RESTRICTED
WORLD TRADE WT/CTE/W/31
30May1996
ORGANIZATION(96-2048)
Original: English Committee onTrade andEnvironment
THE RELATIONSHIP BETWEEN TRADE MEASURES PURSUANT
TOMEAs AND THE WTO AGREEMENT
Proposal byJapan
I. PURPOSE OFJAPAN 'SPROPOSAL
1. Therelationship between theprovisions ofthemultilateral trading system andtrade
measures forenvironmental purposes, especially those pursuant toMultilateral Environmental
Agreements (MEAs) is,among theagenda oftheCTE, themost fundamental issue inanattempt
tomake aninterface between rules oftrade andrules ofenvironment.
2. Thispaper makes thecaseforanon-binding interpretative guideline*tomake trade
measures pursuant toMEAs compatible withtheWTO Agreement. Italsocallsforthepermanent
status aswellastheaddition oftheterms ofreference oftheCTE initsfuture work beyond the
Singapore Ministerial Conference topromote coordination anddialogue between theWTO and
MEAs.
3. Theguideline isnotmeant togiveprejudice tothelegitimacy ofexisting MEAs, norto
dictate thenegotiations onfuture MEAs.
II. BACKGROUND
4. Inorder totackle global environmental problems, ithasbeenrecognized thatnon-trade
measures, including improving access tofinance andpromoting technology transfer, are
preferable. Such positive measure hasproved inanumber ofcases veryeffective inachieving
environmental objectives. However, certain number ofMEAs withtrade measures suchasthe
Montreal Protocol onSubstances thatDeplete theOzone Layer indicates thatthere arecertain
cases where trade measures areconsidered tobenecessary andeffective means forachieving the
environmental objectives.
5. Theextraterritorial useoftrade measures could raisetheconcern ofarbitrary and
discriminatory implementation. Especially unilateral trade measures should beavoided since they
seriously undermine themultilateral trading system.
6. Therefore, when atrade measure istobeapplied, there istheneedtoensure thatsuch
measure should benotused(1)indisguise ofprotectionism, and(2)norinanarbitrary manner.
*Thepossibility ofdeveloping thisguideline intoabinding onewithappropriate modifications asnecessary should befully
explored.WT/CTE/W/31
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7. From suchaviewpoint, andforensuring thattrade andenvironmental policies are
mutually supportive, itisessential todevelop aninternational consensus ontherelationship
between thetrade measures pursuant toMEAs andtheWTO Agreement.
III. POSSIBLE OPTIONS TOACCOMMODATE TRADE MEASURES PURSUANT TO
MEAs UNDER THE DISCIPLINES OFTHE WTO AGREEMENT
8. Amendment ofArticle XXofGATT 1994 toopenan"environmental window" hasbeen
suggested bysome Members attheCTE. Although thisoption would bethemost transparent one
asregard thestatus of"environment" inthecontext oftheWTO Agreement, itwould bedifficult
todefine "environment" inawayapplicable toallcases.
9. Ontheother hand, some Members haveexpressed theirstrong preference tostatus quo.
The"status quo"approach claims toprotect themultilateral trading system. However, without
anyrules concerning "environment" intheframework oftheWTO, thisapproach cannot clarify
thestatus ofMEAs inthemultilateral trading system andmayresult inallowing unilateral
measures inthename ofenvironmental protection.
10. Theproposed guideline could bridge thetwoconfronting suggestions stated above. The
guideline provides areference tothenegotiators offuture MEAs. Itisalsoexpected togivea
guidance inconsidering thecompatibility oftheimplementation ofatrade measure pursuant to
existing MEAs withtheWTO Agreement.
IV. THE GUIDELINE ONTRADE MEASURES PURSUANT TOMEAs
11. Based ontheabove consideration, Japan suggests thefollowing criteria fortheguideline.
Itconcerns thecompatibility ofanMEA aswellasthecompatibility oftheuseoftrade measures
pursuant toanMEA withtheWTO Agreement inthelightofArticle XXofGATT 1994.
1.a. (i)AnMEA isopentoanycountry sharing theenvironmental objective ofthe
agreement.
(ii)AnMEA reflects, through adequate participation, theinterests ofmajor
parties concerned, suchasparties withsubstantial trade interests, actual and
potential major producers andconsumers ofmaterials concerned.
(iii)AnMEA specifically mandates theuseoftrade measures, thecontent of
which isclearly defined, andtheprocedure andtheconditions forapplying the
measures aretransparent andclearly defined.
(iv)Thetrade measures pursuant totheMEA maynotbeapplied inamanner
thatwould constitute ameans ofarbitrary orunjustifiable discrimination between
countries where thesame conditions prevail, ordisguised restriction on
international trade. (thepreamble ofArticle XX).
1.b. (i)AnMEA hasanenvironmental objective ofprotecting anirreplaceable partof
thenatural system oftheearth.WT/CTE/W/31
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(ii)Thetrade measures pursuant totheMEA toachieve itsenvironmental
objective arescientifically based, havenoother effective alternative andhavethe
minimum trade restrictive ordistorting effects.
(iii)Thetrade measures pursuant totheMEA maybeapplied onlytothe
minimum trade restrictive ordistorting effect andonlywhen there isnoother
effective alternative, toachieve theenvironmental objective.
2. With respect to1.b.mentioned above, decisions made byarelevant MEA
Convention ofParties should betaken intosufficient account onthecondition that
theMEA meets thecriteria of1.a.
V. ENHANCING DIALOGUE AND COORDINATION BETWEEN WTO AND MEAs
12. Inorder toachieve theobjective ofmaking trade andenvironmental policies mutually
supportive, thecooperation andcoordination between trade officials andenvironment officials in
respective capitals areveryimportant. However, itisoften thecasethatthecommunications
between thetwosides arenotsufficient. Therefore, theterms ofreference oftheCTE should be
expanded topromote dialogue andcoordination between theWTO andMEAs.
13. With theextended mandate, theCTE should beabletoinvite aparticular MEA Secretariat
toaCTE meeting forabriefing onitstrade measures ingeneral. TheCTE should alsohavean
opportunity toobtain necessary information andexpress itsviews when theprovisions oftrade
measures arecontemplated inthecourse ofnegotiating anewMEA, or,when existing MEAs are
amended.
14. TheCTE should, upon request from MEA Secretariats andnegotiators, holdbriefings or
provide necessary information ontheoperation ofWTO provisions relevant totheuseoftrade
measures taken pursuant toMEAs.
15. UNEP could playanimportant roleintheproposed framework ofdialogue byproviding
theWTO withitsexpertise from theviewpoint ofMEAs.
16. Lastly, theextended mandate oftheCTE assuggested above willalsocontribute to
enhancing thetransparency oftheCTE.