REPORT (2014) OF THE COMMITTEE ON TRADE AND ENVIRONMENT

1.          In 2014, the Committee on Trade and Environment in Regular Session (CTE) met twice under the Chairmanship of Ambassador Päivi Kairamo (Finland) on 30 June^[1] and 23 October 2014^[2] (formal meetings).

2.          The work of the CTE was organized in accordance with the mandate established by the Doha Ministerial Declaration, Paragraphs 32, 33 and 51.^[3] Discussions took place mainly on environmental requirements and market access issues under Paragraph 32(i) ("The effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development").  Other items addressed by the CTE were Paragraph 32(iii) on labelling requirements for environmental purposes, and item 1.^[4]

3.          No discussion took place under Paragraph 32(ii) (relevant provisions of the TRIPS Agreement); Paragraph 33 (technical assistance, capacity building and environmental reviews); and Paragraph 51 (developmental and environmental aspects of the negotiations). 

1  PARAGRAPH 32

1.1  Paragraph 32(i) (Environmental Requirements and Market Access)

1.1.1  First part of Paragraph 32(i) – "The effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them"

1.1.1.1  Environmental footprint of products

4.          At the June meeting, the International Organization for Standardization (ISO) provided an update on the ISO 14067 technical specification related to the requirements and guidelines for quantification and communication of greenhouse gas footprint of products and informed that an ad-hoc group had been established in May 2014 to analyse trade impacts associated with the application of ISO 14067.  ISO also shared updated information on ISO draft international standard (DIS) 14046 related to the principles, requirements and guidelines for assessing and reporting the water footprint of products, processes and organizations.

5.          Several delegations expressed support for the ISO and the development of standards and technical specifications based on scientifically grounded methodologies. Some delegations raised concerns over the possible impact of standards on market access, in particular for small and medium sized enterprises (SMEs) in developing countries, and the risk that such standards could be used as a trade barrier. One delegation stated that the assessment of carbon footprint on a lifecycle basis raised concerns similar to those related to processes and production methods.

6.          At the October meeting, the European Union (EU) provided an update on the voluntary pilot phase of environmental footprint of products and organizations methodology under the EU Single Market for Green Products Initiative. It aims to improve the availability of clear, reliable and comparable information on the environmental performance of products and organisations, and it is based on existing ISO standards. The three year pilot phase (2013-2016), covering a broad range of industrial and agriculture products, aimed to test: (1) the process for the development of specific product and organization environmental footprint category rules; (2) different verification approaches; and (3) various communication methods. The European Union stressed the open and transparent character of the process, with a significant participation of stakeholders from all over the world.

7.          Members generally reiterated their interest in the topic of environmental footprint of products. Several delegations asked for details on the European pilot projects. One delegation welcomed the opportunity to participate in this initiative. Several delegations noted that, in general, the proliferation of labelling schemes could represent trade barriers to developing countries and SMEs' market access, and stressed the need to take key WTO principles into account, such as international harmonization, transparency and non-discriminatory treatment. One delegation expressed concern that many environmental initiatives introduced as voluntary can later become mandatory, and highlighted the need to find multilateral solutions rather than implementing unilateral policies.  The European Union responded by underlining that the process was an open one, which also included non-EU actors.  Several delegations also pointed out that under Paragraph 32(i) of the CTE agenda, Members' focus should be on the impact of such environmental measures on market access and exports, especially from developing countries and the least-developed ones among them. 

1.1.2  Second part of Paragraph 32(i) – "[S]ituations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development"

1.1.2.1  Illegal Logging

8.          In 2014, 13 delegations shared information on experiences with combatting illegal logging and their efforts to promote legally harvested timber.

9.          At the June meeting, the European Union (EU) presented the measures put in place to promote trade in legally-harvested timber and timber products in the EU market, including the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan. The FLEGT Action Plan aimed, among other things, at developing specific procedures to exclude illegal timber from supply chains. One of the available tools was the development of FLEGT Voluntary Partnership Agreements (VPA) to ensure that only legally harvested timber was imported into the European Union. In this context, the European Union highlighted that capacity building and technical assistance were provided to developing countries. Indonesia provided information on the Timber Legality Verification System (SVLK) aimed at zeroing cases of illegal logging by maintaining a sustainable industry based on the principles of governance, representativeness and credibility, including through the negotiation of a FLEGT VPA with the European Union.

