Trade and the environment towards a sustainable playing field : a report from the Swedish Environmental Advisory Council

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ENVIKÖNYENTAL

ADVISORY COUNCIL

TRADE

AND THE

ENVIRONMENT

towards a sustainable playing field

-

A repori from The Swedish Environmental Advisory Council

W m SWCdlSh t Government Officialt Reports

1994:76 @ Ministry of the Environment and Natural Resources

Trade and the Environment

towards

sustainable playing

a field -

A report from

the Swedish Environmental

Advisory Council

Stockholm 1994

This report may be ordered from Fritzes which publishes official government reports and departmental series SOU and Ds.

Address: Fritzes Customer Services S-106 47 Stockholm Sweden Phone: +46-8-690 90 90 Telefax: +46-8-20 50 21

This report has also been published a Swedish version SOU 1993:79: HANDEL OCH MILJÖ hållbar spelplan L - mot en

Translation: Lucy Loerzer, Kendal von Sydow and Bill Harris, Stockholm School of Economics

Cover illustration: Lars-Erik Håkansson

NORSTEDTS TRYCKERI AB Stockholm 1994

Foreword

When working with environment issues, becomes clear that great deal of a energy must be focused the relation between on economics and ecology. vital that concern for the environment recognized in frameworks for international trade. So far, this has been neglected a area. In the 1993-94 Budget bill, the Swedish Government stated that the environmental debt must not be allowed to increase. Measures to achieve the objective of ensuring sustainable development therefore are a significant component of Swedish economic policy. The limits the carrying to capacity of the earth and the ability of the environment to absorb without waste damage have already been reached. The parallel to the state budget deficit

a simple one: insufficient finances drain capital. represent a on essential to establish accurate basis for evaluation of welfare an and to set appropriate frameworks for trade policy.

The authors of this report have different backgrounds: the worlds of

research, business and the Swedish Cabinet. They are responsible for the

content of this report. The collected and integrated ecological economic view they present lays foundation for the important a task of creating a sustainable playing field for the environment and world trade.

Olof Johansson

Swedens Minister of the Environment

Of the å Environmental z Advisory Council

Gunnel Hedman

Head of Division

Trade and the environment -towards a sustainable playing field

Table of Contents

Foreword Authors’ Foreword 5 Introduction 7

Chapter l

Life Support Systems the Foundation for

as 13 International Trade

Chapter 2 Economic Analysis of Trade and the Environment 51 i

environmental problems

Trade and the environment towards a sustainable playing field -

Chapter 3

Trade Regulations the Institutional Framework 85

— and Actual Conditions

Chapter 4

The New Playing Field Towards Sustainable 121

-

Development

Fact Sheet Environmental technology — a growth area for the 1990’s 25 Fact Sheet 2. Environmental effects of transportation 48 Fact Sheet The foundations of trade theory 53 Fact Sheet 4. Environmental dumping and

Authors’

preface

Recent decades have seen a dramatic increase in human impact the on Earth’s nature and environment and there little to suggest that any improvement in sight. There few signs that the destruction are of our environment being kept in check, little cause for optimism about the global situation. On the contrary, most research findings suggest that the state of the environment will continue to deteriorate.

A European study has shown that the five billion inhabitants of our Earth were to consume materials, and minerals raw energy, water at the same rate as the average European doing at the moment, we would face an immediate need for two additional planets. Considering that the global population likely to exceed ten billion within the half lifetime, next this fact in itself provides food for serious thought. As populations and economies grow, the global life pressure on our support systems such as the atmosphere, the oceans, the coastal and the forests will increase, areas and there are few mechanisms in place today to deal with these growing problems.

What part does trade play in all this Should sweeping restrictions be imposed on trade in order to protect the environment Or would the environment benefit from free trade, the individual in position were a to influence the market and shoulder responsibility by choosing environmnent-friendly products Does one country bear responsibility for any environmental degradation which be caused when the may commodities produces are bought and used elsewhere

The following contain these pages no easy answers to questions. We hope, however, that provide the reader with we can a combined ecological and economic view of the links between the environment and trade, and thereby help to develop a cleared idea of how future trade and environmental policies should be formulated. By adopting an integrated approach, principles for socio-economic development could be drawn up so that the various players in society can manage the available resources in the best possible manner, providing sustainable platform a for mankind to use the Earths natural systems without destroying them.

We have also endeavoured identify the to conditions under which international trade could contribute to ecologically sustainable economic development, and have proposed certain changes in current regulations for international trade that would promote such a course.

We make claims regarding the comprehensiveness of our analysis in no this wide-ranging and complicated area. We do, however, hope that this book will promote understanding of issues which will play a crucial role in future trade and environment policies.

Chapter 1 has mainly been written by Carl Folke, Chapter 2 by Thomas Andersson and Chapter 3 by Stefan Nyström. Gunnel Nycander has contributed to the report and served as technical editor.

This preliminary version and we would therefore appreciate any a comments and suggestions.

Stockholm, May 1994

The authors

Thomas Andersson, associate professor, Industrial Institute for Economic and Social Research Carl Folke, member of the Swedish Environmental Council, associate professor, Beijer Institute, Royal Swedish Academy of Sciences Stefan Nyström, Senior Administrative Officer, Ministry of the Environment and Natural Resources Gunnel Nycander, Bachelor of Social Science, Beijer Institute

Trade and the environment towards a sustainable playing field ——

Introduction

Why trade and the environment

At the end of the 1980s and the beginning of the l990s, international interest in the linkage between trade and the environment mounted significantly. A major contributing factor to interest the trade-environment issue was a conflict between the USA and Mexico on American trade restrictions over Mexican exports of tuna. The USA placed embargo an on import of Mexican tuna 1990, as Mexico considered to be taking was insufficient precautions to prevent the accidental catching of dolphins. Mexico protested against this measure, claiming that the USA-irnposed restrictions were not compatible either with international law with the or GATT rules. This particular incident only the tip of the iceberg. International industry, as well as a growing body of public opinion concerned with the health of the environment, demanding new measures against countries which are considered to behave environmentally irresponsibly. Several EU countries have, for example, discussed trade restrictions against imports of tropical timber. In Sweden, import restrictions regarding the blue-firmed tuna, a species threatened with extinction, have been debated. There are a variety of reasons as to why trade and the environment to be appear increasingly intertwined; a number of them will be presented this chapter.

Different actors’ perceptions of the problem

Some environmentalists regard trade itself as the root of the environmental problem. This belief has led to a desire to impose far-reaching restrictions against imports of, for example, goods which are regarded as having been produced under environmentally damaging production technology. The ethics of methods used breeding or capturing certain animals have also led to demands for import restrictions.

Trade and the environment towards a sustainable playing field ——

Business interests some countries advocate measures against the import of goods produced at a lower cost due to inferior environmental standards in other countries. A tendency towards traditional protectionism quite often the real reason behind this argument for enviromnental protection, i.e. measures taken to favour indigenous industry relation to foreign competitors. Environmental measures affecting goods produced the home country are generally met with scepticism by industry, which protests that

such measures will cause a decrease employment and the companys

eventual relocation to another country due to the high costs of to measures protect the environment. Trade experts are primarily concerned that the liberalization which has occurred during the last 40 years, largely as part of the GATT rules, will be undemrined by environmental measures which will turn lead to worlda wide reduction the free flow of goods. One of the additional aims of trade policies a desire for harmonization of regulations. This goal less likely to be realized due to the different environmental conditions, sensitivities and needs different countries. In developing countries has increased the face of concern comprehensive demands for product information, not least when to comes packaging. A swarm of symbols such falcons, angels, as swans, evergreens, dandelions and green dots are appearing more and more on packages and products as a marketing prerequisite for industrial economy markets. Less developed countries regard this trend as a new form of protectionism, since they have difficulty both obtaining information on such classification systems and in fulfilling the demands.

Trends within the environmental area

Manufactured goods have an increasing influence on the environment.

Many of the environmental problems which were identified during the 1960s and 70s, above all emissions from large, point sources, are at least partially on the way to being solved industrialized countries. For many example, Sweden reduced emissions from the 1,000 largest sources by 70 cent during the 1970s and 80s.1 At the time, enviromnental per same new problems are appearing, which are oflen connected to the of array new products constantly being developed and marketed. In pace with increasing consumption of goods, environmental problems connected to either the utilization of consumer goods or the disposal of used items are growing. Many goods contain environmental risks, the form of direct or delayed emission of harmful substances. There therefore, an increasing need for efforts directed towards adapting products to the

Trade and the environment- towards a sustainable playing field

ecological cycle through recycling, re-utilization of material and the efficient use of both energy and materials. Within environmental policy-making, demands consequently being are made today which have a more direct efiect trade with other countries on than measures against large point emissions, which generally only source have an eñect on manufacturing processes the home country. Measures regulating the environmental elTects of goods also influence consumer foreign producers. Transboundary environmental problems. Attention has shified from local environmental issues to regional and global problems. More diffuse and elusive challenges such depletion of the layer, the greenhouse as ozone efi°ect and threats to biological diversity, replacing local environmental are concerns previously symbolized by filthy sewers and stinking smokestacks.

Trends within trade

The volume of international trade expanding. During this the

century, volume of international trade has quickly than international grown more production. Different countries economies intertwined and are ever more mutually interdependent. A country which trades with other countries becomes dependent on their production systems and patterns of consumption. This type of trade results the different countries influencing each others’ economies. Trade especially important for small, open countries such as Sweden.

The overall picture

The sum of these trends the recurring tendency within trade and environmental policies for measures one sector to have marked effect a the other area.

Trade and the environment towards a sustainable playing field —

Environmental Policy

Figure Trade and environmental policies increasingly overlap one another, as shown the illustration.

International cooperation

Knowledge of the increased reciprocal effects of trade and environmental policies has resulted the start of comprehensive work several international forums with the explicit aim of further exploring this relationship. Since the autumn of 1990, trade and environmental policy experts in the OECD have been working side side to create mutual understanding between the two groups. One of their goals to identify potential problem areas and create an information base which can be utilized during the coming GATT negotiations. The group has established specific guidelines for trade and environmental policy, with the aim of avoiding problems and conflicts. a Communiqué from the OECD annual meeting between trade and finance ministers June 1993, the groups goal was clearly stated: to create an analytical foundation for the coming negotiations on trade regulations other international forums. Since the autumn of 1991, a technical group has been working trade on and environment issues within the GATT. The has specific agenda 2 group a and, within the framework of its work, offers GATT member countries an

Trade and the environment -towards a sustainable playing field

opportunity to exchange views and present up-to-date analysis related to trade and environmental policy. UNCTAD works with a variety of questions on trade and the environment. Continually growing interest the subject can also be observed at universities and within environmental organizations throughout the world.

Brief summary of contents

Chapter Life support systems as the foundation for international trade.

The importance of the ecological system as the basis for all economic activities discussed in the first chapter. The role of the environment and the ecological services provides are presented, as well as societys dependence on them. Environmental values from the economic theory perspective are briefly presented. In addition, economic growth, technological developments and the environment are discussed, and an ecological-economic synthesis presented. This followed by a description of international trade from the natural resource and environmental viewpoint. The significance of production and consumption patterns, societys carrying capacity, transportation and various driving forces in relation to increased internationalization are some of the themes explored. The overall goal a society which develops within the framework of functioning life-support systems, and where trade makes a positive contribution this direction.

Chapter Economic analysis of trade and the environment.

Economics the theory of how scarce resources can be used to the greatest advantage. The environment can be included within the definition of resources a resource which becomes more limited as degradation — increases. In extreme terms, economics about seeking the means to achieve certain goals, for example, to increase welfare. Therefore, the role of economics to assist finding suitable means to shape international trade so that results sustainable development. First, a short introduction to basic trade theory presented. The chapter then examines whether all countries should have the same environmental protection regulations. Further, the arguments for introduction of trade

barriers under various conditions environmental effects due to consumption production, local global environmental effects are explored. Finally,

or or the theoretical results in relation to the opportunities and risks posed by political reality are discussed.

ll

Trade and the environment towards a sustainable playing field -—

Chapter Trade regulations the institutional framework and actual — conditions. This chapter begins with an exploration of the concept of flee trade, followed by an overview of the ground rules for international trade outlined by the GATT, and also by the EU and NAFTA. In particular, the available

opportunities for allowing enviromnental protection which will

measures

affect trade to take precedence general trade regulations, and

over more what most likely to happen of conflict, examined and case are described. The growth of free trade relation to enviromnental policies then discussed general tenns. Finally, with this analysis as a departure point, the directions discussed are which trade restrictions should be developed order realize the to measures needed to achieve ecologically sustainable economic development while at the same time retaining stable and respected regulations for international trade.

Chapter The new playing field —towards sustainable development. The final chapter summarizes the prerequisites for sustainable development. A number of ground rules which should be observed order for trade to contribute to this development are presented. The need stressed for the market to receive signals regarding actual environmental values and costs, which are ofien invisible today. The significance of improved international cooperation also emphasized. the interests of both trade and environmental policies to as soon as possible formulate regulation of trade which will hasten towards sustainable development. Finally, progress sixteen conclusions are presented.

Trade and the environment towards a sustainable playing field ——

Chapter

Life

Support Systems

as the Foundation

for International Trade

Should society prioritize measures against environmental damage Should we not put our own economic house order before we can afford to care about nature and the environment This type of question still quite common and reflects how the development of society has mentally distanced us from our unavoidable dependence on functioning and healthy ecosystems. The dependence of our society and its welfare on life support systems will be described this chapter. This followed discussion of economic a growth and the environment and their relation to production, consumption and environmental technology. The next section explores the economic efficiency of society, the economic valuation of nature and the environment, and the role of functioning increasingly The ecosystems as scarce resources. section ends with an ecological-economic synthesis for sustainable development. The last part of the chapter offers analysis of the role of an trade relation to, among other things, ecological limitations, vulnerability, transportation and technical development.

Life support systems prerequisite for welfare

—— a

Humankind has, especially during the last century, lived with the belief that we are above nature, with the ability to decide what value nature has, any. In cities and industrial societies there little evidence of our day-to-day dependency on nature. When problems with natural and the resources environment occur, we turn towards our wealth of inventions and technical development. Nature and the environment are treated something outside as society, which can be replaced by technology. Fortunately, this attitude changing, even though the quite slow pace many areas: fortunately, because life support systems are the basis of, and a prerequisite for, our general welfare. Human beings are dependent and on a part of the ecological cycle, whether we recognize not. In reality, or

Trade and the environment towards a sustainable playing field ——

not only the environment which saved when society strives towards sustainable development, but also present and future generations of human beings. There are signs which indicate that the old world view, regarding humanity as above and independent of nature, changing. Peoples understanding growing, whether they are fiom the North, South, East or West; are we realizing we are merely sub-system of the global ecosystem the a —

biosphere3. The survival of the human sub-system dependent the

on functioning of the overall system.

SOLAR ENERGY ECOLOGICAL SYSTEM

ECOLOGICAL SERVICES K ‘A NATURAL RESOURCES DEGRADE RESOURCES K 1 z ENERGÖ ECONOMIC SYSTEM

2:fbi’Ts§fq‘|-AR DEGRADED

AL K X ENERGY ENERGY POLLUTION

Figure The socio-economy a sub—section of the ecosphere and needs energy, natural resources and ecological services in order to function. Ecological services are generated by species functioning synergy within their particular environment; they supply a basic production factor for the socio~economy.

Human beings need energy, natural resources and sustenance from the ecosystem on a daily basis order for society and the to economy function.4 Without natural possible for machines, resources not the cars and technologies which have been developed to be built.5 We require food, air and water to live. Nature cannot be entirely replaced and mankind carmot fully substitute its dependency the life-support on

environment. Natural capital6 will always be needed, and human beings

will always be dependent on Therefore, we must conserve, rather than use

up, this capital.7

Trade and the environment towards a sustainable playing field -

Life-supporting ecosystems and ecological services

The life-supporting environment that part of the earth which supplies the biophysical preconditions we need order to survive: water, air, food, other types of energy and mineral nutrients. The earths species closely many are intertwined with their respective environments an eternal cycle of time and space which also contributes to providing the preconditions essential for life itself, including human life. This constitutes natures support for society and its economy; sustained by the ecosystems: species interacting and evolving with their environment. The ecosystems produce renewable resources such as fish, crops, trees, drinking water and so on. They provide society with a variety of ecological services, for example the circulation of nutrients essential to agriculture, forestry and fishing. The ecosystems create fertile fields, pollinates crops, produce nourishment from the sea, maintain genetic diversity and the quality of the atmosphere, provide pure air to breathe and water to drink. The ecosystems are in charge of‘ the crucial water cycle, and transform and also utilize part of the waste produced by society. Furthermore, all these functions and processes within the ecosystems occur a way which creates the basis for humankind’s recreation and enjoyment of the environment. The ecosystems’ dynamic structure forms the requirements for life support systems for society. Without functioning ecosystems, neither renewable resources nor ecological services would be generated. If soil acidification negatively affects the basic compounds required for flora and fauna, the ecosystem‘s ability to renew itself and create new structures which will generate renewable resources and ecological services dramatically reduced. The production of environmental goods and services other words, dependent upon a functioning and healthy ecosystem. The importance of the ecosystems to social welfare rarely included financial or developmental discussions. Only negligible proportion of the a renewable resources and ecological services appreciated and an even lower proportion considered have economic value3

to an see 27.

Environmental debates are often more concerned that fish being are poisoned and trees are suffering from acid rain than that the basic carrying capacity of the ecosystem to support society has been seriously undennined. This situation serious, since society cannot function without healthy

ecosystems. Despite our sophisticated societies, humans remain biological

creatures who are undeniably just a part of the whole ecological puzzle. Life support systems and ecological services are needed for a functioning society, and cannot be completely exchanged for capital or machines. On the contrary, they are two elements which are absolutely necessary for continued positive development of human society.

Trade and the environment towards a sustainable playing field —

Ecological boundaries and societys carrying capacity

Ecological bio-physical carrying capacity marks the maximal population size which can be maintained by nature with a given technology within a specific area. Societal carrying capacity the maximal population size which can be supported given the different societal systems. In order to be able to discuss sustainable development, societal carrying

capacity must stay within ecological carrying capacity.9 This not to

say that ecological carrying capacity static or absolute but rather that a society which degrades the ecosystem moves closer to the ecological boundaries

and therefore reduces the potential for societys economic development.

Carrying capacity not a static concept since ecological as well as human systems are constantly evolving. not possible to prevent them from changing. possible, however, to harm them, and that leads to irrevocable changes natures ability to sustain our society with ecological goods and services then the choices available to our generation as well as future generations have been distinctly restricted. The challenge lies instead improving our handling of the systems resilience, that to say, ability to renew itself after unforeseen disturbances, to absorb them, and to adapt itself changing situation.10 The goal should be retain flexibility and to a to the fieedom of choice to choose new paths of development in both the ecosystem and society.

How society uses resources and the limits of expansion

Production and consumption are often handled quite ineflectively today. Natural resources are pumped into one end of society and goods are produced. The goods are utilized for shorter or longer periods of time and then discarded at the other end as waste. This process characterized by resources being collected from vast

ecosystem areas, often outside the country question see page 38 on shadow areas and concentrated within cities and industries. The

concentration of resources a limited area creates a situation where the surrounding ecosystems are not able to efficiently process the resulting pollution and waste products. Combined with the use of fossil fuel to run the infrastructure for industry and urbanization, this has led plethora of to a environmental problems. The availability of inexpensive industrial energy, especially fossil fuels, has created this throughput—based, and oflen wasteful production system

which lacks any connections to its life support ecosystem. The that

way natural resources and fossil fuel have been used has caused severe environmental problems, rather than the fact that they are used at all. History shows that more and more industrial energy, natural resources and

Trade and the environment towards a sustainable playing field —

ecosystems are needed in order to extract natural of increasingly resources lower quality. This has led deterioration of the natural environment. to a Even more industrial energy and natural resources are required to balance the 12 out process. Developments intensive agriculture, fishing and the timber industry are examples of this phenomenon. Soil erosion compensated for in variety a of ways, such as the of artificial fertilizer produced using fossil fuel. use Decreasing fish populations are compensated for by the of larger boats use which cover larger areas of the ocean, and which powered and produced are with fossil fuels. In many cases fish populations are heavily exploited, which results in consequences for other economic sectors. Acidification has made necessary to doctor the forests with products manufactured using fossil fuel. Therefore technical advancement in itself guarantee for no a more intelligent and effective utilization of natural However, given the resources. right signals, technical development can be the key needed to guide society the right direction. At an earlier point time, expansion of national economies not was limited, since their size was small comparison to the global ecosystems size and buffer capacity. Local environmental problems but arose, were often solved by techniques which simply moved them to other areas or other countries higher smokestacks, extended pipe systems and transportation of waste. This method delays the solving of the problem at hand and leaves

the lap of future generations the collecting of from

sludge

sewage

treatment plants, eutrofication, acidification, etc.1 A technical

development which freed societal developments from local ecological limits and natural variations the ecosystem dominated. Scope for developing such technologies was an important limiting factor for national economies. Today, the state of the ecosystems increasingly important for societal development and well-fimctioning life support systems become an even more limiting factor. This partially due to the population explosion but also due to the fact that utilization of the earths has increased resources enormously Figure 3, without active method of revitalization any or recycling. the population explosion, the increase of the scale of human activities and, above all, the way which these two factors have relation to grown the base of ecological which together have led to natural capital resources, being increasingly regarded as a scarce resource for societys continued development Figure 4. The longer takes for to recognize this, the us more difficult becomes to turn around the whole greatly process, increasing the risk for catastrophic results. We have begun to reach the limits of how much of our activities the global ecosystem can handle, which reflected in such things as: changing climate, depletion of the layer ozone and other serious environmental threats. Human beings alone utilize 40 per

Trade and the environment towards a sustainable playing field -

cent of the land ecosystems life-supporting ability today15 and the world

population expected to double in approximately thirty years15. Bearing

these factors mind, obvious that we must take good care of our own life support systems order to sustain our own existence; we should use them but not abuse them.

billion inhabitants U Esnmauons . . —9 .by UN m .n I 9 I 8 I

7 l I 5 l 1990 —- S

Industrial 4 revolution

3 Black death 2 Rise of Fall of Fa of the Sumelian [he Roman the Sumerian civilisation E‘°e4, 1 civilisation z 4, 0 Ål £1000 1000 0 1000 2000 SGI] 301 Xifi

B.C. AD-

Figure The population explosion. human beings are to be prevented from draining the earths resources then a material standard equal to the present-day Western standard available for 500 million people. Today close to a billion already have that standard and there are 5 billion people to share the worlds resources.l7

Source: Pezzey, 1992. Sustainability. Environmental Values 1:321- 362.

Trade and the environment towards a sustainable playing field -

SOLAR ECOLOGICAL SYSTEM ENERGY K ECOLOGICALSERVICES‘ ‘K ,N

NATURAL SOCIOECONOMIC DEGRADED RESOUR- SYSTEM RESOUR- CES css

:p POPU LATION : Eugglécl-5

AN D DIRECT DEGRADED

ENERGY

Figure Population growth, expansion of human activities, and above all how they behave towards the ecological resource base, have led to a situation where natures ability to provide society with natural resources and ecological services increasingly restricts the development of society.

Growth and the environment

An example of the above reasoning how strongly rooted the view that economic growth a goal itself Western culture, without regard to how this growth achieved. From this perspective, free trade regarded as postive, since leads to economic growth and the achievement of other economical goals, including a healthy environment. An example of this Principal 12 of the Rio Declaration, stating: States should cooperate to promote a supportive and open international economic system that would

Trade and the environment -towards a sustainable playing field

lead to economic growth and sustainable development all countries, to better address the problems of environmental degradation. The linkage between growth and the enviromnent can be seen from the perspective of differing Characteristics of individual environmental problems. The development which we have seen indicates that point emissions tend to decrease as income rises but that diffuse emissions increase under the same

circumstances see Figure 5.

Environmental degradation

...Poverty... ...Middle-income... ...Wealth.

Deficient sanitary C°°°ti"" Amour

conditions sulphur dioxide in of waste

city air

10° 100 100 60 60 60

0 income,

ädla

100 1000 10.000 100 1000 10.000 100 1000 10000 og. scale

.Particle.content CW d‘°X‘d°

Deforestation % 1 city a % emissions % 100 100 100 60 50 60 20 20 20 income 0 ° 0 dollars 100 1000 10.000 100 1000 10.000 100 1000 10.000 log. scale

Figure How environmental problems evolve relation to increasing income. The problems are transferred from a local to a regional level, and eventually become global.

Source: The Economist, May 30, 1992.

Trade and the environment towards a sustainable playing field -

Local environmental problems, such disposal urban as sewage areas or toxic discharge into lakes ofien decrease the populations income as increases. Apparently, regional problems like sulphur emissions increase along with the populations income but arrive at a breaking point when incomes reach a certain level, approximately equal to $5,000-5,500 per capita per After they reach that level the regional problems start to

decrease.1 8year.

This can be interpreted of rising incomes creating the as a case possiblities to invest effective technology which pollutes less. more One example of global pollution the emission of carbon dioxide. This problem has also been analyzed using the same factors; the breaking point was found to be approximately $5,000. However, this analysis only concerns pollution per capital unit. In this the sharp rise in production case,

an overall scale increase overtook the reduction pollution which the

was result of more resource-efficient technical development. Using technological advancement as the point of departure, further analysis completed using was

data from 109 countries from 1960-87. estimated that annual

was income per capita would have to reach $80 million for carbon dioxide emission to begin to decrease.19 Naturally, the result unreasonable but illustrates that the total carbon dioxide emission to increase seems exponentially relation to increasing incomes despite technological advancements. seems that many technological achievements have not compensated for the increasing pollution which has proceeded increased income capita. per Despite the technological improvements that have been implemented and the decrease of annual European sulphur emissions, emissions over most of Europe are greater than can be absorbed by the soils. Acidification these continues.20 One explanation areas that the technical improvements which have been achieved and the infrastructure within which they fimction are based upon the use of fossil fuels. Economic growth built the increased utilization of natural upon resources and continued deterioration of life support systems cannot be combined with long—term sustainable development. The need for type of a new infrastructure obvious. Society must establish infrastructure which also an reduces diffirse emissions and develops opportunities for ecocyclical an society. This means that production and consumption will have to be more

and more integrated with the ecosystems’ See 22.

processes. page economic growth to remain line with environmental protection, must be based on quality improvement rather than throughput-based on production and consumption. Improving quality other things, means, among that economic development based effective utilization of natural on a more when goods and services produced and consumed.21 resources are Economic growth must also be measured such that takes all these a way factors into account.

Trade and the environment -towards a sustainable playing field

This does not mean that the development of human societies and economies should be constrained. does mean that irreversible changes the ecosystem as a result of production and consumption should be avoided. Such changes can cause a reduction the ability of society and its environment to absorb and buffer disturbances, and the ability to recover may be lost. The conventional attitude towards growth and the way that growth measured today only takes one part of the world situation into account. Economic growth can be a way to increase welfare but not a guarantee, itself, for an improvement welfare. T0 develop society and its resource base towards sustainability involves not only an ethical or moral responsibility towards our fellow human beings and future generations. If we destroy the ecological system we are dependent upon, then we destroy our own chances for well-being and advancement. Caring about the Earth and its life therefore directly interests. support systems our

Environmental technology of the future

Technological development plays a decisive role regarding opportunities to actively re-use and recycle natural resources and develop a sustainable society. The challenge of technology lies the ability to build future products and production processes at a high level of quality, to create recyclable or re-usable products which are manufactured using energyefficient processes. Perhaps the biggest challenge to develop renewable energy sources to replace fossil fuel, which the most significant contributor to such complex environmental problems as acidification and climate changes. Sweden has started the move towards an ecocyclic society by, for instance, reducing and many cases stopping altogether the use of poisons and hazardous Chemicals. The next logical step would be to actively

connect production and consumption pattems to ecocycles.25 A

our resource-effective ecocyclic society a way of working with, rather than against, ecological processes and flows. also more tune with sustainable economic and environmental development. The goal to conserve rather than to use up natural capital. To respect ecological limits and thresholds and develop an economically efficient approach which works correspondence with natural rhythms a diflicult but essential task. A first step to move away from the type of production and consumption which quite obviously environmentally damaging and reduces the capacity of ecosystems to support society. The advancement of environmental technology therefore of the utmost importance. The direction of such technology has changed course over time, partly as a reflection of the

Trade and the environment—towards a sustainable playing field

changing face of environmental problems. The development of environmental technology can be roughly divided into the following areas:

Chimney filters and other end-of-pipe solutions which reduce point emissions. Input management: examine how resources are utilized; from raw material to waste; reduce the use of chemicals and poisonous materials the manufacturing process which results more energy— and resource-effective production processes. Recycling of products. This further reduces both point emissions and diffuse emissions, assuming that recycling not based on an increased use of fossil fuel and non-renewable natural resources. Ecocycles and integration with the processes of the ecosystem. Both point emissions and diffuse emissions are reduced since waste regarded as resources which have simply ended up in the wrong place. These resources are used to generate new products cooperation with the ecosystem.

