 
 
 RESTRICTED  
WORLD TRADE  WT/CTE/M/8  
  11 April 1996  
ORGANIZATION  
 (96-1270)  
 
Committee on Trade and Environment  
 
 
 
 REPORT OF THE MEETING HELD ON 25 AND 26 MARCH 1996  
 
 Note by the Secretariat  
 
 
1. The Committee on Trade and Environment met on 25 and 26 March  1996 under the 
chairmanship of Ambassador Juan Carlos Sánchez Arnau of Argentina.  The agenda contained in 
WTO/AIR/289 was adopted.  
 
2. It was agreed  to invite the United Nations Industrial Development Organization and the World 
Customs Organization to participate on an ad hoc  basis as observers at formal meetings of the Committee.  
 
3. It was agreed  the Chairman, on behalf  of the Committee, will request the Chairman of the 
General Council to continue informal consultations concerning relations with non -governmental 
organizations and derestriction of documents in the WTO in order that the General Council is, as soon 
as possi ble, in a position to adopt decisions which will assist the Committee in addressing Item 10 of its 
work programme.  
 
4. It was agreed  the next meeting of the Committee will be held on 20 -21 and 23 -24 May.  For the 
period thereafter, the Chairman proposed a tentative calendar of meetings:  19 -21 June;  10 -12 July;  
12-13 September;  and 22 -25 October, which along with a work programme will be decided at the May 
meeting.  The Chairman will continue informal consultations on rules of pro cedure.  
 
Item 6 : The effect of environmental measures on market access, especially in relation to developing 
countries, in particular to the least developed among them, and environmental benefits of 
removing trade restrictions and distortions  
 
5. The representative of Argentina  presented his delegation's paper (WT/CTE/W/24) and outlined 
its methodology.  In accordance with Principle 16 of the Rio Declaration, commodity prices should 
reflect the full cost of production, including environmental costs.  However, commodity prices were far 
from having achieved cost internalization.  Two categories of problems hindered this objective:  market 
failures and policy interventions.  His delegation's paper concentrated on the latter, with an emphasis on 
subsidies  and tariff escalation.  Market failures could not be addressed unless policy intervention failures 
were dealt with first.  Regarding the factual basis for the analysis, the paper referred to cases from various 
sources on the environmentally -damaging effec ts of distortions in agricultural trade.  Environmental 
damages might be local to the country which applied the distorting measures or could extend to countries 
which were forced to take the internationally affected prices due to the other country's interv ention 
failures.  Concerning the possible solutions to the identified environmental problems, he summarized 
these as requiring more free trade and less distortionary practices.  Argentina was not suggesting that the 
mere elimination of subsidies would be e quivalent to the adoption of sustainable agricultural practices, 
but without this initial requirement the improvement of agricultural practices was not possible.  The first 
step was to internalize environmental costs such that prices would be equivalent to  private marginal costs 
of production.  Although the paper referred to price distortions generated by high income countries, it 
was not his intention to frame this issue in terms of a North -South dimension.  Argentina's proposals for WT/CTE/M/8  
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further action acknowl edged there was a growing consciousness of the environmental damage caused by 
the irrational use of capital and agricultural support measures.  The CTE should contribute to the 
ongoing debate, which was taking place particularly in the EC and the US.  A ba lanced Report to 
Ministers at the Ministerial Conference (the "Report") should include a clear recognition of the negative 
environmental effects generated by distortionary agricultural practices, which were also negative for trade.  
It should also feed a c ontinued process of reform in the agricultural sector, which had been started in the 
Uruguay  Round.  Argentina was not proposing any changes to existing rules, but that the CTE should 
contribute to the process of reform in the context of the Agreement on A griculture.  Argentina felt it 
would not be possible to analyze any proposals for further restrictions to obtain environmental benefits 
unless there was a clear commitment to eliminate the restrictions which already existed which were 
environmentally -harmf ul.  As the WTO had as its goal to liberalize trade, this should be its main 
contribution to the environment.  
 
