 RESTRICTED  
WORLD TRADE  WT/CTE/M/7  
 22 March 1996  
ORGANIZATION  
 (96-1042)  
 
Committee on Trade and Environment  
 
 
 
 REPORT OF THE MEETING HELD ON 26 -29 FEBRUARY 1996  
 
 Note by the Secretariat  
 
1. The Committee on Trade and Environment met on 26 -29 February 1996 under the 
chairmanship of Ambassador Juan Carlos Sánchez Arnau of Argentina.  The agenda contained in 
WTO/AIR/253 was adopted.  
 
2. The Chairman announced informal consultations were continuing on the Committee's  rules of 
procedure, observership for intergovernmental organizations and Item 10 of the work programme.  
 
3. It was agreed  to derestrict WT/CTE/W/8 an d the relevant excerpt of the report of the meeting 
held on 21 June 1995 (WT/CTE/M/3) at which this document had been discussed.  The Secretariat, on 
its own responsibility, would forward these documents to the Secretariat of the Convention on Biological 
Diversity to assist in the preparation of a report on Biological Diversity and trade -related intellectual 
property rights.  
 
Item 1 :  The relationship between the provisions of the multilateral trading system and trade measures 
for environmental purposes, in cluding those pursuant to multilateral environmental agreements  
 
4. The representative of New Zealand  placed his delegation's paper (WT/CTE/W/20) in the 
broader context of the Committee's work.  Its purpose was to assist in formulat ing the Report to Ministers 
at the Ministerial Conference (the "Report"), which would hopefully reflect a consensus on a number of 
areas where work could be advanced.  As part of such a consensus, he hoped there would be a shared 
interest in ensuring trade  and environmental policies were mutually supportive in promoting sustainable 
development by providing for legitimate measures to protect the environment while also safeguarding the 
multilateral trading system.  A responsibility existed to address the real ity that governments were already 
responding to environmental concerns by agreeing to commitments which had obvious implications for 
WTO rules.  The paper outlined an approach for formulating an Understanding to provide a structured 
and disciplined accommo dation under WTO provisions for the use of environment -related trade 
measures.  Reflecting the scope which existed in the WTO for Members to use trade -related policies to 
protect national environmental resources, the Understanding would focus on the use of  trade measures 
for global and transboundary environmental problems, be applicable across the WTO and build on 
existing approaches for dealing with measures taken for non -trade objectives contained in GATT 1994.  
It would be dependent on conformity of meas ures with substantive and procedural criteria reflecting the 
policy context in which the measures had been taken.  The conformity of particular measures with 
criteria specified in the Understanding could be examined, where this was provided for through dis pute 
settlement procedures, on a case -by-case basis.  
 
5. The procedural and substantive criteria should ensure legitimate environmental protection 
measures could be taken while safeguarding against protectionist abuse.  The proposal  covered a range 
of measures, including extrajurisdictional measures based on unincorporated process and production 
methods (PPMs) and agreements.  He noted the distinction made between measures used in different 
policy contexts for which different solutio ns were proposed.  For an MEA that met the specified criteria, 
specific and jointly notified measures applying between WTO Members which were parties to the MEA 
would prevail over WTO obligations between them to the extent of the mandated inconsistency;  W TO WT/CTE/M/7  
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dispute settlement would not be available to the notifying Parties for trade action within the terms of the 
notified measures.  This accommodation would apply to other consensually applied and jointly notified 
measures.  The proposed solution also cover ed non -consensual measures, those taken between Parties 
pursuant to an MEA but not specifically mandated in it, and measures taken against non -parties which 
were specifically mandated in an MEA.  These measures as well as those taken against non -parties wo uld 
be testable through dispute settlement against necessity -based criteria, including effectiveness, least trade -
restrictiveness and proportionality.  The proposed accommodation was oriented around the 
identification of interested or concerned countries, which were sources of related production and 
consumption which contributed to an environmental problem and whose participation was required for 
any solution to be effective.  This was a limited and well -defined group.  Outside this group, the broader 
WTO m embership would be unaffected.  
 
6. The Understanding would not cover measures applied unilaterally or against MEA non -parties 
without being specifically mandated in an MEA.  If countries wished to impose such measures in a 
manner in consistent with WTO obligations that could not be justified under current WTO exceptions, 
a waiver could be sought.  This conclusion was based on the fact that such measures would not be 
effective and could not be necessary to the achievement of the enviro nmental objective.  Citing the 
UNCED conclusions, he said a renewed political commitment to avoid unilateral or extrajurisdictional 
measures was an important part of any WTO outcome in this area.  The attractiveness of trade measures 
needed to be weighed a gainst their actual effectiveness.  Referring to the lack of domestic coordination 
in the policy making process, he said there was a growing awareness between trade and environment 
policy makers of the contribution that each could make to the policy develo pment of the other, to which 
the procedural and substantive criteria could contribute.  New Zealand looked forward to delegations' 
views on its proposal and to developing a consensus Report.  
 
7. The representative of the European Co mmunities  introduced his delegation's non -paper which 
represented a stocktaking of the debate on Item 1 in the EC and aimed to stimulate discussion.  Positive 
and substantial recommendations should be elaborated on this Item for the Report.  The presentati on 
of only an analytical Report would be regarded as a political failure of the WTO.  Any result of the 
Committee work must be balanced.  The non -paper was subject to improvement and would benefit from 
other delegations' comments.  His delegation was not s uggesting the establishment of a special WTO 
dispute settlement mechanism for environmental matters.  On the contrary, in its contribution the 
existing dispute settlement mechanism played a pivotal role and its potential to fight protectionist abuse 
should  not be undermined in any way.  
 
8. The representative of Egypt  said Article XX was sufficiently flexible to allow for exceptions to 
accommodate environmental objectives and allow for the use of trade measures inconsistent with WTO 
obligations to achieve, inter alia , environmental protection.  The conditions in Article XX reflected the 
checks and balances that prevented abuse of such exceptions.  One of the key issues of Article XX was 
that there were safeguards to ensure fair and equ itable treatment of WTO Members and any attempt to 
tamper with this balance entailed enormous risk.  Her delegation supported an ex post approach, where 
granting a waiver under Article XXV:5 could provide a solution for MEAs that contained WTO -
inconsistent  trade measures, based on the rationale that no challenges had so far arisen in this regard.  
She acknowledged the arguments against such an approach.  It could also be argued that an Article XX 
amendment would raise the problem of hierarchy between the WT O and MEAs, in favour of the latter.  
The WTO should not become an environmental organization nor be adapted to deal with structural 
environmental problems, which were the competence of MEAs.   
 
9. Egypt felt an ex post  approach wou ld be sufficient to deal with situations arising from present 
MEAs as only a few of them contained trade provisions and the possibility that disputes might arise over 
their WTO -consistency was minimal.  However, the right of WTO Members to challenge such t rade 
provisions should remain.   For future MEAs, coordination should take place at the national level by the 
parties to both the MEA and the WTO through the inclusion of trade experts in delegations negotiating 
MEAs.  She supported the setting of criteria  to examine the requirements for an eligible MEA and noted 
that each MEA was different and should be treated case -by-case.  Additional discussion of necessity and          WT/CTE/M/7  
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effectiveness was warranted.  Whereas necessity in Article XX had been based on concepts such  as least -
trade restrictiveness, a definition of environmental necessity was evolving and might draw on a number of 
principles such as the precautionary principle which was referred to for lack of scientific evidence or the 
high costs involved.  It was dif ficult to admit indefinite criteria in the WTO in this area.  Another 
principle could be whether trade was the root cause of the environmental problem, which would make 
trade measures necessary to address them.  Also, the necessity and effectiveness of tra de measures for 
non-complying non -parties differed among MEAs and had been put into question.  It was difficult to 
assess the effectiveness of the use of trade measures in MEAs, per se, in isolation from the package of 
positive measures in MEAs.  Also, the  persistence of illegal trade undermined the effectiveness of trade 
measures in MEAs.  MEAs should preserve their comprehensive character and advocate positive 
measures.  Giving a special status to trade measures went against the overall goals of MEAs and elevated 
the use of negative measures.  For these reasons, her delegation was unconvinced of the necessity to 
elaborate new rules in this area.  
 
10. The representative of Nigeria  gave preliminary comments on the EC proposal.  He said relaxing 
the rules for the use of trade measures which were exemptions to WTO rules would weaken the trading 
system and risk converting exceptions into new rules.  Justification was required on the ne cessity of using 
trade restrictions, which were exceptions from WTO obligations and negative in character, to attain non -
trade objectives, as opposed to positive measures.  Given no disputes had arisen, he questioned the need 
to amend Article XX.  A hierar chy of measures should be recognized, starting with positive measures, 
such as financial flows, transfer of technology, technical assistance, capacity building, and ending with 
trade restrictions as a last resort.  He asked if the trade measures applied fo r environmental purposes 
were sufficiently precise to determine their effects and exclude unintended outcomes.  He asked if a ban 
on trade in rhino horns or elephant tusks drove their price downward and reduced trade, or if it increased 
trade by making it more profitable;  estimates on demand and supply elasticities in MEAs would assist in 
consideration of the EC proposal.  Necessity and effectiveness of trade measures pursuant to MEAs 
needed to be assessed;  measures could only be applied after a thorough assessment of their potential 
impact had taken place.  Related to the EC proposal, which was based on a partial equilibrium model 
with a two -dimensional relationship between specified trade measures and environmental purposes in 
MEAs, he asked whether a li near relationship existed between specific trade measures and environmental 
objectives.  He suggested a general equilibrium model merited consideration.  Relaxing the conditions 
for the use of trade measures in MEAs might create a loophole for protectionis m, a risk that needed to 
be weighed against the benefits of using trade measures.  He asked for clarification of "overwhelming 
environmental importance" and "legitimate environmental objectives".  In the proposal, environmental 
policy makers would have fle xibility to judge the legitimacy of environmental objectives and the types of 
trade measures for achieving them;  the absence of specificity could lead to distortion and abuse.  Risk 
of mismatches of trade measures and environmental objectives raised the i ssue of proportionality.  The 
flexibility for MEA negotiators to judge adequate trade measures might be at variance with the preferences 
of trade policy negotiators.  He said any exceptions from the general rules should be precise.  Also, it 
should be made  clear whether an Understanding would be binding.   
 
11. Commenting on the New Zealand proposal, he said paragraph 88 should be further explored.  
He asked how the effectiveness of measures could be assessed if they were non -specific.  His delegation 
could not support the use of trade measures against MEA non -parties.  Noting the advantages of the 
trend towards liberalization, globalization and international cooperation in addressing global 
environmental problems, he said, how ever, there were areas where national sovereignty should prevail.  
Nigeria did not accept the extraterritorial application of environmental standards.  There were common 
objectives to accomplish, but the degree of responsibility differed.  He observed that  just as many 
countries were liberalizing trade, restrictive trade policies for non -trade reasons were being proposed.  In 
this respect, the WTO should not send the wrong signal to its Member.  He said a combination of 
positive measures with improved marke t access, such as the elimination of subsidies, further reduction of 
tariffs, and lowering of technical barriers to trade, were what was required as a first step forward.   
 
