Environment & Security in Central Asia - A brief introduction to the links between environment and security, and a discussion of the issues of great- est relevance in Central Asia. Saule Ospanova, Alexander Carius, and Jason Switzer - Addressing Environmental Risks and Promoting Peace and Stability: The post Kiev process. This paper describes the structure and aspirations of the ENVSEC initiative following the Kiev ‘Environment for Europe’ Ministerial in May 2003. The Initiative will focus on three activity areas: (1) vulnerability assessment and monitoring of environment and security linkages, (2) policy development and implementation, and (3) insti- tutional development, capacity building and advocacy.

134 Policy Matters 11, September 2003 Trade,Environment and Investment The year 2002 was a great move forward for GETI; by further developing our relationship with the IUCN Secretariat, further developing the scope and readership of BRIDGES Trade BioRes, as well as by engaging actively in the World Summit on Sustainable Development (WSSD), Johannesburg, 2002; GETI has moved forward and come closer to its goal and its mission. In 2003 GETI has built on these strengths to organise events in relation to the Fifth WTO Ministerial meeting in Cancun, and to further develop its relationship with various other components of IUCN. The GETI Steering Committee was established and held its first meeting in Johannesburg during the WSSD. This meeting was important because it led to the identification of GETI areas of work and development of the membership structure. Subsequently GETI has worked on developing its by-laws and project guidelines. GETI has developed its website over the past months and maintains two websites: basic information is available at http://www.iucn.org/themes/ceesp while more updated informa- tion is available on the website of ICTSD, the host of GETI: http://www.ictsd.org/geti/welcome.htm.

IUCN partner activities - Participation in the IUCN Advisory Group (IAG) for the WSSD - Participation and assisting IUCN in developing a strategic work programme on trade (included partici- pation in preparing documents, research and analysis, prior to the IUCN Biodiversity and Trade Strategic Workshop). In 2003 GETI continues to assist IUCN in setting up a Biodiversity and Trade Strategic Programme - Provided input on IUCN project proposals on trade related issues, in particular on the project proposals on Alien Invasive Species, and Access and Benefit Sharing - Developing project proposals in collaboration with IUCN Secretariat based on priority areas that were defined at their Steering Committee meeting during WSSD; two noteworthy initiatives are projects on Access and benefit sharing and Intellectual Property Rights (IPRs); and, Alien Invasive Species and international trade.

Global Biodiversity Forum 2003 CEESP-GETI, along with the IUCN Secretariat, ICTSD, and the Ministry of Environment and Natural Resources of Mexico (SEMARNAT) are holding the 18th Session of the Global Biodiversity Forum from 5-7 September 2003 in Cancun, Mexico, prior to the 5th WTO Ministerial Conference, on 10-14 September 2003, also in Cancun. This is the first time that a GBF is being held prior to a WTO Ministerial meeting. As of the time of this writing the proposed topics for the workshop are: - TRIPs-CBD relationship - Biosafety and Precautionary Principle (incl. Alien Invasive Species) - Sustainable Livelihoods For more information please see http://www.gbf.ch/present_session.asp?no=31&lg=EN. The overall objective of holding the Global Biodiversity Forum in conjunction with the Fifth WTO Ministerial Conference is to provide a platform for trade and biodiversity communities to consider how the pursuit of their respective goals and objectives might complement or hinder each other. Specifically, the meetings aim to: - Support the biodiversity community in formulating the trade-related aspects of their respective areas of work - Facilitate the identification of openings for the biodiversity community to effectively participate and there- by integrate their concerns in the international trade policy-making process - Build new and strengthen existing networks among the trade biodiversity communities - Develop concrete recommendations targeted at negotiators in Cancun and identify follow-up activities

Policy Matters 11, September 2003 135 The timing of the GBF enables its discussions and outcomes to be directly linked to the current trade round as negotiations will enter a crucial stage after the stock-taking in Cancun. Hence this event will help leverage and focus biodiversity-related inputs into the WTO process. But it will also enhance the knowledge of trade linkages in the biodiversity community, allowing participants to heighten their awareness of these linkages in relevant international biodiversity processes as well as broader-based processes, such as the World Parks Congress in Durban, South Africa, which will be held concurrently with the WTO Ministerial meeting.