The ñrst two groups listed above are based on fairly conventional methods of industrial thinking. Recycling, and above all a cycle which works harmony with the ecosystem, a relatively new way for industrial society to use the environment without degrading This called ecological technology and an example of how society can take the challenge of actively connecting and consumption cooperation with the

ecosystems froduction 6 One example the restoration of wetlands collect

support. to and purify from nitrogen and pollution from agricultural areas. water Another example breeding fish an ecocyclical system as a part of

agriculture and industry, instead of on a throughput based system.

Products resulting from ecological agriculture which are increasingly sold markets throughout Sweden yet another example. Knowledge of this are type of technological advancement available in many developing

countries and be of great service to the development of modern

can ecological technology.

Local, international or global environmental problems

In public debate, only a few environmental problems, even they are serious, are considered international and global. Most of the problems are regarded as local and, according to international law, are the problem of the

people who live the respective country see page 95. We believe,

however, that many more effects of pollution than those focus today should be regarded as crossing national boundaries and the long tenn even

Trade and the environment towards a sustainable playing field -

as being global problems. The fact that they are today considered local as mainly due to a lack of knowledge and understanding, of since ecosystems they are interlinked. A disturbance ecosystem which one occurs once or relatively minor scale often has limited effect that a very on ecosystem. The effects are then slight local and temporary. But the or same disturbance occurs repeatedly and often, that certain more to say a development trend shared by and players, then its influence more more can spread to a regional system and eventually to the global The ecosystem. greenhouse effect, depletion of the ozone layer and acidification all wellare known examples. important to remember that just few decades a ago these problems were not included the ecological agenda serious on as problems. Figuratively speaking, created which waves are are then transmitted to other ecosystems and enviromnental problems national borders. cause across An example of the effects of local damage to the environment that when

mangrove forests on the coasts of South America and Asia chopped are down, fish reproduction decreases, resulting fewer fishing catches outside

the countries where the problem originated. An increase of cattle Holland

causes downfall of nitrogenous compounds the surrounding countries. The

destruction of wetlands leads to eutrophication of coastal and coastal zones waters the countries surrounding the Baltic are an example. Environmental

problems which have no boundaries not just about sulphur, nitrogen, are CFC and so on, but also about the indirect effects surrounding on ecosystems which occurs as a result of the original, local environmental

effects. The ability of ecosystems to recover after changes deteriorates, and

their ability to generate ecological services and support for the socioeconomy therefore also deteriorates.

Local environmental damage also lead which influence can to waves other countries through negative effects on the social structure. Examples of

this are deforestation, over-exploitation of farmland and specialization

export crops.30 These compromise the

can resource base for large sections of the population, cause an increase the population and even cause environmental refugees to flee their homeland. Discovering of ways developing society which promote ecological security therefore of great importance. l

Local environmental damage also lead to changes welfare other can countries, regardless of whether not their ecosystems affected. The or are extinction of certain species for example, lead people other countries may, to feel such disgust that their well-being damaged by the extinction. The

costs of preserving species national parks developing countries has

shown itself to be high local level, lower regional national level on a on a or and lower still global level. When to from value of on a comes revenue or

saving a species a national park, the situation the opposite. Purely

Trade and the environment towards a sustainable playing field ——

aesthetic aspects of our relationship to the ecological system, biological diversity and other human beings‘ quality of life and environment, their e.g. work environment, also often mean that may be justified to treat local

problems as global.

The conclusion that many more environmental effects transboundaiy are and therefore international than those receiving attention today. The effects of local environmental damage should therefore be regarded and be as, handled as, being without geographical boundaries.

Trade and the environment towards a sustainable playing field -

Trade and the environment towards a sustainable playing field —

Economy and ecosystems

The efficiency of an economy implies that scarce resources are used and managed to achieve maximum benefit to society. According to economic theory, there no price of a utility until its supply becomes scarce, that when demand as great or greater than the supply. only when this happens that the resource suddenly becomes visible element of the a economy. In a market with perfect competition, prices of goods and services are decided by the relationship between supply and demand. In practice, there should be few perfect markets. When different factors restrict or distort competition, market prices do not reflect societys actual costs and benefits. Lack of information also of significance this respect. For the most part, markets lack the tools to handle lack of information and risks. In addition, vital resources fall outside the market when there are no well-defined property rights. There can be no market price a seller does not possess full ownership and carmot defend his rights as an owner. But who owns the climate How much does a new ozone layer cost therefore quite seldom that market prices reflect all the changes societys welfare when goods or service are utilized. This results in external effects, that costs and benefits which fall outside market prices. That they fall outside the market means that the individual or company responsible for a change not confronted with the costs and benefits of their actions, even though their actions have resulted a change the welfare of others. Hence, there will be a difference between private and social values. The private value the change welfare which consumption of goods or services offers the individual and the social value reflects the total changes the welfare of all individuals, both present and future generations. This difierence between private and social economic values of great importance for the environment and life support systems. These utilities rarely carry a price tag, whether on markets or indirectly through various policies. An example of an external effect the case of a factory which discharges toxic waste, killing fish an adjacent lake without the factory owner having to compensate fishermen for their losses.

Trade and the environment towards a sustainable playing field -

Internalization of external effects

External effects can result substantial costs for society. One way to reduce environmental problems from this viewpoint to internalize the external effects, that to correct for the existence of extemalities so that costs and benefits are debited to the agents who incur them. By internalizing environmental costs we mean all measures, direct as well as indirect, which

influence the costs and benefits of the actors in society so that the

diflerences between private and social value decrease. In practice, internalization means that the costs of environmental damage are included the price of those goods and services which cause that damage. For example, the cost of cancer-related illnesses and harmful effects on plants and animals would be included the price of products which cause depletion of the ozone layer. An increased internalization of environmental costs would change production into energy and resourceeffective processes and products would be better suited to the basic ecological conditions. New types of invesnnent would be generated and the prerequisites for competition would change. An indication of the degree of internalization of environmental costs throughout the world given the 1993 World Watch Institute report. The institute presents information on the global state of the environment on an annual basis. A complete intemalization of environmental costs would, in principle, mean that the boundaries of the long-term carrying capacity of the natural environment could not be crossed under any circumstances. Unfortimately most signs point to an opposing trend: continued extemalization. The global forestry acreage decreasing. According to the World Watch Institute, destruction of tropical rain forests continuing, desert areas are expanding, and one-third of the worlds agricultural area suffers serious erosion problems. Furthermore, the number of plant and animal species quickly being decimated approx. 34 of the worlds 9,000 known species of birds are at risk of either depopulation or extinction. The concentration of greenhouse gases the atmosphere increasing annually and virtually every study of the ozone layer shows that being depleted at an ever faster rate. Experience has proved that the market not able to handle the intemalizion of environmental costs on its own. Society therefore has a vital role to play. With the right signals from society, would be profitable for companies and other actors to develop ecocyclical, resourceeffective technology that works cooperation with the environment. Environmental costs can be internalized directly via laws and regulation of products and production technology, via markets for emission rights, environmental charges and taxes, and by controlling resource use and waste and pollution through better defined property rights. more difficult to get an overview of indirect measures because of the complex nature of social

Trade and the environment towards a sustainable playing field ——

structure. Indirect measures can be created through changes macroeconomic policy, legislation, consumer behaviour changes social or values.

In this context, the establishment of institutional frameworks, national and

international, become extremely important. How the ground rules for

individuals and markets shaped plays decisive role the are a intemalization of environmental costs. The formulation of these rules relates

to societys view of the natural environment

see page 45. Various

institutional frameworks discussed Chapter are

Valuation of changes in

welfare

In order to determine the extent of external effects and thereby internalize to them, a number of methods within environmental economic theory have

been developed to evaluate environmental and changes. The resources foundation for the evaluation of costs and benefits changes human

welfare, based human and expressed

preferences

on as peoples direct or indirect willingness 4 to pay. The methods and their application obstructed because are many environmental effects of human activities not known at the time of are valuation. also difficult to take into account the values of future

generations. Environmental eifects tend to first become visible many years after the original event and the dimensions ofien dependent are on a complicated relationship to other external effects, well the resilience as as on of the ecosystem. The amount of uncertainty situation where creates a various risks must be weighed against another. Valuation further one hindered by the lack of real markets. Artifical markets either carmot or should erhaps not be constructed order to the willingness even measure 5 to pay. A complete valuation of external costs of be achieved. can course not Nevertheless, valuation of environmental costs and benefits plays an essential role to bring environmental into economic decisions, both concerns concerning the formation of regulations and laws from society’s viewpoint,

and companies’ and consumers’ actions. An example of this salmon

farming coastal areas, an industry which has expanded rapidly during the

last ten years. Production the type described 16; that linear on page a throughput type which does not relate to the base. has been said resource that salmon production not ecologically feasible.36 The process causes a variety of environmental effects, such eutrophication of coastal as waters. Manufacturers do not pay for the cost of the external effects they cause society. Calculations show that the cost of eutrophication be were to

internalized based societys actual willingness to for technology that

on pay prevents the eutrophication then the cost of producing salmon would exceed

Trade and the environment towards a sustainable playing field —

the highest price the manufacturer received for salmon the market. In this on sufficient to internalize of the many environmental effects case, one production economically feasible not.37 order to judge whether or As mentioned earlier this chapter, the ecological preconditions determine the framework for economic activity. Society reformulate this can in terms of absolute environmental goals, such as a ceiling on the amount of dioxide allowed in the air.38 Bearing in mind the difficulty sulphur valuing the environment in monetary terms, important task to find a an cost-effective of reaching those goals within the ecological way framework.

A functioning ecosystem the new scarcity

— Today number of ecological services already scarce, even though this a are seldom visible market prices. There to expect increased are reasons shortages. the availability of clean air, drinking water and other ecological services unrestricted, then they would not be scarce resources. There was also would not be to include them economic analysis. In any reason relation to previous statements, regard life support systems and our we ecological services increasingly resources, addition to the fact as scarce that they represent fundamental production factors for national economies.

This illustrated Figure The first picture shows situation where large proportion of life support a a for example the availability of water, fresh air, tropical rain forests systems, and wetland, unrestricted for economic development from a global are perspective. The variety of life support systems and ecological services sizeable in relation to demand. Local limitations occur nevertheless. In the second picture, the demand for clean air, water and other ecological services has increased and has been pushed to the right. This because the earths population and the consumption of have both increased resources substantially. The in which this has taken place has led to damage to the way

natural environment, causing the availability of ecological support to shift

towards the left. difficult to the total of individual actions, survey consequences many and thereby to absolutely determine exactly when life support systems should be regarded We do know, however, that there as a scarce resource. always true uncertainty and lack of information when complex ecological a and economic systems must be managed and that irreversible changes can resilience deteriorates. The social for develop when an ecosystem‘s costs unforeseeable changes be enormous and have an influence far beyond can the national borders.

Trade and the environment towards a sustainable playing field —

Price

demand supply

a

Lifesupportsystems, quantity Price

reducing Supply b

Lifesupportsystems, quantity

Figure The ecosystem a The supply of

as a scarce resource.

ecosystems and services was not previously b An

scarce. increased scale of economic activities and the population explosion have created a situation where the ecosystems support and services should be regarded as a scarce resource.

We do not know exactly where the Figure 6b But curves are. as seen from previous statements this chapter, longer rational to believe no that the capacity of ecosystems to support human society still unrestricted, that the price still zero. The reason for the difliculty determining exactly when resources become restricted that environmental effects often are delayed in terms of time and space. They accumulate and spread geographically and takes time before the effect the environment on becomes visible. takes longer before actual environmental even an problem identified and longer still before information leads to measures which send signals to society and business that there a new scarcity. Certain types of ecological services have become damaged that by the so time the damage visible too late to start managing From resources. a global perspective, resources can be scarce because of different systems‘ interdependence, even though the not considered to be same resources are locally and from the perspective of certain 23.

scarce a sector see page

necessary to try to foresee this and to avoid situation where there serious a scarcity pro-active rather than re-active management; the goal to manage all of societys resources efficiently.

Trade and the environment towards a sustainable playing field —

An ecological-economic synthesis

In Figure 7 we present a conceptual picture of the above discussion. The illustration shows the simplified relations between natural capital and manmade capital, seen from three different viewpoints. In all three cases natural capital has decreased and man-made capital increased. The dotted line indicates todays situation. The first picture illustrates the attitude that society must first have a functioning economy with growth order to be able to afford to invest in the environment. This attitude based on a world view where human beings believe that they are above nature, where nature and the environment are regarded as separate from the economy and where environmental problems are solved as they arise by developing new technology. Free trade encourages economic growth. Figure 7a. In the second picture, human beings are seen as parasites whose society has destroyed nature. The limits of the earths carrying capacity are considered to have been reached or already passed, and a decrease in all human activities regarded as essential order to avoid ecological collapse. A move towards free trade thought to increase environmental destruction Figure 7b. Both these viewpoints segregate society and the environment and do not examine the whole picture of the relationship between ecology and economy. Such segregation does not lead to constructive solutions for the fixture and carmot guide society towards an ecologically sustainable economic development. This report strives for an integrated systems view of the relationship between nature and human society, between ecology and economy. This presented Figure 7c.

Trade and the environment towards a sustainable playing field ——

Natural Capital Human-Made Capital

A Revenues ~ from growth Economic could beused lo Optimist g preserve nature Vision ° ¢ x

Present Tlme

Natural Capital Hurnan~Made Capital I 4

I Possible Ulm Environmental l recovery Pessimist arter collapse Vision I

I

l

Present Time

Nanna, capna. ‘Qualitative + Physical {dimensions Hawa 9 ofhuman- z : made ital ’ mmm å cap about I ä — posslbililleslor ~- ’ , C + ~— , qualitative improvement .ä development

å o Physical DimensionsEcological I ofHuman-Made Economic Capital Vision Present Time

Figure Three different perpectives of the socio-economys relationship

to nature. A Growth and technical optimism. B

Environmental pessimism. C The ecological-economic

perspective.

Source: Folke, C.; Hammer, M.; Costanza, R.; Jansson, A-M. 1994

Investing Natural Capital: Why, What and How In: Jansson,

A-M; Hammer, M; Folke, C.; Costanza, R. eds., Investing

Natural Capital: The Ecological Economics Approach to Sustainability. ISEEIsland Press, Washington.

Trade and the environment towards a sustainable playing field —

The socio-economy of the overall ecological system. Life represents a part support systems determine the ultimate limits for societys expansion. The closer get to those limits the less room there for economic we development. The limits not fixed, rather they are constantly changing are largely due to human behaviour towards the resource base. An important challenge the task of turning societal development from a continued rapid expansion of material consumption towards a development which resource-efiicient and connected to the functions and processes of the ecosystems. The ecosystems and ecological services that they provide must be appreciated as the basic founding production factors which, as increasingly scarce resources, need to be managed efficiently. Growth and technical development by themselves cannot guarantee

solutions. how economic growth as a measurement of societal

development and how technology develops which determine an occurs ecologically sustainable economic development will take place. Free trade itself guarantee of improved environment. Whether a liberalised no an trade will have positive or negative effect on the environment depends to a a great extent the economic development and structure within which trade on takes place. This interplay can be illustrated by the following metaphor. If a large boat awkwardly loaded, its ballast uneven, and cannot effectively transport its of goods without the risk of sinking. We set up a market, a price cargo system, where the price of loading the boat higher or lower depending on how far to the waterline the boat when being loaded. In this near or the market that the boat efiiciently loaded. However, we way, ensures loading the boat with goods, will sink. This why the Plimsoll line go on

see Figure 7c exists; indicates that goods loaded over a specific mark

will sink.42 cause the boat to The metaphor demonstrates that the market plays an important role improving the management of natural resources and the environment and that the internalization of environmental values and costs essential since will encourage markets to work more efficiently than previously, from a social perspective. But the scale of activity constantly rises, then internalization no guarantee of long-term sustainable development since practice carmot be complete, partly due to true uncertainty, market and policy distortions, and lack of information. The importance of clear and a basic rules and long-term signals from society increases the faster human society approaches the ecological limits. That why this publication constantly emphasizes that the ecological limits that provide the framework and the preconditions for society and human welfare, and that society should strive to manage all resources the most efficient possible within this framework. Inefficient use of way increases the risk of a sinking ship, the ecological limits come resources

Trade and the environment towards a sustainable playing field closer and freedom of choice and action continues to shrink. an important challenge to interpret and the signals that getting manage we are from the ecosystems.

Trade from a natural resource and environmental

perspective

Trade strengthens economic development

Trade originates markets, which turn coordinate production and consumption of goods and services. Trade therefore connected to the environmental effect which can occur when goods and services produced are and consumed. Trade between two countries influences both the prices of goods and resources as income, production and consumption patterns, etc. both countries. Since trade aflects national economies and national economies affect the ecosystem, trade can be said to indirectly influence the environment. How that influence appears positive negative -is ——— or diflicult to determine ahead of time due to the complexity of the socioeconomic system and its relationship to the ecosystem. the institutional structure a country ignores the fact that goods are produced a way that deteriorates life support systems, then trade with these goods will strengthen this trend. That that will increase the to say enviromnental effects which occur when goods produced and consumed. are institutions, on the other hand, create ground rules which point production and consumption towards a sustainable development, then trade add to can this process.

...None of the aspects of sustainable development intrinsically linked to international trade. A failure to place a value on environmental

resources would undermine sustainable development in even a completely closed economy. Trade seen, rather, as a magnifier.

the policies necessary for sustainable development in place, trade

are promotes development that sustainable. Trade and Environment, Chapter 3 International Trade, 1990-91, GATT 1992,Ege 25.

We are highly dependent on imported goods order to maintain the material prosperity existing a country like Sweden today. production of imports destroys the environment then our demand adds to the degradation occurring other countries, even unintended. Cotton raised for export accounts for 25 per cent of international consumption of insecticides; an

Trade and the environment -towards a sustainable playing field

instance where Swedish consumers indirectly contribute to an environmental

problem through their purchase of cotton Clothing. The decisions of

individual consumers seldom have the ability to influence production, but the collective impact of consumer demand does.

The illustration below symbolizes simple life cycle for one product,

a commonly referred to as from the cradle to the grave. No single link the life-cycle chain be skipped; each link necessary for production, trade, can transportation and consumption to take place. Trade an integrated part of the chain and therefore cannot be removed and regarded as a separate entity in discussion of the different steps involved environmental influence. a

Raw material Production Consumption Waste L

Transport

Figure The role of trade relation to the life-cycle of a product.

Trade internationalizes the environmental problem

Environmental problems be divided into such categories as what can happens during production or what happens when goods are consumed or become waste. not easy to make this type of division reality. At the intermediary stage, effects the ecosystem from, for example, the on petrochemical industry can be regarded as environmental effects from either oil consumption plastic production. Both consumption and production or effects spread borders. Using this schematic division, can be local or across situations can be differentiated where the presence of trade contributes to the development of an international environmental problem. See Figure

national boundary

Figure Simplified picture of production P, consumption C, local and transboundary environmental problems and how trade contributes to the internationalization of environmental problems.

Trade and the environment towards a sustainable playing field —-

Environmental problems become intemational, partly when pollution and changes the ecosystem national boundaries, cross partly when the cause of the environmental effects product producer national — a or a — crosses boundaries. The connection between trade and peoples effect on life support systems can be organized the following manner:

Trade creates dependency ecosystems other countries. on

Trade has a direct effect on the environment, via transportation.

Many imported and exported goods environmental effects cause during the consumption of the goods. Waste a special case.

With regard to goods which environmental effects during cause production, environmental regulations and taxes should be introduced in order to affect production costs and competitiveness. If enviromnental demands become too extreme, there risk that a production will country and simply another cease one move to

country with less stringent laws see 60 68. Trade

pages can therefore lead to production moving out of the country or, put another way, cause politicians to hinder environmental legislation. This the case for both local and global environmental effects but especially global effects, since the environmental cost of having little or no protective legislation spread all the world. over

The first two points discussed this chapter. The other points are are discussed Chapter where we will also examine the general question of how trade affects the environment and and how trade barriers can be used to reach environmental objectives.

Trade dissolves local boundaries

Sustainable development requires society to remain within ecological boundaries. These boundaries exist different temporal and spatial levels, on

from global e.g., the greenhouse effect to local e.g., fish production

lakes. Trade between different countries offers an opportunity for people to free

themselves from local limitations by importing resources raw processed

or

materials and ecological services from other countries. Access thereby

gained to information, capital, products available the resources or not home country.

Trade and the environment towards a sustainable playing field —~—

Even though trade dissolves local boundaries, cannot do away with

ecological boundaries. These limits be moved but not eradicated and at can the time they shared by people. Continued unsustainable same are many production and consumption patterns threaten natures capacity to sustain

national economies and bring closer to the total ecological boundaries, us the risk being that collective human society will hit a ceiling our

simultaneously.44

Hence, the majority of the worlds economic communities are dependent

only imports from other countries but also the support of the not on on which produces those import goods. Trade means that people in ecosystem indirectly dependent their to resources and one country are on access functions outside their country. Trade moves ecological ecosystem own boundaries outside national boundaries, and large ecosystem areas, or

shadow required to produce the imported goods and services. areas, are

Shadow areas

Estimating the scale of ecological shadow 45, city needs

support, or area a illustrate the importance of fimctioning ecosystems. The shadow one way to the needed to produce the goods and services which are area area consumed, for example, in city. The citys footprint not just the actual a but also includes the natural life support Figure 10. The area area, see footprint needed support the residents of typical city the industrial to a world, of 300 people kilometre, basically with products from per square modern agriculture have study been estimated to an area one region itself.45 The approximately 20 times larger than the area of the shadow for modem agriculture the form of raw materials, imported area animal fodder, not included this estimate. The same reasoning etc for the production of individual goods. Farmed sahnon needs, for true example, life from the environment which approximately a support area 50,000 times larger than the of the netpens which salmon farmed. area are

The shadow often outside the country question.47

areas are Japan and other nations with concentrated population and intensive many a industrial activity would not be able to maintain their level of production and

material standard of living through their own natural resources and

indigenous ecosystems.48 They are dependent upon shadow areas which

exist far beyond their national borders.

Trade and the environment -towards a sustainable playing field

Figure 10. The citys footprint.

Source: Rees, W.E. and Wackernagel, M. 1994. Ecological Foot Prints and Appropriated Carrying Capacity. Measuring the Natural Capital Requirements of the Human Economy Ref. 93.

A concrete example of this type of relationship from Swedens trade with fish and fish products as follows: Sweden a net importer of fish products monetary terms and therefore asserted that Sweden should decrease its import and concentrate more on building up its domestic fishing

industry. Ecological and economic relationships between Swedish import

and export of fish products are summarized the following table.

Trade and the environment towards a sustainable playingfield -

between Swedish imports and of fish products in

Relatsignship

exports 1986 Irnportexport

This table shows that Sweden imports 2.5 times more fish than exports, measured in monetary terms. But the results also show that Sweden utilizes

more of the life support system shadow area per Swedish crown of

imported products than per crown of exported products. In other words, Sweden indirectly buys support which provided by the ecosystem other countries at a considerably lower price than we sell equivalent ecological work to other countries. This balance of trade advantageous for Sweden and illustrates a relationship between developed and developing countries which not uncommon. The majority of developing countries are net exporters of food, raw material, minerals and fuel to developed countries; raw materials often dominate their total export figures. For example, more than 98 per cent of the value of Bolivias, Ethiopias, Ghanas and Nigerias exports consists of raw materials, as compared with 24 per cent for the USA and a bare 2 per

cent for Japan.51

In certain cases, excessive exploitation of natural resources has transformed countries from net exporters to net importers of raw materials. Such the case for Thailand, Nigeria and the Philippines regarding timber

products. The Gold Coast and Ghana will be the position.

soon same Ecological analysis of New Zealands export of natural resources and of Ecuadors export of intensively cultivated prawns suggests that the countries importing these resources assimilate substantially more of the ecosystems work than they actually pay for. Export leads to an impoverishment of the export countries‘ ecological resource base and aflects their ability to attain

long-tenn economic stability.53 The increasing scarcity not reflected

the export prices. Ecological services with a high value to society have fallen outside the market prices and outside the institutions which regulate production, consumption and trade. The monetary flow mainly related to labour and capital produced by human activity, and partly to natural resources and ecosystems with well-defined property rights. But they seldom cover the ecosystem support which needed order for trade with goods and

services to be possible illustrated Figure 11.

Trade and the environment towards a sustainable playing field —

r RECVCUNG

NATURAL RESOURCES

J

K GLOBAL ECOSYSTEM

Figure 11 Conceptual picture of the trade and the environment. economy, . The significance of the environmental base for resource a national economys welfare falls outside the economic arena.

Source: Hammer, M. 1991, Marine Ecosystems Support to Fisheries and Fish Trade. In: Folke, C. and Kaberger, T. eds. Linking the Natural Environment and the Economy: Essays from the Eco-Eco Group, Kluwer Academic Publishers, Dordrecht.

Specialization leads to vulnerability

The resilience of the be compared with societys flexibility ecosystem can

and ability to adapt to changes.54 As discussed Chapter trade

as becomes more sophisticated, production becomes specialized. more Specialization results increased vulnerability and greater dependence a on conditions other areas, with less opportunity to influence the situation as a result. Widespread specialization can also make difficult and costly to adapt as surroundings change.

Specialization has often led to throughput-based production systems see

page 16. Modern monocultures are an example of a type of specialization which made possible by substantial contributions of auxiliary inputs to

Trade and the environment towards a sustainable playing field ——

sustain production, for example, artificial fertilizer, pesticides, a high degree of mechanization, etc. Many of these inputs imported and large shadow are outside the monoculture needed to maintain the system and avoid areas are disturbances. But vulnerability to external disturbances increases. There are similarities between monoculture and stressed ecosystem. Both have many a imperfect ability to retain nutrients and organic material in an energy, addition to being sensitive to attacks by parasites. Recycling occurs on a restricted scale. Food webs short, the structures are simple, the very are diversity and the systems efficiency low.55 Stressed systems fimction less

efiiciently than systems which contain diversity and variation. diflicult with certainty whether the environment very to say capable of recovering after serious disturbance. People will always need to a live with uncertainty regarding how handle complex and interrelated we can ecological and economic systems. Society should seek to avoid production and consumption patterns which obviously lead to degradation of resources, risking irreversible changes. The phrase sustainable development means that the potential for ecological systems to support present and future generations should not be tampered with. Vulnerability be reduced society endeavors to complete the ecocycle can and actively the environmental feedbacks within both production manage and consumption. Recycling of and nutrients, ideally in tune with resources the ecosystems creates diversification and resilience while processes, reducing vulnerability.

Trade, transportation and the environment

Without transportation, trade carmot take place and since transportation adds environmental problems then trade has direct influence on the to a environment this instance. has been estimated that international truck transportation within the EU will increase by 30-50 per cent as a result of the development of markets and deregulation within the common transportation Truck traffic geographical boundaries North sector. over America expected to increase seven-fold during the next decade as a

result of the North American Free Trade Agreement NAFTA.56

One of the major problems of todays transportation that the means of transportation largely driven by fossil fuel, resulting air and water are pollution. Air and transportation of people and goods account for one sea

eighth of the worlds oil consumption and are responsible for an already

large and increasing proportion of carbon dioxide, nitrogen oxides, sulphur dioxide and hydrocarbon. Direct oil discharge when transporting oil must be

added to this. Transportation represents difiizse emission which several a source difficult to regulate than point emissions from stationary respects more

Trade and the environment towards a sustainable playing field emission sources, such as individual industries. In practice, very difficult to tax aircraft fuel and bunker oil for ships. Such measures must be coordinated by many countries since otherwise easy to fill fuel tanks countries without a fuel tax. This has resulted plane and ship fuel being relatively untaxed most countries, while taxation of, for example, gasoline for cars and oil for central heating of private homes often amounts to several hundred per cent of the actual market price. the total costs of all the environmental effects of fossil fuel use were reflected the price of oil, would be markedly higher and transportation would be distinctly more expensive. Then not only trade but also production and consumption patterns would be quite different. would be increasingly profitable to bring the material ecocycle full course, above all on a local level, and the need for transportation dependent on fossil fuel would decrease too.58 The motivation develop eflicient and environmentallyto friendly modes of transportation, for example cleaner boats and trains, would also increase. Today, however, transportation costs are so low that

extreme price changes would be needed for such a change to take place see

Fact Sheet 2 for the environmental effects of transportation. Other environmental effects of transportation are, for example, noise, changes in the landscape due to changed land usage and the barrier effect of roads and railways. Transportation affects the environment via the use of fossil fuel, minerals and other resources when trucks, boats, railroads, airports, gas stations, etc are manufactured or established. The way the transportation system set up has strategic importance for societys advancement. Planning of housing, the workplace and service within

communities and regions addition to a companys production planning are

all influenced by the type of transportation available. Societys choice of transportation has far-reaching effects for the entire community.

Direct and indirect driving forces

Whether trade and the environment are conflict or cooperate with each other determined by the institutional structures within and between countries and the various driving forces which cause environmental destruction economic, social, political, cultural that exist within these — -—— structures. Direct driving forces can be: changes land usage, resource exploitation, discharge of harmful elements, urbanization, industrialization, the building of the infrastructure, etc. Indirect driving forces are less obvious and ofien are connected to societys institutional structures and the behaviour which these structures promote. Some examples of indirect driving forces are the structures of property rights, taxes, legislation, macro-economic policies and the attitudes of culture and religion.