12. The representative of Singapore, speaking on behalf of the ASEAN countries , said any results 
for the Ministerial Conference should be balanced.  He said trade promoting measures, not trade WT/CTE/M/7  
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restrictive measures, would help meet the goal of sustainable development.  Given that ASEAN felt 
Article XX was broad eno ugh to cover all legitimate trade -related environmental measures, it supported 
a case -by-case examination of measures in MEAs using an ex post  waiver approach in the context of 
Article XX as:  (i) only a few MEAs contained trade provisions;  (ii)  only a sm all number of trade 
measures in MEAs could be WTO -inconsistent;  (iii) to date, no MEA had been challenged in the 
GATT/WTO;  (iv) a genuine MEA should find broad support among WTO Members;  and (v) it was 
not appropriate to formulate general criteria for t rade measures in MEAs given that they addressed 
different environmental problems.  ASEAN could not accept any attempts to amend WTO provisions 
to be compatible with trade measures in MEAs which placed the WTO in a secondary position to MEAs.  
The Committee  was not mandated to provide leeway for MEA negotiators to introduce trade restrictive, 
WTO -inconsistent measures.  Although ASEAN was conscious of the need to provide guidance to MEA 
negotiators, this process should not be hurried.  Korea's proposal at th e November 1995 meeting 
deserved elaboration.  Korea had suggested a combined approach based on ex post  procedures with 
some guidelines to enhance the predictability and compatibility of trade measures in MEAs.  Also, he 
supported Egypt and India's suggest ions at that meeting to define specific criteria for MEAs.  While not 
agreeing with all the points made in the EC and New Zealand proposals, ASEAN felt both furthered an 
understanding of this Item.  New Zealand's proposal gave a more balanced treatment of the issues and 
paragraph 88 should be elaborated.  He said broadening the scope of Article XX would legitimize 
unilateral measures and the extrajurisdictional application of environmental laws, which would undermine 
the open, nondiscriminatory and rules -based nature of the WTO.  Given the uncertainty about the 
effectiveness of trade measures in MEAs, ASEAN felt trade promotion through increased market access 
was a better policy measure to safeguard the environment.  The WTO could best contribute to 
sustaina ble development by facilitating trade liberalization, not by condoning the use of trade -restrictive 
measures.  
 
13. The representative of the United States  said coordination between trade and environmental 
officials at the national le vel in support of multilateral negotiations could mitigate many concerns about 
the use of trade provisions relating to MEAs.  The WTO was not the place to deal with insufficient 
coordination within governments.  He noted that not all trade provi sions cons idered for inclusion in 
MEAs raised WTO issues, and said that non -parties should receive treatment equivalent to that of MEA 
Parties where they took equivalent action.  He referred to the issue raised in both proposals of the 
appropriate way for the WTO to  support multilateral environmental cooperation.  Thus far, discussions 
gave the impression that the negotiation of MEAs that included trade measures was seen with only slightly 
less concern than unilateral approaches.  In this context he cited paragraph 3 2 of the New Zealand 
proposal which referred to fears of protectionist abuse of trade measures in MEAs, and discussions at the 
October 1995 meeting when many delegations had spoken of the need to ensure that any trade provisions 
in MEAs were effective, nec essary and proportionate.  He asked if MEA negotiators would negotiate 
trade provisions in MEAs that they viewed as ineffective, unnecessary, or disproportionate.  He suggested 
a response might be that this concern only arose with respect to trade measures  in MEAs and not with 
respect to MEAs per se .  However, including trade measures in MEAs had been important for their 
environmental objectives;  for example, it was difficult to deny trade measures were central to CITES.  
In light of the role of MEA -based trade measures, WTO rules should not serve to impede the appropriate 
use of such measures;  equally, trade measures in MEAs should be sensitive to the norms of the trading 
system.  He agreed with the EC that the necessity of trade measures in MEAs was best  determined by 
MEA negotiators, while recognizing the importance of coordination between environmental and trade 
officials in capitals.  He referred to the EC approach to balancing interests by presuming trade measures 
in MEAs to satisfy the necessity test  of Article XX(b) while keeping them subject to the disciplines of the 
chapeau.  Trade measures in MEAs might also be covered by Article XX(g) which set a different test.  
Noting the EC option that tracked Article  2101 of the NAFTA in which parties articul ated their 
interpretation that Article XX(b) included environment, he felt there could be no question environment 
was already encompassed in Articles XX(b) and (g).  He noted the New Zealand approach, similar to 
that agreed in Article 104 of NAFTA, for the  case where parties were members of both the WTO and 
the relevant MEA.   
          WT/CTE/M/7  
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14. He agreed with New Zealand that the WTO was not the competent body to question the 
environmental objective of MEA trade measure, but had doubts about its e xtrapolation of concepts from 
necessity in Article XX.  Panels had interpreted necessity to mean that a measure was not necessary if 
there were other measures reasonably available to achieve the same objective that were consistent, or less 
inconsistent wit h the GATT.  However, this interpretation was not universally accepted.  He asked 
where least trade -restrictiveness, effectiveness and proportionality were found in Article XX.  He was not 
aware of any panel that had asked if a measure taken under Article XX was the most effective that might 
have been taken.  He had doubts about introducing necessity or effectiveness as criteria for MEA trade 
measures to be accommodated in the WTO.  Referring to the panel interpretation described by New 
Zealand, to the effe ct that MEA negotiators would be expected not to use a trade measure if there were 
other measures that were consistent, or less inconsistent with the GATT that were reasonably available to 
the negotiators and would achieve the same objective, he asked what  reasonably available meant in an 
MEA negotiation.  Referring to CITES, he asked if as an alternative to trade measures, national capacity 
building to protect endangered species was a reasonably available option during the negotiations and if 
this would ha ve been sufficient to achieve the conservation objective.  The WTO did not have the 
technical competence to determine if alternatives met the MEA objectives.  
   
15. He asked if the use of effectiveness meant MEA negotiators should no t use trade provisions that 
would obviously not work, or that they must use the most effective approach available.  If a measure that 
could not achieve its stated goal was argued to be necessary, then the objective could be legitimately 
questioned.  Howeve r, there were differences of opinion among MEA negotiators over the most effective 
approach to be used.  Also, a key tenet for MEA negotiators was the precautionary principle.  He said 
questions on the legal analysis in paragraphs  80 and 81 would be taken up bilaterally.  He asked if an 
accommodation of MEAs under the WTO meant MEA negotiators might use trade provisions, but only 
if they met criteria that went beyond those applied for unilateral actions and would still be subject to 
dispute settlement.  He agreed with the EC that doing nothing on this issue was preferable to doing worse, 
i.e. subjecting MEA trade measures to additional disciplines that made it more difficult to use such 
measures for environmental goals in a WTO -consistent manner.  
 
16. The representative of Japan  said, considering the broad definition of environment, ex ante  
proposals to amend Article XX should ensure that Article XX exceptions could not be abused for 
protectionist purposes.  Guidelines were necessary to  judge whether an environment -related trade 
restriction could be regarded as an exception to WTO obligations.  Guidelines would also be useful for 
an ex post  waiver approach to ensure environment -related trade restrictions were predictable and 
compatible w ith WTO Agreements.  They would also provide guiding principles for future MEAs.  
Regardless of whether an ex ante  or ex post  approach was taken, guidelines should include at least two 
types of requirements.  First, requirements for MEAs to be considered l egitimate:  the MEA should be 
(i) based on international agreement;  (ii) subscribed to by countries of significant interest;  (iii) open to 
any country;  (iv) deal with environmental protection of a transboundary nature or reflecting common 
values where t he necessity of protection was recognized;  (v) clearly state which trade measures could be 
taken, under which circumstances and following which procedures;  (vi) prescribe trade measures based 
on sound scientific grounds;  and (vi) prescribe trade restric tive measures based on the principles of 
national treatment and MFN.  Second, requirements for trade restrictions in MEAs to be compatible 
with WTO Agreements were as follows:  (i) as provided for in the chapeau of Article XX, such measures 
should not be a pplied in a manner which would constitute a means of arbitrary or unjustifiable 
discrimination between countries, or a disguised restriction on international trade;  (ii) there should not 
be any effective alternative measure to achieve the environmental ob jective;  and (iii)  the impact on trade 
should be minimal.  The legal status of these guidelines would need to be examined.  According to the 
EC proposal, MEAs were simply required to be open to all parties concerned and reflect the benefits of 
interested parties.  Taking into consideration the development of guidelines, the WTO should be able 
to judge MEAs from the perspective of Articles 3.1 and 3.2 of the DSU.  
 
17. The representative of Hong Kong  supported a waiver approach which r equired no modification 
of WTO provisions.  Only if waivers failed to ensure the compatibility of trade measures in MEAs was 
there a case to recommend modifications to WTO provisions.  He recalled waivers were considered to WT/CTE/M/7  
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be sufficient to deal with impor tant issues, including balance of payment restrictions.  Acknowledging 
that dealing with MEAs on a case -by-case basis was time -consuming, he said the ex ante  approach might 
not prove more expeditious.  However, the definition of specific criteria for an Un derstanding or the 
negotiation of a collective interpretation also would be a long and not necessarily productive process.  
There was no certainty of consensus for criteria capable of catering to existing MEAs nor that, if agreed, 
they would meet the needs  of future MEAs.  A waiver approach could be used without delay.  He noted 
that some felt waivers might inappropriately place the WTO in the position of passing judgement on 
environmental issues;  the WTO could not avoid this.  In the ex ante  or combination approaches, 
negotiations on criteria for an Understanding also involved taking a view on environmental issues.  
Concerning the claim that only the collective interpretation of Article XX could cope with the anticipated 
increase in the use o f trade measures in MEAs, he said an environmental window, once opened, might 
serve to invite an increase in trade measures which otherwise would not occur.   
 
18. Commenting on the New Zealand proposal, he supported the importance a ttached to the terms 
necessary in paragraphs 35 and 36 and effectiveness in paragraph 36, which could be developed further.  
However, he expressed disappointment that necessity had only limited application.  The 
accommodation of MEA non -parties through com bined ex ante  and waiver approaches and WTO 
dispute settlement was pragmatic but it was difficult to visualize how it would operate.  A major concern 
was the use of joint notifications among MEA Parties which would prevail over inconsistencies with WTO 
provisions;  this would create a plurilateral code of conduct among Parties whereby they would forgo 
WTO dispute settlement rights.  Certain WTO Members could accept stricter disciplines, but by 
forgoing part of their WTO rights MEA Parties were discriminatin g against themselves and the legal 
implication were not clear.  Risks were inherent in such a consensual approach, which might encourage 
bilateral pressures on individual WTO Members to join MEAs and relinquish their WTO dispute 
settlement rights.  He had reservations about departing from the multilateral approach and recalled the 
example of the MFA.  Given Hong Kong's preference for a waiver approach and the importance it 
attached to necessity, he had two comments on the EC proposal.  By seeking special tr eatment for MEAs, 
the EC options seemed to be seeking exceptions to exceptions;  such an accommodation did not appear 
to be the original intention of Article XX.  In support of paragraph 16, Hong Kong favoured a special 
transparency regime for measures in MEAs through a WTO notification requirement.  This would not 
require a recommendation as to whether modifications to WTO provisions were required and could be 
implemented on its own.  He recalled Hong Kong's suggestion for an inventory of environmental 
notifications (WT/CTE/M/6).   
 
19. The representative of the Korea , commenting on the EC proposal, said Korea did not consider 
it necessary or appropriate to amend Article XX and was not convinced of the gravity of future conflicts, 
given the impact of trade measures in future MEAs was unknown.  As the EC proposal indicated, only 
18 out of 180 MEAs contained trade measures and to date they had not been challenged.  As for 
predictability and flexibility, existing practices and disciplines  in MEAs and the WTO did not seem 
deficient.  A legally -binding rule for legitimizing trade measures in MEAs might enhance predictability 
but at the cost of other concerns;  predictability could be achieved in different ways.  The most cautious 
approach sh ould be followed in amending Article  XX, since any derogation might compromise 
Members' rights and obligations.   
 
20. The proposed EC Understanding would allow MEAs to legitimize trade measures based on non 
product -related PPMs and non-specified trade measures.  Exemption of the necessity test for 
discriminatory trade measures agreed among MEA Parties would affect the rights of WTO Members 
which were MEA non -parties.  The second option under Article XX(b) also opened the door to 
unilateral trade measures based on non product -related PPMs and had extraterritorial effects.  The ex 
post part of the proposal had shortcomings since any challenge to trade measures could be handled under 
existing WTO procedures.  Commenting on the New Zealan d proposal, he said its analysis of necessity 
and specificity of trade measures in MEAs deserved further study.  While environmental necessity was 
still evolving, WTO necessity was based on the concept of least trade -restrictiveness and least 
inconsistency  with WTO obligations.  He concurred with the analysis of necessity in paragraphs 35 and 
36.  In accommodating trade measures, specificity was important.  He agreed with paragraphs 82 -84.           WT/CTE/M/7  
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Trade measures in MEAs could be handled under existing WTO discipli nes even though potential 
conflicts existed between two legal systems pursuing different objectives.  The merits of the ex ante  
approach (predictability and flexibility), could be achieved through waivers;  it was unnecessary to make 
amendments for the sak e of de jure  compatibility.  Information exchange could be improved through 
enhancing WTO transparency.  He said priority should not be given to specific Items until discussion of 
all Items of the work programme had been completed.  Here, paragraph 88 was also relevant.  
 