6. The representative of Nigeria  said significant environmental benefits would follow the elimination 
of trade restrictio ns.  He supported Argentina's proposals for further action.  Several factors related to 
market access and their effects on environmental protection merited examination.  Argentina had dealt 
with agricultural subsidies and distortions.  He noted that the en vironmental benefits of reducing poverty 
were crucial, but were being addressed in other fora.  He focused on tariff escalation.  He agreed with 
the analysis in paragraph 3 of WT/CTE/W/25 that market access  improvements due to tariff reduction 
depended on  the elasticity of import demand.  He said paragraph 7 should be clarified.  While agreeing 
export barriers restricted trade and were thus "similar" to the restriction of trade through tariff escalation 
in an importing country, he did not think their effec ts were "similar".  Evidence suggested the effects might 
be "opposite" as the formal objective for such a restriction would be for a more efficient allocation of 
resources by creating domestic incentives for more value -added at higher levels of processing,  which 
reduced pressures on the environment.  While escalating tariffs entailed minimal environmental gains 
and losses, improved market access as a result of tariff de -escalation would further environmental 
protection.  He suggested specific studies be und ertaken with organizations, such as UNEP and 
UNCTAD, to provide data on the environmental effects of escalating tariffs on cocoa, rubber, 
groundnuts, timber, leather, and metals.  Tariff escalation was a market access barrier and a disincentive 
to foreign goods' providers as it prevented value -added and diversification, reduced income, and 
intensified consumption of domestic resources.  Environmental effects of tariff escalation were 
experienced through income and production effects.  The net effect of redu ced income and intensified 
natural resources consumption was environmentally harmful.   
 
7. Environmental measures affected international trade, particularly market access.  Although 
empirical evidence was inconclusive, there were s trong grounds to believe environmental measures 
increased compliance costs and affected competitiveness.  Eco -labels were proposed to distinguish 
products based on environmental quality, which would assist consumers to make environmentally -friendly 
choices .  Yet, concerns had to be addressed that these were devices for protecting domestic markets.  
There was a need to monitor the operation of eco -labelling programmes based on a set of specified criteria 
over time to determine if they were trade promoting or  restricting and protectionist.  He supported the 
first three elements of Canada's proposal (WT/CTE/W/20) and the US proposal (WT/CTE/W/27), 
which contributed to addressing these concerns.  Transparency was vital if eco -labelling programmes 
were to shed th e stereotype of being protectionist tools.  Ex ante  transparency should be the rule.  As 
well as concern over objectivity in the use of product requirements based on life cycle analysis, the absence 
of timely information created problems for market access.   The TBT Agreement should function 
objectively, with all its provisions uniformly interpreted to avoid that environmental measures were trade 
restrictive or protectionist.   
 
8. The representative of Japan  said, in order to  have results on this Item for Singapore, it was not 
appropriate to advance discussion on this sensitive issue based on abstract concepts.  Given the variety 
of socio -economic and environmental conditions, environmental policies could be different and each  
country bore common but differentiated responsibilities for environmental protection.  It was not clear 
environmental policies affected competitiveness.  Differences between environmental policies, per se , 
were not the direct cause of the problem.  Each c ountry should ensure environmental measures were          WT/CTE/M/8  
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not unnecessarily trade -restrictive, accounted for the context of the policy and enhanced transparency.  
To realize sustainable development, each country should internalize environmental costs.  Developed 
countries should cooperate with developing countries so the latter could take the appropriate 
environmental policies, in accordance with their developmental stage.  Disguised protectionism or 
WTO -inconsistent unilateralism should not be permitted and unilate ral trade restrictions should not be 
taken based on differing environmental policies.  He recalled the OECD Ministerial statement that in 
general trade liberalization had positive environmental effects, provided effective environmental policies 
were implem ented.  The environmental effects of trade liberalization could be either positive or negative, 
depending on the country, sector, and particular circumstance.   
 