Trade and the environment towards a sustainable playing field -

In Sweden, subsidization of road construction forests close to the

ecologically sensitive northern mountain fjell has been decisive areas or a indirect driving force for the timber exploitation of these ecosystems. Until a few years ago, land property rights Madagascar not well defined. were There was therefore little motivation to conserve land, which led to serious soil erosion. Diamonds and meat are two vital export products for Botswana. Meat production has increased substantially during the most recent decades. based on raising of cattle on pastureland which has, in tum, caused excessive grazing and had a distinct influence plant and animal life in the on nearby savanna. Cattle breeding subsidized many different ways by the Botswana government and promoted by the EU which indirectly guarantees the importation of a certain quantity of meat annually. A total of 45 cent per of export proceeds to the EU 1982 went to commercial cattle breeders, who amount to a bare 0.6 per cent of total cattle breeders. Small local breeders 94 per cent of cattle breeders received only 33 cent of —— — per

the EU proceeds during the year.59 Analysis shows that drop of just

same a a few per cent in world market diamond prices has a definite effect on Botswanas diamond exports and economy makes profitable to more expand cattle breeding activities. This will lead to even more excessive grazing and the spreading of the desert.60 Clear cutting of forest the Amazonas has been speeded up by other indirect driving forces. In Brazil, taxes on agricultural income, rules for land allocation, land taxes, regional and sector taxes and the possibility of

obtaining loans have only added to the problem.61 Tax regulations were

changed the late 1980s, but many people who do not land continue own to move to the Amazon area because of the lack of implementation of land reform regulations. As a result of complex socio-econornic relationships, the effects of trade on the resource base are difficult to predict. therefore diflicult to argue that increased trade barriers or liberalized trade will automatically lead to a sustainable utilization of life support systems. better to work with the existing institutions that provide the framework for national economies, so that production and consumption of goods and services are realigned in a sustainable direction. environmental effects are not heeded and trade opened up, then the prospects for export incomes and short-term economic profit increase the temptation to implement unsustainable production. Powerful interests such situations take advantage of the lack of environmental policy. When this occurs, property rights structures and production systems which have fimctioned for thousands of years are ofien completely destroyed.

Trade and the environment towards a sustainable playing field -

This type of event occurs today coastal where many areas mangrove forests are cut down to accommodate intensive shrimp farming, activity an where the product designated for export. The lost worth of the mangrove forests as a life support system for, other things, fuel and fish among production for a large proportion of the local population not included the market price of the giant shrimp. In such cases, trade raises the need for the internalizing of these external costs. At the time, those who profit same by such trade activities are highly motivated to fight the internalization

process.52

Ethics and technology in an internationalized world

Our world view, values, knowledge and institutions influence to great a extent the way which society relates to nature and the environment. If people believe they rule and separated from nature then over are a conquering technology will develop which strives society that to create a not dependent on nature. people regard themselves part of nature as a and recognize their dependence its support then collaborative type on a more of technology, known ecotechnology, will develop. as Technology not just a tool which be used for positive negative can or purposes a reflection of the world view, values, knowledge and — institutions the society where fonned. This known cultural as

capital.53 A simplified illustration of systems view of the relationship

a between nature, technical advancement and culture be Figure can seen 12. technology camouflages societys dependence life support systems on and continues to procrastinate environmental problems, then people over will be lulled into believing that above nature and we are can manage without This will lead to institutions basing their policy this of on way thinking, which turn influences teaching, research, information, problem solving, aid to developing countries, decision making, etc. a country continues to damage its ecosystems this that human means beings rely on a technology which to make possible to exchange seems those goods and services generated by the domestic ecosystems for the imported goods and services from other countries. But the scale of human activity continues to grow and environmental damage does not only occur indigenous ecosystems. From the perspective of sustainability, such an exchange therefore merely illusion. 64 an

Trade and the environment towards a sustainable playing field ——

Regulates exploitation of

Alteration Generated of bY

Impacts on

Figure 12. Life support systems prerequisite, necessary but are a a insufficient condition for culture and welfare. Tools and techniques created by interplay between nature and are an culture. Technical development influences nature, and also the cultural view of nature sustainable or non—sustainable a direction.

Source: Berkes, and C. Folke 1994, Investing cultural capital for sustainable use of natural capital. In: Jansson, A.-M., a Hammer, M., Folke, C., Costanza, R. and M. eds., Investing Natural Capital: The Ecological Economic Approach to Sustainability. ISEEIsland Press, Washington.

People becoming and dependent and are wielding are more more on greater influence even unconscious over situations which occur — — other countries. This trend strengthened by increasing trade and enviromnental effects which spreading over a larger and larger are geographical The scope of the individuals influence includes a larger area. responsibility, especially roles There also a need for our as consumers. new norms and ethics of peoples actions.

Trade and the environment towards a sustainable playing field —

The internationalization of the world economy can nevertheless result people having greater difficulty taking responsibility for their behaviour. The individuals own actions can be regarded as a drop the One of ocean. the challenges of creating sustainable development lies turning human interest away from the level of the individual and getting them to recognize that their self-interest to contribute to the maintenance of functional life-supporting ecosystems. An increased recognition of dependence our on resources produced by ecosystems other countries would add to the motivation to contribute to the conservation of those ecosystems. For this to occur, more information and an inner desire to connect remote occurrences with our own actions are required. At the same time, experience suggests that ethical rules for sustainable behaviour develop when people are directly confronted with the of their actions.55 Society partially speed this consequences can up process by introducing different forms of policy. One example would be prohibiting the export of hazardous waste to other areas and countries. By removing the possibility to ship away all the unpleasant of consumption, consequences people would be forced to tackle their problems themselves or prevent them from occurring in the first place. History shows that many societies which are dependent on a nearby ecosystem have developed sophisticated ecological knowledge with social and ethic rules for how the local resource base can be utilized in a sustainable manner. This knowledge and these relationships to life support systems have developed as a necessity. These societies have learned how to

handle feedbacks from the ecosystem order to survive. The global move

towards sustainable development can be seen as an international effort to

handle feedbacks from the global ecosystem.

Many local societies have knowledge of how to use resources a sustainable fashion. The shifi from local support to globalization include can negative external effects the form of loss of such knowledge and of the institutions and rights which preserve knowledge of sustainable utilization a

of the ecosystems.67

As traditional peoples are integrated into the global economy, they lose their attachment to their own restricted resource catchments. This could lead to a loss motivation to observe social restraints towards

the sustainable use of a diversity of local resources, along with the

pertinent indigenous knowledge that goes with Fikret Berkes, Carl Folke och Madhav Gadgil, 1993, Traditional Ecological Knowledge, Biodiversity, Resilience and Sustainability. Beijer Discussion Paper no. 31. The Beijer lntemational Institute of Ecological Economics, Stockholm.

Trade and the environment towards a sustainable playing field —

i ,i f

Trade and the environment towards a sustainable playing field -—

Trade and the environment towards a sustainable playing field -

Chapter

Economic of Trade

Analysis

and the Environment

Interest the linkage between trade and the environment has grown rapidly during recent years, although there still little literature available on the subject. As the character of environmental values has been discussed in the previous chapter, a short summary of the economic view of trade will be presented here. Thereafter the chapter focuses on the connection between trade and the environment. The environment‘s international aspects are presented and possible ways of handling problems through harmonization and international cooperation are discussed. The chapter further examines arguments surrounding trade barriers as an instrument for handling environmental problems, localizing activities which damage the environment, and political factors.

Theories of trade

Traditional theories explain international trade of goods as countries having different conditions, or comparative advantages, for different types of production. According to Heckscher-Ohlin, a countrys comparative advantages are determined by the availability of production factors relative other countries and the input that required within different industries.68 to A country rich in labour power but with little capital has comparative advantages work-intensive production. That country will most likely export goods such as clothing, and import capital-intensive items, such as machinery. An alternative explanation of comparative advantages, developed by Ricardo-Viner, proceeds from differences between countries regarding technology. Simply put, five types of resources can be identified: natural resources, real capital, labour power, capital the form of labour’

power-knowledge human capital and the ability to produce new knowledge

through research and development RD, see Figure 13. The environment should be regarded additional resource, which will be discussed as an further at a later stage.

5l

Trade and the environment towards a sustainable playing field -

labour capital

| PRODUC1-0 E G°°d5 am’

s°’i°°‘°]

natural resources -

+ t human capital RD

Figure 13. The five factors of production usually considered

which are

By facilitating specialization of production different countries, trade was shown to lead to the highest possible welfare overall. The traditional models are, however, based on a variety of special assumptions which seldom are or never fulfilled reality. For example, was assumed that all costs and revenues are taken care of by the market, that perfect competition exists among all players neither single countries nor companies are able to —— influence prices and that there economies of scale production. — are no With time, has become obvious that trade theory its traditional form not sufficient. has since been complemented or replaced on a number of points by newer theories, although the specialization of production accordance with comparative advantages remains important component an of trade theory. The bulk of international trade occurs today within the same industries, which results countries buying and selling similar products. The countries which trade the most with each other are also very alike with regard to access to resources such technology, which that the as means exchange cannot simply be explained by differences between countries-69 In addition, a significant proportion of international trade within occurs multinational companies. These control foreign subsidiary companies through direct investments, by which assumed that they have sufficiently large blocks of shares to establish substantial and long-tenn influence. Direct investments are not possible complete competition prevails all on markets, but presuppose access or abilities specific to the individual

company. Multinational companies Competence within, for

convey example, production and distribution, and the completely dominant technology flow between countries occurs today within their organizations. According to recent theories, trade patterns are mainly decided by imperfect competition, asymmetric information, economies of scale, and

variation the design of products. When attention given to such

Trade and the environment -towards a sustainable playing field

factors, appears that trade can be harmful under certain conditions. On the other hand, the potential advantages of trade are larger than those that emerged according to traditional trade theory. This because trade makes possible for companies to gain from economies of scale, increased more competition makes difficult to charge high prices, and be customers can offered a more varied selection of goods and services. The environmental consequences, however, less clear, which will be discussed below. are

Trade and the environment towards a sustainable playing field

Trade policy

n Trade and its effects on welfare are not only determined by the market but are also influenced by institutional relationships and political interference. This can occur consciously, for example when the framework and regulations for functioning trade are constructed, or as a result of unforeseen side effects. Policy measures can compensate for different types of market failures but can also cause the market to function at a much lower level of success. Even though the promoters of political interference have received support from the new strategic trade theory, the economic view of trade still continues to be stamped by the insight that clear and open ground rules

are the long run best for all parties.

Trade policy measures can usually be divided into customs duties and nontariff trade barriers, of which the latter can cover a highly varied collection of measures. Besides quotas and other import regulations, non-tariff barriers consist of product norms, subsidies and other measures which do not work directly as border barriers, but do restrict sales for foreign companies. While customs duties have been steadily reduced since World War due to

repeated negotiations under GATT see page 87, the non—tariff trade

barriers have changed character. In particular, voluntary export restrictions and anti-dumping measures have appeared as new instruments which can be used effectively against exports from specific countries and companies. In the next chapter, we will discuss trade policy systems and their connection to environmental questions greater depth. can, however, be noted that multilateral negotiations have ended up a troublesome move backwards, at the same time that an ever greater portion of international trade liberalized on a local level, most significantly within the EU and NAFTA. The USA has systematically worked for bilateral trade agreements and, among other things, has forced countries East Asia to agree to

Trade and the environment towards a sustainable playing field ———

voluntary export restrictions. The EU also follows this line, with the result that has become all the pressing for small countries to have more cooperative partners international negotiations. There widespread anxiety today regarding the growth of trade blocks liberalized from — within but which set up barriers against each other. Other observers feel that regional reduction of trade barriers leads to more open trade all over the world.

Transformed trade patterns

l970 l980 I985 I988 Year

i Agricult. products ore VA Industrialgoods % Other

Figure 1 Composition of world trade, the world as an entirety.

Source: UNCTAD, 1987 and 1990, Handbook of International Trade and Development Statistics, New York.

According to Figure 14, which shows the composition of trade goods for different products, industrial products have regained and even overtaken the dominant position which they enjoyed before the oil crisis. At the same time, industry has moved towards production of highly-processed goods with a substantial technological content, and services are on the way to being a

central component of nearly all types of production. That the value of

trade services has risen far above trade goods however, misleading

Trade and the environment towards a sustainable playing field -

since the financial flow back and forth within seconds without moves any visible transfer of resources taking place. Thus ability to handle human knowledge and modern technology provides the base for an increasing proportion of the worlds material production and trade, while natural resources and inexpensive labour account for power a smaller and smaller proportion when analyzed economic terms. Parallel to this course of events, the third world has obtained marginal a role the global spite of the fact that the majority of the economy — worlds population and natural located there. The most obvious resources are exception the newly industrialized countries East Asia, the of success which has substantially increased competition within industry and service production. The traditionally dominating economic of North powers America and Western Europe have consequently lost their grip on the most expanding segments of world trade, and seeking to respond. are new ways The earlier plarmed economies of Eastern Europe have dropped back even more drastically, but there hope that of them enter the some can soon group of successfiil, newly industrialized countries.

Other forms of trade

Trade does not only consist of flow of goods and services which changes a owners on the international market. A large part of trade within occurs countries and regulated by national trade barriers such certain as activities being forbidden or having formal educational requirements — which function as non-tariff trade barriers with effects international trade. on While border barriers give rise to smuggling, domestic trade barriers can can result tax evasion and growth of black market. a In addition, there trade time, for example, with regard to saving over and other types of consumption. Finally, there exist flows which entirely are or partially non-commercial, which that there well-functioning means are no markets. The result that no actual trade comes into existence, although transfer of resources takes place. As discussed the previous chapter, this true for many environmental effects, which take the form of extemalities and fall outside the market.74 Economic players therefore are not confronted with the actual costs and benefits connected to their actions. The management of different values be divided scales which can on contain everything from perfect markets to totally blocked trade on the one hand, and transfer of resources without functioning trade the other hand. on Changed conditions for one type of value can also result repercussions on the others. The effects of, for example, abolishing trade barriers for certain products are decided to a high degree by the extent to which other

Trade and the environment towards a sustainable playing field -

dependent also handled by fiinctioning markets be used resources are or can without regard to their actual value. When not all costs and taken into account the market, revenues are many former results of trade theory need no longer be accurate. In order to correct the occurrence of external effects, either functioning markets must be created or, for example, charges and regulations be introduced to compensate for the lack of functioning markets. The goal that costs and revenues become the responsibility of those who them that to cause — say that extemalities are internalized.

Evaluation of the environment

Even though may be difficult in many cases to evaluate the importance of life support systems to society, cost-benefit analysis be used to a can estimate societys priorities and thereby get away from the attitude that the environment should not involve actual cost. Without getting overly an

involved the principles of this type of evaluation, be stated that

can the best solution from an economic viewpoint reached when consideration for the environment demanded to the degree that expected marginal profits are as large as the costs. The first best measure, whether tax a or a market for emission rights, forces those who are responsible for damage to carry the actual cost and thereby stimulates technological development for improved environmental management. In certain situations preferable to regulate, for example order to simplify compliance control.75 should, however, be emphasized that investments the environment

and commercial activities do not need to conflict with each other to — represent substitutes. In they actually enhance each other, that many cases, to say they constitute complements. The efforts act same can as a substitute one situation and complement another. a The principle of substitution dominates high degree the short-term to a perspective. An investment purification equipment for example, lead can, to a company having to reduce its production capacity. Complementarity tends to appear stronger the long-term perspective, since the environment functions as an infrastructure for continued activity and environmental many effects are long-tenn. The spatial geographic dimension also vital. or Environmental damage ofien has long distance effects while the cost of pollution reduction paid locally; complementarity generally stronger the larger the area involved is. The from preserving rain forests benefits revenue the entire world, while the actual concentrated costs are individual countries and are even more concentrated the people, ofien the on very poor, living the vicinity of the rain forest.78 This that investment means the environment and a better material standard likely to be regarded are more as

Trade and the environment towards a sustainable playing field -

complementary the greater the consideration for the future value and the that different regions and countries work cooperatively towards a more common goal. Individual players oflen tempted not to take complementarity into are account, since they profit by their actions without bearing the entire can cost. Nevertheless, there considerable evidence that consumers appreciate environmentally-fiiendly products and production processes and that companies profit from goodwill by taking advantage of this. can Governments also have particular responsibility to vouch for economically a optimal handling of the environment, since individual players carmot be expected to consider effects long as the profits are partially reaped as others.

Trade and the environment

The world consists of sovereign states with their own territories, but sharing resource base. In practice, can be difiicult for a single country a common to introduce taxes or other measures, even the actual environmental costs known and there opportunities to control the situation. The are are for this are rooted in the international aspects of the environmental reasons problem.

This ‘spiders web’ phenomenon global integration has meant increasingly that everyone tends now to be in everyone elses backyard, making import competition in one’s own market, and export competi-

tion in the 0thers market and in third markets, ever more fierce in an atmosphere reminiscent the struggle for the sun in a dense tropical

forest. Bhagwati, Jagdish, The World Trading System at Risk, 1991, page 16.

The degradation of natural capital caused by a group of driving forces, such lack of information and well-defined ownership rights and a as a result of production or consumption. The lack of a fimctioning market for environmental effects and political measures, where governments profit from the enviromnent rather than compensate for market failures, results a devaluation of life support systems. The connection to trade has only been clarified recently. There no actual conflict between liberalized trade and conservation of the environment since both have the same goal: to use and distribute the available to society in the most efiicient manner. resources Trade itself does not problem the effects are internalized, pose any meaning that those who cause problems must bear the cost of those

Trade and the environment towards a sustainable playing field —

problems. Trade this case makes possible for society to achieve the highest possible gain. Free trade in commercial goods alone, however, where environmental effects not taken into comprises are account, a

completely different situation, which applies to the majority of the worlds

societies at the present time.

The arguments surrounding the effect trade of on the

environment

The effect of trade on the environment interpreted differently depending on the point of departure. On hand, be said that trade, by one can preparing the way for specialization, facilitates higher income-levels and faster technological development, which create for more resources environmental investment and greater appreciation of environmental a values. On the other hand, can be argued that expanding transport and production increase the environment. For example, within pressure on agriculture and forestry alleged that economic specialization creates monocultures and reduction of diversity, which lead decline the value to a of the environment and increased vulnerability. There little doubt that biological diversity tends to be impaired by economic specialization, not least due to scale economies which increase productivity. Specialized agriculture, with its utilization of modem machinery, chemical insecticide and artificial fertilizer, eliminates, almost by definition, competing biological This has already occurred in resources. developed countries and now taking place developing countries. Losses occur partly because variation itself a resource which appreciated — more desirable to have many rather than fewer alternatives and partly —— because a portfolio of alternative each with varying yield, resources, one a

increases societys ability to adapt to changes.

Without touching all the connections between trade and the upon environment, can be concluded that not particularly profitable to try to decide which of these arguments weighs the heaviest. cannot be said å priori how trade will generally promote or damage the environment; can rather be stated that trade strengthens economic development whether sustainable or not.

International environmental problems

Simply put, there two basic for international environmental are reasons problems. First, an activity which takes place country alfect the one may environment other countries. Second, activity which an causes

Trade and the environment -towards a sustainable playing field

environmental damage can move to another region or country. In both cases, individual countries are less motivated and have fewer opportunities to implement far—reaching environmental demands within their regions. The total environmental damage can, for example, increase a single country implements stricter measures, since other countries thereby be less may motivated take action.80 to any Let us very simply consider the fundamental case, which one country can cause environmental damage another country due to the environments international dimensions. Three different cases are illustrated Figure 15:

The importation of goods results local environmental effects when they are consumed. Production has local environmental effects, and the country producing goods does not take environmental costs into account. Pollution travels across borders as a result of consumption or production. 3

Figure 15. Three fundamental cases which one country causes damage another country due to the enviromnents international dimensions. The straight line shows trade flow from one country to another. The crooked lines show environmental effects.

In the first case, damage connected to products and direct result of a consumption. In the second case, which can be called environmental dumping, the problem stems instead from production processes. Damage an indirect result of domestic environmental policy being difficult to maintain because production may then move out of the country. ln the third case, a country can be damaged both directly from a polluting activity a foreign country and indirectly because environmental demands are counteracted, since firms can relocate their activities and continue polluting another country.

Trade and the environment towards sustainable playing field ——— a

The majority of international environmental problems can be simply classified accordance with these three different cases. The transportation of goods also causes environmental effects, which threaten countries can other than those that export import

or see Chapter In the case of global

commons such as the and the atmosphere, all countries suffer sea can to varying degrees the long In order make reasoning run. to our as clear as possible, most of our discussion model involving uses a two countries. Certain questions, such waste examples as management, present of all categories of international environmental problems, depending upon whether waste exported or dumped the original country without satisfactory processing. Through its pronounced character of contamination, the issue of

waste disposal pushes international environmental problems to extremes

see

Fact Sheet page 71.

In the following section discuss the role harmonization, we trade barriers and other policy tools may play the three different cases.

Should environmental be harmonized

norms

Because of the environments~ international dimensions, individual countries

cannot usually, on their own, push through that those who measures so cause environmental damage also the actual Uncoordinated pay cost. actions different countries lead, however, result which to a undesirable for either

party.31 Perhaps the commonly heard

most suggestion for the management of international environmental problems that the emission levels and norms which are allowed different countries should be harmonized, i.e. standardized But harmonization requires similar some sense. a degree of concern for the environment from each individual If the country. same demand were required all countries, the problem of coordinating policies would cease to exist.

The fact however, that the environment, together with capital, labour

power, technology, etc., forms the manual conditions for production.

Adjustments are constantly made whether consciously between — or not — the enviromnent and commercial values, which decide the level of ambition for policy. Adjustments affected by several factors, which are are different different countries. Let us name a few:

Natural conditions differ, for example, their ability absorb to emissions damaging to emit kilo of sulphur ——— more a over an acidic forest Swedens Bohus province than calcium-rich land over Ireland.

Trade and the environment towards a sustainable playing field —

for alleviating environmentally damaging activities differ The costs from for example, less expensive to purify a country to country — kilo of sulphur Poland than Sweden.

Peoples incomes and willingness to for clean environment vary pay a both from country and within country. The occurrence of country to a problems countries lead to society preferring other acute poorer can higher emissions exchange for higher export incomes.

combination with other factors such prices of capital, labour and In as technology, the level of environmental consideration influences the size of

production Due differences values, incomes, costs for anticosts. to pollution and natural conditions, the desired environmental measures protection varies. Regarding effects with global consequences, localization

generally has little influence the size of the environmental effects a on —— kilo of carbon dioxide CFC inflicts the damage whether or same released Sweden France but the cost of reducing emissions, income or — levels and evaluations still varies. The realization of for the environment would a common concern consequently lead ineffective production pattern, which by definition to an would be unfair certain parties most likely those who have little to — influence the decision-making process. For the same reason, not on efficient systematically counteract cost differences order to improve the to trade barriers.82 lntemational agreements which strive to enviromnent with reduce emissions equally, regardless of geographic location, will inevitably

provoke strong opposition from certain areas. Despite the inefficiency of standardization of demands for environmental a consideration, harmonized minimum demands be justified when the risk can and irreparable damage would otherwise arise. This applicable of severe of sensitive where difficult to judge to the management ecosystems beforehand when resilience disturbed, for poisonous emissions which or spread far and wide and which only become visible after a long period of are time.83 the whole, however, harmonization of consideration for the On environment, in the that becomes standardized across countries, sense neither desirable accessible method of solving the represents a nor an environmental problem. to seek other alternatives. necessary

Trade and the environment towards a sustainable playing field -

Cooperative solutions

Instead of harmonizing for the environment, there concern are strong arguments for producing international rules and agreements of other types. In principal, the environmental problem could be solved countries

accepted and respected the so-called polluter-pays-principle PPP, with

the interpretation that those who damage also for This has cause must pay never been the intention, however, and would be unrealistic many cases, especially regarding global environmental effects

see Fact Sheet page

83. On the other hand, countries would greatly profit from a coordination of

policies, either through binding agreements and conventions through or socalled transfer payments. Such transfers into problems due resource can rim to, for example, moral hazards meaning that — access to payments influences behaviour so as to into possession of them. Nevertheless, come binding contracts andor transfer should lead payments to effective agreements, given that governments aim to maximize welfare their respective countries. 34

Regarding global environmental effects which all countries, concern solutions can be accomplished by introducing of charges, a common system and markets for emission rights, complemented suitable incentives to

attract other countries which would otherwise suffer. Regarding sulphur

emissions, for example, there cooperative solutions with compensating are payments which theory would lead to sizeable potential profits for Europe

as a whole, compared with national rules fixed emission limit. or a Introduction of charges for the emission of carbon dioxide would the same way facilitate substantial efficiency profits compared with, for example, a general freezing of emission levels. 85

Despite international agreements, great deal of pollution and a resource destruction continues to be unregulated between countries practice. The reasons will be discussed the section the prerequisites for policyon making. Many producers do not need for the actual to pay costs of their activities, and actual utilization does reflect natural conditions. resource not When trade strengthens economic development, whether sustainable or not, the question raised whether the introduction of trade barriers a possible path for handling the environmental problem.

Product norms and standards

Under which circumstances does the need to address environmental matters

justify trade barriers The linkage between trade and the environment evident the first of the three above, that when environmental cases damage occurs as result of consumption the importing a country. In this

Trade and the environment towards a sustainable playing field -——

environmental problems principle, be managed with product case, can, standards and rules. These take the form of non-tariff trade barriers, norms, competition-neutral they domestic and foreign products but can be treat

the same way. In order for economic activity and its resulting environmental effects to

conform countrys particular conditions, freedom to introduce product to a standards actually given that environmental effects are not necessary, otherwise taken into account. On the other hand, exporters are forced to

adapt their products the varying regulations of different countries, which to decreased competition and less economies of scale production, can lead to especially small markets. In order to solve such problems, efforts are

being made, for example within the European Union, to achieve common

rules. far from obvious which level product should be decided on norms -local, regional, national international. Global standardization of or environmental requirements generally not a good idea; decisions made on

too local levels lead to loss efficiency, and abuse. The fact remains, can however, that product standards must be decided level and that this on some in principle constitutes accessible of managing environmental an means effects resulting from consumption, both when the goods are produced

domestically and when they are imported.

Effects of production processes

The other where country suffers because of production two cases, a activities other countries, difficult to rectify with trade barriers. are more should be noted that the acceptance of unregulated environmental effects

with the implicit subsidy of polluting activities, at the cost of synonymous other countries when damage geographical borders. escapes across Trade barriers principle, also be justified when environmental may, damage due to manufacturing processes other countries. The occurs motive then the lack of other possible which could directly measures attack the of the problem and that trade barriers can induce the source offending country to change its actions. The level of desirable customs

duties, other trade depends the damage suffered by the or measures, on importing and how trade which directed towards country measures — are products influence the conditions for the manufacturing processes which — the underlying As shown by Baumol, duties which are represent cause. desirable from the perspective of individual country may be at odds with an desirable for all c0untries86 what Trade barriers however, create unexpected effects and an undesired can, distortion of prices trigger punitive from the countries affected or measures

Trade and the environment -towards a sustainable playing field

these measures.87 Further, difficult for small and economically weak countries to apply them, since they lack negotiating power. Finally, should be noted that other factors speak against trade barriers. These are of a political nature, but equally important and therefore must be included in an

economic analysis see 75.

page

Trade and the environment towards a sustainable playing field —

Trade with without internalization or We have stated that trade does not, in itself, cause environmental problems, long environmental costs are reflected market prices. In that case, a as as liberalization of world trade would be compatible with, and would support, long-tenn sustainable development. We have, however, seen that environmental costs not internalized general. This raises the following are two central questions:

Does the present development lead to less internalization of more or environmental costs liberalization of world trade compatible with ecologically sustainable development when environmental costs are not intemalized

There little doubt that the public much more conscious of environmental issues today than previous decades and that substantial investments are being made to alleviate the problems. Most countries have, many areas with the signing of the Rio Declaration and Agenda 21, at least in principle, internalization of environmental The significance united to strive for costs. of this position is, however, highly unclear. Paragraph l6 of the Rio Declaration states for example that National authorities should endeavour the internalization of environmental costs and the use of to promote economic instruments without distorting international trade and

investment. See Appendix 3 for complete quotation.

a In fact, there doubt that internalization of environmental costs no an would lead to significant changes production and many cases consumption patterns, which would turn affect trade today. Goods as which burden the environment would become less common and be replaced by goods which resource-effective and ecocycle-adjustable. are more Unfortimately, reality shows that the towards an internalization of process environmental costs only its infancy. Certain countries have come

Trade and the environment towards a sustainable playing field —

further than others, but overall, a great deal remains to be done. Very few

countries use a range of economic policies taxes and fines

to counter environmental degradation, and legislation insufficient. This many cases has been discussed the previous chapter. The answer to the question of whether increased liberalization of world trade compatible with the goal of long-term sustainable development depends to the extent and the speed with which environmental effects on are internalized. enviromnental effects not heeded, expanding world are an economy will the long be incompatible with conservation of the run ecosystem and therefore threaten the basis for life earth. very on therefore, far from certain that liberalization of trade for the common good. By increasing material welfare, expansion of trade lead higher an can to demands for environmental and also create larger and measures resources better technology for an intemalization of environmental costs. For this to be realized, the market players must receive signals that them believe cause to the profitability of these If companies and households measures. are not to be threatened by costly adjustment problems when environmental problems which have been neglected for as long possible suddenly become as acute and then force mechanisms needed long-term goal measures, are to secure formulation for structural conversion. This boils down creating to institutional relationships which effectively stimulate sustainable production and consumption patterns.

