Prioritise balance of ecology, trade

The world realises that environment contributes to the growth of trade in a substantial manner.

What is not adequately addressed at the WTO negotiations and various fora, whereas its gravity is well-recognised, is the issue of open trade and the protection of environment. Like most contentious issues agriculture and NAMA negotiations on trade and environment are moving nowhere. Yet, they are of special significance as they are likely to set in motion the direction for future negotiations at the WTO.

Today, environmental trade is on the rise. The world realises that environment contributes to the growth of trade in a substantial manner. In fact, the logic or justification behind the promotion of environmental trade was that it would benefit developing countries and LDCs in establishing environmental infrastructural facilities in their own country and also, since some of them have the expertise and technical know- how, would be in a position to provide environmental services to other countries.

Currently, environmental services where developing countries have capabilities are not registering much growth because a clear-cut classification of services has not been worked out. Countries are unable to send their request and offer as the services trade is conducted through different modes by following 'request and offer' provisions. They are not sure under which mode these services are to be provided.

Though developing countries like India are strongly advocating that it should be dealt with modes 3 and 4 given the need for setting up environmental infrastructural facilities and the professional skills required to provide such highly specialised services in different parts of the world, developed countries, on the other hand, are keen to conduct it on mode 1 through which they can only provide or sell those equipment. This in no way addresses the important issue of technology transfer which is crucial for developing countries' needs and, more importantly, has been an original mandate of the issue of trade and environment when it was introduced at the WTO negotiations.

Voices are being raised to put an end to or reduce transactions of environmental trade to a level where the protection of environment is utterly secured. In this regard, many international organisations have expressed that they owe a shared responsibility towards environmental protection.

The WTO is one such organisation whose responsibility was adequately discussed at the Doha Ministerial in 2001 when, for the first time, it brought the issue of trade and environment into a sharp focus in the negotiations. As the WTO fully understands that the importance of environmental trade is a necessary condition for sustainable development, it works out different ways and means of negotiating with different organisations and members to help achieve that end.

Committees on Trade & Environment and Trade & Development are currently engaged with UNEP and other developed and developing countries in terms of establishing synergy between existing WTO rules and specific trade obligations set out in Multilateral Environmental Agreements (MEAs), and reducing or eliminating tariff and non-tariff barriers for advancing the cause of trade liberalisation in environmental trade without harming the environment.

Open, equitable system

While the WTO can contribute to environmental protection by removing environmentally harmful trade restrictions and distortions, it cannot ensure environmental protection.

Its mandate is to promote an open, equitable and non-discriminatory trading system, whereas UNEP is the international body responsible for environmental protection. International organisations argue that the protection of environment cannot be left to them as individual countries have a larger responsibility to share. After all, they are at the forefront of designing policies which should simultaneously promote trade and protect their environment.

Balancing environmental and economic policies can be a challenge for governments. It is also true that in the absence of proper environmental protection policies, trade will exacerbate existing environmental problems. In limited circumstances, trade can itself be the cause of environmental problems. But environmental policy-making is the responsibility of individual governments. During the 1992 Rio Earth Summit, it was made loud and clear that governments must act to protect their domestic environment and work in unison to address environmental problems of an international character.

While it is argued that trade can bring some negative impact on the environment, it is also believed that trade represents a far more efficient allocation and usage of resources than would exist in a world where protectionist policies prevail and are encouraged. Imagine a country producing all goods and services only for its own consumption without participating in international trade.

If trade and environment can reinforce each other to attain sustainable development, the collective responsibility of the WTO, UNEP and individual governments of balancing environmental and economic policies for protecting the environment becomes the top priority.

(The writer is Professor, Lal Bahadur Shastri Institute of Management and former Senior Faculty, Indian Institute of Foreign Trade, New Delhi)

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