9. Analysis of the environmental effects of trade restrictions and dis tortions had not been well -
developed and, at this stage, it was not appropriate to discuss a specific sector, such as agriculture, for 
which Article 20 of the Agreement on Agriculture should be followed.  The environmental effects of 
agricultural policies depended on geographical conditions and production methods.  Agricultural 
policies were implemented so various functions of agriculture could be demonstrated.  The 
environmental effects when agriculture failed as a result of the decrease of domestic suppor t should be 
studied;  some domestic support helped maintain agriculture which had positive environmental effects.  
The relationship between increased market access as a result of the reduction of tariff escalation for 
processed exports and positive environ mental effects was not clear.  Even if it allowed the development 
of domestic industry, if appropriate domestic environmental policies were not in place, the burden on the 
environment might increase.  He cited the example of an export restriction on logs, for environmental 
reasons, which did not necessarily lead to environmental protection.  Deforestation might increase 
following an increase in the export of processed wood products.  He supported the view in 
WT/CTE/W/1 that export restrictions could lead to  an inefficient, economically and environmentally 
costly, relocation of production.  He questioned the assertion in Argentina's paper that, in some 
developed countries, reduced domestic support in the agricultural sector would have a positive 
environmental  impact.  There were non -trade concerns in the agricultural sector, which domestic 
support sought to address.  Concerning agricultural trade and the environment, empirical analysis 
needed to be accumulated by sector and country within a balanced analytical  framework;  at this point 
there was insufficient data.  From this perspective, Japan could not support Argentina's proposal.   
 
10. The representative of the European Communities  made preliminary comments on Argentina's 
paper.  Alth ough this paper was characterized by a rigorous economic analysis that highlighted the 
potential negative effects of certain agricultural policies, the analysis fell short of inscribing the issue in the 
framework of the debate on Sustainable Agriculture an d Rural Development (SARD) being developed 
by FAO, in co -operation with other bodies, and monitored by the Commission on Sustainable 
Development (CSD).  The CSD decision on SARD, adopted in April  1995, recognized the importance 
of the implementation of the  WTO Agreement on Agriculture.  Reforms were on -going to achieve 
substantial and progressive reductions in the support of agriculture, covering internal regimes, market 
access and export subsidies.  To promote sustainable agriculture, non -trade concerns su ch as the 
economic, social, food security and environmental impacts should be evaluated, taking into account their 
impact on net food importing developing countries.  The CSD had called for an examination of 
agricultural policies through the use of indicat ors based on agri -environmental criteria, which were being 
developed, covering "environmental, economic, social and cultural dimensions".  Argentina's analysis did 
not recognize that a continuous assessment of the environmental performance of agricultural production 
systems should include not only the negative environmental effects of certain agricultural policies, but also 
the positive effects, such as preservation of landscape and biodiversity.  Analysis was needed on the 
impact of market regimes, rural d evelopment programmes and trade policies on sustainable agriculture 
to enable policy makers to progress towards sustainable agriculture.  Argentina's paper neglected to note 
progress was on -going to revise national and regional agricultural policies in rel ation to, inter alia , trade, 
pricing policy, subsidies and taxes.  Current reform of the EC's Common Agricultural Policy would result 
in a reduction of the general support price which was compensated by direct financial support to farmers.  
This was accomp anied by other measures allowing for the remuneration of environmentally -favourable 
agricultural practices and activities safeguarding the hydrogeological balance.  Agreeing with the need to 
promote discussion on these issues, he felt however all aspects w hich played a role in the definition of an WT/CTE/M/8  
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appropriate approach should be weighed to permit balanced results.  He said the conclusions in 
WT/CTE/W/26 helped dispel misconceptions which had characterized the trade and environment 
debate since the outset.  W T/CTE/W/25 demonstrated tariff escalation was not a North -South issue and 
provided useful statistical analysis.  
 