Localization of environmentally damagig activities

Through the occurrence of trade, theoretically possible localize to environmentally damaging activities where they do the least damage andor where there requirement to take environmental destruction into no account. The likelihood that production be knocked out relocated can or to another country can, at the time, prevent demands for long-term same environmental consideration country when corresponding a measures are not introduced by others. In this section discuss the questions we surrounding the relocation of polluting production activities.

Trade and the environment towards a sustainable playing field -

Expected relocation

predicted early the 1970s that long-tenn anti-pollution was as as requirements certain countries would lead to relocation of polluting activities in practice from developed to developing countries and to a higher degree the less bound companies are to country-specific input

goods.33 No comprehensive relocation has been observed, however, with

the exception of production of highly poisonous substances such as asbestos, benzidine colouring agents, chemical pesticides and heavy metals like zinc and lead. In these industries have been re-located copper, cases, new todeveloping countries afier the closure of production in developed

countries. According to Leonard89, relocation has only taken place

industries with slow growth and weak domestic demand and which have not significantly contributed to economic development. Although developing countries have relatively large share of a environmentally damaging industry, there has been considerable speculation of relocation has been observed.90 One as to why a greater degree not position that the costs for installing pollution abatement are too small to influence localization. The technological growth needed to fulfill these demands also be preferable to relocation for a company. Further, can a move there risk that other countries will also propose sirniliar requirements a the fixture and that will not be pleased a company moves its consumers pollution- roducing activities abroad rather than tries to counteract the pollution. 1 In unofficial from the World Bank in 1992, was an memo

asserted that relocations desirable and should be encouraged see

more were Fact Sheet page 71.

Is relocation desirable As discussed above, sound conditions for the localization of environmentally damaging activities should be utilized. That relocation caused by economically motivated environmental policy poses no problem does not necessarily that production should to the location where mean move environmental protection the weakest, however. relevant here to briefly discuss the arguments for and against localization of enviromnentally destructive activities developing countries, which ofien have few protective measures. ofien asserted that ecological consideration a luxury which developing countries cannot afford today, and that acute problems such as hunger, illiteracy and unemployment should take precendence over care of the environment. The socially desirable level of protection for the environment would, in other words, be lower than industrialized

Trade and the environment -towards a sustainable playing field

countries. This argument be countered the that developing can statement countries have especially limited ability an to manage environmental problems. Emissions are often associated with risk-taking, and developing

countries have few resources to negative manage a outcome. Many biological and chemical substances spread much more easily a tropical climate, even though of those elements might also break down some more rapidly. A population suffering from chronic malnutrition has a reduced chance of fighting off illnesses. Furthermore, industries in developing countries are generally geographically concentrated and efforts to spread them out have mostly failed. While possible, was some decades ago, to

assert that developing countries had undisturbed environment an as compared with developed countries, the case today oflen the opposite.

Any sort of general relocation of environmentally damaging activity to developing countries therefore undesirable, though even justified

some cases. The limited amount of evidence that relocations have taken

place may suggest that the potential profits sufficient are not to cover the costs involved the not, however, certain that move. the possibility of relocation canies weight with regard to the policy which adopted. no

The absence of internalization

A relocation of polluting activities have negative can consequences all countries do not apply which force internalization measures an of enviromnental effects. Given that environmental protection too low some countries, activities be relocated, although this will lead less can to a productive allocation of The risk of such incorrect resources. relocations can motivate trade policy complement environmental measures as a to

measures given that industries can thereby be prevented from moving — abroad, continuing to pollute and export from the country. new Other measures generally prevent production from moving more effectively than trade barriers, however not least for small countries, — whose companies tend to export to a high degree. One possible option to

subsidize anti—pollution which often touted the next best measures, are as instrument for managing environmental effects

alter a tax which equates

marginal costs of emission and purification.92 Subsidies also associated

are with problems, however. The individual companys emissions reduced, are but entry of be stimulated,

comganies

new can so that there a risk of total emissions increasing. 3 In order avoid this, to essential that subsidies are designed so that technical development of environmentally improving

stimulated.94 Depending measures on their form, subsidies also may violate existing trade agreements.

Trade and the environment towards a sustainable playing field —

Technological transfers

Relocation of production also involves technological transfers. Indeed,

multinational corporations the most important players the world are regards the development and diffusion of new technologies. economy as important differentiate between the availability of existing advanced to enviromnental technology and how actually used. The most advanced

technology not generally demanded by subsidiary companies in

developing countries and seldom forced upon them by the parent

Multinational companies tend to have cleaner production company. developing countries than domestic companies, even more

environmentally damaging than the equivalent production in industrialized

countries. 5

If foreign companies‘ investments replace influence domestically-owned or production, there large potential for improved environmental a countries. Technology transferred by licensing management poorer exchanging labour, instructing suppliers, contacting local control processes, authorities, etc. This not to that foreign technology should always be say preferred the technology of the host country. Modern technology from over industrialized countries far from always being the most likely to best

stimulate sustainable development in countries. A number of studies poorer have shown generally low level of technological assimilation to the a special conditions present developing countries. T0 what multinational companies transfer environmentally-adapted extent technology utilize lack of cleaning requirements order to avoid taking or a action with regard emissions greatly influenced by the actions of to Today, environmentally-fiiendly businesses and products are consumers. and appreciated, which makes possible for a company to more more

strengthen its good reputation by taking global responsibility. See Fact

importance of the fast expanding market for environmental Sheet 1 on the

technology in general.

What I would ultimately like to be able to do set up a perfect example of honest trading in fragile community and make a a benchmark should conduct such trade in future. The rules how we simple. First, have to be invited in. Second, we must not are pretty we with the environment the culture. Third, must reward the mess or we primary producers.

Anita Roddick founder of Body Shop. Body and Soul, 1991, page

213.

The reliable and available information different companies’ actions more on and the better the evaluate them, the motivated consumer can more consider the environment.95 Those who have not been companies will be to

Trade and the environment -towards a sustainable playing field

successful this area are motivated to obstruct factual information, while others have reasons to encourage Opposing interests similarly prevail between governments, partly due to differences ability between companies their respective countries. Countries around the world have negotiated vain for years to establish a Code of Conduct for the actions of multinational companies with regard to environmental as well as other issues.

Trade and the environment towards a sustainable playing field -

Trade and the environment towards a sustainable playing field -

Trade and the environment -towards a sustainable playing field

Political Factors

As stated the above section, difficult to manage international environmental problems resulting from environmental dumping or unregulated transboundaiy effects. There are reasons to probe more deeply into the real cause of the problem. The fact that environmental dumping generally inferior to other methods as an instrument for increasing

competitiveness.99 Further, should be possible to assume that countries

are capable of managing international efiects such as agreements and transfer payments. That this does not always highlights the motives of occur those power and the interaction between players. has traditionally been assumed that governments act in the interests of their citizens. The public choice school has however pointed out that carmot be asstuned that politicians act to maximize societys good. The opposite seems to be true: people power to some extent look to their own profit, which causes the interests of influential groups to weigh relatively heavily. The possibility of

Trade and the environment towards a sustainable playing field —

politicians seeking to maximize something other than societys welfare creates a situation where the functioning of public institutions must be included the overall economic analysis. This also underlined by the fact that the majority of the worlds countries are dictatorships.

Skewed political influence

A sensible utilization of trade policies obstructed by societys power structure. The good of a better, healthier environment tends to spread out people and results long—term profits, while the costs of over many combating problems relatively short-term and concentrated on smaller are groups. Those who suffer were perhaps not even born when the damage was caused and carmot speak for themselves. Again, should be stressed that complete information not available and that different players do not have access to common information. Environmental effects be made less politically sensitive they are can charmelled against groups who are uninformed about, or have limited opportunities to protest against, their losses. Problems are especially pronounced in dictatorships where the use of force to oppress weaker rampant. The result can, for example, be that pharmeceuticals, groups poisons and other goods which are found to cause dangerous health effects are dumped countries where either the authorities or the public who will these products have opportunity to evaluate them. One example consume no the ongoing redistribution of tobacco from wealthy countries, use to poor

supported by comprehensive advertising campaigns, see Fact Sheet page

79. Part of the problem that certain spectacular environmental questions exploited when environmental arguments can be used as an excuse for are measures which fulfill completely different objectives. Against this background can be seen distortions political influence which tend to discriminate against the environment. At the same time, the introduction of trade barriers tend to benefit well-organized producers while harming consumers.100 Anti-dumping policies in the USA and the EU

present disturbing examples.101 For such reasons, trade barriers and

consideration for the environment be said to represent an unholy can alliance. Differently stated, can be difficult for fiiends of the environment to assert themselves politically against those who demand trade barriers for other reasons.102 There definite need for general a regulations which carmot be manipulated and evaded, weak countries are not to get raw deal. This demonstrated clearly by the fact that the two a types of production within which developing countries have clear-cut competitive advantages, agriculture and textile manufacturing, have landed outside the GATT rules and characterized by tangle of trade barriers are a and subsidies.

Trade and the environment towards a sustainable playing field ——

Despite broadly-based support for the principles of trade fair on conditions, the global community had great problems in completing the latest

round of Uruguay discussions GATT. The future for world trade open still uncertain. Inasmuch as not possible to clarify with great precision

when trade barriers are used to protect the environment and for other no reason, there an obvious risk that the environmental be used argument can as an excuse for traditional protectionism. With the door wide for open discriminating trade policies, the prerequisites for cooperation on common resource questions deteriorate even further.

The interaction between interested parties

The consequences of trade barriers thus depend not only direct costs and on revenues, but are also influenced by societys structures and power are related to the development of the multilateral trade system its entirety. In

order to bring about meaningful to observe how measures, necessary people adapt their actions according to how they expect others to act. The

relationship between different interest expressed in strategic groups behaviour. A well-known example the prisoners dilemma two — players who cannot coordinate their actions to both end manage up trouble, since each one risks being fooled by the other. Another example

when one person tries to hitch a free ride from else. someone Combined with imbalances political influence, strategic behaviour leads

to an extremely complex decision-making situation. Even the ruling power one country strives for the greatest good for society, they have to may cooperate with other countries whose governments indifferent to the are state of the environment. The failure to heed environmental in consequences one country can mean that the level of desirable environmental requirements

declines other countries too, when the possibility of transfer even payments and binding contracts available. 103

Strategic interaction between countries the form of competition

regarding localization of production leads to further problems.104 Countries

can outbid each other with incentives to attract investors, and companies can use the situation to devastate natural country after another. resources one

This sometimes called sequential exploitation.105 The inability

or disinterest of host countries coordinating policies lays foundation for the a destruction of Poorly functioning capital markets, least the resources. not wake of the debt crisis, contribute to the problem by limiting to access capital, raising interest rates and creating extremely limited planning

horizons for economic decisions.

Several possible explanations to why environmentally damaging as activities are not re-located often here. the majority of more appear

Trade and the environment towards a sustainable playing field -

countries set low priorities on environmental protection, then each country would be forced to be satisfied with the environmental demands which are compatible with industries refusing to move. other countries do not care about the environment, those who do care are therefore forced to find other solutions. These include industrial policies, subsidies, too low may enviromnental demands requirements for trade barriers. The flow of or production over geographical borders therefore results consequences for the desire and ability to protect the enviromnent, even though a more comprehensive re—locating of environmentally damaging activities not observed. Due to uneven access to information, the less than full representation of people the political and the fact that coordination of all many process, interests cannot occur, impossible to find ideal answers to international environmental problems. Practically possible solutions demand that interaction between various interests used positively, so that productive cooperation develops between the players involved on various levels — and different countnes.106 government authorities, companies consumers

An example of cooperation

Environmental charges in country result companies incurring costs in the a short-terrn perspective. On the other hand, technological development and skills which reduce costs are stimulated. Given that companies win goodwill the of the consumer and that environmentally damaging eyes activities are met by increasing international opposition, other countries are pressured to eventually adopt the same policy. Those who introduced purification requirements early enjoy strategic advantage, which at an stage has so far been exploited principally by Japan and Germany. The American professor, suit.107 Porter, argues that the US should follow

The World moving towards deregulation, private initiatives, and global markets. This requires corporations to assume more social, economic, and environmental responsibility in defining their roles. We

must expand our concept of those who have a stake in our operations

to include not only employees and shareholders but also suppliers, customers, neighbours, citizens’ groups, and others. Appropriate communication with these stakeholders will help to refine continually us our visions, strategies, and actions. Declaration of the Business Council for Sustainable Development.

If consumers do not appreciate anti-pollution efforts, and other countries do not adopt them, then companies can still decide to move to another country order to avoid the charges. How consumers and companies react turn

Trade and the environment- towards a sustainable playing field

decides whether other governments find worthwhile require to environmental protection well since this decides to what extent they as — attract investors or lag behind they do not. In combination, this cooperation, illustrated Figure 16 for the of case purification requirements, decides how fruitful for individual country an to take action the first place.

Home country Purification demands

yes no --— 7. . . . . - - - - - - - - - - - - - - - - - - - - --

5 °°S° 5

I --‘ yes --- E

- - - - - -- no . . . - - - - - - - - - - -- T I ‘

i i °°‘Pa‘°S 4 T

I n0,productiont0be -..I.. I ja :

I I Abroad E

Punfication demands

E E

-- yes --- ----- - - - - -- no - - - - - - - - - - - - - - : -- ..: .- --— . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --

Figure 16. Example of the relationship among consumers, companies and governments. Each players judgments and actions affect the final results.

In order for environmental policies to be successful, important to coordinate international This the for, not least, global measures. case enviromnental problems such as the risk of an accelerated greenhouse effect as a result of increasing carbon dioxide the atmosphere. Calculations which heed technological advancements show how sensitive national a economy to the pace at which tax carbon dioxide introduced. a on Measures will be they shown to be costly the —— are necessary — more longer wait to begin taking action.108 we Effective systems of charges must be created internationally and, at all possible, lead to the largest reduction of pollution where costs the least. On the other hand, the desire to adopt measures increases with the ability to pay. The OECD has calculated costs for possible strategies. All developed countries, or OECD Europe, could introduce reasonable charges for the emission of carbon dioxide without suffering unmanageable costs.109

Trade and the environment towards a sustainable playing field ——

Although the costs of reducing emissions lower countries, the are poor measures will hardly to unless industrialized countries introduce come pass them first. the OECD introduces small but steadily rising charges for emissions, technological advancement will be promoted, and the at same time the means will be generated to stimulate the introduction of measures poorer countries. A more effective solution would be achieved by coordinating measures which influence both emissions and absorption of carbon dioxide. A large part of the human contribution to the greenhouse effect would, for example, be reduced more cost-effectively by checking forest destruction than by reducing consumption of fossil fuel. Apart from the fact that carbon dioxide released when a forest such those the Amazon burnt, the as area destruction of tropical rain forests draws attention to the potential value which forfeited with the loss of genetic diversity, such unexploited as opportunities for medicines the fixture. These losses increase further since ongoing advances biological technology opening of are up new areas application for genetic information. Developing countries, however, lack the capital and technology which would make possible for them to profit from the wealth of the rain forests. While access to credit rationed, previously accumulated debt burdens and high interest rates create great need for capital income the short a term. The establishment of industry also hindered by trade barriers processed on products in developed countries. Developing countries therefore have little understanding for demands by world opinion that the rain forest should be

preserved, see Fact Sheet page 114. There naturally, other

are, many ecosystems which also important with for example to manage care, sensitive mountain and coast Many ecosystems seriously areas. are threatened today and, like the tropical rain forests, will have disappeared within a few generations, unless satisfactory share of the actual value of a the resources goes to the people living with, and from, them.

Trade and the environment towards a sustainable playing field

needed. has been estimated that tree needed for 300 cigarettesim,

one or that an acre of tobacco requires an acre of forest. Large areas are involved in the total picture; the import of tobacco to England, for example, consumes

almost 200,000 hectares € 490,000 acres of forest per year.111

In total, 35 million small farmers all over the world are dependent on tobacco cultivation. Tobacco exports are a significant source of income in, for instance, Tanzania, Brazil, Sierra Leone and Mali. Tobacco export accounts for 25 per cent of Zimbabwes total export income, and in Malawi an even greater proportion, 68 from of tobacco. 112 Tobacco production per cent, comes export completely dominated by large companies, both national monopolies and multinational enterprises. Seven companies account for half of the global production. The negative effects of tobacco consumption also increasingly affect the Third World. Tobacco one of the most profitable consumer products, but the market has shrunk significantly the industrialized world. Cigarette marketing increasingly restricted, and fewer people smoke. Multinational tobacco companies therefore market themselves in developing countries, although they cannot charge such high prices there. The largest producer in the USA, Philip Morris, sold more outside the USA than at home for the first time in 1990. In fifteen years’ time, the greatest profits are also expected to be earned outside the USA.113

Sources: French, H.F. 1993, Costly Tradeoffs: Reconciling Trade and the Environment. World Watch Paper ll3, page 12; Wells, P. and M. letter, 1991, The Global Consumer, Best Buys to Help The Third World. New Consumer, page 180; The Search for El Dorado, The Tobacco Trade, The Economist May 16 1992 page 21 Hard to give up the weed, The Economist, January 1986 page 56.

Instruments and possibilities for solving international environmental problems

In this chapter, the economic view of the connection between trade and the environment has been discussed. Environmental problems stem from market and political failures and the international aspects of environmental problems decrease individual countries possibilities of correcting them. Harmonization which standardizes environmental requirements different countries not desirable, since leads to insufficient solutions. The import of goods where consumption leads to environmental damage legitimizes the introduction of product norms and standards, but the question at which level this desirable: local, national or international.

Trade and the environment towards a sustainable playing field --

International enviromnental effects also results of production are processes. Other countries may suffer damage either because the environment abused manufacturing country, which equivalent a to a subsidy of the activity question, because of emissions which travel or across geographical boundaries. The management of such problems requires international cooperation. This be accomplished by and can common taxes charge systems or by coordination of international transfers and national measures order to encourage environmental in countries which measures lack the ability to pay. Trade barriers usually ineffective instrument are an when trying to tackle this type of environmental problem and risk being abused for other purposes as well obstructing desirable cooperative as efforts. In order to facilitate spontaneous market solutions the environmental area and to lessen the danger of opening the door for capricious trade policymaking, essential that international environmental and the agreements multilateral trade system within GATT do not conflict with each other. Since the costs of implementing environmental rise they introduced measures are a hurry, important to be prepared good time given that — environmental concerns will later demand action. Unambiguous sooner or international agreements the environmental would lead general area to a spurt efforts not to be left behind. A this direction would be move facilitated by easily accessible and reliable information how individual on players afiect the environment. There reason to question what small country do, in of a can terms international cooperation and its to address international on own, environmental issues. Let again consider the Swedish With the EEA us case. Agreement, as well as possible membership the EU, Sweden will have less scope for setting its product standards. This does that the own not mean country will stand helpless the face of international environmental problems. Active contributions required from different players are effective solutions to be achieved, and EU member possible are as an that Sweden would play important role influencing European an enviromnental policy. On the other hand, there risk that Sweden might a be bound by EU decisions and would be forced into agreeing to a less active environmental policy nationally well internationally. To determine as as which direction will result the best possibilities lies outside the issues addressed this report. Advanced industrial countries have special opportunity to influence the a environmental question. Swedish industry has high share of research and a development, but renewal of manufacturing rather weak. Above all, few new products and companies being developed. A one-sided focus are on cutting costs results a gloomy perspective for the International economy.

Trade and the environment towards a sustainable playinLfieId -

demand weak and there for undifferentiated products with a low refinement value tough competition from the newly industrialized countries and potentially Eastem Europe. Continued welfare today requires competence development, flexibility, structural changes and a reorganization of production. Increased environmental consciousness gradually creating significant adaptation problems for many industries. This especially true for energy and material-based industries. Increased recycling of paper seems, for raw example, to be negatively affecting demand for wood products within the future. On the other hand, the demand for reduced carbon dioxide near emissions and the need for alternative fuel for transportation may lead to higher demand from slightly longer term viewpoint. Above all, a development of environmental technology means new possibilities a field where Swedish companies able to match most competition. The state are carmot and should not try to foresee which specific ventures are motivated, but still act promoter and qualified purchaser an area where can as a enviromnental technology apparently has a future. Effective international programs which compensate countries for the maintenance of life-supporting natural resources of global importance will most likely take some time to develop. There however, a way to indirectly stimulate and facilitate sensible resource utilization in poor a countries, connection with offering aid. In order for this to be possible, aid agencies will have to increase their knowledge and administrative competence in that area. This necessary both so that life support systems can be managed as an aid goal in itself and so that consideration will be paid to the environment overall aid work. should also be possible to coordinate foreign investments and aid for the of promoting the purpose development and spreading of environmentally friendly technology. In the former state-plarmed economies of Eastern Europe, particularly in the former Soviet Union, there are a number of ticking environmental bombs which result far-reaching consequences not only for the immediate can but also for the population of neighbouring countries. Until now, the area West has been satisfied with, for the most part, determining what the problems This where individual countries should more are. an area actively seek to take a stand with selective measures which can inspire ways more comprehensive ventures cooperation with others.

Trade and the environment -towards a sustainable playing field

Trade and the environment towards a sustainable playing field ——

Chapter 3

Trade

Regulations -

the Institutional Framework

and Actual Conditions

There a widespread misconception that free trade would be desirable. not unusual that the GATT agreement referred to as a free trade agreement and the EU referred to as a free trade area. These expressions imply that there would be no restrictions whatsoever on trade; on the contrary, trade would not be regulated at all. Let us establish that there are no free markets free trade the true or sense of the word. Markets, i.e. places where things bought and sold, are and trade, that buying and selling, always function within different institutional frameworks. Legislation competition legislation, taxation, etc., trade regulations GATT, bilateral trade agreements and cultural aspects are examples of such frameworks. Free trade would totally free presuppose unregulated markets and would mean total lack of institutional a frameworks. There would consequently be taxes, laws and no no no international agreements. If free trade existed, would be permissible to trade anything that someone else was willing to buy or sell, including people, narcotics, atom bombs and toxic waste, to mention few of the striking examples. a more From this perspective, seems quite obvious that free trade not something to be aimed at. This observation also confirmed by the fact that countries all over the world have chosen to limit different forms of trade, for example within the areas referred to above. What generally meant by the phrase free trade increased liberalization of international trade, the removal of trade barriers which impede the flow of goods between countries, hindering efficient an utilization of resources and thereby impairing the general welfare. But just as there are reasons to stimulate a freer flow of goods borders across some instances, so there are obvious why to restrict trade in reasons necessary order to increase welfare. This expressly recognized in, GATT rules e.g. and within EU regulations, since certain paragraphs grant member countries

the right to introduce rules for environmental protection, for instance which

restrict trade a number of ways.

Trade and the environment towards a sustainable playing field --

This means that there no actual free trade and that thereby no areas exist that are not covered by trade restrictions. However, there are geographical areas within which countries have agreed that in principle permissible to sell a particular item everywhere, given that the item has been approved for sale country included that area. The EU has, since a January 1993, represented such an area, as a further development of the original customs union. As a result of the principle of free movement of

goods produced and marketed in EU country the Cassis de Dijon

an Principle, see page 104, usually called a free trade area. Individual membership countries, however, have the opportunity to adopt measures which restrict trade, directed towards, for example, protection of they are the environment. The question thus, not whether trade should be regulated, but how

should be regulated. This leads to the difficult question of what kind of trade

should be restricted. How should an institutional framework be designed with regard to trade, order to achieve as high a level of a welfare as possible, both materially and otherwise Which types of trade are desirable and which are less desirable impossible to give simple and complete answers to such questions. The lie in what the political systems different countries are answers prepared to accept, which means that there are considerable diñerences between countries. This neither right nor wrong; quite natural considering the diversity of cultures and religions which exist different countries. There nothing odd about the fact that there are different opinions as to what good or bad, desirable or undesirable; on the contrary, very human. There are, however, certain utilities which the interest of everyone to preserve, namely the basic prerequisites for human life. Some examples are: protection against ultra-violet light the form of a functioning ozone layer, a normal climate and biological diversity which ensures genetic

selection and prevents resilience the ability to recover afier a disturbance

from diminishing. In general terms, development which preserves such values usually called sustainable development or ecologically sustainable development. This chapter examines the opportunities offered today for adoption of measures for environmental protection which afl°ect international trade within the framework of GATT. The EU trade regulations are also discussed from the same perspective, albeit somewhat briefly. An overview of certain

key fimctions in the NAFTA North American Free Trade Agreement

then presented. At the end of the chapter, we discuss in which respects international trade regulations would possibly need to be changed in order to

Trade and the environment towards a sustainable playing field ———

better correspond to the demands set by the international communitys goal for ecologically sustainable development.

GATT todays playing field for world trade

-———

The GATT General Agreement on Tariffs and Trade was established

1947. The purpose was to try to achieve better organization of international trade, which after World War was full of regulations which had ofien been introduced for specific situations which occurred during the war years. The GATT not independent organization, merely an agreement the an intentions of which can only be interpreted the member countries. The agreement has formally into effect, but the fact that GATT has never come existed and been applied since 1947 has resulted the GATT rules being regarded as binding. Since its beginning, GATT has provided a forum for negotiation for simplification of the regulations for international trade among the member countries. In 1992, GATT had 108 members, who account for approximately 90 per cent of world trade. In principle, the GATT agreement only regulates trade of goods and products and, in the present model and with the present interpretation, not production GATTs objective to promote economic processes. with various barriers international trade.115 development by doing away to The agreement gives detailed instructions for GATT countries’ conduct the trade policy arena, and thereby regulates the conditions for how countries respectively should should not act when designing trade policies or although considerable scope left for interpretation. — Within the GATT framework, six general tariff negotiations were completed from 1947 to 1967. In principle, these aimed at first mapping out restrictions international trade the form of quantitative restrictions and on customs duties, and then minimizing the levels of duties. This process continued from 1973 to 1979 during further round of negotiations, the a Tokyo Round. New agreements for levels and areas for customs duties, as well as new multilateral agreements regarding non-tariff measures, were

finalized during these negotiations. The TBT Agreement Technical Barriers to Trade on technical trade barriers can be found among these agreements.

Express of the word environment GATT context was first made use a the TBT Agreement.

Trade and the environment towards a sustainable playing field —

The Uruguay Round The Uruguay Round began within GATT in 1986. has concemed with custom duty levels and technical trade barriers as well trade of services as and intellectual property rights eg. patent rights, which completely are new areas of interest for GATT. The Uruguay Round includes suggestion a for a separate agreement on sanitary and phytosanitary the SPS measures, Agreement Sanitary and Phytosanitary measures, 95.. This see page agreement specifically mentions the environmental issue, and approximately the same way as the TBT agreement. Environmental issues are included the Uruguay negotiations, at least indirectly, but many important questions concerning trade and the environment have not been under discussion. According to informed observers, several governments are employing a deliberate strategy of not dealing expressly or comprehensively with environmental questions in the current negotiations. This can be explained to extent by general some a unwillingness to come to grips with environmental questions, and by the fact that an exhaustive body of data which to base negotiations not yet on available. can, however, be stated that there a general opinion, both environmental and trade policy circles that forthcoming negotiations will have to deal with the difficult and complex matters related to trade and the environment. As mentioned at the beginning of this report, analysis of trade and environmental issues has already commenced several international forums. The aim to map out questions and define concepts order to

facilitate the coming negotiations regarding the GATT rules see page I0.

A much-debated and controversial suggestion the Uruguay Round has

been the creation of an international trade organization Multilateral Trade

Organization: MTO from the GATT which would give the GATT formal status and formal authority. This suggestion has given rise to considerable opposition, for example from environmental organizations the USA, possibly because the MTO could be given authority which would supersede

national United States legislation. Some central aspects of the MTO

are examined the following sections, but not especially exhaustively. This due to the fact that discussions regarding an MTO are far from complete; even establishing an overview of the current proposals within the framework for the Uruguay negotiations a complex matter. therefore diflicult to present a fair view of the situation. can, however, at the time of writing 1993, be stated that no proposal can be identified which would undoubtedly reduce improve opportunities for environmental protection. or In other words, as already stated above, environmental issues have not been given priority the Uruguay Round.

Trade and the environment towards a sustainable playing field -

National regulations create comparative advantages

One of the central intentions within the GATT that any advantage, favour, privilege or immunity granted by contracting party to product any any originating or destined for any other country applies equally to the like product originating or destined for the territories of all contracting parties.