21. The representative of India  recalled the Report would have to deal with all ten Items of the work 
programme.  He felt that only the limited number of existing MEAs should be considered under Item 
1.  Criteria for  assessing a genuine MEA should include whether:  (i) it had been negotiated under the 
aegis of the United Nations:  (ii) its procedures stipulated that participation was open to all countries;  
(iii) it allowed for participation in the negotiations by cou ntries of different geographical regions and at 
different stages of economic and social development;  and (iv) it provided for accession of countries 
which were not original parties on equitable terms.  He made the point that focusing only on one aspect 
of MEAs (trade measures) would contribute to distorting their essence;  this aspect should be further 
examined.  Although it was not the Committee's mandate to examine environmental issues, trade 
measures in MEAs represented only part of an integral, negotia ted package which included positive 
measures (financial flows and technical and technological assistance).  Focusing on trade measures might 
encourage dependence on them to achieve environmental objectives.  Various factors influenced the 
formulation of ME As and there could not be an a priori  assumption that trade measures in MEAs would 
pass the tests of necessity, effectiveness, least trade distortion and proportionality.  Even though it was 
not his intention to judge MEA negotiators, it could not be taken  for granted that they had assessed in 
depth the need to incorporate trade measures.  Trade measures for achieving environmental objectives 
should be addressed under Article XX to ensure non -discrimination.  
 
22. Trade provisions in M EAs should be compatible with WTO provisions.  The concepts of  
flexibility/freedom and security/certainty in the EC proposal were important to those countries wishing to 
use trade restrictions to legitimise their use by seeking exemption from WTO provisio ns.  He said it was 
better to give such flexibility and certainty by requesting environmental experts to ensure trade measures 
in MEAs were consistent with WTO provisions ab initio .  The "legitimate goal of environmental 
protection" and "the expression of international consensus and cooperation" could only be present when 
the MEA incorporated all the above -mentioned elements.  The EC approach differed and this matter 
had to be further discussed.  He was concerned that trade measures taken pursuant to specif ic provisions 
of certain MEAs should be accorded special treatment, given that Article XX was capable of dealing with 
all legitimate concerns.  This had implications for other non -trade issues.  The core element of the 
proposal was that if a trade measure was specified there would not be scope for judging its necessity under 
Article XX (b), nor jurisprudence regarding effectiveness, least trade distortion and proportionality.  Any 
proposal which waived the necessity test or limited Members' dispute settleme nt rights concerned India.  
Also, he was unclear about the implications of the proposed cooperation between WTO and MEA 
dispute settlement mechanisms and the idea of mandating WTO Secretariat involvement during MEA 
negotiations and subsequent amendments.  
 
23. He made preliminary observations on the New Zealand proposal.  He said the procedural and 
substantive criteria for MEAs were similar to India's approach.  Paragraph 34 and 35 followed accepted 
criteria like necessity, effectivene ss and proportionality.  Paragraph 88 contained new ideas which should 
be studied further, in particular their implications for the interface between sustainable development and 
the TRIPs Agreement.  Paragraph 8 clearly stated measures which were consisten t with fundamental 
obligations like national treatment, MFN and elimination of quantitative restrictions, whether taken for 
environmental or other non -trade purposes, were not vulnerable to WTO challenge.  Paragraph 9 noted 
that Article XX provided, in exc eptional circumstances, for otherwise WTO -inconsistent measures.  
Even the EC proposal acknowledged Article XX was broad enough to encompass all environmental 
objectives.  He referred to the fact that no dispute involving trade measures in MEAs had arisen,  and 
said the Committee was trying to solve a problem which did not exist or at least had been exaggerated.  
From an environmental or economic efficiency perspective, it was difficult to assert that trade measures 
in place in some MEAs were necessary.  How ever, even assuming certain trade measures were necessary, WT/CTE/M/7  
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if they were taken for genuine environmental reasons, on a non -discriminatory basis, and fulfilled the test 
of necessity, effectiveness and proportionality, they were fully protected under existing  WTO provisions.  
Amending Article XX, either directly or through an Understanding, would set a dangerous precedent and 
jeopardize the trading system.   
 
24. The representative of Switzerland  shared the EC's way of approaching the pr oblem through an 
ex ante  phase which aimed at preventing disputes from arising and an ex post  phase which aimed at 
settling disputes which arose despite the ex ante  consultation mechanism.  In certain cases trade measures 
might be an effective tool to atta in environmental objectives.   However, their potential should not be 
overestimated and they should be used with caution and in a way that least affected the functioning of the 
trading system.  Setting up a consultation mechanism amongst competent bodies o f MEAs and the WTO 
should promote the appropriate use of trade measures.  The requirement to notify trade measures that 
could be included in a future MEA or in an amendment to an existing MEA should be elaborated to 
avoid conflicts.  It could be imagined t hat competent MEA authorities adopting trade measures and the 
WTO could conclude agreements which could specify modalities for cooperation.  If conflicts arose 
despite the ex ante  phase, a means of settling potential disputes should be envisaged which pres erved, as 
far as possible, the domains of trade and environment.  Consistency between efforts to protect the 
environment and WTO rules should be ensured.  He agreed with the EC that a special dispute 
settlement panel should not be concerned with the legiti macy of MEA objectives nor the necessity of the 
measures taken to attain them;  the WTO should deal with trade conflicts.  For that reason, he agreed 
with New Zealand that the WTO should not be used to remedy shortcomings in MEAs.  To contribute 
to legal s ecurity, MEAs should benefit from special treatment as proposed by the EC.  Criteria to be 
applied by panels to determine if an MEA would benefit from special treatment were crucial.  He 
referred to the importance of avoiding recourse to unilateral measure s which were incompatible with 
WTO provisions.  He expressed interest in New Zealand's proposal that any solution should concern all 
Annex I WTO Agreements.  Concerning New Zealand's proposal to notify MEA trade measures, he 
asked how considerable the admi nistrative work involved would be and to what extent these were already 
covered by notification provisions.  
 
25. The representative of Canada  said WTO rules already provided broad support for domestic and 
international environmental policies.  In exceptional circumstances, where it was necessary and effective 
to include WTO -inconsistent trade provisions in an MEA, an MEA Party could decide not to exercise 
its WTO right to challenge another Party's measures in a particular MEA.  Parties could not collectively 
override the WTO rights of non -parties through the MEA as any limitation of WTO rights could only 
be achieved by Members.  The WTO had a le gitimate interest in MEAs containing trade provisions.  A 
distinction needed to be made between specific trade measures that were negotiated and required to 
implement an MEA and those not negotiated but introduced pursuant to MEAs.  The latter included 
domestically -developed trade measures to advance MEA objectives or taken pursuant to domestic 
legislation.  He felt trade -related provisions that might be taken pursuant to, rather than required by, an 
MEA had a greater potential to be used for protectionist reasons and were more likely to be subject to 
dispute.  Canada supported a case -by-case approach;  it could not relinquish formally its WTO right to 
challenge action taken under the trade provisions of an MEA.  A waiver should be sought if MEA Parties 
wanted an absolute assurance that trade measures would not be challenged in the WTO.   
 
26. There was a practical need for the WTO to address the question of how trade provisions in 
MEAs should be developed, formulated, and applied to minimize the likelihood of challenges in the 
WTO.  Whether this should be done in the WTO or jointly with a multi lateral body like UNEP 
required further consideration.  The WTO should set out guidelines to assist MEA negotiators should 
they determine trade measures were necessary to ensure these measures conformed, as far as possible, to 
WTO disciplines.  They would also serve as the basis on which the WTO Secretariat could provide 
technical advice to MEA secretariats and negotiators on trade measures.  The guidelines should indicate 
a preference for trade measures that were:  chosen only when other alternatives were ineffective;  
necessary to accomplish the environmental goal;  non -discriminatory;  directly related to the 
environmental problem (coverage of the trade measures should match the product(s) and not be applied 
to unrelated products);  no more trade -restrict ive than necessary;  and, where applicable, science -based          WT/CTE/M/7  
         Page 9 
 
and measurable.  The WTO should also establish principles related to the MEA negotiating process that 
would increase the legitimacy of any trade measures that might be included in an MEA.  The WTO 
could indicate its preference for an MEA negotiating process that was:  open on an equitable basis to all 
countries;  reflected international consensus (with participation by affected countries, those at different 
levels of development and in different part s of the world);  had clear, binding environmental obligations;  
had effective compliance procedures, including for dispute settlement;  did not treat MEA non -parties 
that provided environmental protection equivalent to that required by the MEA less favour ably than 
Parties;  detailed how the measures were to be implemented;  and explicitly considered the guidelines 
set out above.  If MEA trade provisions adhered to these principles, they would be presumed necessary 
and effective and thus justifiable and non -arbitrary.  Given the consensus such principles would reflect, 
the risk of trade disputes would be low and the need for waivers small.  The qualifying principles to 
determine if an MEA reflected international consensus were important in the context of dis putes among 
Parties.  While recognizing the need for flexibility for regional arrangements, the EC proposal required 
more precision.  Provided an MEA met the qualifying principles, any challenge would focus on whether 
the implementation of the measure conf ormed with the chapeau of Article XX.  Disputes between 
Parties and non -parties had the potential to become a more important issue.  Given the evolving nature 
of MEAs, Parties could decide not to ratify amendments, thereby becoming a non -party.  For exampl e, 
Canada would not ratify the recent Basel Convention amendment if trade in non -hazardous recyclables 
was jeopardized.  He felt the New Zealand proposal outlined a variant of Article XX which provided for 
greater oversight by a WTO panel on trade measures  in MEAs than that of the EC, but this would have 
to be considered further.  He hoped progress on Item 1 was possible by Singapore.  
 
27. The representative of Australia  said a notable aspect of the New Zealand proposal was its  
atten tion to unilateral measures to advance environmental objectives, especially when these attempted to 
change the domestic policies of other countries.  Concerning the MEA issue, the proposal highlighted 
there were other approaches which did not fit easily in to an ex ante  or ex post  solution, but which deserved 
consideration.  It drew attention to ensuring WTO Agreements dealt with MEA issues in a consistent 
manner.  He asked if specific measures only included those mandated in an MEA which all Parties were 
required to implement;  if specifically detailed but not mandatory measures were considered to be 
specific or non -specific measures;  where the line was drawn between a non specific measure referred to 
in an MEA and a measure which was essentially unilateral , although the country taking it claimed it was 
intended to advance an MEA objective;  and whether measures taken pursuant to decisions or 
recommendations of MEA bodies could be adequately dealt with through use of the specific and non -
specific categories,  or whether another category was needed.  Terms should be defined and should cater 
to a range of situations as MEAs were elaborated over time through amendments, protocols and the 
adoption of decisions and recommendations.  He noted the use of necessity an d the related issues which 
needed to be explored, such as the effectiveness of the trade measure in achieving the environmental 
objective,  the use of the least trade -restrictive measure, and proportionality.  In further discussion of 
these issues, the pri nciples and rules suggested in Agenda 21 as applicable to trade measures necessary 
for enforcing environmental policies should be examined.  Expertise and institutional competence 
required for evaluating the necessity of trade measures in MEAs was also req uired.  Any criteria should 
provide security to MEA negotiators.  Australia would need to examine the EC proposal further in the 
light of its implications for other WTO Agreements, the criteria for trade measures in MEAs and MEAs 
themselves, and the nature  of any rules to ensure the criteria were in fact followed, including how dispute 
settlement should be conducted where disputes concerned a trade measure pursuant to MEA provisions.   
 