11. The representative of Korea  said this Item was important for developing countries in terms of 
sustainable developmen t.  Environmental measures and economic instruments such as charges, taxes, 
product requirements, eco -labelling, packaging and recycling requirements would have significant effects 
on market access for developing countries.  However such measures were also  becoming useful tools for 
achieving environmental objectives.  He identified several issues related to market access:  (i) market 
access effects of environmental measures cut across other Items and should be dealt with in an holistic 
manner;  (ii) environ mental measures with significant trade effects should be WTO -compatible and 
should not be misused for protectionist purposes;  (iii)  maximum transparency of environmental 
measures should be provided;  (iv) environmental measures based on PPM -related criter ia were not 
legitimate;  (v) unilateral measures taken to address environmental problems extra -territorially might not 
be justified and should be rejected;  and (vi) the underlying causes affecting market access for developing 
countries, related to financi al, technological and institutional capacity -building should be considered.  
 
12. Although empirical evidence in WT/CTE/W/26 addressed issues of concern, it was insufficient 
to draw general conclusions on the market access effects of some environment measures.  He had 
difficulty in supporting the conclusions in paragraph  52.  Referring to unilateral trade restrictions with 
extraterritorial effects, the cases referred to in WT/CTE/W/26 might be only a small part of the evidence 
of the n egative effects of unilateral trade restrictions.  In the shrimp/sea turtle case, he asked whether 
compliance costs would be as insignificant as WT/CTE/W/26 indicated.  Further case studies and 
analysis were needed.  Trade liberalization had potential envi ronmental benefits in the agricultural sector 
by contributing to the optimal allocation of natural resources and income growth.  The removal of trade 
restrictions or trade distorting measures provided potential environmental benefits.  However, in certain 
cases, liberalized trade was directly and indirectly responsible for environmental degradation as illustrated 
in WT/CTE/W/1;  the absence of policy interventions in the agricultural sector would bring about a 
number of negative consequences, including envi ronmental degradation and socio -economic setbacks, 
especially in developing countries.  As the environmental impact of trade liberalization varied sector -by-
-sector and country -by-country, generalizations were dangerous.  Unless the source of the problems and 
their effects were analyzed, taking into account heterogenic socio -economic conditions in each country 
and food security concerns, discussion would produce unnecessary side effects.  Korea felt issues related 
to agriculture were best addressed in the A greement on Agriculture, which envisaged the continuation of 
agricultural reform in spite of the political sensitivity in this area.  Even though it was only in the process 
of implementation, it would contribute to agricultural policy reform, which include d measures to reduce 
distortions, taking into account the specific conditions of countries, in particular developing countries, 
and the multi -dimensional role of the agricultural sector.  Korea felt discussion on market access should 
not overemphasize any specific sector.  He recommended an assessment of environmental quality with 
respect to agricultural policies in a balanced context.  In general, each country maintained agricultural 
policies, including various types of subsidies to meet a variety of socio -economic conditions.  It was not 
possible to conclude agricultural policies always had negative environmental effects.  As stated at 
UNCED, environment and development issues should be dealt with together in the pursuit of sustainable 
development.  For th e time being, sustainable development, especially in developing countries, had not 
been fully recognized in the trade and environment debate.  He recalled Agenda 21 emphasized the 
importance of increasing food production and enhancing food security.  Stabi lity in food supply was a 
prerequisites for sustainable development.  Noting the decline of global grain supplies which had led to 
increased prices, he said attention should be given to the harmonization of food security, sustainable 
development and trade issues.   
 
13. The representative of Egypt  reiterated the importance of this Item as it examined the relationship 
between trade liberalization and environmental protection from a development perspective.  The 
correlation between mark et access and a capacity to trade stimulated better environmental protection, 
which had been initially outlined in the 1987 Brundtland Report:  "If developing countries are to          WT/CTE/M/8  
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reconcile a need for rapid export growth with a need to conserve the resource ba se, it is imperative that 
they enjoy access to industrial country markets for non -traditional exports where they enjoy comparative 
advantage".  From this perspective, Egypt had asked for additional information on tariff escalation as a 
trade -distorting mea sure and an impediment to market access for value -added raw materials.  The 
request had been to study the impact on developing country exports due to increased tariff escalation in 
major developed countries in the post -Uruguay  Round.  Paragraph  11 of WT/CT E/W/25 noted the 
protectionist effects of tariff escalation.  Tariff escalation forced developing countries to export raw 
materials to generate revenue for development, which risked over -exploiting natural resources and 
exacerbating environmental degradati on.  She felt the tariff tables could have been more specific and not 
only those of a few countries.   
 