No country should discriminate against any other Article GATT,

regarding the MFN principle Most-Favoured-Nation. In line with this principle, countries should not introduce trade restrictions which discriminate against foreign producers relation to domestic producers

Article GATT, the principle of National Treatment. The foundation for

these two central GATT principles can be found economic theory see

Chapter 2. The theory shows that the overall material welfare improves countries trade with each other and thereby specialize their production to the items they can produce at the highest quality and best price compared to other counties, given certain assumptions. The fact that these conclusions are based on assumptions which are seldom or never fulfilled in reality has already been discussed in Chapter Yet another dimension of GATT appears when discussing the content and interpretation of the phrase comparative advantages, namely national legislation and regulations. These are regarded by GATT as part of a countrys relative competitive strength. GATT members have agreed not to introduce discriminatory customs duties for different goods. This makes difficult to even out differences production costs by collecting duty on imports from countries which have, for example, lower taxes, fewer longterm requirements for labour protection or less-developed social welfare

systems. These items are often referred to as self-induced costs.

can, however, be strongly disputed whether for example the rapid destruction of a countrys rain forests be regarded comparative can as a advantage for that country. The country can, the short run, gain some export income as a result of low production costs, but in the long the run conditions for a sustainable income from the forest undermined. source are also impoveiishes international resources such as the biological diversity which only exists rain forests. The rain forest also most likely represents an essential link in the sensitive interplay between the different factors which determine the worlds climate. For reasons identified the previous chapter, these aspects are not considered by the market. For quite some time, there have been detailed discussions within GATT regarding the introduction of form of social clause.116 A clause of this some nature would make possible to discriminate against imports from countries which have insufficient labour protection andor lower levels for certain central social welfare functions and therefore incur lower production costs.

Trade and the environment towards a sustainable playing field -

A social clause has still not been introduced, but there constant discussion of the subject. Similar reasoning can be applied when certain countries allow inferior environmental protection with the aim of holding production costs down and therefore increasing their own competitive strength. Obviously, policy-making which results the disregarding of long-term economic interests, as well as national and global environmental interests, has nothing to do with production advantages. On the contrary, such policies should, GATT tenns, be referred to as hidden subsidies to industry, which are forbidden according to the GATT rules. As Franklin Roosevelt put a speech to the US Congress 1937: Goods which are produced under conditions which do not meet a rudimentary level of decency should be regarded as contraband and not be allowed pollute the roads of international trade.117 to

Violation of GA TT rules

In principle, the GATT rules are binding, but there are a number of exceptions to which we will return later. can be stated that no country automatically guilty breaks one of the GATT rules. Every country obliged to notify GATT of all measures which may influence international trade. The notification procedure makes possible for contracting parties to be sure that their rights according to the GATT are not violated. In such cases, possible for countries to register complaints about the measures

whether they have merely been suggested or already put into practice

which they deem to infringe their rights. First, bilateral negotiations are to be initiated between the parties concerned. Ifno solution to the conflict can be arrived at by discussion then the contracting party bringing the complaint

can request from GATT that a panel be appointed to decide whether or not

the GATT rules have been violated. A panel consists of three experts with special competence in trade policy. The experts are appointed by GATT and need to be approved by the parties involved. The panel has the right to consult with each international organization deemed appropriate and to procure the specialized knowledge requires. principally the accused country which must prove that has not acted a way which would constitute a violation of the GATT rules. The outcome will depend upon which paragraph of the GATT rules the contracting party bringing the complaint referring to. Using the petition from the party bringing the complaint as a foundation, the panel must determine whether the GATT rules have been violated. The panel report not, however, equal to the ruling of a court of law, but

Trade and the environment towards a sustainable playing field -

sent to the GATT Council one ambassador from each contracting party,

which can unanimously adopt the panels recommendation. There need be only one dissenting voice the Council for the panels decision not to be adopted. According to the current proposal the Uruguay Round, suggested that certain changes be made at this stage the dispute settlement process. One of the proposals, which at the time of writing still being discussed, that a panel should be able to apply form of qualified some majority consensus cannot be reached. The possibilities for sanctions are also being examined. There also a proposal that the recommendation of the panel could be appealed against, which not possible today. should be noted that only countries which are GATT members can interpret the rules. The GATT not an independent organization, but rather the sum of the agreements of its member countries. This means that countries can agree that rules should be given a certain interpretation, that an older interpretation can be changed or that the GATT texts be changed. therefore not clear how a certain measure will be judged by GATT, there a great deal of room for alteration to accepted practice regarding interpretation changes over time and different types of questions. One of many examples of such interpretations the meaning of the words:

arbitrary and unnecessary Article 20 see below.

Sweden has, for example, since 1979 successively developed an increasingly restrictive attitude to the use of cadmium. The present decision was introduced 1985 and formulated as a eneral ban on the use of

cadmium, with list of the permitted exceptions. 18 this ban necessary

a arbitrary The ban has never been tried GATT, since no other member countries have challenged the Swedish measures. However, that not to say that Sweden could today decide to similarly ban the use of mercury without a dispute. would depend entirely on whether or not a contracting party complained about the ban. Generally, environmental measures have led to few formal deliberations within the GATT fiamework and even fewer panels.

Trade and the environment -towards a sustainable playing field

GATT exceptions for environmental protection

As mentioned above, the GATT rules principal, binding. There are, are, however, a number of exceptions which the main regulations in can cause the GATT rules to be set aside. This text will describe only the exceptions which at present can be invoked to apply trade restricting for measures environmental protection, specifically Article 20. Article 20 GATT often called the rule of exceptions; stipulates that measures applied a manner which would not constitute of a means arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction international trade on are

pemiitted as follows Article 20 full Appendix 4:

appears

b necessary to protect human, animal or plant life or health;

g relating to the conservation of exhaustible natural such

resources measures are made eflective in conjunction with restrictions domestic on production consumption. 119 or

should be noted that the word environment not expressly found the

General Exceptions. However, the text has especially 20 b to be

come interpreted as general environmental protection, since protection of human, animal or plant life or health principle what directly indirectly we or wish to protect by protecting the environment. not obvious what the words arbitrary, unwarranted disguised or restrictions mean, and what the phrase countries where the same conditions prevail means practice not completely apparent either. We will return to these phrases later in this chapter.

Conditions for the approval of environmental protection

measures

If a country adopts to protect the environment necessary to measures

protect human, animal or plant life or health and the influence

measures international trade, the should fulfil certain conditions measures order to be compatible with GATT rules.

the environmental protection legitimate The word legitimate implies an implicit requirement to prove that environmental problem actually an exists, i.e. scientific justification

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the measure necessary Are there other alternative which

measures fulfill the goal of environmental protection, where trade influenced to a lesser extent

the measure applicable such a way that foreign producers not are discriminated against an unjustified manner Simply put: domestic are goods treated the same way as foreign goods

the measure applicable such a way that no particular GATT member will be discriminated against relation to other GATT countries Are imported goods, regardless of the country of origin, treated the same as native goods

According to current interpretation of GATT rules, the only measure can be introduced order to protect national territory.

The GATT regulates only the trade of goods and products, not production processes, i.e. how the goods are manufactured. This that not means permitted, general, to adopt against imports, based how the measures on goods are manufactured the importing country. importing country an believes that a manufacturing country has not protected the environment sufficiently during the manufacturing process of actual goods, the importing country does not have the right to introduce import restrictions against the goods by invoking environmental protection, according to the GATT rules

as they are formulated today. In principle, only product-related effects i.e.,

hazardous substances, insanitary conditions, etc. can be invoked according to the GATT. If the proposals for examination by the TBT Code the Uruguay Round are passed, then production methods with product-related effects will be covered by the GATT to a certain extent.

Extraterritoriality —interfering in other country s policies

Trade restricting measures which are directed towards conditions outside individual countries, for example, against production methods other countries, are usually called extratenitorial One probable measures. reason why the GATT rules principle only concede measures which directed are towards product-related effects and not towards production methods, that the GATT, principle, could otherwise be violation with current international law. According to international law, each nation state has sovereign right over its own territory. the GATT rules conceded measures against products which are based judgments of how the product on manufactured in another country, would result a distinct interference in

Trade and the environment towards a sustainable playing field —

the decision-making sovereign rights of nation states. This would favour large, economically strong countries, which could then force smaller countries to change their policies. In discussions on trade and the environment, the phrase environmental imperialism sometimes used. The fact that the GATT rules only allow measures which aim at environmental protection within a countrys own territory today seems obsolete and limited, since environmental degredation to an increasing extent spills over national borders. Perhaps the greatest threats to the environment that we know of today are those of climate change and depletion of the ozone layer. Both are examples where global commons are affected i.e. areas which lie outside the legal jurisdiction of any particular — country are threatened. To this already bleak picture can be added the rapid depletion of genetic diversity through the extinction of plant and animal species. Fish, birds and other wild animals do not recognize man-made borders. The environmental gain from protecting a species on one country would, therefore, be reduced neighbouring countries did not introduce similar protective measures. can be thought quite remarkable that, according to GATT, permissible to take measures against the importation of products which are

manufactured by prisoners see Article 20, Appendix 4, while at the same

time not permissible to take measures against imports of products manufactured a way which damages the earths shield against ultraviolet rays an essential prerequisite to biological life as we know The — explanation lies most likely the fact that the GATT rules were fonnulated some time ago. At that time, trade of goods manufactured by prisoners was a great problem from the point of view of competition, while the substances which destroy the ozone layer had not even been invented. According to information from the Ministry of Trade Great Britain, the first draft of Article 20 was written the early 1920s. This may also explain the weight attached to trade gold and silver, since gold, especially, was the monetary

standard of coinage of the time see Article 20, Appendix 4.

should be noted, however, that when interpreting Article 20 not evident that Article 20 can be applied only when taking measures to protect a nations own territory. One trade analyst from the USA points out that an addition, which would have restricted the use of Article 20, was not adopted when the paragraph was fonnulated. At the beginning of the 1900s, there was also a tradition of making agreements with extraterritorial influence. During the decades before GATT was written, a great many agreements were aimed toward protecting people and the environment, not just certain countries but all countries, and which regulated trapping animals, for example.

Trade and the environment towards a sustainable playing field ——

In general, import bans were introduced within the framework of international cooperation, order to help export countries implement protective legislation. On a few occasions, countries acted either unilaterally or collectively, hoping to influence countries which not part of the were agreements. One example of the latter the ban against the production and import of matches manufactured using white phosphorus. White phosphorus caused serious health problems during the manufacturing process, but not when the matches used. 120 were The GATT has changed time, and articles have been added. over new

According to Article 21 on exceptions regarding national security for

example, pennissible to introduce trade they taken to any measures are protect interests regarding national security, such as the following:

i relating to fissionable materials or the materials from which they

are derived;

relating to the trafific in ammunition and implements of

arms, war and to such traffic in other goods and materials carried directly as on or

indirectly for the of supplying military establishment;

purpose a see

Appendix 4.

Special agreement within GATT on product regulations and

related areas

In connection with the conclusion of the Tokyo Round 1979, the GATT rules were supplemented by independent agreement from GATT, namely an the TBT Agreement.

The TBT Agreement Technical Barriers to Trade, regulates the

utilization of national technical regulations and standards which can influence international trade. TBT all types of products, including covers agricultural products, but not trade of services. Todays decisions TBT are concerned with product features, while the Uruguay Rounds proposal for revision of the TBT Code includes characteristics which relate to production methods and include, for example, requirements for packaging and labelling. The proposal for an agreement on sanitary and phytosanitaiy the measures, SPS Agreement Sanitary and Phytosanitaiy concerns human, animal or

plant life or health the ongoing Uruguay Round all

covers measures which are taken order to protect human, animal plant life health. or or The departure point for both agreements that contracting parties should not be prevented from taking which to protect measures are necessary human, animal plant life health. Since such values directly relate or or to what usually call environmental protection, TBT be interpreted we can as

Trade and the environment towards a sustainable playing field —-—

including environmental protection as a legitimate use for technical regulations covered by the agreement. However, this does not give carte blanche to the introduction of all measures developed for protecting the environment. In a manner corresponding to GATT, required that measures fulfill certain conditions before they are permitted according to TBT andor SPS:

Transparency. The proposal for the SPS and TBT Agreements the Uruguay Round both contain comprehensive decisions concerning

transparency, that information for interested parties other contracting

parties. Information should be available both a measure going to be taken beforehand, and also on how the decision formulated afterwards. 121

Legitimacy. The Uruguay Rounds proposal for both agreements requires that taken to protect the environment or health should be measures legitimate, meaning that there must be scientific justification to indicate that the will the environment health.122 This measures actually protect or a further example of the scope for interpretation which exists GATT, since quite clear that all scientists are not unanimous on all issues.

Non-discrimination. The proposals to both agreements are based on Article 20. However, there are stricter requirements regarding nondiscrimination TBT than SPS.

Least trade restrictiveness. Both agreements contain requirements that the measure which taken should disturb trade to a minimal extent, given that the environmental goal can be reached. In SPS, there a supplement stating that the above applies, but what technically or economically feasible also be considered.123 must

In the Uruguay Rounds proposal for the TBT and SPS there are decisions which production methods.124 TBT and SPS consequently contain cover decisions measures which should be taken other countries. The on decisions are, however, restricted to measures which directly relate to product characteristics essential to the importing country TBT or measures which are necessary to protect health within the importing countrys territory SPS. An example of the SPS Agreement the management of timber in export countries regarding measures for killing bark beetles, since the spread of these insects to importing countries could cause damage to the forests in those countries.

Trade and the environment towards a sustainable playing field —

A final item worth special notice the TBT Agreement the decisions on international standards. TBT states that where relevant standards exist or where their preparation close to completion, the contracting parties should

case international standards or relevant sections of them not be appropriate may for the contracting parties, for example for reasons such as the protection of human health or safety, animal plant life health, the environment; or or or fimdamental climatic geographical factors; fundamental technological or problems. In practice, this will mean that, even international standards exist for, e.g., permissible traces of insecticides food products, each country still free to introduce stringent regulations. The TBT requirements more regarding standards should thus be regarded floor rather than as a as a ceiling.

GA TT panels on environmental questions

There have been few panels regarding methods for environmental protection during GATTs nearly fifiy year old history. Of the hundreds of panels which have been appointed, only a small number have been concerned with Article 20 GATT, the article which be cited when dealing with health and can environmental protection The most interesting and comprehensive measures. of the panels concerned with Article 20 has been the USA ban the on importation of tuna from Mexico. Schools of yellowfish tuna the Pacific Ocean ofien swim beneath schools of dolphins, which results the dolphins being caught nets meant for the tuna and consequently dying. This especially the when fishing case for tuna with a purse seine net. There already law the USA 1972, was a the Marine Mammal Protection Act, which aims to protect marine mammals such as certain species of dolphin. The law ceiling limit dolphin sets a on catches as well as the number of dolphins relation to the number of tuna caught. This legislation applies US territorial water and the economic zone; ships travelling in international waters and registered the USA are also bound by this legislation. The law decrees import ban tuna fish an on which caught using methods which do not comply with US standards. The legislation offers an opportunity to ban the importation of all fish from a country which does not comply with agreements made this of debate. area In August 1990, an embargo placed the import of tuna from was on countries not fulfilling US standards. The embargo first covered five countries, but finally only concerned with Mexico since the other was countries had promised to fulfill the American demands. Imports of

Trade and the environment towards a sustainable playing field —

yellowfish tuna, a tuna product from Costa Rica, France, Japan and Italy, among other countries, were later prohibited. Mexico protested against the measures and requested consultations with the USA November 1991. When nothing carneof these discussions, they GATT dispute settlement panel February 1991. requested a

Mexico argued as follows:

The American measures are opposition to GATTs Article ll ban against quantitative restrictions and Article 13 ban against

discriminatory measures connected to specific geographical areas. The possibilities to expand the embargo on all fish from countries which do not fulfill specific regulations regarding tuna are in opposition to Article 11. The marking of approved products dolphin-safe discriminatory and opposition to Articles 9 and

The USA cited Article 3 its answer and considered the treatment of

imported goods to be no less favourable than the treatment of similar

domestic products see page 89 and Appendix 4. The USA also stated that

the could be considered to be opposition to Article even measures

then they could be defended by citing Article 20 b or

Mexico replied its comment to the American statement that Article 20 refers to individual country and cannot be used extraterritorially, that the one affected dolphin species were not threatened with extinction according to the Washington Conventions Appendix that the same species were influenced by other fish the Northern Pacific Ocean which were not under the same restrictions and that generally doubtful whether the phrase exhaustible can be applied to a population of living creatures.

The panel decision

In the panel report, published August 1991, the American measures were found to be in opposition to Article 3 and 11. The panel stated that only measures connected to the product are agreement with the GATT charter and that the American measures related directly to production methods. The panel also noted that the GATT did not specifically say anything about the possibility, with the support of Article 20, of taking measures for

the protection of the environment outside countrys territory

areas a own extraterratorial. The preliminary work and the aim of the exception clause were therefore analyzed addition to the consequences for GATT that interpretation general could result in. According to an early version of

Trade and the environment towards a sustainable playing field -

Article 20, measures could be taken with the aim to protect plants and animals corresponding domestic protective existed in the measures importing country. This was considered by the panel to that the aim mean to allow protection of the environment only within a countrys own territory. The panel fiirther felt that the United States measures were not necessary, for example as a result of certain technological details on how import regulations are formulated. The possibility of instituting environmental marking dolphin-safe was not regarded to be opposition to GATT. The panel also emphasized that the GATT rules offered substantial opportunities for member countries to institute which would measures restrict trade in order to protect the environment within their territory. own The panel also stated that import restrictions based on differences countries’ environmental requirements were to be allowed then would be necessary to define the limits for how and where this could occur so that abuse in the form of, for example, disguised restrictions can be prevented. If such possibilities are to be created, would be better to change the agreement and simultaneously safeguard possible changes with limitations and criteria rather than to extend the present interpretation of Article 20.125

What happened afterwards

In reality, the USA did not follow the GATT panels recommendation, and consideration of the panels report for formal adoption was deferred by the GATT Council, since the USA vetoed its approval. Mexico decided not to pursue the question fiirther. In the spring of 1992, the USA and Mexico began negotiations for an agreement on a five year moratorium the of on use the much-discussed seine nets.126 purse

GATT and international environmental agreements

Since GATT was created 1947, enviromnental problems have changed character. The changes described the previous section, that Rom local to transboundary, regional and global problems, have introduced whole a new dimension to environmental work. New solutions required which are demand distinctly intensified international cooperation, since single no country can alone solve problems by taking measures its own territory. With these factors forming the background, negotiations international on environmental agreements have become increasingly important part of an environmental policy most countries. Until now, the work has resulted

approximately 170 international environmental agreements being signed127,

Trade and the environment towards a sustainable playing field —

where countries undertake different long-term environmental measures depending on the level of development and other factors. An important element of these agreements that industrialized countries ofien allocate money international funds, which are intended to be transferred to developing countries under certain conditions, enabling them to afford to comply with the international environmental agreements. Barely 20 of the international environmental agreements contain measures

which are directed towards trade see Appendix 2. Decisions on the

regulation of international trade have, in general, been introduced so that the effects of other measures will not be negated. An example of this kind of convention the Montreal Protocol which an agreement among lll countries to reduce emissions and the use of ozone-depleting products according to certain criteria. In pace with the increase the number of international environmental conventions with regulations regarding trade, the risk of conflicts between GATT rules and the international environmental conventions has also increased. As we shall see below, the legal relationship between international environmental conventions and the GATT not completely clear.

GA T T and the Montreal Protocol In the Montreal Protocol, trade ozone layer-threatening substances regulated between countries which have signed the protocol as well as other countries. According to Article member countries may not trade those substances regulated the protocol including products containing those

substances with countries which have not signed the protocol. However,

trade regulated substances as well as products among those countries which have signed permitted. The motive for introducing this trade regulation was the risk that industries which manufacture substances that threaten the ozone layer could move their production to countries which had not signed the Montreal Protocol. Such a move might cause the member countries decreased emissions to be nullified, since the environmental problem would simply be moved from one location to another. does not matter where CFC released; its influence on the ozone layer equally negative. Using GATT terminology, the Montreal Protocols trade regulations can be described choice by the members to discriminate against non-member as a countries concerning trade substances and products containing those substances, as regulated the protocol. this instance that problems can arise regarding the relationship between regulations the Montreal Protocol and regulations GATT. As

Trade and the environment towards a sustainable playing field ———

described on page 55, GATT member countries have agreed not to treat another GATT country less favourably than the most-favoured—nation

Article l. One potential problem between GATT and the Montreal

Protocol lies the fact that countries have signed GATT but opted some to

remain outside the Montreal Protocol see Appendix 2. The following

example illustrates the problem: according to GATT, Sweden has committed

itself to treat South Korea favourably for example, the UK, the as as, at same time that Sweden has agreed, according to the Montreal Protocol, to

discriminate against South Korea relation to the UK when comes to

trade substances and products containing these substances

that are regulated by the Montreal Protocol.

A further aspect of the relationship between trade in, for measures example, the Montreal Protocol and GATT, that the present interpretation

of the GATT, see page 58, only provides for which

measures are

necessary to protect human beings, animal plant life of health Article

or 20b within a countrys territory. In the respective discussions within own the OECD and the GATTs Group Environmental Measures and on International Trade, has been questioned whether to protect the measures ozone layer are really agreement with the current interpretation of Article

20, that whether the layer actually of national territory. ozone a part At the same time, a conflict will not arise unless GATT member one brings an official complaint about another GATT member. Furthermore, no country has as yet questioned the Montreal Protocol.

not clear either how a potential GATT panel would rule these on questions. According to international law, takes a new agreement precedence over a previous agreement and specific agreement takes a precedence over a general one. difficult to date GATT since constantly being re-negotiated. The

fact that GATT has never formally come into effect, though has been even applied for almost 50 years, further complicates the issue. The Montreal

Protocol however, without doubt specific than GATT General more Agreement on Tariffs and Trade. The Montreal Protocol also has more members than GATT. This will not however resolve potential dispute, a since a GATT panel only consider whether the GATT rights of can or not the contracting party bringing the complaint have been inadrnissibly violated.

However, a large number of GATT member countries have signed the

Montreal Protocol, and hardly their interest to set trap for a themselves. GATT not independent organization but of rules an a system which can only be interpreted by member countries. therefore unlikely

that a measure taken accordance with trade decisions the Montreal

Protocol would not be approved of by the GATT Council, country even a which had not signed the protocol brought formal complaint. a

Trade and the environment —towards a sustainable playing field

The other international environmental agreements, where compatibility with GATT has been discussed, are the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal, and the

CITES Convention International Trade Endangered Species of Wild

on Fauna and Flora. CITES came into effect in the early 1970s. There have been instances of a GATT member country complaining that their GATT no rights have been violated by application of the trade decisions this

environmental agreement.

GA T T and Agenda 21

In November 1992 decided within GATT that Agenda 21 should be was submitted to the GATT Group Environmental Measures and International on Trade for the discussion of relevant questions. Certain items Chapter 2A in Agenda 21 will be examined by GATTs committee for trade and development. presently unclear how the work with Agenda 21 will take shape. Some of the relevant points already being examined within the are standing agenda of the on environmental measures and international group trade the GATT. At the time, obvious that all trade and same enviromnental issues Agenda 21 are not covered under these points. In the ongoing negotiations within the Uruguay Round there a proposal to create special environmental committee within GATT. Such a a committee could work united and comprehensive manner with a more trade and environmental questions. At the time, be stated that same can this extremely controversial issue, and the final decision carmot be an predicted. There good justification for giving special attention to one of the principles of the Rio Declaration, namely Principle States have, in accordance with the Charter of the United Nations and the principle of international law, the sovereign right to exploit their resources pursuant to their environmental and development policies and the responsibility to own that activities within their jurisdiction control do not cause damage ensure or to the environment of other states or of areas beyond national jurisdiction. The principle embraces of the central issues the trade and one environment debate, namely production other countries and the processes opportunities for certain country to take measures against conditions a outside their territory. Let that a certain country contains a own us assume large proportion of the worlds rain forests, which of global interest and are value terms of preservation of biological diversity and protection of world climate. Assume finther that the country has long-term unsustainable same a forestry policy, which means that the rain forests are being rapidly decimated, resulting dramatic losses of species and negative impact on

Trade and the environment towards a sustainable playing field -

the CO2-balance in the atmosphere. According to Principle 2 the Rio Declaration, that country has the right to exploit its own resources accordance with its own developmental policies, but at the same time the country in opposition to the second part of Principle which states that activities within one country may not damage other countries’ environments, or areas which lie outside their national borders.

Provided there was broad support for the idea, GATTK member countries could decide to allow the imposition of import restrictions on exports from countries whose environmental regulations were

considered to be inadequate. . would be necessary to define . . inadequate environmental regulation and to develop procedures and

criteria that would minimize the chances of abuse.

Trade and Environment, page 12, chapter 3 International Trade, 1990-1991, GATT 1992

How will countries react when their interests are damaged and both the interests and the cause of the damage physically lie outside their territories What measures can countries take to protect such interests and how important that they do this relation to the importance of upholding can the principle that every country decides over its own natural and resources development obviously of the utmost importance possible to as soon as find a way to combine important principles of international law on decisionmaking rights over a countrys own territory with the need to protect environmental values which are of global interest.

EU trade regulations and the environment

The Common Market aims to create economic growth and stability and thereby increase welfare. Member states’ production resources are to be used as rationally as possible. Equivalent and undistorted competitive conditions should enable trade and exchange of goods and services on a common market, and member states should be able to work, invest and produce, and thereby further the goals of the community. 123 The Treaty of Rome contains a number of prohibitions against national measures which create trade barriers and transboundary activities. Free movement of goods can, for example, be hindered national regulations with demands for a products quality are formulated differently, that so products cannot be marketed countries other than the one they are produced without the additional costs of adjustments during or after production. 129

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The EU a customs union with a common border. The customs union concerned with all trade of goods, and customs duties cannot be applied either on goods which are exported or imported between countries. Charges with the same effect are also banned. Once a product has passed the common border, has free movement within the community and covered by the Treaty of Romes regulations on free movement of goods. In principle, the Treaty of Romes regulations do the member not cover countries‘ tax systems. Tax regulations may not, however, create barriers for the free movement of goods, services, capital and services. Therefore, the treaty contains regulations directed towards fiscal discrimination. forbidden to levy tax on other member states products above the level of direct or indirect taxes on similar domestic products to, using taxation, or indirectly protect certain products. similar products are taxed unevenly, then that difference must be for objective reasons. Other barriers to the international flow of goods are covered by the Treaty of Romes Article 30. This article prohibits quantitative import restrictions

and all measures having an equivalent effect see 101. In

page a

fundamental miingl30, the EC Court of Justice explained that the

prohibition Article 30 covers any measure which can directly or

indirectly, actually or potentially influence trade negatively.131 In reality,

covers any measure which can be thought to prevent someone from moving goods from one member state to another.

An important principle Cassis de Dijon

—

To the extent that specific directives common regulations for particular

goods do not exist, the general EU rule that a product accepted one member state then can also be sold freely other member states. Perhaps the most well-known example of the questions which concern this principle and have been handled in the EC Court of Justice concern a French liqueur, Creme de Cassis de Dijon. When the West German government tried, at the request of their own liqueur producers, to stop the import of similar French liqueurs, they referred to West German alcohol policy regulations: the French liqueur, which has a lower alcohol content than the West German liqueur, was declared to be hazardous to some sections of the population as would be abused by certain groups of people. This argument not was approved of by the EC Court of Justice and West Germany forced to was withdraw its sales ban. 132

Trade and the environment -towards a sustainable playing field

Exceptions for environmental protection

The equivalent to Article 20 GATT Article 36 the Treaty of Rome, which establishes that which act trade barriers be measures as can introduced on the basis of particular considerations. These considerations are similar to those which are named Article 20 GATT and with are, regard to consideration for the environment, described protection of the as health and life of human beings, animals or plants. Measures which are based on these considerations do not need to treat foreign and domestic goods alike. They not, however, be arbitrarily may treated differently or a protectionistic in the manner, same way as according to the GATT rules. The principle that must be a measure necessary also contained the Treaty of Rome. If the Council has adopted a harmonization member state also refer to article measure a can l00a4 deems necessary to apply, i.e. stricter, national environmental requirements. A requirement for environmental influencing trade, which measures found in the Treaty of Rome but not the GATT, that the environmental

measure must be proportionately formulated In reality this means that the

environmental gain should be at least large the potential trade loss. as as Two of the most important court cases the EC Court of Justice which are concerned with the environment are described below.

Danish bottles in the EC Court of Justice

In 1981 Denmark decided that all beer and soda must be sold recyclable bottles. The decision was made the context of old and well-functioning an glass bottle recycling system which was threatened by increased sales of non-retumable beer bottles and other non-retumable bottles. The EU Commission considered the law to add greater costs to suppliers of imported goods than to suppliers of Danish goods and that the law thereby created a trade barrier preventing free movement of goods within the community. The case was handled the EC Court of Justice 1986. The Commission claimed that Danish law conflicted with the basic regulation that all goods accepted member state automatically one are accepted all other countries. Even though foreign bottles not directly were prohibited, foreign suppliers had greater difficulty creating system to a handle all the recyclable bottles. The Commission regarded this as discrimination against the foreign companies. They also stated that the law was not proportion to the environmental gain and that sufficient environmental protection could be reached other for example, means, voluntary collection systems and recycling instead of re-use.