28. The representative of Mexico  said there shou ld be a balanced treatment of all the Items of the 
work programme.  As trade measures were not the best solution for environmental problems and there 
was no evidence of a real conflict between MEAs and the WTO, it was inappropriate to change WTO 
provisions .  Furthermore, trade measures were only one alternative among many others in the package 
of instruments that could be used to achieve MEA objectives;  positive measures and incentives were 
more efficient and effective.  Mexico felt proposals to derogate f rom WTO rules to accommodate MEA 
trade measures were an unbalanced and isolated approach as long as there was no parallel commitment 
to first use and enforce positive measures.  There was no justification for the use of trade sanctions vis -a-
vis non -partie s, nor even between MEA Parties.  Commenting on the EC proposal, she agreed with WT/CTE/M/7  
Page 10 
 
Korea that predictability for MEA negotiators could be ensured in different ways, notably within MEAs 
themselves.  She supported the United States' comment that greater nation al coordination would help 
mitigate problems of perception regarding the relationship between trade and environment.  The 
Committee's Report would contribute to clarifying the MEA issue.  She asked for clarification from the 
EC as to how it defined legitim acy (was it based on science, consensus, or the political weight behind the 
environmental aim of the MEA);  measures taken pursuant to an MEA;  and necessity.  She felt the 
New Zealand proposal dealt with the latter two concepts in a more balanced manner.  Mexico was against 
waiving measures not specified in an MEA, either between Parties or against non -Parties.   
 
29. On specific measures between Parties, she clarified the NAFTA Article 104 provisions for cases 
of inconsistency betwe en NAFTA and specific trade obligations in CITES, the Montreal Protocol and 
the Basel Convention.  Two conditions were explicitly mentioned to ensure the supremacy of the MEA 
obligations over NAFTA:  the measure must be the least trade restrictive and be s pecifically prescribed 
in the MEA.  This was applicable only in cases where NAFTA Parties were also MEA Parties.  The 
possibility of adding other agreements to the list required the unanimous consent of NAFTA Parties.  
The New Zealand proposal referred to the similarity of its proposal in paragraphs 45 -47 to NAFTA 
Article 104.  It differed in that notification was required.  Under NAFTA, unanimity was required to 
define an MEA whose specific measures would have supremacy over NAFTA and recourse to its dispu te 
settlement mechanism was not hindered.  In the WTO context, Mexico would not renounce its right to 
use the WTO dispute procedures.  Necessity was the first criterion which should be defined in any 
attempt to seek an accommodation of MEA trade measures.  Use of necessity in the WTO had been 
based on the condition that the measure be the least trade restrictive or least -inconsistent with WTO 
obligations.  However, the definition of environmental necessity was still evolving.  She agreed with New 
Zealand th at necessity included the consideration of criteria linked to the effectiveness and proportionality 
of measures;  the necessity test could not be taken for granted.  Citing the recent Basel Convention 
amendment, she said the decision to use trade measures in MEAs might depend more on political 
pressure than actual necessity.  Also, paragraph 88 of the New Zealand proposal should be elaborated.  
 
30. The representative of Norway  gave preliminary comments on the proposals.  Environment 
related trade measures should not be subject to a disproportionate number of criteria under Article  XX.  
In this respect, both the EC options based on an amendment to Article XX and an Understanding met 
Norway's concerns.  She noted New Zealand's proposal c overed GATT, GATS and TRIPs, not only 
Article XX.  However, she felt all these Agreements could not be covered at the same time.  In order 
to have a recommendation by Singapore, work should concentrate on Article XX.  Then the feasibility 
of a horizontal s olution covering all three Agreements could be considered.  Although both the New 
Zealand and the EC proposals elaborated criteria like openness, specificity and necessity, the latter put 
forth rather few criteria.  New Zealand's proposal was more detailed  and distinguished between those 
MEAs which mandated specific trade measures and those which did not.  The non -party issue could be 
a problem, especially if MEA dispute settlement procedures were insufficient.  Here the issue was 
whether trade measures wer e specifically mandated in an MEA.  Concerning the extent of specificity, 
flexibility should be kept in mind.  An important aspect would be to interpret terms like adequate or 
significant cover.  New Zealand used the criterion:  "adequate representation o f consumer and producer 
nations", while the EC proposed broader wording:  "reflects, through adequate participation, the interest 
of parties concerned, including parties with relevant signifi cant trade and economic interest".  She 
enquired if New Zealand' s definition of necessity was correct and if the Secretariat could comment on this 
interpretation.  In view of New Zealand's emphasis on necessity, she asked if it agreed with the EC that 
if an MEA fulfilled the criteria then necessity considerations were assumed to be fulfilled by that MEA.  
Norway would have more concrete reactions at a later date.  
 
31. The representative of Morocco  said crucial issues under this Item related to accommodating 
MEA trade measures which were applied ex traterritorially or on MEA non -parties.  He felt an Article 
XX amendment could contribute to a solution.  However, he recalled trade measures for environmental 
purposes were not the best solution and, if applied, should be adequately justified and pre cisely identified 
in the MEA.  He said the advantages of environmental measures should be commensurate with the costs 
involved in imple menting them, i.e. the principle of proportionality.  He referred to the importance for          WT/CTE/M/7  
         Page 11 
 
developing countries of positive mea sures in MEAs, such as the transfer of technology.  Morocco could 
not accept the application of extraterritorial trade measures for environmental purposes.  Guidelines to 
assist MEA negotiators on the use of trade measures should be developed.  Panels coul d examine any 
divergence from these guidelines and should include experts from the MEA secretariat or UNEP.  
   
32. The representative of Brazil  said although it was natural to avoid creating environment -related 
trade barriers in the WTO, references in the preamble to the Final Act and the Decision on Trade and 
Environment stated sustainable development was the framework for debate on trade and environment.  
The Report should cover all Items and, even considering the little progress ac hieved so far, it would be 
difficult to accept a selective agenda.  Caution characterized delegations' attitudes, which could be 
attributed to the rule -oriented nature of the WTO.  Any acceptable result for Singapore would have to 
be a package deal.  Under lying the reluctance of some delegations' to engage in negotiation of new 
disciplines was a concern to safeguard the Uruguay Round achievements, particularly on market access 
in the TBT and SPS Agreements;  environmental concerns should not lead to new mar ket access 
restrictions.  WTO effectiveness in regulating disputes involving these issues should be examined before 
moving into a new exercise.  He said the recommendations in the Report should be non legally -binding.  
The establishment of the Committee on  a permanent basis with a negotiated mandate could be 
considered as a major achievement for Singapore.  Certain issues would be more mature than others by 
Singapore and two types of recommendations could be envisaged for the Report:  for more mature Items 
(i.e., MEAs and eco -labelling) operational results, and for others, procedural recommendations.  
Preventing unilateralism was central and MEAs containing trade provisions could be made compatible 
with WTO disciplines if they followed certain criteria or we re negotiated under particular guidelines.  
Procedural guidelines were linked to either Article XX or Article XXV through a case -by-case approach.  
The lack of jurisprudence on Article XX might lead to the belief that current provisions were sufficient 
to cover MEAs, which might not create an adequate framework for the interaction between the WTO 
and MEAs.  He said the far -reaching EC proposal was premature and unwarranted.  Brazil was still 
considering the implications of the New Zealand proposal since eve n an Understanding could entail risks 
for the Uruguay Round achievements.   
 
33. The representative of Argentina  said the proposals under this Item would assist in the preparation 
of the Report which should represent part of a balanc ed package of recommendations.  Both proposals 
contained aspects which deserved precision and could form the basis of further work.  Argentina had a 
flexible attitude on this Item that did not exclude any possible outcome, a position he hoped would be 
reciprocated when other Items of the work programme were considered.  To progress on Item 1, he 
proposed a methodology consisting of three phases:  identification of the problem;  identification of 
possible solutions;  and selection of solutions based on their  feasibility of being adopted.  Based on 
discussion to date, there was no common vision of the problem.  As Canada had stated, it was not clear 
what the problem was.  He asked if the issue was that environmental objectives had not been sufficiently 
set out  in Article XX, or related to the appropriateness of adopting guidelines for future MEA 
negotiations.  A definition of the issues was a crucial step in order to be able to determine appropriate 
solutions.   
 
34. The representative of  Cuba  gave preliminary comments on the New Zealand proposal.  He 
supported the necessity of eliminating unilateral measures in trade in general and related to trade and 
environment in particular.  He would also consider favourably the EC proposal.  He shar ed the views 
expressed by ASEAN, in particular related to preserving an open, non -discriminatory multilateral trading 
system and contributing to sustainable development by improving market access.  Referring to Principal 
12 of the Rio Declaration, he rejec ted the use of measures which were discriminatory and unilateral.  
 
Item 5 :  The relationship between the dispute settlement mechanisms in the multilateral trading system 
and those found in multilateral environmental agreements  
 
35. The representative of the European Communities  recalled the EC statement at the April  1995 
meeting that the Committee's task in addressing this Item would be easier if consensus had been achieved 
on rules regulating the relationship between the WTO and MEA s.  Noting that the EC had developed WT/CTE/M/7  
Page 12 
 
its position on this issue, he said the DSU should be applied in such a way as to ensure the use of relevant 
legal and technical environmental expertise in environment -related trade disputes.  Environmental 
expertise wa s essential to test if environment -related trade measures were necessary and to assess scientific 
evidence.  Members' rights, especially those which were MEA non -parties, to discourage protectionist 
abuse through the WTO dispute settlement mechanism should  be preserved to safeguard against the 
application of unnecessary restrictions.  Disputes related to implementation of an MEA between MEA 
Parties should be settled in the MEA dispute settlement mechanism.  WTO Members which were MEA 
Parties should not reso rt to the WTO dispute settlement mechanism to circumvent or impair the 
obligations they had accepted by becoming MEA Parties.  The EC felt efficient dispute settlement 
mechanisms, including enforcement mechanisms, should be developed in MEAs, particularly those 
including trade provisions.  This would help dispel the risk that if trade disputes arose between Parties 
resort would be made to the WTO.  If a WTO panel was requested to examine a complaint against a 
trade measure taken pursuant to an MEA it should  proceed according to the results of the discussion on 
Item 1.  He recalled the EC proposal under Item 1 that trade measures taken pursuant to specific MEA 
provisions be granted special treatment.  Technical expertise under DSU Article 13 should be request ed 
by a panel judging the legality of a trade measure in an MEA, if necessary in consultation with the relevant 
MEA secretariat.  
 
36. The representative of Japan  said this Item should be further examined after discussion of Item 1 
had been concluded.  However, Japan's provisional position was that even when parties to a dispute were 
MEA Parties, their right to WTO dispute settlement procedures should not be denied.  Given dispute 
settlement procedures were contained in both MEAs and t he WTO, an examination was required as to 
which procedures should be used in disputes related to trade measures taken pursuant to MEAs.  When 
one of the parties to the dispute was a non -party to the MEA in question, WTO dispute settlement 
procedures should  be used.  In this case, it would be reasonable that an environmental expert participate 
in the expert review group in the panel process.  However, it was not appropriate to make it a rule that 
one of the panellists be an environmental expert.  
 
37. The representative of the United States  said mechanisms by which WTO panels could be 
informed about relevant MEA provisions related to a dispute should be explored, including the 
application and interpretation of an MEA or judgements on env ironmental matters in MEAs.  The 
WTO process would benefit if panels, where appropriate, sought expert advise on environmental, 
scientific and technical matters in environment -related disputes.  It was essential DSU Article 13 
procedures operated effective ly.  To some degree, the DSU suffered in comparison to MEA dispute 
settlement procedures in terms of public accessibility.  Greater opportunities existed in some MEAs for 
the public to have knowledge of and observe the proceedings.  
 