10.      Australia provided an update on the Illegal Logging Prohibition Amendment Regulation 2013 requiring Australian importers and domestic processors of regulated timber and timber products to have a complying due diligence system in place in order to reduce the risk of illegally logged timber entering the Australian market. Ghana described their domestic programme establishing tree growth limits, annual caps and selective harvesting initiatives to address illegal logging. Switzerland informed on nationwide supervision and controls, as well as market transparency mechanisms ensuring the risk of illegal timber harvest was negligible in Switzerland. The United States presented the different means through which illegal logging was being addressed, including the Lacey Act, which prohibits trade and imposes penalties on the purchase and sale of wood products from illegally sourced timber; and the inclusion of specific provisions in regional trade agreements (RTAs). Canada reported on their rigorous and effective supervision of sustainable forest management that provides assurance that Canadian forest products are made from timber originating from legal sources. Canada informed that it supports a risk-based approach to combatting trade in illegally harvested forest products, focusing enforcement efforts on imports from regions where there is a demonstrable risk. Canada indicated that it uses official development assistance to support sustainable forest management and to combat illegal logging internationally. New Zealand informed on the promotion of voluntary industry initiatives.

11.      At the October meeting, China complemented its statement delivered at the June meeting with a presentation on its domestic and international efforts to combat illegal logging, such as the launch of a pilot project on timber legality in selected enterprises, the development of a Chinese forest certification scheme, and bilateral and international cooperation with several WTO Members, and the International Tropical Timber Organization (ITTO). Cameroon presented the various measures adopted to combat illegal logging, including a transparent attribution scheme for exploitation permits, an increase in the number of government staff in charge of monitoring compliance, strict sanctions in case of non-compliance, and the adoption of a FLEGT VPA with the European Union in 2011.

12.      Chinese Taipei reported on the legal framework applicable to producers and consumers of forest products, including a research and development programme in cooperation with the Forest Stewardship Council (FSC). Mexico referred to internal measures adopted to address illegal logging and to their active participation in the United Nations Forum on Forests (UNFF). Chile reported on the legal forestry framework, in particular the requirements to be fulfilled in order to perform any forestry activity. It was highlighted that all logging activities performed in a native forest, no matter the type of soil where the forest is located, must be executed with a Management Plan previously approved by the responsible government agency.

13.      WTO Members in both regular meetings of the CTE welcomed the national experiences in fighting against illegal logging and related trade, which have serious environmental, social and economic impacts. A number of delegations underscored the importance of bilateral, regional and international cooperation to address illegal logging and related trade. Some delegations recalled that illegal logging initiatives should be consistent with WTO disciplines, scientifically based and not constituting unnecessary barriers to trade. Some Members raised concern regarding the implementation costs of some initiatives that could affect market access for developing countries. One delegation underscored the need to provide developing countries with sufficient policy space to manage their own natural resources in line with their development goals and within the framework of shared responsibilities. The need for capacity building in developing countries to improve the enforcement of laws and regulations aimed at combatting illegal logging, and to raise awareness about its associated impacts, was also underscored.

14.      In addition to national experiences, the United Nations Forum on Forests (UNFF) reported on the activities to promote sustainable forest management and strengthen long-term political commitment to this end. The Secretary-General of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) presented the Convention's work related to legal and illegal trade of forest products and other species. At the last Conference of Parties (COP), a significant number of timber species had been listed in the CITES Appendices.

1.1.2.2  Fossil Fuel Subsidy Reform

15.      At the June meeting, New Zealand reported on the key points from a roundtable on fossil fuel subsidy reform jointly hosted by the Friends of Fossil Fuel Subsidy Reform^[5], the United States and the World Bank on 11 April 2014. The event was an opportunity to support reform efforts by providing participants with (1) updates on peer review processes currently under way through the G20 and Asia-Pacific Economic Cooperation (APEC); (2) first-hand accounts from countries about their reform experiences; and (3) briefings from international organisations on the tools and initiatives available to support the reform.

16.      Several delegations welcomed the presentation. Some delegations highlighted that the fossil fuel subsidy peer review was a voluntary process taking place under the G20, without any linkages to the WTO, and were of the view that the CTE was not the appropriate venue to discuss those reforms. Other delegations pointed to the broad CTE mandate and considered such information sharing to be useful.

1.1.2.3  Preventing and removing trade restrictions in the natural gas sector

17.      At the October meeting, Qatar presented on the environmental benefits of preventing and removing trade restrictions on natural gas as a source of clean energy. According to Qatar, the products covered by the seven HS-6 tariff lines encompassing the natural gas sector are still facing important trade barriers, such as high bound and applied tariff rates. Qatar also reported on various projects aimed at enhancing the country's environmental performance. Some delegations expressed the view that reducing barriers to natural gas trade could further environmental protection. One delegation was of the view that the imposition of export restrictions on fossil fuels was not a suitable measure to protect the environment.

1.2  Paragraph 32(iii) – "Labelling requirements for environmental purposes"

18.      At the June meeting, the Organization for Economic Cooperation and Development (OECD) provided an update of their on-going project on environmental labelling, underlining the importance of moving towards internationally recognised standards to tackle the issues associated with the multiplicity of environmental labelling schemes, such as inaccurate claims; systemic favouring of domestic over international producers; and lack of harmonization of domestic regulations regarding particular self-made environmental claims.