Trade and the environment towards a sustainable playing field —

The court ruling September 1988 allowed Denmark to keep its law on obligatory re-use. The court confirmed that environmental protection a consideration within the EU which can allow an exemption from the general rule of free movement of goods. If there no specific EU law that particular area, situations may arise where distortions of trade are caused as a result of acceptance of different regulations different countries. The court decided that a law stating that beverage packaging must be returnable was necessary order to reach a high level of returns and that the measure was therefore in suitable proportion to the goal. However, Denmarks requirement for approval of bottle types was not accepted. After 1984, foreign manufacturers were required to sell goods in bottles which were accepted by Denmark or in their own bottles, but for test periods only and limited quantities. The motive behind approving bottles was that not possible to have an effectively functioning return system

with high levels of returns there a wide variety of types of containers

on the market. By controlling the types of bottles, the amounts could be restricted. The court found that a system of recycling non-acceptable bottles does not guarantee a maximum recycling level but does protect the environment. As a result of this ruling, very few beverages are imported into Denmark. The court thereby found that the environmental gain from an obligatory approval of bottle types was not proportion to the substantial

drawbacks for foreign supp1iers.133

Trade in Waste: The Walloon Ruling

In 1985 the Belgian Walloon region introduced regulations prohibiting the storage and depositing of waste from other countries or regions of Belgium. The EU Commission requested Belgium to appear in the EC Court of Justice and stated that the country had not fulfilled its commitment according to the Treaty of Romes Article 30 and 36 addition to several different directives dealing with waste which exist within the EU.134

On July 1992 the EC Court of Justice confirmed that:

Waste should be regarded as goods. Recyclable waste has a commercial value, but even non-recyclable material which transported over a border and an object for business transactions should be considered as goods, regardless of how the transaction may appear. however, difficult to distinguish recyclable waste from other types of waste.

Trade and the environment towards a sustainable playing field -

not permitted to introduce general import prohibitions of environmentally hazardous waste under the exception Article 36, harmonized legislation this area.135 since there

The Walloon situation exceptional, with an abnormally large influx of waste from other regions. The overwhelming need for environmental protection therefore justify an exception from can Article 30.

For exception to be granted according to Article 36, the measures an must not discriminate. The court ruled that particular regulations for waste from outside the immediate district should exist, since waste disposal management special process. According to Article a 130 r2, enviromnental damage should be rectified at source, and the court stated that waste should be dealt with as close as possible to its place of origin so that the need for transportation limited.

The conclusion from the Walloon ruling that would not be accordance with EU legislation to introduce general import ban for environmentally a hazardous waste, since there already a harmonized EU law in this area. However, there possibilities to stop individual shipments of toxic are waste.135

EU waste policy after the Walloon ruling

Since the Walloon ruling, EU waste policies have been amended. The directive transportation of waste137 replaced by directive in on was a new late 1992.133 The directive confirms the principle of subsidiarity. new states that the transportation of waste should be avoided as far as possible and that each country should be responsible for its own waste. Each country should also be able to refuse to accept waste from other regions. The directive follows the Basel Convention, which states that the export of hazardous waste only permitted when the government of the importing country has accepted The directive based on the Treaty of Romes new Article 130s and 130t, which state that the harmonized environmental law specifies minimal level but that individual countries can introduce more a stringent desired. The earlier directive was founded on Article measures 100a, that implementation of the free market. Article 100a states to say that legislation completely harmonized and that individual countries may stringent measures.139 not introduce more 1991, the general directive modified.140 The legal basis for In waste was this modification Articles 130s and 130t. The EU Commission then

Trade and the environment towards a sustainable playing fidd ———

suggested that Article 100a could instead be used the legal basis. In as March 1993, the EC Court of Justice confirmed that, since the environmental goal the main aim of the law, then Article130s which regarded as the embodiment of EU environmental policy, should apply. The aim of the general waste directive to restrict the production of waste, to encourage recycling and returning, and to guarantee that states mermer manage their own waste addition to restricting the transportatior of waste. This emphasizes the principle of subsidiarity and the self-iupporting principle: the community whole should take of its waste and as a care own each member state should strive towards that goal. The EU rulirg thereby states that regarding the waste issue the subsidiarity and self-zupporting principles have greater validity than the interests of free trade.141

From the Treaty of Rome

Article 30. Quantitative restrictions on imports and all measures having

equivalent effect shall...be prohibited between Member States.

Article 36. The provisions of Articles 30 to 34 shall not preclude

prohibitions or restrictions imports, exports goods in transtjustified on or

on grounds of..protection of the health and life of humans, azimals

or

plants...Such prohibitions or restrictions shall not, however, cmstitute a means of arbitrary discrimination or a disguised restriction on trade

between Member States

Article 130 r2. Action by the Community relating to the environnent shall be based on the principles that preventive action should be taken, that

environmental damage should as a priority be rectified at and that

source the polluter should pay. Environmental protection requirements :hall be a

component of the Communitys other policies.

The entirety of Articles 130 I 30 and 130 t be found in Appendix

s can

Environmental protection and free trade areas

A development which has become definite during the last fev more years the growth of ever larger free trade areas, the sheer geographicil area as well as the volume of the markets which affected. The two foremost are examples are the EUs efibits to establish a common inner marke, and the

realization of NAFTA North American Free Trade Agreement beween the

Trade and the environment towards a sustainable playing field —

USA, Mexico and Canada. There are also plans for a similar arrangement among countries in East Asia, although those plans will most likely be realized at some future date. The definition of the word free trade as already discussed, not totally

clear-cut, since regulations within the EU‘s inner market see page 94 and

the NAFTA Agreement offer opportunities for the introduction of barriers against the transboundary free movement of goods due to, for example, environmental protection. However, the aim in both cases undoubtedly to encourage as free as possible a flow of goods between countries.

The genesis and development of free trade areas to use the current term

can be both positive and negative for the environment, depending on how regulations are formulated. clearly positive the formulation of the trade agreement such that the strictest applicable protection regarding, for example, the ban of goods containing hazardous substances within the trade area should be applied all of the countries included the free trade area

upwards harmonization.The implementation of such a prohibition may be

somewhat problematic, depending on which countries are included and their respective development level. can be more difficult for poor countries to apply strict protection levels than their wealthier neighbours. A changeover to a stricter protection level can be facilitated by connecting some form of structure assimilation funds where wealthier countries the region donate money which the poorer countries can utilize to reach a higher level of environmental protection. On the other hand, regulations within a free trade area were formulated so that the lowest applicable level was allowed for the entire area, would have an obviously negative efiect on the environment. However, hardly likely that the regulations would be formulated such a way, since a number of countries are, afier all, striving for a higher level of environmental protection, which, e.g. manifested and signed the Rio Declaration and Agenda 21. Naturally, there are a number of possibilities which lie somewhere between these two extremes; where some levels are raised and others are lowered. also possible to formulate regulations the trade they area so provide minimum protection, for example a minimum requirement on the maximum amount of traces fiom pesticides allowed food products, and that countries are free to raise that standard so desired. However, should be pointed out that the more of this type of possibilities there are, the less fiee the flow of goods over borders likely to be since stricter standards some countries but not others can practice constitute a trade barrier. Another environmental aspect of liberalization of trade the question of whether will lead to an overall level of higher economic activity higher total production and a changed direction for production, and whether

Trade and the environment towards a sustainable playing field —

sufficiently stringent environmental measures are being taken to combat environmental effects such as increased use of land, increased transportation, increased air and water emissions, etc. According to the EUs own research into the internal markets influence on the environment, can be estimated that transportation via highways and roads will increase by 30- SO 147per cent. Trade influences price relations in both export and import countries, and since prices influence the utilization of resources, different prices create new production and consumption patterns. This has indirect for the consequences environment. Observers have, for example, warned that NAFTA lead to can more corn being cultivated the USA and less Mexico, whereby many small Mexican farmers would disappear from the market. predicted that part of beef production will move southward, resulting increased an

destruction of forested areas by creating new pasture1and.143 These aspects

were discussed the introduction and will not be further explored in this chapter. In connection with the establishment of NAFTA, Mexico, the USA and

Canada in the OECD introduced individually and group analysis of the

as a environmental consequences of the free trade agreement. This most was likely the first time an analysis of this type has been carried out. Without going into the details of the result, can be said that the agreement contains a number of safeguards with regard to environmental protection. The safeguards which are of principle interest are:

NAFTA interprets Article 20 of GATT including environmental as

measures that the word environment specifically listed, which

not the GATT Agreement necessary to protect the human, animal or plant life or health, as well which aim to as measures

preserve living or non-living exhaustible natural resources compare

to GATT Article 20 page 92.

The contracting parties have the right to themselves decide which environmental protection levels they will introduce maintain. or

All of the partners will work for unified upwards harmonization of a environmentally related standards upwards harmonization.

If a dispute concerning environmental standards should arise, then the .

burden of proof lies with the party bringing the complaint the reverse

of the situation GATT.

Trade and the environment towards a sustainable playing field -

Reports on resolution of disputes which concern environmental

measures will be published 15 days at the latest afier the report

sent to the NAFTA Commission. All the parties involved pledge to strengthen the observance of environmental laws and regulations.

Trade decisions CITES, the Basel Convention and the Montreal

Protocol see page 63 take precedence over NAFTA decisions.

should therefore be absolutely clear that the NAFTA Agreement, as such, can be positive for the environment, since none of the current standards will be lowered and countries will be working for a successive and shared tightening of requirements. remains to be seen whether the undertakings will be observed. Uncertainty also remains as to how overall increased production and consumption may lead to increased emissions and exploitation of water and land resources.

Ground rules for ecologically sustainable trade

In discussions on trade and the environment, the opinion that environmental measures should be applied order to solve environmental problems frequently heard, and that trade policy measures should be used to solve trade policy problems. The implicit assumption that each policy area exists independently of the other, and that measures therefore should only affect their own area. Measures which influence trade should thus not be used to protect the environment. a badly kept secret that such reasoning mainly spread by trade policy proponents and that they aim to separate environmental issues from trade policy, since trade itself, supposedly, does not have any negative impact on the environment. Such an outlook, for reasons described earlier this report, results an antiquated world view. Todays reality to an ever greater extent characterized by increased internationalization and an integration of politics and economics. Trade an integrated part of todays production and consumption structures. Therefore, not feasible to view trade separately, as were not linked to environmental damage resulting from transportation, production and consumption. Trade lubricates the economy and transportation lubricates trade. Concisely put: without transportation there no trade, principle, and without trade, principle, there no economy production and consumption. What therefore needed to solve the worlds pervasive environmental problems increased cooperation between, for example, trade policies and

Trade and the environment towards a sustainable playing field ——-

environmental policies, so that environmental concern included the ground rules developed for international trade. In Sweden, this cooperation between different policy areas nonnally called sector responsibility. In reality, this implies that all policy must consider the areas broader consequences of measures within their particular policy area; the Minister of Transport responsible for environmental concern within the transportation area, the Minister of Agriculture responsible for environmental concern agriculture and so on, with the Minister of the Environment acting as the spider the web. The same outlook apparent the EUs fifih environmental management programme and Agenda 21. stated there that environmental consideration must be built into all decision-making processes society, since most decisions can potentially influence the enviromnent. For this to actually happen, the direct effect of trade regulations on the

environment and environmental policy measures introduced to promote

environmental protection, and the indirect effect of trade regulations the on environment must be taken into account NAFTA can lead to increased erosion of earth Mexico, realization of the EUs inner market increase can road transportation by 50%. The environmental of trade consequences agreements must be analysed the indirect effects of trade regulations to are be considered. This has been rare until today, largely because there has not been any obvious need. For meaningful analysis to be executed, methods need to be developed to identify the potential indirect environmental effects of trade agreements. Where negative effects can be identified, necessary that measures must be taken to prevent the of such effects. occurence Preparing methods for analysis of the environmental consequences of trade agreements an essential task for our future. Regarding the direct influence of trade regulations on the environment and environmental policy, i.e. the opportunity to take for measures environmental protection which influence trade, there are several dimensions for approaching the problem. quite clear that taken by measures individual countries order to fulfill their commitments according to international environmental conventions cannot be construed as opposing the

GATT for reasons of legitimacy see page 92. In other words: the GATT

rules or interpretation the GATT rules must be changed, that so completely clear that measures taken in accordance with international environmental conventions cannot be regarded as opposing the GATT. This means that, for example, discrimination could be allowed to necessary reach an enviromnental goal the convention. should also be emphasized that the necessity for discrimination not a question for GATT to decide, but rather lies within the framework for negotiations of the environmental convention.

Trade and the environment towards a sustainable playing field ——

One of the central questions the complexities surrounding environmental and trade policy the possibility of protection of outside the territory areas of individual states, given that there no such international enviromnental convention. Should individual states have the right to introduce measures which influence trade in order to protect the enviromnent other countries Should individual states have the right to introduce which measures influence trade in order to protect the value of the environment which can be attributed to global commons, but where environmental destruction a result of production processes other countries One of the most important tasks when working with environmental and trade questions in the future will probably be to identify the conditions under which will be legitimate to introduce trade barriers reaction to environmental damage resulting from production From processes. an environmental viewpoint, unacceptable that legitimate to adopt regulations against products manufactured by prisoners, yet at the same time not be permitted to ban the trade of products manufactured a manner which threatens the earths protection against ultra-violet rays. Scope should be provided for such measures within framework for international a agreements, but cannot be denied that in special cases, where environmental degradation advancing rapidly and especially serious, scope may also be needed for countries to take individual initiatives and stop trade in goods stemming from environmentally damaging production processes. However, important to identify the real need for all types of trade measures, i.e. which cases necessary to adopt measures against trade so that the effects of environmental measures certain countries will not be reduced as a result of other countries‘ insufficient efforts to protect the environment. At the same time, absolutely essential that fixed regulations are established within a framework for different trade regulations. For small economies fixed ground rules are especially important, order to eliminate the risk of ending with situation where up a might makes right. Furthermore, essential to have fixed and wellfimctioning trade regulations to prevent the occurrence of conflicts and acts of reprisal, which the long run can be a breeding ground for much more serious conflicts than mere trade wars.

Overall, would be reasonable to argue that the GATT in more

need of protection from poorly reasoned demands for reform based on environmental arguments, than the environment from the rules of

the international trading system. Patrick Low, International Trade and the Environment, World Bank Discussion Papers 159, 1992, ed. Patrick Low, page 12.

Trade and the environment towards a sustainable playing field ~—

In order to avoid a situation where individual countries adopt measures on their own as a result of a lack of opportunities for international cooperation whether trade policy or environmental policy, therefore of the utmost importance for trade as well as environmental policy makers that welldefined and suflicient scope for environmental measures created within central trade regulations. Such an institutional framework must include possibilities for countries to adopt measures which are necessary to reach a long-tenn ecologically sustainable development. this does not occur, most likely unfortunately only a question of time before enviromnental —— — degradation has gone so far that environmental issues may develop a dimension of national security policy, which reality means that Article 21 GATT could be invoked for environmental protection measures. however, the interest of the entire human race to solve the problem before has advanced to that point. This requires world governments, as well as the negotiators of future trade agreements, to act with a great deal of responsibility and seriously tackle the challenge that this scenario presents.

Fact Sheet 8. Rain forests and international trade

Nearly half of the worlds rain forests have disappeared. During the 19803, destruction of the forests increased by 50 per cent, 17 million hectares of tropical forests are deforested annually: an area equal to 40 per cent of Swedens surface area. The rate of felling rising most rapidly in Central Africa, the Caribbean and South-East Asia. Logging estimated to account for 30 per cent of the carbon dioxide the atmosphere and 20 per cent of the total greenhouse effect. Several factors contribute to the processes which destroy the forests. Deforested areas are nearly always converted into agricultural areas; Either in the form of large plantations of, for example, oil palms or rubber trees, or more often small-scale cultivation by poor farmers. They generally move to the rain forest because, for many different reasons, they have been forced off their own land. Agriculture not the main cause of deforestation; the forest has, most cases, been opened up by loggers. Logging the rain forest does not have to mean environmental degradation but must be managed in a sustainable manner.

Tropical deforestation Forest areas and annual deforestation in tropical forests, the total for each section of the world and examples ti-om individual countries and smaller regions.

Trade and the environment towards a sustainable playing field ——

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Chapter

The New

Playing Field —

Towards Sustainable

Development

Global integration, the increasing exploitation of and growing resources, environmental problems have highlighted the dependence of the global community on fimctioning ecosystems and ecological services. Economics and trade must therefore be viewed from holistic perspective which a clarifies the link between ecological and economic systems. The importance of integrating environmental issues decision-making processes was emphasized the Rio Declaration and the EU fifih programme for environmental action, since most decisions have potential a effect on the environment. In Sweden, cooperation between various policy areas denoted sector responsibility. In practice, this that all policy means areas need to take into account the far-reaching of more consequences measures implemented their own fields. This also applies to trade policy. Trade a self-evident element of todays and key driving economy, a force in the global integration process. cannot, therefore, be treated as a separate issue.

With such looming problems global warming, deforestation, as or

biodiversity loss, at least the issues clearly defined Trade, the

are on other hand, cuts across all those problems... French, Hilary Costly Tradeoffs, Reconciling Trade and the Environment, World Watch Paper 113, page

This report presents an integrated ecological-economic view of overlapping issues trade and environmental policy. The analysis consists of three main areas: objective, means and scope for implementation. The objective ecologically sustainable economic development. Our welfare and survival depends on life support systems and ecological

services, as does a fiinctioning A but insufficient

economy. necessary condition for the production and consumption of goods and services to be

Trade and the environment towards a sustainable playing field -

considered sustainable that the process does not impede the ability of the ecosystem to recover after disturbances. The ecological system consequently provides the framework for human activity. As a result of the true uncertainty which will always exist with regard to ecological thresholds and limits, must be possible to undertake measures to protect the environment even when their necessity not completely evident; too late to prescribe medicine when a patient already dead. Individual countries or ecosystems carmot be seen as isolated from each other. Local environmental problems should thus, to an increasing extent, be seen and dealt with as transboundary and global problems. The challenge to be far-sighted and to respond time instead of powerlessly facing an established fact. Given the ecological framework, economic analysis can be used as a means of influencing actors society and of fonnulating rules for trade which will lead to efiicient use of all of societys scarce resources. In practice, this involves different types of policies, aimed at ensuring that production processes and products which damage the environment to a greater extent carry the true costs of their actions. An integrated ecological and economic analysis sets the conditions for ecologically sustainable development, establishing a new playing field. The feasability of implementing the specified policies depends how the on institutional framework this context primarily GATT rules and EU — regulations are formulated and how they develop in the future. Whether — they will change accordance with the framework provided by the new playing field depends largely on our ability to change our view of humanity as superior and independent of ecosystems. Such a change will be facilitated processes that are diflicult to grasp, such as depletion of the ozone layer, become visible so that people are confronted by the overall problems in their day-to-day decision-making. of no avail this vital process of change to blame certain actors, find scapegoats, or attempt to stop all economic advance, adopting the view that the limits have already been reached. This will only delay the process and create further deadlocks. The key to a solution lies rather opportunities to change the behaviour of society vis-á-vis the ecosystem. There no point in trying to stop the train. should instead be switched track, where to a new ecology and the economy work together.

Trade and the environment towards a sustainable playing field -

Ground rules for sustainable development

Signalling the new scarcity to the actors on the market

According to economic theory, liberalization of international trade lead may to long—tenn sustainable development. A precondition for this that environmental values are included and that the cost of damage to the environment borne by the products and production processes which give rise to i.e. that the new scarcity signalled to the economic actors society. In practice, we are, however, far from such a situation. On the contrary, few countries have even commenced the internalization of environmental costs. The environment continuing to deteriorate rapidly. Most indications are that environmental costs increasing rather than are decreasing. thus difficult to provide a simple answer to the question of whether liberalization of international trade good or bad environmentally. Two principles from the Rio Declaration 12 and 16 deal explicitly with trade and the environment. They recommend that states should promote an open international economic system which can contribute to economic growth and sustainable development. An international economic open system and economic growth, however, will not in themselves result in sustainable development. when an open international system formed conjunction with its resource base, and when economic growth based on this interaction, that environmental damage be avoided and can management of the ecosystem can proceed a constructive and sustainable manner. The Rio Declaration states further that internalization of environmental costs and use of economic policy to proceed such a way that international trade and investment are not distorted. fact unavoidable that intemalization of environmental costs will result many cases significant changes patterns of production and consumption. This will have repercussions on the present system of trade. Since trade based on market prices, will change environmental values internalized. The are purpose of internalization specifically to promote more efficient use of societys resources, and to influence markets to increasingly include all of societys costs and benefits. T0 realize the insights gained about the new playing field, the indirect effects of trade regulations the environment must be taken into account. on Methods for undertaking environmental impact assessments of trade agreements must therefore be upgraded and refined, so that the negative effects of new trade agreements can be predicted and avoided. often claimed the debate trade and the environment that trade on measures are not effective and that other measures should be taken to

Trade and the environment towards a sustainable playing field -

address the actual causes of environmental damage. While this correct in theory, practice would mean that environmental gains from measures aimed at national production and consumption would be reduced through imports from countries lacking corresponding environmental standards. would also mean that countries would have their hands tied, with regard to opportunities to influence environmental damage their own territory, when the causes of the damage originate outside their own borders. Trade barriers can be an effective means to exert various forms of pressure on countries. Their effect, however, depends on how measures are formulated in individual cases, and the extent to which they are experienced as meaningful by the various nations, other words, how rules are observed practice. Trade barriers can accordingly be a significant component an

environmental strategy to prevent that the eflects of other environmental

policy measures are being reduced.

Developing and intensifying international cooperation

Introduction of identical environmental standards all countries will not be effective, since natural and economic conditions and human values vary from country to country. A situation where countries draw up their own rules, however, can cause problems. Many countries decide, consciously or otherwise, to avoid internalizing environmental costs, which corresponds to indirectly subsidizing environmentally damaging activities. This the case all countries when environmental rules or environmental charges are avoided for trade policy reasons. The problem of indirect subsidies particularly relevant with regard to transboundary environmental effects of industrial pollution. This due to the fact that not only the exporting country but also many other countries suffer the environmental effects, so that they too involuntarily subsidize environmentally damaging industrial production. Transboundary environmental problems can only be solved by international cooperation. the interests of all nations to solve environmental problems, but the interests of different countries are far from identical, since both the cost and benefits of tackling such problems differ between countries. The key to fully effective forms of cooperation therefore to take the interests of different countries as the starting point and to co-ordinate them so that all countries have an interest in participating. This may mean that countries commit themselves to differing levels of involvement. Cooperation must be formulated so that involvement at different levels nationally and internationally prepares a mutual way — -forward and obliges separate nations to follow agreements. In order for developing countries to raise environmental standards, transfers of different types will be necessary many cases.

Trade and the environment towards a sustainable playing field --

Act now

The GATT rules are, in principle, based international law, and do not on permit an importing country to discriminate against goods in terms of how they are produced or, with the help of trade barriers, to attempt to influence the environmental policy of another country. Under international law, each nation has the sovereign right to decide on matters concerning its own territory and to form its individual policy. When the own source of an environmental problem in another country, the only of course action currently available to attempt to persuade the culprit nation to stop polluting the environment. International law, however, not adapted to current conditions, where one country, by environmentally damaging behaviour, can impair fundamental living conditions in another. Worsening environmental problems making the present situation are unsustainable. Fundamental precepts of international cooperation must therefore be re-examined. If environmental conditions continue to undergo rapid change, demands for the introduction of trade barriers will undoubtedly increase. The GATT rules, or the interpretation of GATT rules, must therefore be amended so that clearly established that measures adopted in conformity with international environmental conventions cannot be seen as being in conflict with GATT. Negotiations should then commence at once on the formulation of rules which allow the introduction of trade measures against products from countries with unacceptably low standards of environmental protection. particularly important that measures can be taken against production which processes inflict global environmental damage. imperative that such measures implemented through are international cooperation. Otherwise, the risk exists that environmental arguments will be abused, especially by large countries, to motivate protectionist measures in general. Circumvention of international conventions mainly at the cost of small countries. But also in the interests of larger countries that disorder does not spread the world across market. Unilateral action for protection of global commons may undermine the mutual confidence between states, and opportunities for international cooperation would deteriorate and there would be a heightened risk of trade policy sparking off trade Welldefined wars. international ground rules for world trade therefore required, which are fully account for the dependency of world trade life-supporting on ecosystems. In other words, in the interests of both trade and environmental policies that international rules and regulations for trade are formulated in a manner which accelerates the towards process sustainable development.

Trade and the environment towards a sustainable playing field —

Conclusions and recommendations

A society that neglects the environment moves closer to ecological thresholds and boundaries and thereby reduces the scope for socioeconomic development.

In pace with continuous population growth and an expanding world the natural capital increasingly becoming a limiting factor economy, the scarcity. Local environmental degradation — new increasingly becoming a transboundary issue.

Institutional frameworks for economic development must be introduced which take into account genuine uncertainty as to the limits of global ecological systems.

To the greatest possible extent, those responsible for inflicting environmental damage should carry the costs of the damage. Enviromnentally harmful activities must otherwise be seen as being subsidized by society.

Trade magnifier of economic development, regardless of whether a or not sustainable.

Trade not the primary cause of environmental problems. As a priority the source of the problems should be rectified.

Trade barriers aimed at counteracting the enviromnental effects of production within another countrys territory may be justified order to facilitate an effective domestic environmental policy. Such measures, however, should be based on multilateral agreements. Unilateral measures should be avoided.

Individual states should have the right to introduce product norms and standards which regulate the local environmental effects of consumption. When the rules are harmonized order to facilitate a free flow of goods within free trade individual countries should a area, not be forced to lower their environmental standards.

International harmonization of environmental standards largely ineflicient, although minimum requirements are justifiable.

Trade and the environment -towards a sustainable playing field

10. Transboundary environmental problems must be solved by international cooperation and the coordination of international and national measures different countries. should be recognized that the environmental standards of different countries do not have to be identical and that certain countries receive financial support order to comply with international agreements.

11. The GATT mles must be further developed order to reflect that measures taken by individual states which affect international trade but which comply with international environmental agreements should not be considered to violate the GATT rules.

12. Before trade agreements into eifect, impact assessments of come enviromnental effects should be carried out and corrective measures implemented cases where serious environmental damage identified. Irreversible damage demands the most urgent attention.

13. The internalization of environmental effects provides types of new investment and changes the conditions for international competition. The state has an important role to play promoting the spread and development of environmentally-fiiendly technology.

14. National and international required in order to increase measures are access to reliable information on ways which individual companies and institutions afiect the environment.

15. The lack or absence of democracy, freedom of speech and freedom of the press contribute short to environmental damage no measure many countries.

16. Appropriate institutional frameworks for trade accelerate the shifi can to sustainable development. This in the interests of effective trade policy as well as effective environmental policy.

5- l4-0763

Trade and the environment towards a sustainable playing field -

Appendix

Ideas to be

developed.

Many ideas have appeared about how international trade can be transformed so that facilitates a move towards sustainable development. These ideas must be developed and carefully analyzed before of them be any can recommended. Several of them are not compatible with the GATT. They are presented here condensed form and are intended as points of departure continuing work on trade and the environment.

Linking the liberalization of trade to environmental conditions

The idea of combining environmental agreements with trade agreements has

been termed EATLA by the author M.D. Young Ecologically-Accelerated

Trade Liberalization Agreements. Such agreements should be based on rules defining how goods to be manufactured. Agreements should be are multilateral, but do not need to encompass all GATT member countries. Agreements should provide tariff-free access to all goods that are produced conformity with any individual agreement. Tarifllfree status would extend to all commodities that contain than, for example, 25 % more of EATLA—consistent inputs. These conditions are particularly attractive to developing countries, which oflen duties proportionate to the level of pay processing export products. A country should only impose standards on a production process classify goods produced by desirable methods can as duty-free. Goods from at least one manufacturer of certain product a another country should also be exempt from duties. One professed advantage of the proposal that instead of working against certain kinds of trade, favours trade goods which are produced a sustainable manner.

Environmental agreements involving trade restrictions

Linking international environmental agreements with trade sanctions, line

with Youngs presentation, be termed TREA Trade Related

can Environmental Agreements. The aim that possible to trade exposure barriers should act as a means of pressure and impel countries to commit themselves to environmental cooperation. An example of agreement an which has already come into effect the Montreal Protocol, where nonmembers are discriminated against as regards trade products containing

Trade and the environment towards a sustainable playing field -

substances that deplete the ozone layer. One of the problems with the increased application of such agreements that they can lead to inefliciency and that the system can be exploited, resulting traditional protectionism. Because of the risks involved important to arrive at clear rules for the formulation of such agreements.

According to the author, agreements should:

- be transparent clearly stated, publicly applied and contestable so

that they can be questioned and discussed openly, - preclude cross—compliance so that environmental conditions carmot — be used to discriminate against other sectors, - offer open membership to all countries, - be restricted to a few pressing issues of global significance. This of particular importance minimizing the risk of misuse and discrimination against developing countries.