38. The representative of Chile  said most MEAs contained dispute settlement procedures which 
emphasized the need for conciliation, consultation and cooperation.  To date, there had not been a 
significant number of cases where mandatory dispute settlemen t procedures had been invoked.  In 
future, environmental legislation might emphasize standards rather than elaborate doctrines for dispute 
settlement.  However, increases in trade would maintain the necessity of resorting to the WTO dispute 
settlement proc edures.  In order to avoid conflicts of jurisdictional competence between MEAs and the 
DSU, it might be necessary to examine the similarities between these two systems.  In principle, concepts 
like notification of measures, prior consultation, conciliation , investigation, mediation, and arbitration 
were common to both.  It was to be expected, however, that the DSU would have greater scope for 
application than MEA dispute settlement procedures as WTO rules and principles were clear standards 
which had alread y been interpreted and allowed for retaliation in the event of non -compliance.  He 
inquired as to what type of trade -related disputes which arose from MEA rules should be submitted to 
the DSU:  all possible disputes including those in which parties had exc eeded the standards permitted in 
the MEA, or only those arising from the application of trade -related environmental standards which 
interfered with basic WTO provisions;  and, could the parties to the dispute include in a panel's terms 
of reference the tra de-related standards of the MEA, and if so would this mean that panels would be 
interpreting standards contained in another international instrument.  Would the Appellate Body then 
be inhibited, which meant reducing its importance as a body designed to pre serve the unity and coherence          WT/CTE/M/7  
         Page 13 
 
of WTO rules.  Recourse to arbitration in DSU Article 25 should be considered as the appropriate 
means of resolving trade and environment disputes.  A rapid and flexible arbitration procedure might be 
an efficient instrument t o settle disputes without interfering with the relative spheres of jurisdiction.  
 
39. The representative of Switzerland  said this Item was linked to progress under Item 1.  
Considering trade provisions were included in MEAs as negoti ators felt them necessary to achieve the 
environmental objectives, he said it was not up to the WTO to call into account the need or the 
appropriateness of such decisions.  The WTO dispute settlement mechanisms should focus on trade 
disputes and be limited  to examining the compatibility of such measures in relation to WTO rules.  
Concerning the participation of environmental experts in resolving trade disputes, he recalled DSU 
Article 8.1 did not state that the parties to a dispute could nominate such an ex pert to serve on a special 
panel, although this would be possible if an expert was well -versed in WTO rules.  Also, DSU Article 13 
provided that a panel could make use of any expertise it considered necessary.  He felt the WTO dispute 
settlement mechanism provided guarantees that ensured environmental expertise could be included when 
necessary.  
 
40. The representative of India  said the DSU covered the trade issues involved in considering the 
interface between dispute settlement in MEA s and the WTO.  Concerning the EC proposal under Item 
1 to extend special treatment to MEAs, this was not contained in the DSU and any limitation of Members' 
rights should be raised in the DSB.  DSU Article 13 covered any additional technical expertise whi ch 
would be required by a panel.  
 
41. The representative of Norway  said this Item was linked to Item 1.  She felt disputes between 
MEA Parties should be settled in the MEA dispute settlement mechanism.  To date, binding 
environmental  dispute settlement had not been widely used. Thus, Norway felt further elaboration and 
strengthening of MEA dispute settlement was important;  however, this was not part of the WTO 
concern.  A consensus on third parties was what was needed.  The environme ntal and trade aspects of 
the dispute should be adequately addressed and required environmental and trade competence.  The 
DSU had general provisions for the inclusion of environmental expertise, but did not ensure 
environmental expertise would be always p art of the panel or called upon in connection with panel 
proceedings.  She referred to Japan's comment against the right of environmental expertise to be 
included in panels.  Environment expertise should always be consulted in WTO dispute settlement 
procee dings concerning MEA trade provisions.  Provision should be made to secure this participation, 
for example through binding obligations to include such expertise.  In this respect, she cited GATS 
provisions that, for example, provided for financial services  experts to be on a panel.  Beyond the 
framework of an MEA, environmental expertise should also be included if a dispute touched on elements 
relevant to environmental protection.  
 
42. The representative of Singapore, speaking on beha lf of the ASEAN countries , questioned the 
rationale of drawing a linkage between WTO and MEA dispute settlement procedures.  MEA 
obligations should have no bearing on WTO rights and obligations.  In accordance with Article 1 of the 
DSU, that it applied onl y to disputes brought pursuant to provisions of WTO Agreements, discussion 
should be limited to trade measures in MEAs which affected WTO rights and obligations. As the 
Committee had not been mandated to contemplate changes to the DSU to accommodate MEAs, ASEAN 
could not accept its modification.  ASEAN saw merit in the suggestion the WTO dispute settlement 
process would benefit if panels on environment -related disputes sought expert advice on environmental, 
scientific and technical matters.  The DSU Article  13 provided for this.  However, he supported India's 
comment that it was the panellists' task to judge a dispute and the DSU gave clear guidelines about how 
they should carry out their work.  Panel independence should not be compromised and the DSB should  
not undertake to resolve environmental issues per se  nor to interpret MEA provisions.  
 
43. The representative of Japan  clarified that, although he did not deny that in some cases a panellist 
could be an environmental expert, it was not appropriate for it to be a rule that one of the panellists should 
be an environmental expert.  
 WT/CTE/M/7  
Page 14 
 
44. The representative of Korea  endorsed the statements of India and ASEAN.  
 
45. The representative of Nigeria  said this Item was related to Item 1.  Caution should be used in 
drawing linkages between WTO and MEA obligations.  DSU Article 1 was of overriding importance, 
i.e. the DSU applied only to disputes brought pursuant to WTO prov isions.  This mandate should not 
be stretched beyond its agreed legitimate objectives.  If environment -related disputes arose, the dispute 
settlement mechanism would benefit if panels sought the relevant expert advice on environmental, 
technical and scient ific matters as permitted under DSU Article 13.  However, panels should seek such 
views taking into account the diversity of views on environmental matters.  He endorsed the statements 
of India and ASEAN.  
 
46. The representative of t he European Communities  said the current DSU provisions should be 
applied in such a way as to ensure the use of relevant legal and technical expertise in environment -related 
disputes.  Members' rights, especially those which were MEA non -parties, to discou rage protectionist 
abuse through the dispute settlement mechanism should be preserved.  
 
Item 3(b) :  The relationship between the provisions of the multilateral trading system and requirements 
for environmental purposes relating to products, including stand ards and technical regulations, packaging, 
labelling and recycling  
 
47. The representative of Canada , introduced his delegation's proposal in WT/CTE/W/21.  Eco -
labelling could be an important tool for encouraging resource and manufac turing industries to adopt 
higher standards of environmental protection. Granting eco -labels to environmentally preferable products 
and services was designed to influence consumer purchasing behaviour and provide opportunities for 
increased market share.  Eco-labelling programmes were valid environmental policy instruments which 
must be developed and implemented in a manner consistent with fundamental WTO disciplines of non -
discrimination and national treatment.  He said that many delegations were concerned  about the possible 
introduction of unincorporated (i.e., non -product related) PPMs into the WTO.  The best way to handle 
this concern was to limit the possible cover of unincorporated PPMs to voluntary eco -labelling 
programmes, i.e., standards.  His deleg ation was not proposing to interpret the definition of technical 
regulation.  Some had argued that unincorporated PPMs -based measures were not consistent with non -
discrimination and national treatment obligations of the GATT 1994 and the TBT Agreement.  
However, while there was no scope for technical regulations based upon unincorporated PPMs, the 
situation was less clear with respect to standards.  He thought that voluntary eco -labelling programmes 
should not be excluded from TBT coverage only on the basis  that the life -cycle approach (LCA) might 
result in a standard that might or might not fall within the scope of the TBT.   
 
48. From an environmental perspective, LCA was an integral part of eco -labelling programmes.  
LCA considered the environmental impact at each stage of the product's life, and eco -labelling 
programme criteria were developed accordingly. Where the greatest impact was at the consumption (i.e., 
energy or water consumption of home appliances) or final disposal (e.g., batteries, lubricating oil) stage 
the resulting eco -labelling criteria would be largely product -related and characteristic or performance -
based.  These criteria were no different from other voluntary standards and should be subject to existing 
TBT discipli nes.  Where, however, the LCA indicated that significant environmental impact was at the 
production stage (e.g., paper products), the resulting eco -labelling criteria could have a strong component 
of unincorporated PPMs.  From a trade per spective, it was important that eco -labelling programmes be 
subject to disciplines to reduce the potential for protectionist abuse.  Referring to principle (d) of the 
paper, he proposed that the TBT Agreement be interpreted to cover the use of certain standards based 
on un incorporated PPMs in vol untary eco -labelling programmes, provided these programmes were 
developed according to multilaterally -agreed guidelines consistent with the basic obligations of the GATT 
1994 and of the TBT Agreement.  Guidelines such as those unde r development in the ISO and the 
Global Eco -labelling Network (GEN) and complementary work carried out by UNEP would reduce the 
possibility of protectionist abuse and trade discrimination.  These guidelines were expected to be more 
on the level of procedur es and methodologies rather than specific benchmarks. This approach thus          WT/CTE/M/7  
         Page 15 
 
acknowledged that specific environmental standards might vary as a function of local environmental 
absorptive capacities.  
 
49. With respect to the implementatio n of the guidelines, he said his delegation's analysis was still 
incomplete.  However, he suggested that the basic transparency disciplines of the TBT Agreement and 
the Code of Good Practice should apply.  The use of LCA made it more important for foreign and 
domestic producers to participate in the development of such standards from the earliest stage and the 
require ment under the Code of Good Practice for semi -annual publication of the work programme would 
provide this opportunity.  This could reduce the  risk that standards reflected unique national production 
factors or technologies. Furthermore, the requirement to allow sixty days for comments would reinforce 
the opportunity to provide a final "check" on the draft standard.  While respecting the integri ty of LCA 
and thus the possibility for standards based on unincorporated PPMs, the preference should be for 
performance -based standards as stated in Article 2.8 of the TBT Agreement and Paragraph I of the Code 
of Good Practice.  He believed the work carrie d out in GEN and ISO was in line with these disciplines.  
According to the current draft of ISO Guiding Principles and Procedures on Environmental Labelling, 
such environmental guidelines "shall be capable of demonstrating that products meeting the criteri a fulfil 
the labelling objective of reducing environmental impact; the development and selection of criteria for 
environmental labels shall be based on scientific methodology; and the establishment of criteria, as well 
as their review and revisions, should  be the result of impartial decisions".  He reiterated his proposal that 
the joint CTE/CTBT should consider interpreting the scope of the TBT Agreement to cover the use of 
certain standards based on unincorporated PPMs for voluntary eco -labelling programme s and looked 
forward to continuing discussions of the issue.  The comments, concerns and queries of other delegations 
would assist in the further refinement of his proposal.  
 
50. The representative of Brazil  stated that eco -labelling  schemes fell under the scope and the 
disciplines of the TBT agreement.  His delegation had traditionally held the position that unincorporated 
PPMs were not under the scope of the TBT Agreement.  However, it recognized that LCA in eco -
labelling programmes  was based also on unincorporated PPMs, and it had not yet decided whether this 
was a sufficient reason to interpret the TBT Agreement to accommodate unincorporated PPMs.  He 
supported the conclusions contained in sections (a), (b), and (c) of the Canadian  proposal.  However, he 
reserved his position on the ambiguity of the definition of "standard" in the TBT Agreement, as stated in 
Canada's proposal, since, in his view, it did not leave any room for accommodating unincorporated PPMs.  
He said that results in this area should not be taken in isolation but were condi tioned on an overall 
understanding of other Items of the  work programme.  
 
51. The representative of Argentina  said there were risks implied in Canada's proposal to interpret 
the scope of the TBT Agreement to cover the use of certain standards based on unincorporated PPMs 
by eco -labelling programmes, provided these standards were developed according to multilatera lly agreed 
guidelines.  At present, Members could  not agree on whether unincorporated PPMs were covered by 
the TBT Agreement.  Canada's proposal implied that Members would lose the benefit of the doubt and, 
as other delegations indicated, probably lose th e right to challenge under the dispute settlement 
mechanism.  However, the Canadian proposal also had some benefits.  It relied on the "equivalency" 
aspect, the possibility to question unincorporated PPMs when not consistent with internationally agreed 
guidelines, and the possibility to limit unincorporated PPMs expanding into the rest of the system, 
particularly into technical regulations.  The Canadian proposal would not imply that unincorporated 
PPMs should not comply with other TBT principles such non -discrimination, national treatment, 
avoidance of unnecessary obstacles to trade and transparency.  Therefore, he looked at it with sympathy.  
 