19.      Several delegations expressed support for the OECD work and welcomed further discussions on this subject. Several also reiterated their concern regarding the impact of the multiplicity of environmental labelling schemes on market access, especially for developing countries. China shared its experience with environmental labelling and underscored the importance of bilateral and international cooperation agreements in order to avoid restrictions on trade.

1.3  Other Paragraph 32 items

1.3.1  Item 1

"The relationship between the provisions of the multilateral trading system and trade measures for environmental purposes, including those pursuant to multilateral environmental agreements."

20.      Following requests by several delegations, the CTE received at the June meeting an informal presentation by the WTO Secretariat on "Environment-related Case Law under GATT Article XX".

2  Other Business

2.1  Initiative on Environmental Goods Agreement

21.      At the June meeting, Canada reported briefly on the Initiative on Environmental Goods announced at the World Economic Forum (WEF) at Davos in January 2014 and noted that participants in this plurilateral initiative were committed to transparency.^[6]  Canada also noted that any agreement concluded would be implemented once a critical mass of participating members was reached, and would be done on a Most Favoured Nation (MFN) basis.  China underscored the importance to accommodate the concerns of participants with different development levels and avoid the misuse of the environmental concept. At the October meeting, Costa Rica, on behalf of the representative of Australia, provided an update on the progress of the Environmental Goods Agreement negotiations. Following its formal launch on 8 July 2014, two negotiating rounds had been held to discuss the identification of possible environmental products, which would be nominated under an agreed list of environmental product categories. A third round would take place in December 2014. The initiative remained open to other WTO Members similarly committed to liberalization of trade in environmental goods. 

22.      Several delegations welcomed this transparency exercise and further information sharing was encouraged. Several delegations expressed concern regarding the status of the initiative including its possible link to the CTESS negotiations under Paragraph 31 (iii) of the Doha Ministerial Declaration, and noted its genesis outside the WTO and pursuant to a separate mandate. One delegation queried what definition of environmental goods was being used and whether the elimination of non-tariff barriers had been contemplated.  Some delegations expressed concern on the negotiation of plurilateral arrangements and others indicated that any such initiative should include goods of interest to developing countries, in particular biodiverse and organic goods, and that it was important that the results be extended on an MFN basis.

2.2  APEC Environmental Goods List

23.      At the June meeting, China reported on the meeting of the APEC Ministers Responsible for Trade held in May 2014. A stand-alone statement was made on strengthening the multilateral trading system that reaffirmed the commitment to implement the APEC environmental goods list by the end of 2015. APEC leaders also directed Ministers to explore opportunities in the WTO to build on the APEC environmental goods commitment.

2.3  Briefings by observer organizations

2.3.1  International organizations

24.      At the June meeting, the United Nations Conference on Trade and Development (UNCTAD) presented the activities of the UN Forum on Sustainability Standards (UNFSS)^[7], created in 2013 and focusing on private sustainability standards and the role of governments in making such standards work for public policy objectives and sustainable market transformation.

25.      The United Nations Environment Programme (UNEP) presented the decisions adopted at the first United Nations Environmental Assembly (UNEA), held in Nairobi in June 2014. Sixteen decisions and resolutions were adopted to encourage international action on major environmental issues, including sustainable development goals, illegal trade in wildlife, and air pollution. UNEP also reported on the first Partnership for Action on Green Economy (PAGE)^[8] Conference held in Dubai in March 2014. Finally, UNEP informed the CTE on the launch and activities of the Green Growth Knowledge Platform (GGKP)^[9], which aimed at: (i) developing collaborative research committees in charge of identifying and addressing knowledge gaps in green growth theory and practice; (ii) managing knowledge through a dedicated web platform; and (iii) sharing knowledge with practitioners and policymakers through social media and a series of events, conferences, and workshops.

26.      At the October meeting, UNEP provided an update on their latest trade-related activities, including a study on south-south trade of selected environmental goods and country projects on green economy and trade opportunities.  One delegation expressed concerns on the concept of green economy and highlighted that, according to the Rio+20 outcome document, "The Future We Want", there were other approaches for sustainable development and encouraged UNEP to also promote them.

27.      The OECD presented on the recent studies and workshops organized on the increasing number of RTAs with comprehensive environmental provisions. According to a recent survey undertaken by the OECD, one of the main policy drivers behind the decision to include environmental provisions in RTAs was the desire to ensure that the parties would not weaken their environmental regulation to promote trade or attract investment.

28.      The Food and Agriculture Organization of the United Nations (FAO) presented the 2014 report on the State of World Fisheries and Aquaculture (SOFIA). Total world fisheries production had continued to reach new highs in recent years, with fishery products becoming one of the most traded food products. The 2014 SOFIA also underscored the increasing number of fish stocks being overfished as well as the increasing importance of aquaculture.