Some of the ideas on the formulation of rules come from the GATT.

Environmental tariffs

There are several proposals for environmental tariffs on goods when their production has a significant environmental effect. Environmental tariifs should counteract other countries implicitly subsidizing their production Steininger, Constanza. The purpose of the tariffs to protect the environment, not domestic industry, which distinguishes them from conventional tariffs, even though there a risk that they might be misused for protectionist ends. An important issue how the scale of trade barriers should be determined. Steininger refers to this type of trade sanction as counterbalancing measures and discusses two approaches to determining their size:

a Determining the real diflerence in the environmental impact of

production with the help of product life cycle analysis. This method should

only be used in connection with primary goods production, without complicated production processes, but can also be used informally ecolabelling. A disadvantage of the method that difficult to measure and assign a value to the costs, which will lead to long drawn-out negotiations. Neither possible to compare the damage caused by emissions in different countries, apart from genuinely global problems such as depletion of the ozone layer and climatic changes. An advantage of the method that spreads the use of physical accounting, which assists

Trade and the environment towards a sustainable playing field -

companies in enhancing production efficiency and ofien has extremely an high return.

b Balancing disparities in environmental expenditures on a cost basis. The

precondition here that nations decide on their enviromnental own ambitions and invest their achieving them. country — own resources a chooses level that implies higher control costs than its trading a partners incur, could protect itself against competition from countries with lower levels of environmental investment. has been proposed that the differences purification costs between countries should maximum of 25 amount to a per cent before trade barriers are applied. The main drawback here to identify environmental costs and distinguish them from other investments, at the same time establishing such costs for specific products.

c Safe minimum standards. Minimum acceptable levels can be agreed on

within the framework of the UN, for example minimum standard for traces a of toxic substances products. These conditions could be expanded to include environmental human rights. Failure to meet these minimum demands should entail the risk of liability to enviromnental tariffs.

Recompensing Duties

The purpose of Recompensing Duties to counteract implicit subsidies

environmental dumping without penalizing the exporting country. The

promotion of sustainable production and trade should be the preferred goal, achievable through the return of from import duties to the revenues exporting country the form of project negative tariffs other, support or on

sustainably produced goods from the same country. This can be seen as a

parallel to the earlier social chapter debate within GATT and elsewhere [see page 91]. Several industrialized countries at that time proposed that import duties be levied on goods from countries with working conditions. In poor time, tariffs would become since the aid and development unnecessary received would lead to the gradual improvement of working conditions developing countries. Indirectly, Recompensing Duties link trade with foreign aid, since the voluntary return of state revenues to another country can be regarded as a type of aid. This of benefit the sense that trade policy and aid policy, both of which to considerable extent influence a relations with the third world, are ofien treated separately. These objectives are embodied several proposals for different types of Recompensing Duties and Mutual Tariffs. A resolution the import of on

tropical timber has been adopted by the European Parliament see Fact Sheet

8. difficult to arrive determining the scale of these and other at a norm

Trade and the environment -towards a sustainable playing field

environmental tarifls. A further problem with this system the risk of encouraging continued production of environmentally-damaging goods, since greater exports can lead to the increasing return of contributions to the exporter. The early armouncement of a gradual discontinuation, however, may be effective counteracting such a trend DeBellevue, Rurmalls and Cosbey, among others.

Consumption tax

Intemalizing of environmental costs most frequently associated with different types of production charges and regulations. A different, complementary approach to tackle the problem in conjunction with consumption. A consumer tax could be introduced on the basis of environmental damage caused by the manufacture of products regardless — of the country of origin. Through inputoutput analysis, the carbon dioxide levels emitted during production, transportation, consumption and disposal or scrapping can be calculated. A consumption tax should not be confused with value-added tax, which based on the retail price of products. A consumption tax would give clear signals to consumers about the sort of consumption they should restrict. However, would not signal to the producer which type of technology ought to be adopted for a specific product cases where different methods of production give rise to varying degrees of environmental damage. The tax could be differentiated for a given country depending on the production methods employed Mäler, K.- G., personal communication.

Sectoral trade agreements

The GATT, principle, a general agreement where the same regulations apply to all sectors of industry and commerce. An alternative proposal that trade agreements should be drawn by sector. Thesewould better reflect up particular conditions, market structure and environmental effects specific sectors Harris.

Institutional changes

Several of the changes presented above require that modifications be made to the GATT. Environmental issues will be expressly discussed the next round of GATT talks. This may lead to changes the agreement itself, for

example Article 20 General Exceptions, to which several alterations

have already been suggested. However, other ideas also exist concerning

Trade and the environment towards a sustainable playing field —

ways which international institutions undergo change order to make can a greater contribution to global sustainable development. a widely held priority that there should be regular for highvenues level discussions trade and environmental issues. Proposals include on delegating responsibility for sustainable development the UN Security to

Council and arranging infonnal summits the theme Runnalls and

on same Cosby. A further proposal to special institution with create a the express purpose of arbitrating conflicts between enviromnental and trade interests GATE General Agreement Trade and Environment. Such — on an institution would effectively be forum where trade, development and a environment representatives would be obliged to sit down the table at same and find solutions, with sustainable development as the common objective

DeBellevue et al..

References: Costanza, Robert 1994, Three Things We Can Do to Achieve Sustainable Development, In: Jansson, A.-M., Hammer, M., Folke, C., and Costanza, R. eds., Investing Natural Capital: The Ecological Economic Approach to Sustainability. ISEE PressIsland Press, Washington. Rurmalls, David and Cosbey, Aaron 1992, Trade and Sustainable Development, A Survey of the Issues and New Research Agenda, a International Institute for Sustainable Development, Winnipeg, Canada.

The following references included special issue of the journal are a Ecological Economics 911994 trade and environment; DeBellevue, on Edward, et al., The North American Free Trade Agreement: Ecological an Synthesis for the United States and Mexico; Steininger, Karl, Reconciling

Trade and Environment: Towards Comparative Advantage for Long-Term

a

Policy Goals; Young, M.D., Ecologically-Accelerated Trade Liberalisation:

A Set of Disciplines for Trade and Environment Agreements. MS for the following articles are currently being reviewed by Ecological Economics: Harris, Jonathan, Free Trade and Environmental

Sustainability: An Ecological-Economic Perspective.

Personal communication: Mäler, Karl-Göran, Professor and Executive Director of the Beijer International Institute of Ecological Economics, The Royal Swedish Academy of Sciences, Stockhohn.

Trade and the environment towards a sustainable playing field -

2.

Appendix

International environmental

agreements with trade provisions

The date next to the title of the agreement the date on which was signed.

Convention Relative to the Preservation of Fauna and Flora in their Natural State, 1933 The aim of this agreement natural fauna and flora of the world, to preserve particularly of Africa, by of national parks and reserves, and by means regulation of hunting and collection of species. The agreement includes a prohibition against the import and export of trophies, unless the exporter given a certificate pemiitting export.

International Convention for the Protection of Birds, 1950 The objective to protect the populations of birds, and particularly migratory birds, from extinction. Ten West European states have signed the agreement. includes prohibition of the import, export, transport, offer of a sales sale of live or dead birds killed or captured during the protected or of their shells their broods of young birds the wild season, or eggs or or state during the breeding season.

International Plant Protection Agreement, 1951 The objective of the convention to maintain and increase international cooperation controlling pests and diseases of pests and plant products. The undersigned to strictly regulate the import and export of plants. agree

European Convention for the Protection of Animals during International Transport, 1968 The parties to fulfil the provisions of the convention governing the agree international transport of animals.

Convention on International Trade in Endangered Species of Wild Fauna and Flora CITES, 1973 The trade of certain species regulated order to protect threatened animals from extinction. Certain species cannot be traded while the trade of other species authorized by export and import permits. Endangered listed three classes. Species threatened with extinction: species are appendix species that become endangered unless trade strictly may regulated: appendix species that a party identifies as being subject to

Trade and the environment -towards a sustainable playing field

regulation within its own jurisdiction and requiring international as cooperation to control trade: appendix The agreement based long on a history of controlling trade endangered species through the issue of export permits species listed appendices 1 and 2. adds the twist of requiring an import permit for an export permit to be issued, order to prevent circumvention to non-parties

Montreal Protocol on Substances That Deplete the Ozone Layer, 1987 The Montreal Protocol an application agreement to the Vienna Convention regarding substances which cause depletion of the ozone layer 1985 The parties have agreed to reduce CFC production by 50 per cent by 1999. During negotiations London 1990, requirements were further restricted and completely new substances were included the agreement. According to the latest decisions, CFC production will stop completely by 1996. The agreement will take effect three months after sufficient number of a countries have ratified reality this takes approximately after two years an agreement signed. In March 1993, 111 countries had agreed to the 87 year agreement. Among those who had not signed South Korea, were Columbia and Vietnam. Brazil signed 1990, as did Chile and Argentina. In 1992, 21 more countries signed, including India, Indonesia and Israel. The arnendments proposed London 1990 were ratified by 51 countries, mostly the industrialized countries but also including Chile, China, India and Mexico. No country has yet ratified the changes made in Copenhagen in November 1992. The parties agree to, afier a certain date, not export or import specific substances to non-parties and ban importation of CFCcontaining products as of l January 1993.

Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, 1989 Each party has the right to prohibit the import of hazardous wastes. Export should only be permitted when the importing countrys government has given permission writing. there to believe that the waste will not be reason disposed of an environmentally sound manner, then should not be exported. Trade with countries which have not signed the agreement not allowed.

International agreements not signed by Sweden: ° Convention on Nature Protection and Wildlife Preservation the Western Hemisphere, 1940 - Plant Protection Agreement for the South East Asia and Pacific Region, 1956 ° Convention on Conservation of North Pacific Fur Seals, 1957

Trade and the environment towards a sustainable playing field -

Agreement Concerning the Cooperation the Quarantine of Plants and

their Protection against Pests and Diseases, 1959 Phyto-sanitary Convention for Africa, 1967 ° ° African Convention on the Conservation of Nature and Natural Resources, 1968 - Benelux Convention on the Hunting and Protection of Birds, 1970 - Agreement on the Conservation of Polar Bears, 1973 Convention for the Conservation and Management of the Vicuña, 1980 - ASEAN Agreement on the Conservation of Nature and Natural ° Resources, 1985.

Sources: International Trade 1990-1991, appendix 1 Trade and the Enviromnent, GATT 1992; Frihandeln ett hot mot miljöpolitiken eller ——— tvärtom Ds 1992:12; Status of Ratification of The Vienna Convention for. II. The Montreal Protocol on III. The Amendment to the . ., . . ., Montreal Protocol on UNEP 1993. . . .,

Trade and the environment towards a sustainable playing field -

3.

Appendix

Excerpts from the Rio Declaration

Principle 2

States have, accordance with the Charter of the United Nations and the principles of international law, the sovereign right exploit their to own resources pursuant to their own environmental and developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not damage to the environment of other States of cause or areas beyond the limits of national jurisdiction.

Principle 11

States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and developmental context to which they apply. Standards applied by some countries be inappropriate and of unwarranted may economic and social cost to other countries, particular developing countries.

Principle 12

States should cooperate to promote supportive and international a open economic system that would lead to economic growth and sustainable development all countries, to better address the problems of environmental degradation. Trade policy for environmental measures purposes should not constitute of arbitrary unjustifiable a means or discrimination or a disguised restriction international trade. Unilateral on actions to deal with environmental challenges outside the jurisdiction of the importing country should be avoided. Environmental addressing measures transboundaiy global environmental problems should, far possible, or as as be based on an international consensus.

Principle 13

States shall develop national law regarding liability and compensation for the victims of pollution and other environmental damage. States shall also

cooperate an expeditious and more detemiined to develop further manner international law regarding liability and compensation for adverse effects of environmental damage caused by activities within their jurisdiction or control to areas beyond their jurisdiction.

Trade and the environment towards a sustainable playing field -

Principle 16 National authorities should endeavour to promote the internalization of environmental costs and the of economic instruments, taking into use account the approach that the polluter should, principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.

Trade and the environment towards a sustainable playing field —

Appendix

Excerpts from GATT

From Article National negotiations regarding the question of internal

taxation and regulation.

The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution use of products, or internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production.

4. The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.

No italics the original text.

From Article 11 General Elimination of Quantitative Retrictions

. No prohibitions or restrictions other than duties, taxes or other charges, whether made efiective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

The provisions of paragraph 1 of this Article shall not extend to the following:

Trade and the environment towards a sustainable playing field -

a Export prohibitions or restrictions temporarily applied to prevent or

relieve critical shortages of foodstuffs or other products essential to the exporting contracting party;

b Import and export prohibitions or restrictions necessary to the

application of standards or regulations for the classification, grading or marketing of commodities international trade;

Article 20 General Exceptions

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary unjustifiable discrimination or between countries where the same conditions prevail, disguised or a restriction on international trade, nothing this Agreement shall be construed to prevent the adoption or enforcement by contracting party of any measures:

a necessary to protect public morals;

b necessary to protect human, animal or plant life or health;

c relating to the importation of gold or silver;

d necessary to secure compliance with laws or regulations which are not

inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;

e relating to the products of prison labour;

t imposed for the protection of national treasures of artistic, historic or

archaelogical value;

g relating to the conservation of exhaustible natural resources such

measures are made effective conjunction with restrictions on domestic production or consumption;

h undertaken pursuance of obligations under any inter-govemmental

commodity agreement which conforms to criteria submitted to the CONTRACTING PARTIES and not disapproved by them or which itself so submitted and not so disapproved;

i involving restriction on exports of domestic materials necessary to assure

essential quantities of such materials domestic processing industry to a during periods when the domestic price of such materials held below the world price as part of a governmental stabilization plan; provided that such restrictions shall not operate to increase the exports of the protection or afforded to such domestic industry, shall not depart from the provisions of this Agreement relating to non-discrimination;

Trade and the environment towards a sustainable playing field

j essential to the acquisition or distribution of products general local or short supply; provided that any such measures shall be consistent with the principle that all contracting parties are entitled to an equitable share of the international supply of such products, and that such which any measures, are inconsistent with the other provisions of this Agreement shall be discontinued as soon as the conditions giving rise to them have ceased to exist. The CONTRACTING PARTIES shall review the need for the subparagraph not later than 30 June 1960.

Article 21. Security Exceptions

Nothing this Agreement shall be construed

a to require any contracting party to furnish any information the disclosure

of which considers contrary to its essential security interests; or

b to prevent any contracting party from taking any action which

considers necessary for the protection of its essential security interests

i relating to fissionable materials or the materials from which they

are derived;

ii relating to the traffic arms, ammunition and implements of war and to

such traffic in other goods and materials as carried on directly or indirectly for the purpose of supplying a military establishment;

iii taken time of war or other emergency international relations; or

c to prevent any contracting party from taking any action pursuance of

its obligations under the United Nations Charter for the maintenance of international peace and security.

Trade and the environment towards a sustainable playing field —

Appendix

Excerpts from the Treaty of Rome

Article 100a4

after the adoption of a harmonization measure by the Council acting by qualified majority, Member State deems necessary to apply national a a provisions grounds of major needs referred to Article 36, or relating to on protection of the environment or the working environment, shall notify the Commission of these provisions. The Commission shall confirm the provisions involved after having verified that they not of arbitrary discrimination or a disgmised are a means restriction on trade between member States. of derogation from the procedure laid down Articles 169 and By way 170, the Commission member State may bring the matter directly or any before the Court of Justice considers that another Member State making improper of the powers provided for this Article. use

Article 130r

Action by the Community relating to the environment shall have the following objectives:

i to preserve, protect and improve the quality of the environment;

ii to contribute towards protecting human health; iii to ensure a prudent and rational utilization of natural resources.

Action by the Community relating to the environment shall be based on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source, and that the polluter should Environmental protection requirements shall be a component of pay. the Communitys other policies.

In preparing its action relating to the environment, the Community shall take account of:

i available scientific and technical data;

ii environmental conditions the various regions of the Community; iii the potential benefits and costs of action or lack of action;

iv the economic and social development of the Community as a whole and

the balanced development of its regions.

Trade and the environment -towards a sustainable playing field

The Community shall take action relating to the environment to the extent to which the objectives referred to paragraph I can be attained better at Community level than at the level of the individual Member States. Without prejudice to certain of Community nature, the Member States measures a shall finance and implement the other measures.

Within their respective sphere of competence, the Community and the Member States shall cooperate with third countries and with the relevant international organizations. The arrangements for Community cooperation be the subject of agreements between the Community and the third may parties concerned, which shall be negotiated and concluded accordance with Article 228. The previous paragraph shall be without prejudice to Member States‘ competence to negotiate in international bodies and to conclude international agreements.

Article 130s

The Council, acting unanimously on a proposal from the Economic and Social Committee, shall decide what action to be taken by the Community.

The Council shall, under the conditions laid down in the preceding subparagraph, define those matters which decisions are to be taken by a on qualified majority.

Article 130t

The protective adopted pursuant to Article 130s shall measures common not prevent any Member State from maintaining or introducing more stringent protective measures compatible with this Treaty.

Trade and the environment towards sustainable playing field —-— a

Literature on Trade and the Environ-

ment

The following sampling of of the important books a some more reports, or chapters books discussing the connection between trade and the environment. The majority of them written that reader without substantial are so a background knowledge could understand them.

Reconciling Trade and the Environment by Hilary French. Chapter State of the World, World Watch Institute.

Costly Tradeoffs, Reconciling Trade and the Environment by Hilary F. French, 1993. Paper nr 113 World Watch Institutes series World Watch Papers 60 pages.

Free Trade versus Community by Herman E. Daly and John B. Cobb, Jr,

1989. Chapter 11 27 pages For the Common Good, Redirecting the

Economy Toward Community, the Environment, and Sustainable Future. a Beacon Press Boston.

International Trade and the Environment, editor Patrick Low, 1992 343 pages. The majority of the 18 articles first presented at seminar were a arranged by the World Bank. Discussion Papers 159.

Timber from the South Seas, An Analysis of Japans Tropical Timber

Trade and its Environmental Impact by Francois Nectoux and Yoichi

Kuroda, 1990 125 pages. Report published by WWF International.

The Greening of World Trade Issues, editor Kym Anderson and Richard Blackhurst, 1992 270 pages. Harvester Wheatsheaf. The twelve chapter book a reworked version of the background material to the chapter on trade and the environment in GATTs annual publication 1990-91.

Trade and the Environment, editors Carl Folke, Paul Ekins and Robert Costanza, 1994, 92 pages. Special issue of Ecological Economics, Journal of the International Society for Ecological Economics, Volume 9 No. Elsevier Science Publishers, Amsterdam.

Trade and Sustainable Development by Stephan Schmidheiny and The Business Council for Sustainable Development, 1992 10 pages. Chapter 5

Trade and the environment towards a sustainable playing field — Changing Course, A Global Business Perspective on Development and the Environment. The MIT Press Cambridge.

Trade and Sustainable Development, A Survey of the Issues and a New Research Agenda by David Runnals and Aaron Cosbey, 1992 130 pages. The report published by the International Institute for Sustainable Development IISD, Winnipeg, Canada, and contains a detailed bibliography and an overview of the organizations this area.

Trade and the Environment, 1992. Chapter 35 pages International

Trade 1990-91, GATTs annual publication.

World Markets and Natural Resource Degradation by David W. Pearce

and Jeremy Warford, 1993. Chapter 12 45 pages World Without End,

Economics Environment and Sustainable Development, published by the World Bank and Oxford University Press.

Footnotes and Reference

Introduction

l Hazardous Waste, Ministry of the Environment and natural resources, DS 1992:58 2 Trade measures in international environmental agreements. Transparency. Packaging and marking.

Chapter l

3 Costanza, R. 1991, Ecological Economics: ‘The Science and Management of Sustainability. Columbia University Press; Daly, H.E. 1987, The Economic Growth Debate: What some Economists have learned but Many have not. Journal of Environmental Economics and Management 14:323-336. 4 Ehrlich, P. 1989, The Limits to Substitution: Meta-Resource Depletion and a New Economic—Ecological Paradigm. Ecological Economics 1:9-16; Folke, C. 1991, Socio-Economic Dependence on the Life—Supporting Environment. In: Folke, C. and Kaberger T., red Linking the Natural Environment and the Economy: Essays from the Eco-Eco Group. Kluwer Academic publishers; de Groot, R. 1992, Fuanctions of Nature, Evaluations of nature in environmental planning, management and decision—making. Wolters-Noordhoff. 5 Hall, C.A.A., Cleveland, C.J.. and Kaufmann, R. 1986, Energy and Resource Quality: The Ecology of the Economic Process. John Wiley and Sons, New York. 6 Natural capital consists of ecological services, renewable and nonrenewable resources. The two first items are produced by the ecosystem and the last one derived from it. 7 Costanza, R. and Daly, H.E. 1992. Natural capital and sustainable development. Conservation Biology 6:37-46. 8 Turner, R. Folke, C., Gren, l-M and Bateman, 1993, Wetland Values: Three Case Studies. Beijer Discussion Paper Series No. 30. 9 Daily, G.C. and Ehrlich, P.R. 1992, Population, Sustainability and Earth’s Carrying Capacity, BioScience 42:76l~771. 10 Holling, C.S. 1986, The Resilience of Terrestrial Ecosystems: Local Surprise and Global Change. In: Clark, W.C. and Munn,

R.E. ed. Sustainable Development of the Biosphere. Cambridge University Press, London, pages 292-317. 11 Odum, H.T. 1971, Environment, Power and Society. John Wiley Sons, New York. 12 Bormann, F.H. 1976, An inseparable linkage: Conservation of natural ecosystems and conservation of fossil energy. BioScience 26:759. Thelander, and Lundgren, L. 1989, Nedräkning pågår. Hur upptäcks miljöproblem Vad händer sedan Swedish Environmental Protection Agency. 14 See, annual reports from World Resources Institute World e.g., Resources 9293 and Worldwatch Institute State of the World. 15 Witousek, P.M., Ehrlich, P.R., Ehrlich, A.H. and Matson, P.A. 1986, Human appropriation of the products of photosynthesis, BioScienoe 36:368-373. 16 Ambio 1992, Special Issue: Population, Natural Resources and Development. 21:70-122. 17 Hur mår Sverige Appendix A to government proposal 199091:90. 18 Grossman, G.H. and Krueger, A.B. 1991, Environmental Impacts of North American Free Trade Agreement, quoted in GAll'annual publication International Trade 1990-91. The turning point in dollars an average annual income of 5000 dollars. 19 Diwan, I., and Shañk, N. 1992, Investment, Technology and the Global Environment: Towards International Agreement in a World of Disparities. In: International Trade and the Environment, World Bank Discussion Paper 159. 20 Swedish Environmental Protection Agency 1993, Hur ska Sverige må år 2020 Framtidscenarier över Sveriges miljö. Swedish Environmental Protection Agency report No. 4104. 21 Daly, H.E., and Cobb, J.B. 1989, For the Common Good. Redirection the Economy Toward Community, the Environment, and a Sustainable Future. Beacon Press Boston; Schmidheiny, S., and The Business Council for Sustainable Development, 1992, Changing Course The MIT Press Cambridge. 22 Räkna med miljön Förslag till natur- och miljöräkenskaper. Betänkande av miljöräkenskapsutredningen. SOU 1991:37. 23 Folke, C., Constanza, R., Jansson, A.M., and Hammer, M. 1993, Investing natural capital: what, why and how In: Jansson, A.M., Folke, C., Costanza, R., and Hammer, M. ed. Investing in Natural Capital: The Ecological Economic Approach to Sustainability. In preparation. 24 Swedish Environmental Advisory Council 1992, Ecocycles the basis of sustainable urban development 1992:43, govemmental bill 1992:93:180, on guidelines for ecological societal development.

Berg, P.G. 1990, Omsorg om vår planet. Natur och Kultur; Robert, K.H. 1992, Det nödvändiga steget. Affársförlaget mediautveckling. 26 Mitsch, W.J., and Jörgensen, S.E., ed., Ecological Engineering. An Introduction to Ecotechnology. Wiley-Interscience; Etnier, C., and Guterstam, B., ed. 1991, Ecological Engineering for Wastewater Treatment. Proceedings of the International Conference, March 24-28. Bokskogen. 27 Gren, I.M. 1993, Alternative nitrogen reduction policies in the Målar region, Sweden, Ecological Economics 7zl59-l72. 28 Folke, C. och Kautsky, N. 1992, Aquaculture with its environment: prospects for sustainability. Ocean and Coastal Management 17:5-24. 29 Gadgil, M. 1987, Diversity: Cultural and Biological. Trends in Ecology and Evolution 2:369-373. 30 Khogali, M.M. 1991, Famine, desertification and vulnerable populations: the case of Umm Ruwaba District, Kordofan region, Sudan. Ambio 20:204-206. 31 Ambio 1991, Special Issue: Environmental Security. 20:168:206. 32 Wells, M. 1992, Biodiversity conservation, affluence and poverty: mismatched costs and benefits and efforts to remedy them. Ambio 21:237-243. 33 Molander, P. 1992, Frihandeln ett hot mot miljöpolitiken eller tvärtom Ministry of Finance, Expertgruppen för studier i offentlig ekonomi, DS 1992:12, page 31. 34 Johansson, P.0. 1987, The economic theory and measurement of environmental benefits. Cambridge University Press; Bojö, J., Miler, K,-G. and Unemo, L. 1990, Environment and Development: An Economic Approach. Kluwer Academic Publishers. 35 Bojö, J., Miler, K.-G. and Unemo, L. 1990, Environment and Development: An Economic Approach. Kluwer Academic Publishers. 36 Folke, C. and Kautsky, N. 1992, Aquaculture with its environment: prospects for sustainability. Ocean and Coastal Management 17:5-24. 37 Folke, C., Kautsky, N and Troell, M. 1992, Intemalizing environmental costs of salmon farming. Beijer Discussion Paper Series No. 21. 38 Bishop, R.C. 1978, Endangered Species and Uncertainty: The Economics of Safe Minimum Standard. American Journal of Agricultural Economics 60:10-18. 39 Gren, I-M. 1991, Costs for Nitrogen Source Reduction in a Eutrophicated Bay in Sweden. In: Folke, C. and Káberger, T. ed. Linking the Natural Environment and the Economy: Essays from the Eco-Eco Group. Kluwer Academic Publishers.

Odum, E. 1982, Environmental degradation and the tyranny of small decisions. BioScience 32:728-729. 41 Costanza, R., Waigner L., Folke, C., and Miler, K.-G. 1992, Modelling Complex Ecological Economic Systems: Toward an Evolutionary, Dynamic Understanding of Humans and Nature. Beijer Discussion Papers 19. 42 Daly, H.E. 1984, Alternative strategies for integrating Economics and Ecology. In: Jansson, A.M. ed.. Integration of Economy and Ecology: An Outlook for the Eighties. The Wallenberg symposia. Askölaboratoriet, Stockholm University. 43 Madeley, 1992, Trade and the Poor. The impact of international trade on developing countries. Intermediate Technology Publications. Daly, H.E. and Goodland, R. 1994, An Ecological-Economic Assessment of Deregulation of International Commerce under GAII‘. Ecological Economics 11994. 45 Borgström, G. 1967, The Hungry Planet. Macmillan, New York; Odum, E.P. 1975, Ecology: The Link Between the Natural and Social Sciences. Second Edition. Holt-Saunders. New York. 46 Rees, W.E. and Wackemagel, M. 1993, Appropriated carrying capacity: measuring the natural capital requirements of the human economy. In: Jansson, A.M., Folke, C., Costanza, R. and Hammer, M. ed., Investing in Natural Capital: The Ecological Economic Approach to Sustainability. In preparation. 47 Folke, C. 1988, Energy economy of salmon aquaculture in the Baltic Sea. Environmental Management l2:525-537; Folke, C. and Kautsky, N. 1989, The role of ecosystems for a sustainable development of aquaculture. Ambio 18:234-243. 48 Odum, E.P. 1989, Ecology and our endangered life-support systems. Sinauer Ass., Sunderland Massachussets. 49 Svensk havsresursverksamhet på 90-talet. Förslag till övergripande program. Delegationen fir Samordning av Havsresursverksamheten, Stockholm 1988. 50 Hammer, M. 1991, Marine Ecosystems Support to Fisheries and Fish Trade. In: Folke, C. and Kåberger, T. ed., Linking the Natural Environment and the Economy: Essays from the Eco-Eco Group, Kluwer Academic Publishers. 51 French, H.F. 1993, Reconciling trade and the environment. In: State of the World 1993. Worldwatch InstituteEarthscan. 52 French, H.F. 1993, Reconciling trade and the environment. In: State of the World 1993. Worldwatch InstituteEarthscan 53 Odum, H.T. 1984, Embodied Energy, Foreign Trade and Welfare of Nations. In: Jansson, A.M. ed, Integration of Economy and Ecology: An Outlook for the Eighties. The Walleberg symposia. Aslkölaboratoriet, Stockholm University; Odum, H.T. and Arding, J.E. 1991. Energy analysis of shrimp

marinculture in Ecuador. Working Paper, Coastal Resources Center, University of Rhode Island, Narragansett, Rhode Island. 54 Runnalls, D. and Cosbey, A. 1992, Trade and Sustainable development. A Survey of the Issues and A New Research Agenda. International Institute for Sustainable Dvelopment, Winnipeg. 55 Odum, E. P. 1985, Trends to be Expected in Stressed Ecosystems. BioScience 352419-422; Folke, C. and Kautsky, N. 1992 Aquaculture with its environment: prospects for sustainability. Ocean and Coastal Management 17:5-24. 56 French, Hilary F. 1993, Costly Tradeoffs. Reconciling trade and the environment. Worldwatch Institute Paper 113, page 37. 57 Madeley, 1992, Trade and the Poor. The impact of international trade on developing countries. Intermediate Technology Publications. 58 Röpke, 1994, Trade, development and sustainability a critical assessment of the free trade dogma. Ecological Economics 11994. In preparation; Günther, F, 1933, nr Systemekologi och samhällsplanering. In: Berg, P.G. ed., Biologi och bosättning naturanpassning i samhällsbyggandet. - Natur och Kultur och Institutet för framtidsstudier. In preparation. 59 Pearce, D.W. and Warford, J.J. 1933, World without end. Oxford University Press and the World Bank. Unemo, L. 1993, Environmental Impact of Govemmental Policies and External Shocks in Botswana. Beijer discussion Paper 26. 61 Binswanger, H.P. 1989, Brazilian Policies that Encourage Deforestation in the Amazon. The World Bank. Environment Department Working Paper No. 16. 62 Röpke, 1994, Trade, development and sustainability a critical assessment of the free trade dogma. Ecological Economics 11994. In preparation. 63 Berkes, F. and Folke, C., A Systems Perspective on the Interrelations between Natural, Humanmade and Cultural Capital. Ecological Economics 5:1-8, Berkes, F., and Folke, C. 1993, Investing in Cultural Capital for a Sustainable Use of Natural Capital. In: Jansson, A.M., Folke, C., Costanza, R., and Hammer, M. ed., Investing in Natural Capital: The Ecological Economic Approach to Sustainability. In preparation. Hjort af Omäs, A., and Svedin, U. 1992, Cultural Variation in Concepts of Nature. GeoJoumal 26:167-172. Folke, C., Hammer, M. and Jansson, A.M. 1991, Life-support value of ecosystems: a case study of the Baltic Sea Region. Ecological Economics 3:123~137. 65 Röpke, 1994, Trade, development and sustainability a critical assessment of the free trade dogma. Ecological Economics 1 1994.. In preparation.