52. The representative of Nigeria  welcomed the presentations of eco -labelling programmes mad e by 
delegations in the CTE/CTBT informal meeting.  He agreed with principles (a), (b) and (c) outlined in 
Canada's proposal but not with (d).  LCA was an integral part of eco -labelling programmes but, in his 
view, only segments of the life cycle dealing w ith product -related characteristics, such as performance, 
were covered by WTO rules.  Unincorporated PPMs were not.  WTO rules, such as the TBT 
Agreement, had been drafted to address specific concerns and should not be stretched beyond those 
limits.  He ex pressed concerns about the issues contained in paragraphs  3(d) and 16 of Canada's paper.  WT/CTE/M/7  
Page 16 
 
First, since the TBT Agreement only addressed product -related PPMs, Canada's proposal to 
accommodate LCA -based eco -labelling programmes in it could be incompatible wi th basic WTO prin -
ciples.  Second, the issue of multilaterally agreed guidelines needed to be further discussed.  He thought 
the ISO's lack of global representation could have effects on its work.  In addition, ISO's  work focused 
more on the promotion of national regulations than on the development of global guidelines.  He also 
recalled concerns about decision -making procedures within ISO.  More information was required on the 
subject.  Third, he noted that Canada's proposal to interpret the TBT Agreement  to cover the use of 
certain standards based on unincorporated PPMs had provoked differing reactions and there was need 
for more dialogue on the issue.  Referring to Canada's statement, he asked for an explanation on the 
possible benefits, and disadvantage s, if any, of such an extensive interpretation of the TBT  Agreement.  
His delegation  recognized the validity of the need for guidelines, for instance, on the equivalency and 
mutual recognition of national stan dards.  The Canadian proposal was slightly di fferent since it proposed 
equivalency of standards and mutual recognition on a case -by-case approach.  However, despite their 
difference, proposals for guidelines on equivalency and mutual recognition of standards on the one hand, 
and proposals for equival ency and mutual recognition on a product or case -by-case basis on the other, 
could be reconciled.  
 
53. The representative of the European Communities  said the first issue to be addressed before any 
view could be reached on the adequa cy of existing rules or the need for further ones was the extent to 
which existing rules in fact applied to eco -labelling schemes.  With respect to the application of the TBT 
Agreement to voluntary eco -labelling schemes based on a LCA, such as the EC eco -labelling scheme, he 
recalled that his delegation at the meeting of the CTE in October, had expressed the view that there were 
legal uncertainties concerning the full coverage of voluntary eco -labelling schemes based on a LCA under 
the TBT Agreement.  Other  delegations at that meeting, in contrast, had argued that the TBT Agreement 
applied fully to schemes of this type.  He thought the Canadian proposal, whilst concluding that the 
application of the TBT Agreement was not absolutely clear, supported the view that the TBT Agreement 
applied fully to schemes of this type.  The main issue to be considered was whether or not voluntary eco -
labelling schemes based on LCA fell within the definition of "standard" in Annex I to the TBT Agreement.  
The inclusion of the w ord "related" before "processes and production methods" could, in fact, be 
interpreted as having the effect of excluding from the scope of the Agreement those rules, guidelines and 
characteristics which concerned unincorporated PPMs.  Document WT/CTE/W/10 confirmed that the 
intention of negotiators of the TBT Agreement was to exclude from its coverage PPM -based specifications 
which did not affect the product as such.   
 
54. However, others argued that the labelling requirements concer ning unincorporated PPMs were 
still covered by the TBT Agreement in view of the fact that the second sentence of the definition of 
"standard" did not specify, as regards terminology, symbols, packaging, marking or labelling requirements, 
that the process o r production methods to which such requirement applied must be "related" to the 
products.  Some delegations had also declared that pursuant to the decision adopted by the TBT 
Committee that mandatory labelling requirements were subject to TBT provisions re gardless of the kind 
of information provided on the label, by implication voluntary eco -labelling standards should also be 
subject to all relevant TBT provisions.  However, the EC considered that this position resulted from a 
misconception about the true n ature of eco -labelling schemes.  Eco -labelling schemes were not merely 
labelling regulations for standards but a mark of conformity to a series of substantive criteria, each of 
which had the potential of being a standard or a technical regulation on its ow n.  The Mexican regulation 
which had prompted the decision of the TBT Committee was a pure labelling requirement and not a 
mark of conformity to a substantive standard or technical regulation.  Accordingly, its only implication 
was that any requirements co ncerning the eco -label itself were subject to the TBT Agreement, regardless 
of their content.  
 
55. It could thus be argued that eco -labelling schemes based on LCA, which by definition included 
both product -related and unincorporated PPM criteria, were not entirely covered by the TBT Agreement.  
A partial coverage of eco -labelling schemes based on LCA excluding unincorporated PPMs criteria was 
possible in theory, if each of the criteria established for a category of products was consid ered as a separate 
rule, guideline or characteristic.  According to this approach, those criteria which concerned product          WT/CTE/M/7  
         Page 17 
 
characteristics or product -related PPMs would be considered as falling outside the scope of the 
Agreement.  However, a partial coverag e would not make sense as an outcome to the discussions on the 
issue.  In the operation of many eco -labelling schemes, including the EC eco -labelling scheme, all the 
criteria established for a specific category of products - whether related to the product itself or to the PPM 
used - had to be taken jointly into account when awarding the labels.  Furthermore, it would not meet 
the concerns expressed in the CTE's deliberations on the application of PPM -related criteria to imported 
products.  The EC therefore remained of the view that there was legal uncertainty about the extent to 
which the TBT Agreement applied to eco -labelling schemes based on LCA.  He repeated his 
delegation's proposals at the October meeting to (i) ensure transparency in the operation of e co-labelling 
schemes as the first priority; (ii) avoid trade distortions; (iii) allow the continued use of LCA, and (iv) take 
into account the specific needs of developing countries.  
 
56. The representative of the United States  said it was generally accepted that eco -labels not involving 
unincorpor ated PPMs were covered by the TBT Agreement.  Since most eco -labels were of a voluntary 
nature, they would be considered to be standards.  Delegations who had suggested that eco -labels 
involving unincorporated PPMs fell outside the scope of the Agreement relied on the first sentence of the 
definition of standard.  However, his delegation believed that, following the second sentence of the 
definition, eco -labels based on unincorporated PPMs f ell under the TBT Agreement.  He recalled the 
Tokyo Round TBT Committee decision on the coverage of the Agreement with respect to labelling that 
labelling was covered regardless of the content of the label.  The WTO TBT Committee had 
subsequently reaffirme d that Decision.  The TBT Agreement provided sufficient flexibility to cover 
unincorporated PPMs and WTO rules could permit the application of innovative environmental policy 
tools.  It was important to find a common understanding of the relevant applicabl e rules since it was 
difficult to discuss the adequacy of disciplines from a trade and environment perspective without an agreed 
baseline.  With respect to the EC statement that eco -labels were not merely labelling regulations for 
standards but a mark of c onformity, he pointed out that the second sentence of the definition of standard 
in the TBT Agreement covered marking requirements.   
 
57. The discussions in the CTE had so far focused on eco -seals granted by a third party on the bas is 
of life -cycle considerations.  However, there were other types of programmes such as manufacturers' 
claims, report card type labels, and "single issue" eco -labels such as "recyclable".  It would be useful for 
Members to reflect and share views on the im plications of various types of eco -labelling programmes and 
on the consider ations that design ers and implementers of eco -labelling schemes might take into account;  
for example, to adequately recognize differing environmental conditions in the home count ry and other 
parts of the world, and to accommodate different approaches that produce an equivalent, environmentally 
beneficial result.  He believed that eco -labelling schemes should be designed to ensure they provided 
sufficient, accurate information to c onsumers on the relative environmental impacts of competing 
products.  In this respect, the principles of truthfulness, scientific basis and substantiability  were 
particularly relevant;  labels should not mislead consumers by making claims that could not be 
"substantiated".  
 
58. Transparency of eco -labelling programmes was essential in avoiding potential trade difficulties 
and had important benefits from the environmental perspective since it increased participation by 
interested parties in such programmes.  Therefore, it would be useful for the CTE and TBT Committee 
to develop a common understanding of how eco -labelling programmes were covered under current 
WTO disciplines, to identify areas associated with the developm ent of eco -labelling programmes with 
gaps in existing transparency provisions,  and, as appropriate, amplify current WTO transparency 
requirements.  He proposed transparency, with an opportunity for public input, at each critical stage of 
the programme's d evelopment:  (i) the establishment or existence of a programme;  (ii) the selection of 
products considered for criteria development;  (iii)  the development of any life cycle and scientific 
considerations used to underpin criteria development;  (iv) the dra ft criteria for product groups, whether 
new or substantially revised;  (v)  the development of any interpretive or explanatory documentation, 
including scientific documentation, necessary to understand how the criteria were to be implemented;  
and (vi) the means by which non -domestic environmental protection practices would be taken into 
account in determining product eligibility.   WT/CTE/M/7  
Page 18 
 
 
59. The TBT Agreement contained specific transparency obligations for both mandatory and 
voluntary meas ures (publication, notification and comment period).  However, a key question was at 
what stage an eco -labelling programme was considered by Members to be "draft" and whether that 
incorporated the six elements identified for eco -labelling programmes.  He r ecalled that according to the 
Decision taken by the TBT Committee on the timing of notifications, "a notification should be made 
when a draft with the complete text of a proposed technical regulation or pro cedures for assessment of 
conformity is available  and when amendments can still be introduced and taken into account".   For 
instance, in developing eco -labelling programmes based on life -cycle considerations, it would be necessary 
to define the product subject to an eco -label, perform a life -cycle inven tory of the environmental impacts 
of the product and prepare a draft standard based on that inventory.  In fact, once the draft standard had 
been developed, the opportunity for meaningful input could be significantly narrowed by decisions taken 
at each of the previous stages.  If the first opportunity for comment came only after a draft standard has 
been prepared it could be impossible to influence the decision on product definition because the 
standards body would have already made a significant investment  in time and resources in the preparation 
of the life -cycle information.  There was no standard methodology for performing life -cycle inven tories 
and thus considerable room existed for honest disagreement on the results.  It would be useful for the 
CTE an d CTBT, meeting jointly or separately, to provide and early opportunity for delegations to 
exchange views as to at what point in the process of development of an eco -label the transparency 
obligations of the TBT Agreement required that an opportunity be pr ovided for input from all interested 
parties.  If a view arose that critical points in the development of eco -labels might not be covered by such 
obligations, it might be useful for the Committees to consider whether it would be desirable to clarify or 
add to existing transparency obligations.  
 
60. The representative of Mexico  agreed with points (a), (b) and (c) of Canada's proposal but 
expressed concern on point (d).  She shared the views expressed by Brazil and Australia regarding t he 
issue of unincorporated PPMs, and sought clarifications from Canada on the definition of multilaterally -
agreed guidelines on eco -labelling.  Canada's proposal to create a kind of derogation for legitimizing the 
use of unincorporated PPMs in eco -labellin g based on multilaterally -agreed criteria, was parallel to the 
proposals made under item 1 of the CTE's agenda.  One of the criteria proposed in the context of MEAs 
was that trade measures be contained in agreements representing multilateral consensus.  Ch ile had 
pointed out that it had a label based on standards based on MEA -agreed objectives. She asked for 
clarifications as to whether Canada was considering something similar or, if not, what type of standardizing 
body representing multilateral consensus w ould be the one referred to in the Canadian proposal.  ISO 
was basically a non -governmental forum, where decisions were not taken by consensus and doubts 
remained regarding the multilateral representation of this organization due to limited representation of 
developing countries' interests. While ISO standards were recognized in the TBT Agreement as 
international standards, technical standards were different from environmental standards, particularly 
when based on unincorporated PPMs. Technical standards co uld be more easily multilaterally -agreed 
since they were based on quality, durability or performance of products.  On the contrary, environmental 
standards, particularly those based on unincorporated PPMs, were founded on values and judgements 
which could vary even within a country.  Therefore, she considered it difficult to agree on multilateral 
environmental standards on unincorporated PPMs.  Rather than harmonization or multilateralization of 
standards, she suggested that the Committees focus on the ques tion of equivalence of standards and the 
possible development of guidelines to ensure mutual recognition for countries having eco -labelling 
systems, and equivalence of standards for countries not having eco -labelling programmes.  
 