29.      Some delegations highlighted the importance of the fishery sector in the work of the CTE and the WTO. Several delegations also expressed concerns about the present pace of fish stock depletion and overexploitation, and on the issue of fisheries subsidies. The need to specifically address subsidies granted to large fishing operations and to take into account the special conditions of developing countries was highlighted. One delegation emphasized the importance of artisanal fishing to developing countries and noted the need to address the issues of technical assistance and illegal, unreported and unregulated (IUU) fishing.

2.3.2  Multilateral Environmental Agreements

30.      At the June meeting, CITES reported on their recent activities, in particular a joint programme with ITTO aimed at ensuring the legality, sustainability and traceability of CITES-listed timber products.

31.      At the October meeting, the United Nations Framework Convention on Climate Change (UNFCCC) provided, through videoconference, an update of the current state-of-play of the climate change negotiations, including the UN Climate Summit, held on 23 September 2014. The current roadmap of the negotiations was aimed at reaching a binding agreement at the 2015 COP in Paris. One delegation highlighted its commitment to the adoption of a legally binding international agreement in 2015 that would be applicable to all Parties; and to raising the global level of mitigation ambition before 2020 in accordance with the requirements of science.

32.      The Bolivarian Republic of Venezuela informed on the organization of a social pre-COP to be held in Venezuela, prior to the Lima COP in December 2014, with the aim of bringing together governments, social movements and organizations to discuss how to achieve successful results in 2015.

33.      At the October meeting, the Convention on Biological Diversity (CBD) reported on the recent meetings of the COP to the CBD, Cartagena Protocol on Biosafety and Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of the Benefits Arising from their Utilization. Relevant trade-related activities included: an upcoming analytical study on identifying harmful subsidies for biodiversity that should be eliminated, phased out or reformed; and the adoption of voluntary guidelines on addressing invasive alien species.

2.4  Briefings by the WTO Secretariat on trade and environment issues

34.      At the October meeting, the WTO Secretariat made a presentation on the "Types of Environmental Provisions in Regional Trade Agreements". The CTE was also briefed by the WTO Secretariat on recent developments concerning the Sustainable Development Goals (SDGs).

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Annex 1:  Items of the CTE Work Programme

Item 1:            The relationship between the provisions of the multilateral trading system and trade measures for environmental purposes, including those pursuant to multilateral environmental agreements.

Item 2:            The relationship between environmental policies relevant to trade and environmental measures with significant trade effects and the provisions of the multilateral trading system.

Item 3(a):        The relationship between the provisions of the multilateral trading system and charges and taxes for environmental purposes.

Item 3(b):        The relationship between the provisions of the multilateral trading system and requirements for environmental purposes relating to products, including standards and technical regulations, packaging, labelling and recycling.

Item 4:            The provisions of the multilateral trading system with respect to the transparency of trade measures used for environmental purposes and environmental measures and requirements which have significant trade effects.

Item 5:            The relationship between the dispute settlement mechanisms in the multilateral trading system and those found in multilateral environmental agreements.

Item 6:            The effect of environmental measures on market access, especially in relation to developing countries, in particular to the least developed among them, and environmental benefits of removing trade restrictions and distortions.

Item 7:            The issue of exports of domestically prohibited goods.

Item 8:            The relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights.

Item 9:            The work programme envisaged in the Decision on Trade in Services and the Environment.

Item 10:          Input to the relevant bodies in respect of appropriate arrangements for relations with intergovernmental and non-governmental organizations referred to in Article V of the WTO.

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Annex 2: Parts of the Doha Development Agenda that relate to the work of the CTE Regular

32.  We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda within its current terms of reference, to give particular attention to:

(i) the effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development;

(ii) the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights; and

(iii) labelling requirements for environmental purposes.

Work on these issues should include the identification of any need to clarify relevant WTO rules. The Committee shall report to the Fifth Session of the Ministerial Conference, and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations. The outcome of this work as well as the negotiations carried out under paragraph 31(i) and (ii) shall be compatible with the open and non-discriminatory nature of the multilateral trading system, shall not add to or diminish the rights and obligations of members under existing WTO agreements, in particular the Agreement on the Application of Sanitary and Phytosanitary Measures, nor alter the balance of these rights and obligations, and will take into account the needs of developing and least-developed countries.

33.  We recognize the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the least-developed among them. We also encourage that expertise and experience be shared with members wishing to perform environmental reviews at the national level. A report shall be prepared on these activities for the Fifth Session.

51.  The Committee on Trade and Development and the Committee on Trade and Environment shall, within their respective mandates, each act as a forum to identify and debate developmental and environmental aspects of the negotiations, in order to help achieve the objective of having sustainable development appropriately reflected.

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