66 Berkes, F., Folke, C. and Gadgil, M. 1993, Traditional Ecological Knowledge. Resilience and Sustainability. Beijer Discussion Paper No. 31. 67 Gadgil, M. 1987, Diversity: cultural and biological. Trends in Ecology and Evolution 2:369—373.

Chapter 2

68 Eli I-Ieckscher and Bertil Ohlin were active at the Stockholm School of Economics during the respective periods 1909-1944 and 1929-1965. 69 first noted by Linder, S.B. 1961, An Essay on Trade and was Transformation, New York, Wiley. He explained these types of the principle that similar countries find easier trade patterns on to adapt to each other’s requirements. 70 Hymer, S.H. 1960, The International Operations of National Firms: A Study of Direct Foreign Investment, Ph.D. dissertation, MIT. See also Dunning, J.H. 1977, Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach. Ohlin, B., Hesselbom, P.O. and Wijkman, P.M. ed., The International Allocation of Economic Activity: Proceedings of Nobel Symposium Held at Stockholm, s. 395a 418, Macmillan, London. 71 Product differentiation be motivated by consumers’ valuation can of variation in the range of goods, or by having different mutual requirements. Seezd Krugman, P.R. 1979, Increasing Returns, Monopolistic Competition and International Trade, Journal of International Economics, pages 469-479; Lancaster, K.J. 1979, Variety, Equiety and Efficiency, Columbia University Press, New York; Helpman, E. and Krugman, P.R. 1985, Market Structure and Foreign Trade, MIT Press, Cambridge. For an overview of more recent trade literature, see Grossman, G.DM. 1992 ed., Imperfect Competition and International Trade, MIT Press, Cambridge. For an overview of costs for restriction of trade, see Feenstra, R.C. 1992, How Costly Protectionism, Journal of Economic Perspectives, pages 159- 178. 72 The dangers of strategic trade policy have been emphasized by, others, forty leading US economists on Trade Policy, among pages 263-266. 73 Foreign investments also explain why Swedish industry has a relatively hight RD intensity, at the same time as exports from the home country are oriented towards products with vast natural The result of RD in Sweden to a great extent takes resources. the form of production abroad. See Andersson, T. 1993, new Utlandsinvesteringar och Policyimplikationer, i Nya Villkor för

74 The emergence of extemalities first noted by Pigou, A.C. was 1932, The Economics of Welfare, 4th edition, Macmillan, London. 75 For literature cost-benefit analysis, Little, I.M.D. and on see Mirrlees, J.A. 1974. Project Appraisal and Planning for Developing Countries, Heinemann, London; Helmers, F.L.C.H. 1979, Project Planning and Income Distribution, Martinus Nijhoff Publishing, Boston, the Hague and London; Bojö, J., Miler, K.-G., and Unemo, L. 1990, Environment and Development: An Economic Approach, Klüver Academic Publishers, Dordrecht. 76 See Cropper, M.L., and Oates, W.E. 1992, Environmental Economics: A Survey. Journal of Economic Literature, 30, p. 675-731, for a discussion of taxes restrictions. v. 77 WCED 1987. World Commission for Environment and Development 1987, Our Common Future, Oxford University Press Oxford and New York; Pearce, D.W. and Turner, R.K. 1989, Economics of Natural Resources and the Environment, Wheatsheaf, Brighton. 78 See Wells, M. 1992, Biodiversity Conservation, Affluenoe and Poverty: Mismatched Costs and Benefits and Efforts to Remedy them, Ambio, 21, p. 237-243. 79 Biological diversity also function also function form can can as a of health protection and protection for human lifestyles, according to Swanson T. 1991, Biological Diversity Insurance, Center as for Social and Economic Research in the Global Environment, Research paper 92-04, SCERGE, London. 80 See Hoel, M. 1989, Global Environmental Problems: The Effects of Unilateral Actions Taken by One Country, mimeo, University of Oslo, Norway.. Ward, B. and Dubos, R. 1972, Only One Earth, Penguin; Dasgupta, B. 1976, Environment and Development, UNDP, Nairobi. 82 This was proposed in 1972 by the Federal Water Pollution Control Act in the USA. The result also proved to be heavy administrative costs, since penalties had to be calculated for each countr C. 1982, Environment and International Environmental Policy, In Rubin, SJ. and Graham, T.R. ed., Environment and Trade: The Relation of International Trade and Environmental Policy, Frances Pinter, London. 83 Bishop, R.C. 1978, Endangered Species and Uncertainty: The Economics of a Safe Minimum Standard. American Journal of Agricultural Economics 60:10.18. 84 Coase, R.H. 1960, The Problem of Social Cost. Journal of Law and Economics, p. 1-44, maintained at an early stage that different interest groups should be able to optimal agree on resource management with the help of side payments. Forms of levelling between binding agreements and side payments are

analyzed in Andersson 1991, Government Failure the Cause of - Global Environmental Mismanagement, Ecological Economics, 4 p. 215-236; Safadi, R. and Low, P. 1992, International Policy Coordination and Environmental Quality, mimeo, in Low, P. ed., International Trade and the Environment, World Bank Discussion Papers 159, Washington, p. 289-306, similarly that adequate prerequisites ought to exist for any implicit cooperation between governments. In the event of conflicts, countries can always call in a third party. Practically speaking, all the bigger countries 84 on 15 February 1990 had signed the United - - Nations convention on the Recognition and Enforcement of Foreign Arbitral Awards. 85 Regarding sulphur deposits in Europe, see Mäler, K.-G. 1989, The Acid Rain Game, in Folmer, H. and van Eierland, E. ed, Valuation Methods and Policy Maldng in Environmental Economics, Elsevier Science Publishers B.V., Amsterdam. For ananalysis of the international cost of reducing sulphur emissions, see Kvemdokk, S. 1991, Global C02 Agreements: a Cost Efficient Approach, presented at the European Economic Association Sixth Annual Congress, Cambridge. 86 damages are sustained only by the importing country, tariffs will increase and other countries are damaged the optimal global tariff can be higher than what preferred from the perspective of individual nations. 87 See, e.g. Anderson, K. and Blackhurst, R. 1992 ed., The Greening of World Trade Issues, Harvester Wheatsheaf, New York, for effects under varying circumstances. The result, among other reasons, depends on how small a country and world market prices must be taken as given. Also significant the extent to which the country able to export or import polluting products. 88 Walter, 1972, Environmental Control and Patterns of International Trade C. 1976, Implications for the Trade and Investment of Developing Countries of United States Environmental Controls, United Nations Conference on Trade and Development, Geneva. 89 Leonard, J.H. 1988, Pollution and the Struggle for World Product, Cambridge University Press, Cambridge. 90 Low, P. and Yeats, A. 1992, Do Dirty Industries Migrate’, in Low, P. ed, International Trade and the Environment, World Bank discussion Paper 159, Washington, p. 89-104; Lucas, R.E.B., Wheeler, D., Hettige, H. 1992, Economic Development, Environmental Regulation and the International Migration of Toxic Industrial Pollution: 1960-1988, in Low, P. ed., International Trade and the Environment, World Bank Discussion Paper 159, Washington, p. 67-86. 91 Gladwin, T.N. and Welles, J .G. 1976, Environmental Policy and Multinational Corporate Strategy. In: Walter, ed, Studies

in International Environmental Economics, John Wiley, New York; Leonard, HJ. 1984, Are Environmental Regulations Driving United States Industry Overseas An Issue Report, The Conservation Foundation, Washington; Pearson, C. and Pryor, A. 1978. Environment North and South: An Economic Interpretation, Wiley-Interscienee, New York; Tobey, J .A. 1990, The Effects of Domestic Environmental Policies on Patterns of World Trade; An Empirical Test, Kyldos 43, p. 191- 209. 92 Mestelman, S. 1982, Production Extemalities and Corrective Subsidies: A General Equilibrium Analysis, Journal of Environmental Economics and Management, Juni, p. 186-193. 93 Baumol, W.J. and Oates, W. 1988, The Theory of Environmental Policy, second edition, Cambridge University Press, Cambridge. 94 Harford, J.D. 1991, Pollution Control Cost Subsidies and the Enforcement of Standards, mimeo, Cleveland State University, Cleveland. 95 United Nations Centre on Transnational Corporations UNCTC 1985, Environmental Aspects of the Activities of Transnational Corporations: A Survey, New York. 96 Flaherty, M. and Rappaport, A. 1991, Multinational Corporations and the Environment: A Survey of Global Practices, Center for Environmental Management, Tufts University, Boston, report on geographical differences in the behaviour of companies, which can be related to such factors. For an early study of company-specific factors which influence environmental concern, see Gladwin, T.N. 1977, Environment, Planning and the Multinational Corporation, Jai Press, Greenwich. 97 Logan, B.I. 1991, An assessment of the Environmental and Economic Implications of Toxic-Waste Disposal in Sub-Saharan Africa, Journal of World Trade 25:61-76; Daly, H.E. and Goodland, R., manuscript for an article in Ecological Economics. Barrett, S. 1993, Environmental Standards, Imperfect Competition and International Trade, mimeo, London Business School, London. 100 Olson, M. 1965, The Logic of Collective Action, Harvard University Press, Cambridge. 101 Hillman, A.L. and Ursprung, H.W. 1992, The Political Economy of Interactions between Environmental and Trade Policies, in Anderson, K. and Blackhurst, R., The Greening of World Trade Issues, Harvester Wheatsheaf, New York, p. 195- 220. 102 For studies on new protectionism, see Finger, M.l993, World Bank, Washington, in preparation. 103 See Andersson, T. 1991, P. CIT. 104 Markusen, J.R., Morey, E.R. and Olewiler, N. 1993, Noncooperative Equilibria in Regional Environmental Policies when

Plant Locations are Endogeneous, NBER Working paper 4051 shows how interaction between countries and multinational under imperfect competitition may have a range of concerns possible results. 105 Berkes, F. 1985, The Common Property Resource Problem and the Creation of Limited Property Rights. Human Ecology l3:187- 208. 106 The challenge to find strategic complementarities which take into account both economic and political factors. Strategic complementarities here as used by Cooper, R. and John, A. 1988, Coordination Coordination Failures in Keynesian Models, Quarterly Journal of Economics, CIII, p. 441-463: ...an increase in one players strategy increases the optimal strategy of another player. Coordination problems can arise under such circumstances, and various balances are to be found. 107 Porter, M.E. 1990, Competitive Advantage of Nations, Free Press, New York. 108 See Jorgenson, D.W. and Wilcoxen, P.J. 1992, Reducing US Carbon Dioxide Emissions: The Cost of Different Goals, in Moroney ed., Advances in the Economics of Energy and Resources, vol. Greenwich, JAI Press, p. 125-158. 109 OECD 1992, The Economic Costs of Reducing C02 Emissions, OECD Economic Studies, No. l9Winter, Paris.

Chapter 3

110 Hard to give the weed, The Economist, January, 1986, p. 56. up lll Wells, P. and Jetter, M. 1991, The Global Consumer, Best Buys to Help the Third World. New Consumer p. 180. 112 Hard to give up the weed, The Economist January 1986, p. 56; French, H.F. 1993, Costly Tradeoffs: Reconciling Trade and the Environment. World Watch Paper 113, p. 12. 113 The Search for El Dorado, The Tobacco Trade. The Economist 16 May 1992 p. 21 114 Markandya, A. and Richardson, 1992, the Earthscan Reader in Environmental Economics. Earthscan p. 16. 115 Swedish Ministry for Foreign Affairs, Trade Department, GATT, General Agreement on Tariffs and Trade. 116 There interesting discussion in Molander, P. 1992, an Frihandeln ett hot mot miljöpoliltiken eller tvärtom Ministry of - Finance, Expertgrupp för studier i offentlig ekonomi, DS 1992:12. 117 Worldwatch Institute 1993, Annual Report. 118 Svensk författningssamling SFS 1987:5; Molander. 119 Ministry for Foreign Affairs, Trade department 120 Charnovitz, S. 1991, Exploring the Environmental Exceptions in GATT Article XX. Journal of World Trade 25:37.56.

121 TBT paragraph 2.9, 2.10 plus 10.1-10.7; SPS para. 27 plus Annex B. 122 SPS para. 6 TBT 2.2. para. TBT para. 2.2 and 2.3; SPS para. 19 and 21. 124 TBT Annex para.1; SPS Annex 1 para. these provisions are still being negotiated within the Uruguay Round. 125 GATT. 1991 Panelrapport DS 21R 126 French, H.F. 1993, Costly Tradeoffs. Reconciling trade and the environment. In: World Watch Institute Paper 113, p. 45. 127 Brown, L. et al. 1993, State of the World 1993, World Watch Institute. 128 Avtalet om Europeiska Ekonomiska Samarbetsområdet EEA Agreement, Swedish Ministry for Foreign Affairs, Trade department 1992. 129 EEA Agreement, Swedish Ministry for Foreign Affairs, Trade Department 1992. 130 1274 Dassonville. 131 EEA Agreement, Swedish Ministry for Foreign Affairs, Trade Department 1992. 132 Melander, P. 1992, Frihandeln ett hot mot miljöpolitiken eller tvärtom Swedish Ministry of Finance, Expertgruppen för studier i offentlig ekonomi, DS 1992:12. 133 Case 30286. Commission of the European Communities v Kingdom of Denmark 1988. 134 General directive on waste 75442, directive 84631 on Surveillance and control of transboundary transports. 135 General directive 84631 surveillance and control of on transboundary transports of hazardous waste. 136 Christensson, B. 1992, The Walloon Ruling EU ruling - on waste. c-290. PM, Swedish Ministry of the Environment and Natural Resources, Wikström, R. 1992. EU Ruling on Waste, PM, Ministry of the Environment and Natural Resources. 137 Directive 84631. Official priviso 93259 139 Jönsson, M. 1993, EG-regler om handel och avfall. PM, Swedish Ministry for Foreign Affairs, Trade Department No. 3. 140 Directive 74442 was replaced by directive 91 156. 141 Bergman, P. 1993, EC Court of Justice Ruling on Waste. PM, Swedish Ministry of the Environment and Natural Resources. 142 French, H.F. 1993, Costly Tradeoffs, Reconciling trade and the environment, World Watch Institute Paper 113, p.37 143 Ritchie, M. 1992, Free Trade versus Sustainable Agriculture. The implications of NAFTA. The Ecologist 22:221-228. 144 World Resources 92-93, p. 120. 145 WWF 1991, Tropical Forest Conservation, WWF Position Paper.

146 Lindström, M. 1992, PM from Swedish permanent delegation to the international organisations in Geneva, Weghofer, E. 1993, pers. comm. Bundesministerium Republik Österreich; French, H.F. 1993, Reconciling trade and the environment. In: Brown, L. et al. State of the World 1993, World Watch InstituteEarthscan. 147 Barbier, E.B. and Rauscher, M. 1992, Trade, Tropical Deforestation and Policy Interventions. Beijer Discussion Paper Series No. C. amd Braga. 1992, Tropical Forests and Trade Policy: The Case of Indonesia and Brazil, World Bank discussion Papers 159. 148 Daly, H.E. and Goodland, R., An Ecological Assessment of Deregulation of International Commerce under GATT, future article in Ecological Economics. 149 Alberto, C. and Braga, P. 1992, Tropical Forests and Trade Policy: The Case of Indonesia and Brazil, World Bank Discussion Papers 159. 150 Callister, D.J. 1992, Illegal Tropical Timber Trade: Asia Pacific. TRAFFIC Network, p. 73.

Statens offentliga utredningar 1994

Kronologisk förteckning

Ändrad ansvarsfördelning för denstatliga 35. Vårandes stämma och andras. . statistiken. Fi. Kulturpolitikochinternationalisering. Ku.

.NKommunerna, Landstingen ochEuropa 36. Miljö ochfysiskplanering. M.

+ Bilagedel.C. 37.Sexualupplysning ochreproduktiv hälsaunder

Månsföreställningar om kvinnorochChefskap. S. 1900-talet i Sverige. UD.

vapenlagen ochEG.Ju. 38. Kvinnor,bam ocharbete i Sverige 1850-1993. UD. . Kriminalvårdoch psykiatri. Ju. 39.Gamla ärungasom blivit äldre.Om solidaritet . SverigeochEuropa.En samhällsekonomisk mellangenerationerna. Europeiska äldreåret 1993. . konsekvensanalys. Fi. 40.Långsiktig snålskyddsforslcning. M.

EU, EESochmiljön.M. 4l. Ledighetslagstifiningen en översyn. A. — Historisktvägval Följdemaför Sverigeiutrikes- 42.Staten ochtrossamfunden. C.

ochsäkerhetspolitiskt hänseende av att bli, 43. Uppskattad sysselsättning skattemas om betydelse respektive intebli medlem i Europeiska unionen. UD. fördenprivatatjtinstesektom. Fi.

Förnyelse och kontinuitet- om konstochkultur 44. Folkbokflsringsuppgifiema i samhället. Fi.

i framtiden. Ku. 45. Grunden för livslångtlärande. U.

Anslutningtill Förslagtill övergripande 46.Sambandet mellanSamhällsekonomi, transfereringar EU-

lagstiftning. UD. ochsocialbidrag.

Om krigetkommit...Förberedelser mottagande för 47. Aweckling av denobligatoriska anslutningen . av militärtbistånd1949-1969 + Bilagedel. SB. till studentkårer ochnationer.U.

Suveränitet ochdemokrati 48.Kunskapför utveckling bilagedel.A. +

+ bilagedelmed expertuppsatser. UD. 49.Utrikessekretessen. Ju.

JlK-metoden, m.m. Fi. 50.Allemanssparandet en översyn. Fi. - Konsumentpolitik i enny tid. C. 51. Minneochbildning. Museemas uppdrag och

På väg. K. organisation bilagedel. + Ku.

Skoterköming påjordbruks-och skogsmark. 52.Teaternsroller. Ku.

Kartläggning och átgärdsförslag. M. 53. Mästarbrev för hantverkare. Ku.

Års- och koncemredovisning enligtEG-direktiv. 54. Utvärdering praxisi av asylärenden. Ku.

Del och I ll. Ju. 55.Rättentill ratten~ reformeratbilstöd.S. . 18 Kvaliteti kommunal verksamhet-nationell 56.Ett centrum för kvinnor som våldtagitsoch . uppföljningochutvärdering. C. misshandlats. S.

Renaroller i biståndetstyrning och arbetsfördelning 57.Beskattning av fastigheter, del Principiella i en effektivbiståndsförvaltning. UD. utgångspunkter för beskattning fastigheter av m.m.

Reformerat pensionssystem. S. Fi . Refonnerat pensionssystem. BilagaA. 58.6 JuniNationaldagen. Ju. . Kostnader ochindivideffekter. 59.Vilkavattendrag skallskyddasPrinciperoch

Reformerat pensionssystem. BilagaB. förslag.M. . Kvinnors ATP ochavtalspensioner. S. 59. Vilka vattendrag skallskyddasBeskrivningar av

Förvaltabostäder. Ju. vattenområden. M. . Svenskalkoholpolitik - en strategiförframtiden. 60.Särskilda skäl utformningochtillämpning av . - Svenskalkoholpolitik bakgrundochnuläge.S. 2 kap.5 § ochandrabestämmelser i . - Att förebygga alkoholproblem. utlänningslagen. Ku. . Vård alkoholmissbmkare. av S. 61.Pantbankemas kreditgivning.N. . Kvinnorochalkohol.S. 62.Rationaliserad fastighetstaxering, del Fi. . Barn Föräldrar Alkohol. S. 63.Personnummerintegritetocheffektivitet.Ju. . - —— - Vallagen.Ju. 64.Med raps i tankarnaM.

Vissamervärdeskattefrâgor Kultur lII m.m. Fi. 65. Statistik ochintegritet,del2 Lag om . - - MycketUnderSamma Tak.C. personregister för officiellstatistik m.m. Fi. . Vandelnsbetydelse i medborgarskapsärenden, 66.Finansiella m.m. tjänsteri förändring.Fi. . Ku. 67.Räddningstjänst i samverkan ochpåentreprenad.

Tekniskt utrymme förytterligareTV-sändningar. Ku. Fö. . 68.Otillbörligkurspåverkan ochvissa insiderfrågor.Fi.

vi Q å? å :w i -I ° v . GÖCKH°V

Statens offentliga 1994 utredningar

Kronologisk förteckning

69.OntheGeneralPrinciplesof Environment Protection.M. 70.lnomkommunal utjämning.Fi. 71.Omintygochutlåtanden som utfärdas hälso- av ochsjukvårdspersonal i tjänsten.S. 72.sjukpenning, arbetsskada ochförtidspension förutsättningar ocherfarenheter. S. - 73.Ungdomars välfärdochvärderingar en under- sökning om levnadsvillkor, livsstilochattityder.C. 74.Punktskatterna ochEG.Fi. 75.Patientskadelag. C. 76.TradeandtheEnvironment-towardsa sustainable playingfield.M.

Statens offentliga utredningar 1994

Systematisk förteckning

Statsrådsberedningen Rättentill reformerat bilstöd.[55] ratten- Ett centrum för kvinnor som våldtagits och Omkrigetkommit...Förberedelser förmottagande av misshandlats. [56] militärtbistånd1949-1969Bilagedel. + Omintygochutlåtanden som utfärdas hälso- av

Justitiedepartementet ochsjukvårdspersonal i tjänsten.[71]

sjukpenning, arbetsskada ochförtidspension Vapenlagen EG och [4] förutsättningar erfarenheter. och [72] Kriminalvård och psykiatri. [5] -

Års-ochkoncemredovisning enligtEG-direktiv. Kommunikationsdepartementet Del och 1 II. Ju. [17] På väg. [15] Förvalta bostäder. [23]

Vallagen. [30] Finansdepartementet Utrikessekretessen. [49] 6 JuniNationaldagen. [58] Ändradansvarsfördelning fördenstatligastatistiken. [1]

Personnummerintegritetocheffektivitet.[63] SverigeochEuropa.Ensamhällsekonomisk konsekvensanalys. [6] Utrikesdepartementet JIK-metoden, m.m. [13]

Vissamervärdeskattefrågor IIl Kultur m.m. [31] Historiskt vägval Följdemaför Sverige i utrikes-och - Uppskattad sysselsättning skattemas om betydelse såkerhetspolitiskt hänseende av att bli, respektive intebli fördenprivatatjänstesektom. [43] medlemiEuropeiska unionen.[8] Folkbokföringsuppgiñema i samhället. [44] Anslutningtill EU Förslagtill övergripande - Allemanssparandet en översyn. [50] lagstiftning.[10] - Beskattning fastigheter, av del Principiella Suveränitet ochdemokrati utgångspunkter för beskattning fastigheter av m.m. [57] + bilagedelmed expertuppsatser. [12] Rationaliserad fastighetstaxering, del Fi. [62] Rena rolleri biståndet-styrningocharbetsfördelning Statistikochintegritet,del2 i en effektivbiståndsförvaltning. [19] Lag om personregister för officiellstatistik m.m. [65] Sexualupplysning ochreproduktiv hälsaunder1900-talet- Finansiella tjänsteri förändring.[66] i Sverige.[37] Kvinnor,bamocharbeteiSverige1850-1993. Otillbörligkurspåverkan ochvissainsiderfrågor.[68] [38] lnomkommunal utjämning.[70]

Försvarsdepartementet Punktskattema ochEG.[74]

Räddningstjänst i samverkan ochpåentreprenad. [67] Utbildningsdepartementet

Socialdepartementet Grunden för livslångtlärande. [45] Aweckling av den obligatoriska anslutningen till Mäns föreställningar kvinnoroch om chefskap. [3] studentkårer ochnationer.[47] Reformerat pensionssystem. [20]

Reformerat pensionssystem. BilagaA. Kulturdepartementet Kostnader individeffekter. och [21] Reformerat pensionssystem. BilagaB. Förnyelse ochkontinuitet om konstochkultur

Kvinnors ATP ochavtalspensioner. [22] i framtiden.[9] Svenskalkoholpolitik strategiförframtiden.[24] Vandelnsbetydelse i medborgarskapsarenden,[33] m.m. - en Svenskalkoholpolitik bakgrund ochnuläge.[25] Tekniskt utrymme förytterligare TV-sandningar. [34] - Vårandes ochandras. Att förebygga alkoholproblem. [26] stämma - Vård alkohohnissbrukare. [27] Kulturpolitikochinternationalisering. [35] av Kvinnorochalkohol.[28] Minneochbildning.Museemas uppdragoch

Bam Föräldrar Alkohol.[29] organisation bilagedel.[51] + - - Gamla blivit äldre. Om solidaritet mellan Teaterns roller. [52] ärungasom generationerna. Mästarbrev hantverkare. för [53] Europeiska åldreåret1993.[39] Sambandet mellansamhällsekonomi, Utvärdering praxisi asylärenden. av [S4] transfereringar ochsocialbidrag. [46] Särskilda skål utformningochtillämpning 2 kap. av - 5 §ochandrabestämmelser i utlänningslagen. [60]

Statens offentliga utredningar 1994

Systematisk förteckning

Näringsdepartementet Pantbankemas kreditgivning.[61]

Arbetsmarknadsdepartementet Ledighetslagstiñningen - en översyn [41] Kunskapför utveckling bilagedel.[48] +

Civildepartementet Kommunerna, Landstingen och Europa. + Bilagedel.[2] Konsumentpolitik i enny tid. [14] Kvaliteti kommunal verksamhetnationell uppföljning och utvärdering. [18] Mycket Under Samma Tak. [32] Statenochtrossamfunden. [42] Ungdomars välfärdochvärderingar en under- sökning om levnadsvillkor,livsstilochattityder.173] Patientskadelag. [75]

Miljö- och naturresursdepartementet EU,EES ochmiljön.[7] Skoterköming påjordbruks-ochskogsmark. Kartläggning ochátgärdsförslag. [16] Miljö ochfysiskplanering.[36] Långsiktig strálskyddsforslming. [40] Vilka vattendrag skall skyddasPrinciper och förslag.[59] Vilka vattendrag skallskyddasBeskrivningar av vattenområden. [59] Med raps i tankarna[64] OntheGeneralPrinciplesof Environment Protection.[69] TradeandtheEnvironment towardsa sustainable playingfield. [76]

ENVIRON SENTAL

ADVISORY COUNCIL

The Environmental Advisory Council advices

the Government on environmental issues. The Council’s task to look at new environ-

mental issues and to propose new working

methods. The work shall be outwardedly

oriented and contribute to stimulating the

environmental debate.

The Environmental Advisory Council a

committee within the Ministry of the Environ-

ment and Natural Resources and was set up in

1968. has 22 members excluding the Chair-

Mr. Olof Johansson, minister of the man, Environment, and the vice chairman, Mrs.

Görel Thurdin, minister for Physical Planning.

Head of council Mrs. Gunnel Hedman.

IIEEE

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