61. The representative of Hong Kong , noted that, according to Canada's analysis, eco -labelling 
schemes, whether mandatory or voluntary, fell within the scope of the TBT Agreement to the extent they 
were based on requirements related to product characteristic s or related PPMs.  However, he recognized 
that the trend of eco -labelling schemes was to use LCA with the result that eco -labelling schemes would 
not be fully covered by the TBT Agreement due to the inclusion of non -product related PPM 
requirements.  Acco rding to WT/CTE/W/10, the intent of the negotiators of the TBT Agreement was 
clearly to exclude unincorporated PPMs from the coverage of the Agreement.  From the WTO 
perspective, the proposal to extend the coverage of the TBT Agreement to unincorporated PP Ms could          WT/CTE/M/7  
         Page 19 
 
lead to a differential treatment for imports of like products based on non -product related criteria.  The 
subject needed careful examination.  He recalled that pursuant to principle 12 of the Rio Declaration 
"unilateral actions to deal with enviro nmental challenges outside the jurisdiction of the importing country 
should be avoided" and stated that unilateralism and extra -territoriality were incompatible with the 
multilateral system.  
 
62. The representative of Switzerland  recalled his delegation's preference to use the term volun tary 
labels rather than eco -labelling, since voluntary labels were not only limited to  environmental issues but 
could be used as a means to achieve other common inter ests.  In his delegation's view,  the TBT 
Agreement and the Code of Good Practice covered voluntary labels based on product characteristics or 
prod uct-related PPMs through the definition of "standard" and "conformity assessment procedures" in 
Annex 1.  Standards were documents with which  compliance was voluntary and dealt particularly with 
labelling requirements.  Conformity assessment procedures included all types of conformity assessment 
procedures required by  voluntary labelling measures.  Therefore, voluntary labels based on prod uct 
characteristics or product -related PPMs were subject to the transparency disciplines of the TBT 
Agreement and the Code of Good Practice.  Voluntary labels should be notified according to the rules 
of the Code of Good Practice and should also respect the b asic TBT principles of national treatment, 
avoidance of unnecessary obstacles to trade and promotion of the use of existing international standards.  
The principles of  Articles 5, 7 and 8 of the TBT Agreement should apply to conformity assessment 
procedur es.  With respect to voluntary labels based on unincorporated PPMs, he noted that most 
voluntary labelling integrated unincorporated PPMs through LCA.  However, the question of the 
coverage of PPMs by the TBT Agreement still represented a very sensitive is sue and he was concerned 
that an extensive interpretation of the notion of standard to include, for voluntary labels, unincorporated 
PPMs could create precedents that could have an impact on the trading system.  Furthermore, since the 
second sentence of th e definitions of "standard" and of "technical regulation" was identical, any 
interpretation of the definition of standards could affect the interpretation of the definition of a regulation.  
The issue needed to be further discussed.  
 
63. The representative of Korea  said that voluntary eco -labelling programmes often included criteria 
based on unincorporated PPMs.  As a result, these programmes could have discriminatory trade effects 
by limiting the market access of foreign suppliers, i n particular small and medium enter prises.  His 
delegation had carefully studied ways to address them.  He believed that the TBT Agreement as well as 
other WTO Agreements accommodated only product and product -related PPMs.  As indicated by the 
negotiating  history of the TBT Agreement, the definitions in Annex 3 did not cover technical regulations 
and standards based on unincorporated PPMs.  He believed that even if voluntary eco -labelling 
programmes based on unincorporated PPMs were developed according to multilaterally agreed 
guidelines, such programmes could hardly be covered by the Code of Good Practice of the TBT 
Agreement for three reasons.  First, if eco -labelling schemes were covered by WTO rules the effects of 
extra -territoriality needed be addresse d.  In particular, Korea had difficulties with the argument stated in 
Canada's paper that it was excessive to suggest that eco -labelling programmes should not be viewed as 
compatible with the WTO simply because one of their essential tools, the LCA, used s ome components 
that might or might not fall within the scope of the TBT Agreement.  It was hardly reasonable to attempt 
to conclude that TBT disciplines were applicable to eco -labelling programmes simply because 
unincorporated PPMs were only one component of LCA without giving due regard to extraterritoriality.  
In his view, unincorporated PPMs were a critical component in reviewing the compatibility of eco -
labelling programmes with the TBT Agreement.  
 
64. Second, eco -labelling programmes were considered to be unilateral measures for domestic 
environmental policy.  Mandatory unilateral measures based on unincorporated PPMs were apparently 
outside WTO rules. The voluntary nature of eco -labelling was precisely  the reason why efforts were made 
to explore the possibility of accommodating the criteria of unincorporated PPMs in WTO rules.  
However, Canada's proposal was not clear on this aspect and seemed to suggest that the mandatory eco -
labelling based on unincor porated PPMs also fell within the scope of WTO rules.  Third, Canada's 
proposal to consider ISO 14000 standards as appropriate multilaterally -agreed guidelines raised questions 
about the ISO as a "recognizable body", transparency of ISO meetings, represent ation of the interests of WT/CTE/M/7  
Page 20 
 
small and medium enterprises in developing countries and the trade impact of eco -labelling schemes.  
He said that the WTO rules accommodated eco -labelling programmes inadequately, despite their 
potential trade effects.  The discri minatory effects of eco -labelling programmes arose when programmes 
adopted criteria which were more favourable to domestic producers and inappropriate to foreign 
producers.  Such forms of discrimination could be countered by strengthening the prior consult ation 
mechanism and introducing a sophisticated safeguard mechanism to eliminate any extra -territorial criteria.  
Another way to prevent discriminatory eco -labelling programmes was to further develop the concepts of 
equivalence and mutual recognition.  As existing WTO disciplines lacked those concepts, he suggested 
guidelines be developed to grant equivalence of each criterion and mutual recognition of eco -labelling 
programmes, taking into account the experience of other relevant organizations.  
 
65. The representative of Singapore, speaking on behalf of the ASEAN countries , wished to reflect 
on the principles contained in paragraphs (a), (b) and (c) of the Canadian proposal and expressed strong 
reservation on paragraph (d).  He shared  Hong Kong's concern related to the concept of unincorporated  
PPMs in eco -labelling schemes and the views expressed by Mexico and Korea on the ISO's 
appropriateness as a negotiating forum for standards related to these schemes.  ASEAN opposed any 
attempt to include any reference to unincorporated PPMs in the discussion of this issue.  Thus, it did 
not favour any inter pretation or extension of the scope of the TBT Agreement to cover the use of criteria 
based on unincorporated PPMs for three reasons.  The a cceptance of the concepts of PPMs and PPM -
based criteria would have the effect of endorsing the extrajurisdictional application of domestic 
environmental laws, thus encouraging the imposition of one Member's domestic environmental norms 
and standards on ot her Members.  In addition, the use of criteria based on unincorporated PPMs would 
have discriminatory effects on market access leading to protectionist abuses of these criteria.  Finally, 
ASEAN believed that unincorporated PPMs concept violated Articles I and III of the GATT.  ASEAN 
recognized the potential role for mutual recognition and equivalence in increasing transparency and 
alleviating discriminatory trade effects of eco -labelling schemes and encouraged the CTE to continue to 
elaborate ways to comple ment the TBT Agreement with these principles.  ASEAN also pointed out that 
eco-labelling schemes imposed a burden on developing countries and that this should be taken into 
account in their elaboration.  
 
66. The representative of Japan noted that eco -labelling schemes, if applied in a non -transparent and 
arbitrary manner, could cause discriminatory effects on imports.  Even if transparent and not 
implemented arbitrarily, these schemes could still have trade impacts if they reflected e nvironmental 
conditions or ecological preferences peculiar to an importing country and included PPMs standards that 
might discriminate between imports.  Therefore, it was imperative that bodies implementing eco -
labelling schemes set the scientifically -based standards and considered ways to promote mutual 
recognition of eco -labelling.  Furthermore, for transparency purposes it was important that the 
implementation or the modification of eco -labelling schemes be notified ex ante  by governments or that 
access to the relevant information be provided to interested countries or organizations.  Referring to the 
Canadian proposal, he said that even if the TBT Agreement was extended to cover eco -labelling schemes, 
some issues remained to be addressed.  First, the pro blem of justifying eco -labelling schemes based on 
unincorporated PPMs under WTO rules.  Second, the question of eco -labelling programmes developed 
by unrecognized non -governmental organizations.  Third, simple labelling requirements prescribing the 
re-collection of products fell outside the coverage of the TBT Agreement.  Finally, with respect to eco -
labelling programmes implemented by local or non -governmental bodies, it was necessary to consider 
whether notification on conformity assessment procedures wou ld be appropriate.  
 
67. The representative of Norway  said that eco -labelling was a high -priority area for her Government.  
Eco-labelling based on LCA would play an important role in future efforts to combat environmental 
problems.  S he was aware that a high degree of transpare ncy was required in eco -labelling schemes to 
avoid them becoming an unwarranted trade restriction.  However, she noted that the very nature of eco -
labelling was to change production and consumption patterns, and , implicitly, trading patterns towards a 
more sustainable direction.  With respect to the issue of coverage of eco -labelling by the TBT 
Agreement, she stated that the Agreement covered both mandatory and voluntary measures, whether 
governmental or non -governmental, and that eco -labelling criteria of non -governmental schemes based          WT/CTE/M/7  
         Page 21 
 
on unincorporated PPMs did not fall under the TBT Agreement nor under GATT 1994.  She suggested 
that the preparation of a code of conduct on voluntary eco -labelling schemes, on the  model of the TBT 
Code of Good Practice, would be more practical than interpreting the scope of the TBT Agreement to 
cover the use of standards based on unincorporated PPMs.  The code could include notification 
procedures, the right for interested Members to comment, with a special mention of the accommodation 
of foreign suppliers, and should take into account the specific needs of developing countries.  However, 
even if transparency of eco -labelling schemes was ensured, foreign producers or suppliers would  have to 
take into account the risk of not getting the eco -label.  Referring to the Canadian proposal, she said that 
it was premature to decide whether the ISO  14000 standard series could be used as a reference for the 
development of multilaterally -agreed guidelines since the contents of these guidelines was yet known.  
However, the concerns of many Members on eco -labelling could be met by following the TBT 
transparency provisions.  Finally, she suggested that some delegations or the WTO Secretariat draw up  
the main elements of a draft code of good conduct on eco -labelling to assist further discussions on the 
issue.  
 
68. The representative of Australia  said the basic principles of the TBT Agreement of 
non-discrimination, avoidance of u nnecessary obstacles to trade, promotion of the use of international 
standards where appropriate, equivalence, mutual recognition, and transparency deserved consideration 
in examining eco -labelling schemes.  In particular, the transparency and procedural r equirements of the 
TBT Code of Good Practice - publication and notification of work programmes by standardizing bodies, 
sixty days comment period on draft standards, and prompt publication of adopted standards - could 
provide a good basis to address some o f the concerns raised about eco -labelling schemes and contribute 
to their effectiveness.  These requirements could play a useful role in maintaining public confidence in 
the integrity of schemes complying with them.  He believed it was useful to develop a set of multilateral 
guidelines or disciplines on means to ensure that the legitimate interests of exporters in other countries 
be taken into account and provide them with the opportunity to influence the development of eco -
labelling schemes.  In fact, the criteria used in one country's eco -labelling scheme could be inappropriate 
for the environmental and developmental needs of other countries.  The transparency and procedural 
requirements and other aspects of the TBT Agreement could assist in addressing thi s issue.  In this 
respect, he asked for clarification of the meaning of the principles of non -discrimination and avoidance 
of unnecessary obstacles to trade for eco -labelling schemes involving LCA.  He recalled that the TBT 
Agreement, already in its preamb le, recognized that developing countries might encounter special 
difficulties in the formulation of technical regulations, standards and conformity assessment and 
emphasized the need to assist them in their endeavours in this regard.  If eco -labelling sche mes were to 
genuinely make a contribution to global sustainable development, the particular concerns of developing 
countries needed to be fully taken into account.  Moreover, the TBT Agreement's encouragement to 
develop and adopt international standards wa s an important pointer to the need for international 
cooperation to ensure that eco -labelling schemes realized their potential to contribute to the promotion 
of sustainable development.  The active participation of relevant bodies in all countries was thus  
necessary.  
 