Publications GETI continues to publish BRIDGES Trade BioRes—Trade and Biological Resources News Digest on a biweekly basis. Between January and August 2002, the BRIDGES Trade BioRes has essentially centred on continuing to refine the editorial focus, including coverage and target audience. In addition to the regular issues, special issues were produced for the Sixth Conference of Parties of CBD (COP-6), the third meeting of the Intergovernmental Committee on the Cartagena Protocol on Biosafety (ICCP-3), the WSSD Prep Com in Bali, and the World Summit on Sustainable Development (WSSD). By the end of 2002, approximately 700 readers had subscribed to BRIDGES Trade BioRes. GETI will continue to develop and distribute the digest throughout 2003 and will provide special coverage of the WTO Ministerial meeting in Cancun . In order to receive this publication on a regular basis, please send a blank email to [email protected]. The International Centre for Trade and Sustainable Development (ICTSD), the International Institute for Sustainable Development (IISD) and the Regional International Networking Group (RING) which includes CEESP—are pleased to announce the launch of a second phase of our project on a “Southern Agenda on Trade and Environment”. The first phase of the project sought to gather and present Southern perspectives on the trade and environ- ment link, building on consultations with developing country trade policy representatives in Geneva. The results of the Phase I were presented in May 2002 at the WTO Symposium on ‘The Doha Development Agenda and Beyond’.

A Southern Agenda on Trade and Environment - Phase II

Phase II, which builds upon the results of Phase I, aims to respond to the opportunity offered by the Doha mandate, to strengthen the capacity of trade negotiators, key national policymakers and regional actors in developing countries to determine priorities for promoting and negotiating proactive positions which reflect their own ‘Southern Agenda’ on environment and trade in the multilateral trading system. The project will be carried out over a two-year period, and is based on six regional dialogues that aim to bring forward regional priorities in trade and environment. The dialogues will both feed into and run parallel to a Geneva-based consultation process involving WTO negotiators, in order to ensure equitable and sustain- able trade policies and agreements that truly reflect regional priorities for environment. The first regional dialogue will be held in Dakar, Senegal from 22-23 July in cooperation with ENDA Tiers Monde. In the course of the project we will be preparing policy papers on key trade and environment issues from a Southern per- spective, as well as regional think-pieces from Africa, Asia and Latin America. As a principal output of the project, we shall be preparing a Resource Book on Trade and Environment aimed at Southern negotiators at the WTO and in other regional processes. We are currently setting up a high-level Advisory Committee for the project, composed of key WTO dele- gates from developing countries.

For more information on the project please see http://www.ictsd.org/issarea/environment/products/index

136 Policy Matters 11, September 2003 EVENTS AT CANCUN AND BEYOND Events at Cancun 5-7 September, Cancun, Mexico: 18th Session of the GLOBAL BIODIVERSITY FORUM on Biodiversity, Trade, and Sustainable Development, in conjunction with the 5th Ministerial Conference of the WTO. The GBF will focus on: The relationship between the CBD and the TRIPS Agreement; Sustainable Livelihoods and Trade; as well as Risk, Precaution, and Bio-security. The GBF is convened by a range of institutions including IUCN, ICTSD, the Mexican Centre for Environmental Law (CEMDA), the Ministry of Environment and Natural Resources, Mexico (SEMARNAT) SEMARNAT, as well as the IUCN Commission on Environmental, Economic and Social Policy (CEESP). The recommendations from the GBF will be fed into the WTO Ministerial Meeting. For more information please see the GBF website: http:www.gbf.ch 5-7 September, Cancun, Mexico: Workshop on SUSTAINABLE LIVELIHOODS AND TRADE. CEESP- GETI will be organising two workshop streams as part of the Global Biodiversity Forum-18. Although it is commonly accepted that sustainable trade can contribute to poverty alleviation and biodiversity conserva- tion, many underlying issues remain to be resolved. The notion of sustainable trade and the role of trade-related economic incentives aimed at supporting sustainable livelihoods and sustainably using bio- logical resources are areas where intensive, sector-based examinations are needed to draw lessons for trade rules and sustainable development policy-making processes. The sessions organised by CEESP- GETI will seek to clarify the concept of sustainable commodity chains and how this can be used as a tool to analyse sustainable trade initiatives and related livelihoods. The second session will focus on engaging participants in a discussion on trade tools and how they can support or hinder sustainable development efforts. For more information please see the GBF website: http://www.gbf.ch/desc_workshop.asp?no=31&app=&lg=EN&now=3 8-9 September, Cancun, Mexico: INTERNATIONAL FORUM: WOMEN’S RIGHTS IN TRADE AGREE- MENTS. The International Forum, organised by Women on the Road to Cancun is a platform for women to share their views and join forces in addressing trade issues. Participants in the International Forum include, amongst others, the National Network on Gender and Economy and the Latin American Network Women Transforming the Economy (REDGE-REMTE).The forum will host panels and debates. For more information, contact: Mujeres Hacia Cancun, [email protected], Mujer Dialogo, mujer- [email protected]. 8-9 September, Cancun, Mexico: INTERNATIONAL PEASANT FORUM: FOOD SOVEREIGNTY AND FREE TRADE. Via Campesina and UNORCA are organising an International Peasant Forum focusing on the WTO Agreement on Agriculture and its impact on food sovereignty. The aim of the forum and the farmer’s movement is to stop the advancement of negotiations at the Ministerial, defend the rights of small farmers and food sovereignty, remove the WTO from agriculture, stop the privatization of public services and stop patents on life. For further information, contact Via Campesina, [email protected], UNORCA, [email protected]; Internet: http://www.viacampesina.org/ 8-17 September, Durban, South Africa: Vth IUCN WORLD PARKS CONGRESS. The ,Parks Congress is a 10 yearly event which provides the major global forum for setting the agenda for protected areas. This fifth meeting will concentrate on issues under the theme “Benefits Beyond Boundaries”. For more information, please see Internet: http://www.iucn.org/wpc2003/ 9 September, Cancun, Mexico: FAO Symposium on AGRICULTURE, TRADE REFORMS AND WORLD FOOD SECURITY. The FAO is organising a symposium on the theme of agriculture trade reforms. The symposium will centre on the experience and lessons learned by developed and developing countries in relation to agriculture trade reforms. Moreover, the discussions will also focus on food security and rural development, mechanisms of financing imports of basic foodstuffs, and the impact of the SPS/TBT Agreements on developing countries. The symposium will be held on the 9th September at the Sierra Hotel. For further information please see Internet: http://www.ictsd.org/ministerial/cancun/docs/fao.htm 10 September, Cancun, Mexico: Boell Forum: WTO AND THE ENVIRONMENT & GATS AND GENDER

