REPORT (2023) OF THE COMMITTEE ON TRADE AND ENVIRONMENT

In 2023, the Committee on Trade and Environment in Regular Session (CTE) held three meetings: a first formal meeting on 14 and 15 March^[1], under the Chairmanship of the Ambassador of the United Kingdom, Mr Simon Manley; a second formal meeting on 12 June[2] and a third formal meeting on 13-14 and 16 November[3] under the Chairmanship of the Ambassador of Ecuador, Mr José Valencia. From 12 to 16 June 2023, the CTE held its fourth Environmental Week. All meetings were hosted both in person and virtually.

The work of the CTE was organized in accordance with the mandate established by the Doha Ministerial Declaration, Paragraphs 32, 33 and 51, inclusive of the 10 items of the CTE Work Programme.^[4] In this context, discussions took place on a wide range of issues outlined below.

1  Environmental measures and market access[5]

1.1  Trade aspects of the European Green Deal

1.1.  At the March meeting, the European Union (EU) provided an update on two legislative proposals: Carbon Border Adjustment Mechanism (CBAM) and Deforestation. The EU also briefed delegations on key features of the European Commission's proposal for a regulation on packaging and packaging waste which included rules on prevention, reuse, recyclability, and compostability. Importers had to ensure compliance with the necessary requirements. Several Members shared their concerns on the implementation of the regulations, requesting the EU to better consider economic, social, and environmental conditions and particular needs of developing countries and LDCs. Several Members suggested that there is a need to respect the United Nations Framework Convention on Climate Change (UNFCCC) Principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC), and to comply with WTO rules.

1.2.  At the June meeting, the European Union briefed delegations on the key features of two European Green Deal proposals on empowering consumers for the green transition. The first proposal aimed to protect consumers and companies from the misleading practice of unclear or poorly substantiated environmental claims ("greenwashing"). Applying only to voluntary claims made by businesses to consumers, it introduced a requirement for independent and accredited verifiers to conduct an ex-ante verification that the environmental claim or label complied with the requirements. The second proposal pursued the objective of promoting the repair and sustainable consumption of goods. Several Members shared their concerns on the trade implications that the two proposals could have on the EU's trading partners and posed some technical questions. Some Members also referred to the importance of addressing greenwashing. While supporting discussions of underlying policy objectives and choices with respect to environmental concerns, one Member noted that such discussions should not replace notification or deliberation in other relevant WTO committees, which have the mandate to discuss specific trade concerns.

1.3.  At the November meeting, the European Union briefed delegations on key features of its proposal to revise the Waste Framework Directive. The revision aimed to deliver more circular and sustainable management of textile waste and clarified the definitions of waste and reusable textiles. This would ensure that textile waste was only exported in the presence of guarantees that the waste was managed in an environmentally sound manner. In addition, the EU provided information on the environmental aspects of the proposal for a Corporate Sustainability Due Diligence Directive. Amongst others, the Directive aimed to anchor environmental considerations in companies' operations and corporate governance. Finally, the EU provided an overview of the Implementing Regulation on the reporting obligations during the transitional period of the CBAM in light of its recent entry into force. Several Members supported discussions, and welcomed the EU engagement both in the WTO and bilaterally on these matters. Several delegations expressed concerns about the adoption of unilateral measures, the impact that compliance with the measures would have on exporters, and their WTO compatibility.

1.2  India's concerns on the use of environment measures as non-tariff measures

1.4.  At the March meeting, India presented its paper on India's concerns on the use of environment measures as non-tariff measures.[6] It claimed there is an increasing use of unilateral measures impacting trade which were justified as environmental measures, with potential inconsistencies with the WTO rules and the undermining of the multilateral agreements. India also underlined the importance to follow the foundational UNFCCC principles of equity and CBDR-RC in the adoption of carbon border measures, minimum residual limits in agriculture trade, and tariff rate quotas based on the green content of commodities. Several delegations shared India's concerns about the application of unilateral measures, reflecting increasing trade costs for exporters. A few delegations considered that there was a growing trend to use the climate agenda to promote purely economic interests through protectionist measures. Others noted that principles from outside the WTO could not be automatically applied to discussions within the WTO, and that Members were allowed to take WTO-consistent domestic actions to address climate change, provided they do not unjustifiably and arbitrarily discriminate amongst Members or constitute disguised restrictions on trade.

1.3  The effect of Environmental Measures on market access, especially in relation to developing countries

1.5.  At the November meeting, Argentina shared its views on 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. It referred to the procedural need for the CTE, in line with its original mandate, to actively debate the impact on market access of environmental measures and proposed to include this issue as a standing item on the CTE, for approval at MC13. Several delegations welcomed Argentina's proposal. One delegation sought clarification on the necessity to institutionalize the item on the agenda and preferred for the issue to be raised at Members' request.  

1.4  UK's updates on due diligence legislation and global carbon leakage risks and approaches

1.6.  At the March meeting, the United Kingdom (UK) provided an update on its due diligence legislation which seeks to make supply chains more sustainable. The forthcoming regulations would make it illegal for larger businesses operating in the United Kingdom to use key forest risk commodities produced on land used illegally in violation of respective national laws. This emphasized the United Kingdom's aim to work with and in support of enforcement frameworks of respective countries, and not to impose UK standards on others.

1.7.  The United Kingdom also provided an update on global carbon leakage risks and policy approaches. It stood behind international solutions to carbon leakage and was preparing to launch a consultation open to international partners to explore a range of possible policy options to mitigate carbon leakage risk. This included voluntary and mandatory product standards, labelling and procurement measures, and potential carbon border adjustment mechanisms. Several Members supported information sharing on the topic of carbon leakage.

1.5  Recent developments on the Global Biofuels Alliance

1.8.  At the November meeting, Brazil, India and the United States provided information on the Global Biofuels Alliance (GBA). Brazil outlined three main courses of action to increase uptake in biofuels, including capacity building and technical support to developing markets; fostering collaboration in biofuels technology; and a shared understanding on performance-based sustainability assessment and other standards for more accurate reporting of greenhouse gas emissions. It noted that international trade was critical in enabling a level of scale that would make biofuels economically viable, and the WTO has the critical mass to promote global cooperation. India added that the GBA was launched during the G20 Leaders' Summit under India's G20 presidency and intended to be a catalytic platform to foster knowledge sharing and widespread use of biofuels. India also mentioned that 19 countries and 12 international organizations were part of the initiative at the launch. The United States highlighted that biofuels remained important in the deployment of cleaner, greener fuels which can be deployed at scale to meet climate goals while spurring domestic growth and sustainable development goals of Members. Biofuels also complemented domestic energy production and supported energy security through having diversified supply chains.