69. The representative of Egypt , referring to Canada's paper, said her delegation did not agree with 
any proposal on the standardization of eco -labelling or introduction of PPMs into WTO rules.  The 
question of whether the TBT Agreement already included unincorporated PPMs was still open and the 
Canadian paper itself cast doubts on this issue.  With regard to the proposal on multilaterally -agreed 
guidelines and the reference to ISO guidelines, she questioned ISO' s representation of international 
consensus and  decision making.  It was not the appropriate body to deal with environmental standards.  
Unlike technical regulations, environmental standards were not based on criteria such as performance, 
durability and q uality.  Environmental standards included PPMs and were exposed to pressure groups.  
Therefore, it would be difficult to attempt to internationalize environmental standards based on PPMs 
since PPMs were based on values which differed from one society to an other.  On the other hand, she 
did not oppose product -related environmental standards, such as disposal and handling.  She favoured 
disciplines on eco -labelling schemes based on equivalence and mutual recognition, where each country 
could set its own stand ards according to its own values as stipulated by Agenda 21.  Aiming at the 
harmonization or internationalization of PPMs on the basis of any set of multilateral guidelines practically WT/CTE/M/7  
Page 22 
 
contradicted rules unanimously agreed by the international community.  She believed it useful to start 
investigating the concepts of equivalence and mutual recognition with the assistance of other organizations 
and perhaps consider an appropriate forum to negotiate guidelines on equivalency and mutual 
recognition.  She said t hat the enhancement of transparency in the preparation and application of eco -
labelling, through notification and comment requirements similar to those in the TBT Agreement, was 
necessary to prevent eco -labelling schemes from being unilateral and extraterr itorial.  
 
70. The representative of India  said that labelling requirements placed a disproportionate burden on 
the trade of developing countries; thus his delegation attached great importance to the issue of eco -
labelling.  He said t hat PPMs were excluded from the coverage of the Tokyo Round TBT Agreement.  
The Uruguay Round TBT Agreement clearly covered product -related PPMs.  However, in his view no 
provisions could be found which extended the scope of the Agreement to cover unincorp orated PPMs.  
PPM standards could not be justified under Article XX of GATT 1994 as legitimate trade measures.  
These issues raised the subject of extra -territoriality, questioning the sovereign right of countries, as 
recognized by the Rio Declaration, to decide on their environmental quality in their own jurisdictions.  
Technical standards were completely different from environmental standards.  In fact, while there was 
no role for PPMs in technical standards, environmental standards had to respond to soci al pressures.  
Therefore, while ISO had a role to play in the field of technical standards, its role in the field of 
environmental standards remained to be defined.  Since in the TBT Agreement there were no provisions 
extending coverage to unincorporated P PMs, the only presumption should be that these were not 
included in the Agreement.  However, even if they were included, the purpose they would serve was not 
clear.  It would have to be clearly specified how the objective of environmental protection was se rved as 
no relevant information would be forthcoming to consumers to make real environmental choices.  
Further, such PPMs would lock producers into choices of technology for specified periods of time 
hindering technological innovation and competitiveness.  
 
71. With respect to the Canadian proposal to include in the TBT Agreement only unincorporated 
PPMs based on multilaterally agreed guidelines, there were no multilateral institutions developing 
universally -agreed environmental stand ards.  ISO was not yet the right forum.  However, even if 
Members agreed to any such international organization there was no role for harmonization since 
environmental standards were based on values which differed between countries, and if only guidelines 
were to be formulated they would be so general as to have little value.  He believed that it was not enough 
to seek equivalence of standards on a case -by-case approach, subject to mutual recognition.  Countries 
having their own eco -labelling programmes wou ld have to set standards based on their own environmental 
values and priorities and it would be unfair to expect other standards to conform to these.  Finally, he 
stressed the need for greater transparency of eco -labelling schemes on the basis of existing TBT provisions 
of non -discrimination and avoidance of unnecessary obstacles to trade.  He reiterated that while labelling 
regulations were mandatory, it would be difficult to impose mandatory compliance provisions on 
standards since compliance with labelli ng standards was voluntary under the TBT Agreement.  
 
72.  The representative of the European Communities  said that there were two alternative 
approaches that the CTE could follow in addressing the issue of voluntary eco -labelling sch emes based 
on LCA.  The first option was to seek their full coverage under the TBT Agreement.  The second was 
to negotiate ad hoc  instruments, i.e. a code of conduct on eco -labelling.  Both approaches had advantages 
and disadvantages and deserved full cons ideration.  The advantage of the first approach, which was 
similar to the Canadian proposal, was its simplicity since transparency provisions were already operating 
under the TBT Agreement.  The second option could in some respects solve the problem of the  
remaining legal uncertainty of the applicability of the TBT Agreement to eco -labelling schemes based on 
LCA.  A code of conduct could introduce additional transparency provisions to those existing in the 
TBT Agreement.  This option would then effectively address the concerns expressed by some 
delegations about the use of unincorporated PPMs in areas other than eco -labelling.  The TBT 
transparency requirements contained in Annex 3 constituted a good reference for the preparation of a 
code of conduct.  
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73. The representative of the United States  stated that eco -labelling was currently covered by the 
provisions of the TBT Agreement so that option two envisaged by the EC served no purpose.  However, 
he sought clarification of whether the preparation of a code on eco -labelling would involve it being 
excluded from the coverage of the TBT Agreement or it being subject to two different regimes depending 
on whether it contained PPM elements.  He said it was difficult for a country preparing an eco-label to 
assess whether it would contain PPM elements and, if two regimes were to apply, there would be confusion 
on the obligations to follow from the development stage.  He wondered whether a standard, including 
both covered and non -covered areas, wo uld fall under the scope of the TBT Agreement.  This was an 
important issue which deserved the Committee's attention.  
 
74. The representative of Canada  noted that a large number of delegations had agreed with principles 
(a), (b) and (c) of his proposal.  He said that the reactions provoked by principle (d) reflected the 
discussions in his own country.   The EC suggestion of a code of conduct on eco -labelling was attractive.  
However, he considered the preferable approach was to recogn ize explicitly that eco -labelling 
programmes were fully covered by the TBT Agreement.  This approach would have, in fact, the 
advantage of providing clear disciplines on the use of unincorporated PPMs and solved the problem of 
the ambiguity of the definiti on of "standard".  He welcomed the presentation by ISO and suggested that 
ISO give at a future CTE meeting a detailed presentation of ISO draft Guidelines and Principles and on 
ISO 14000.  He proposed that further discussions on the issue be held, formally  or informally, in joint 
sessions of the CTE and the CTBT.  
 
75. The observer from the International Organization for Standardization  said the ISO was a 
technical, non -governmental organization comprising national standards bodies fro m 118  countries.   In 
developed countries, the national standards institute members of ISO were mostly recognized private 
organizations.  In most developing countries the ISO member bodies were governmental agencies or 
departments.  The technical work of I SO was carried out in a hierarchy of approximately 3000 technical 
committees, sub -committees and working groups.  ISO's work resulted in international agreements which 
were published as International Standards.  All these standards were international, volu ntary, and 
developed by consensus.  The decision making process ensured industry -wide access for all interested 
parties.  Although ISO standards were voluntary, they were developed in response to market demand 
and were widely used.  ISO had published some 400 environmental standards, mainly relating to testing 
and measuring the levels of air, soil, water and noise pollution.  He stated that at the international level, 
the voluntary standardization process was essentially coordinated under the auspices of th ree apex 
organizations, the International Electrotechnical Commission (IEC), covering the electrotechnical field, 
the International Telecommunications Union (ITU), covering the field of telecommunications, and ISO 
which covered all other subjects of volunt ary standardization.  
 
Item 9 :  The work programme envisaged in the Decision on Trade in Services  
 
76. The representative of the European Communities  recalled the mandate under this Item  and 
reiterated his delegation's statement at t he June 1995 meeting.  The EC had based its consideration of 
how the issues under Item 9 could be addressed on whether it was determined by the stocktaking exercise 
to be a priority issue.  The result was that this Item had not been considered to be a prio rity.  
Nevertheless, the Committee had to fulfil the mandate of clarifying whether there was a need to provide 
for more than what was contained in GATS Article XIV(b).  Until analytical evidence demonstrated the 
need for an analysis on the issue separate f rom that being developed on GATT Article XX, discussion 
should be limited to analysing the need to modify GATS Article XIV in light of parallel work on Article 
XX.  He outlined three possible scenarios for the Report:  (i) no result was achieved on Item 1.   In this 
case it would be difficult to imagine positive recommendations on GATS Article XIV;  (ii) results were 
achieved on Article  XX, but no parallel recommendations figured in the Report because the Committee 
needed further analytical work;  or (iii) r esults were achieved on Article XX and parallel 
recommendations were made in the Report.  It would not be difficult to include results of the work on 
Item 1 in the recommendations on Item 9.  However the lack of analytical work rendered difficult this 
semi-automatic link.  If it was necessary to further study this issue in the post -Singapore process, then 
sectoral studies could be conducted in order to identify the environmental impact trade in certain services WT/CTE/M/7  
Page 24 
 
might have, complementing other international fora's work (e.g. the environmental effects of liberalization 
of transport in goods), and the impact that certain environmental legislation might have on trade 
liberalization (e.g. conditions applicable to service suppliers in the field of waste management  or in the 
supply of environmental services).  
 
77. The representative of the United States  said this Item was not as well developed as others as the 
GATS was a new agreement, which was still evolving.  The GATS included concepts which the GATT 
did not.   This Item would need to be examined in light of these differences.  It could not be assumed  
that conclusions reached on goods would automatically apply to services.  Improved market access for 
environment services and technology was a win -win situation, which overlapped with Item 6.  
 
Item 7 :  The issue of exports of domestically prohibited goods  
 
78. The representative of Nigeria  recalled his proposal which had been tabled by Egypt, on behalf of 
the African Group, for a framework on draft rules on domestically prohibited goods (DPGs).  The 
African Group was working on a revised draft proposal, taking into account delegations' comments.  He 
requested the Secretariat to assist, in cooperation with relevant organizations and interested delegations, 
in determining product scope and coverage to better identify the  gaps to be covered by possible DPG 
rules.  
 
79. The representative of Singapore, speaking on behalf of the ASEAN countries , supported 
multilateral disciplines on DPGs.  He recalled Nigeria had clearly stated that any DPG disciplines should 
build on previous GATT work in this area and that they should be WTO -consistent, non -discriminatory, 
least trade -restrictive and primarily aimed at increasing transparency without leading to extraterritorial 
application of national measures and cove r the export of products banned or severely restricted in 
domestic markets.  ASEAN supported the African Group's proposal on the basis of these four elements, 
in the hope that a consensus decision on this Item could be adopted at Singapore.  However, dupli cation 
with other organizations should be avoided;  product coverage in related MEAs should be examined;  
and coverage gaps should be identified.  Work to identify gaps should also use the expertise in 
UNCTAD and other fora and build on previous GATT work,  starting with the 1991 draft Decision.  A 
Decision should contain maximum transparency provisions, including publication and notification 
obligations and a prior informed consent element.  ASEAN supported Nigeria's proposal that exporting 
countries should  establish enquiry points to provide on request information on notified products.  In this 
regard, discussion under Item 4 was relevant.  The Decision's provisions should not condone or lead to 
any unnecessary trade restrictions.  Given the wide membership  of the WTO, ASEAN felt it was the 
appropriate forum to deal with the DPG issue.  He agreed with India's comment at the June 1995 
meeting that each country should assume full responsibility for decisions regarding its imports, but this 
involved cooperative  action by the exporting country.  
 
80. It was agreed  the Secretariat would assist delegations on this Item.  