Policy Matters 11, September 2003 137 and many more. The Heinrich Boell Foundation is organising several forums and dialogues on the above mentioned themes. For more information please see Internet: http://www.cancun2003.org/ 10 September, Cancun, Mexico: NGO FOREST FORUM. North American and Mexican NGOs (Pacific Environment, Organizacion de Ejidos Productores Forestables de La Zona Maya, OEPFZM, UNORCA, Red México al Frente del Libre Comerico (RMALC), International Forum on Globalization (IFG), International Indian Treaty Council, and American Lands) are organizing an NGO Forest Forum to discuss trade, sus- tainable and the rights of the forest communities. For further information, contact: Cynthia Josayma, Pacific Environment, [email protected]. 10-14 September, Cancun, Mexico: The Fifth World Trade Organisation (WTO) MINISTERIAL CON- FERENCE. For more information see Internet: http://www.wto.org 11-12 September, Cancun, Mexico: PUTTING DEVELOPMENT BACK IN - THE CANCUN TRADE AND DEVELOPMENT SYMPOSIUM. Convened jointly by ICTSD and El Colegio de Mexico, the main objective of the CTDS is to encourage innovative thinking on issues related to trade and development to be translated into inputs for negotiations. The main topics will be drawn from development-related issues in the trade policy and trade rules arena. Particular attention will be paid to how trade policies can help to meet the needs of sustainable human development, the Millennium Development Goals and Targets, and other public policy objectives and needs. For more information please see Internet: http://www.ictsd.org/minis- terial/cancun/tds/index.htm Other Forthcoming Events 13-17 October, Lisbon, Portugal: CONSUMERS INTERNATIONAL WORLD CONGRESS 2003. This event, organised every three years by Consumers International, will focus on the theme of ‘The future of : representation, regulation and empowerment in a world economy’. For more infor- mation please see Internet: http://www.consumersinternational.org/News_Events/world.asp? cat=24®ionid=135. 20-21 November, Miami, Florida: FREE TRADE AREA OF THE AMERICAS (FTAA) MINISTERIAL MEETING. This meeting is an important marker in the negotiations among the 34 FTAA members to remove tariffs, trade barriers, and promote regional economic development and integration in the Western Hemisphere. For more information, please see Internet: http://www.ustr.gov/releas- es/2003/01/03-06.htm 1 - 12 December, Milan, Italy. UNFCCC COP-9. The ninth Conference of the Parties to the UN Framework Convention on Climate Change will continue deliberations from SB-18. For more information contact: UNFCCC Secretariat; tel: +49-228-815-1000; fax: +49-228-815-1999; e-mail: secretariat@unfc- cc.int; Internet: http://www.unfccc.int/ 13-18 June 2004, Sao Paulo, Brazil: 11TH UNITED NATIONS CONFERENCE ON TRADE AND DEVEL- OPMENT. UNCTAD holds its ministerial-level conference every four years to set the organisation’s priori- ties and guidelines for action. The conference is UNCTAD’s highest governing body and also includes a high-level debate on current issues involving economics and development. The theme of the 2004 UCTAD XI conference will be “Enhancing coherence between national development strategies and global economic processes towards economic growth and development, particularly of developing countries”. For more information please see Internet: http://www.unctad.org. November 2004, Bangkok, Thailand: THIRD IUCN WORLD CONSERVATION CONGRESS at the Queen Sirikit National Convention Centre. At the World Conservation Congress - the world’s largest democracy for conservation - IUCN’s members gather to set the work priorities of the Union and elect its Council for the inter-sessional period. World Conservation Congresses are held at intervals of 3 to 4 years. The previous WCC was held in Amman, Jordan in 2000. For more information please see Internet: http://www.iucn.org/about/resolutions.htm

138 Policy Matters 11, September 2003 CEESP Steering Committee and Contacts Name & affiliation Role/area of responsibility Nationality/ residence Themes and Working Groups & Focal Points for the Regions

Farvar, M. Taghi ([email protected]) Chair of CEESP, and of the Theme on Sustainable Iran Centre for Sustainable Development (CENESTA), Iran Livelihoods (WGSL)

Deputy Chair of CEESP, Mayr Maldonado, Juan ([email protected]) Focal Point for Governance Issues, International Group of Eminent Persons, Advisors to the Secretary Processes and Bio-cultural Diversity Colombia General, UN & for Latin America

Vice-Chair for Theme on Co-management of Natural Resources (CMWG) & Borrini-Feyerabend, Grazia ([email protected]) Co-chair of joint CEESP/ WCPA Theme on Indigenous Italy/ Switzerland Ittifaq Keyke Mate (IKM), Switzerland and Local Communities, Equity and Protected Areas (TILCEPA) Halle, Mark ([email protected]) Vice-Chair for Theme on Environment & Security International Institute for Sustainable Development Italy/ USA/ Switzerland (WGES) (IISD), Winnipeg & Geneva Kothari, Ashish ([email protected]) Vice-Chair & , India Co-chair of joint CEESP/ WCPA Theme on Indigenous India Coordinator of the Technical and Policy Core Group of and Local Communities, Equity & Protected Areas India’s National Biodiversity Strategy and Action Plan (TILCEPA)

Melendez, Ricardo ([email protected]) Vice-Chair for Theme on Environment, Trade & International Centre for Trade and Sustainable Colombia/ Switzerland Investment (GETI) Development (ICTSD), Geneva

Other Themes & Regional Focal Points

Al-Eryani, Abdul Rahman ([email protected]) Vice-Chair for Island Ecosystems Yemen Islands Promotion and Development Authority Yemen & for the Arab Regions Green Yemen Argumedo, Alejandro ([email protected]) Vice-Chair for Indigenous Peoples & Biodiversity Asociación Quechua-Aymara (ANDES) and Indigenous Peru & for Latin America Peoples Biodiversity Network Gritzner, Jeff ([email protected]) Vice-Chair for USA University of Montana, USA & for North America Jibrell, Fatima ([email protected]) Vice-Chair for Community Environmental Care Somalia Horn Relief Organisation & for North-eastern Africa Vice-Chair for mining, environment and local communi- Mate, Kwabena ([email protected]) ties Ghana & from Africa Monro, Rob ([email protected]) Vice-Chair for Sustainable Use of Natural Resources Africa Resources Trust (ART), and Zimbabwe Trust, and CBD issues Zimbabwe/ United Kingdom Zimbabwe & for Southern Africa Mumtaz, Khawar ([email protected]) Vice-Chair for Gender Issues Pakistan Shirkat-Gah, Pakistan & for South Asia Vice-Chair for Economic Theory and Globalisation Nadal, Alejandro ([email protected]) Issues Mexico El Colegio de México, Mexico & for Latin America Vice-Chair for Marine & Coastal Issues Primavera, Jurgenne ([email protected]) & for Southeast AsiaVice-Chair for Marine & Coastal Philippines SEAFDEC Aquaculture Department Issues & for Southeast Asia Vice-Chair for Land Tenure and Sustainable Livelihoods Williams, Afriyie Allan N. Issues Guyana/ Trinidad & Tobago ([email protected]) & for the Caribbean

Policy Matters 11, September 2003 139 Staff contact persons Maryam Rahmanian ([email protected]) CEESP Executive Officer +98 21 295 4217 & +98 21 293 4958 Iran Marianne Jacobsen ([email protected]) Environment, Trade & Investment (GETI) Denmark/ Switzerland +41 22 917 8492 Manisha Sheth Gutman ([email protected]) Indigenous & Local Communities, Equity & Protected India + 91 20 567 5450 Areas (TILCEPA) Jason Switzer ([email protected]) Environment & Security (WGES) Canada/ Switzerland +41 22 979 9353 Aghaghia Rahimzadeh ([email protected]) Sustainable Livelihoods (WGSL) Iran +98 21 295 4217 & +98 21 293 4958 Nahid Naqizadeh ([email protected]) & Maryam Rahmanian ([email protected]) Collaborative Management (CMWG) Iran +98 21 295 4217 & +98 21 293 4958 CEESP main office: c/o: CENESTA, 5 Lakpour Lane, Suite 24 Langary Street IR-16936 Tehran, Iran Telephone +98 21 295 4217 & +98 21 293 4958 Local Fax: +98 21 295 4217 International fax: +1 253 322 8599 E-mail: [email protected] CEESP web site: http://www.iucn.org/themes/ceesp IUCN Secretariat Focal Points: Gonzalo Oviedo, Senior Advisor, Social Policy ([email protected]); telephone: +41 22 999 0287 Joshua Bishop, Senior Advisor, ([email protected]); telephone: +41 22 999 0266

Policy Matters is the newsletter of the IUCN Commission on Programme and Mission with particular reference to five thematic areas: Environmental, Economic and Social Policy (CEESP). It is published at - Collaborative Management of Natural Resources (CMWG) least twice a year and distributed to CEESP’s 600 members, as well as - Sustainable Livelihoods (WGSL, including poverty elimination and the IUCN Secretariat and at conferences and meetings throughout the biodiversity conservation) world. When possible, it is published concurrently with major global - Environment and Security (WGES) events as a thematic contribution to them and to the civil society meeting - Environment, Trade and Investment (GETI) around them. - Theme on Indigenous Peoples & Local Communities, Equity, and Protected Areas (TILCEPA, joint between CEESP and WCPA) IUCN, The World Conservation Union, is a unique Union of members from some 140 countries include over 70 States, 100 government agen- Each issue of Policy Matters focuses on a theme of particular impor- cies, and 800 NGOs. Over 10,000 internationally-recognised scientists and tance to our members and is edited by one or more of our working experts from more than 180 countries volunteer their services to its six groups focusing on the five thematic areas. Past issues have focused on global commissions. The vision of IUCN is “A just world that values and themes such as “Collaborative Management and Sustainable Livelihoods”, conserves nature”. “Environment and Security” and the Caspian Sturgeon, including issues of trade, conflict, co-management, and sustainable livelihoods for communi- IUCN’s six Commissions are principal sources of guidance on conser- ties of the Caspian Sea (“The Sturgeon” issue). For more information vation knowledge, policy and technical advice and are co-implementers of about CEESP and to view past issues of Policy Matters, please visit our the IUCN programme. The Commissions are autonomous networks of website: http://www.iucn.org/themes/ceesp. expert volunteers entrusted by the World Conservation Congress to develop and advance the institutional knowledge and experience and objectives of CEESP is hosted by the Iranian Centre for Sustainable Development and IUCN. Environment (CENESTA). For more information about CENESTA please visit http://www.cenesta.org. CEESP, the IUCN Commission on Environmental, Economic and Social Policy, is an inter-disciplinary network of professionals whose mission is to Please send comments or queries to [email protected]. We look forward to act as a source of advice on the environmental, economic, social and cul- hearing from you! tural factors that affect natural resources and biological diversity and to provide guidance and support towards effective policies and practices in environmental conservation and sustainable development. Cover picture credit: front cover, Patrick Krohn

Following the mandate approved by the Second World Conservation Design and layout artist: Jeyran Farvar ([email protected]). Congress in Amman, October 2000, CEESP contributes to the IUCN Lithography: Hoonam, Tehran.

140 Policy Matters 11, September 2003