14. Commenting on WT/CTE/W/26, which treated this Item as cross -cutting, she said it correctly 
referred to increased environmental requirements emerging in sectors where developing countries had or 
were gaining a comparative advantage, primarily in labour -intensive, low value -added products.  
Developing countries were concerned the Uruguay Round gains in many sectors whe re tariffs had been 
reduced might be eroded if environmental and other standards increased production costs.  A number 
of economic factors emphasized the significant effects of environmental measures on developing country 
competitiveness, which could be at tributed to different levels of compliance costs.  Although 
WT/CTE/W/26 referred to some of them, further work was needed.  Based on the UNCTAD case 
studies, developing countries were more vulnerable to adverse competitiveness effects of environmental 
policies because:  (i) developing country exporters normally were price -takers.  Environmental 
requirements resulting in cost increases reduced their export competitiveness, although it depended on 
the level of price premiums, which were high in some sectors a nd made environmental changes feasible.  
For textiles and leather, the ability to adjust might be difficult given low value -added;  (ii) adjustment 
problems were higher for small and medium enterprises (SMEs);  (iii) variable costs of complying with 
enviro nmental standards were higher in sectors of interest to developing countries, e.g.  leather, footwear, 
textiles and clothing.  The Indian UNCTAD case study illustrated the cost of chemicals required to meet 
international standards was three times that of co nventional chemicals in the leather tanning sector;  (iv) 
demand elasticity for developing country products and economic diversification were important.  
Ex ante transparency was crucial to ensure market access;  early involvement of all parties in the 
formulation of standards should be assured.  Also, mutual recognition and equivalency should be 
negotiated.  She suggested technical assistance to developing countries be provided to develop 
certification and inspection bodies.  She referred to the UNCTAD/Fin land seminar Environment, 
competitiveness and trade:  a development perspective , where the concept of proportionality between 
economic costs and environmental benefits had been discussed, particularly its effect on market access.  
Analysis was required to apply the principle of proportionality at the international level, which was 
necessary to weigh the economic costs of environmental measures on developing country exports against 
the environmental benefits for the developed countries which imposed them.  T his should take into 
account costs, timing of implementation, necessity, effectiveness and priority in the development process.  
Also, work was needed on how the de minimis  approach related to environmental measures and in order 
to determine special and di fferential treatment for developing countries.  To facilitate market access, the 
impact of such principles on market access should be examined in the CTE's future work programme or 
in the Committee on Technical Barriers to Trade (CTBT).  
 
15. Argentina's paper contained elements with which her delegation could identify, but its scope was 
narrow.  The CTE had not reached the stage of addressing the negative environmental consequences of 
trade restrictions and distortions.  To have a bal anced Report, paragraphs 30 and 31 should include the 
effects of trade restrictions and distortions on, not only agriculture, but also sectors of interest to 
developing countries, such as textiles and clothing, leather and footwear, and focus on more than subsidies 
as a distortive factor.  She said this Item was cross -cutting and it should be dealt with in the Report 
considering:  (i) trade restrictions and distortions, as reflected in tariff escalation and tariff peaks which 
had a negative impact on compar ative advantage, and the possibility of further reductions of tariff 
escalation at Singapore;  (ii) the effects of environmental policies and measures on developing country 
competitiveness, based on WT/CTE/W/26;  and (iii)  the principle of proportionality and cost -benefit WT/CTE/M/8  
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analysis and their impact on national treatment and least trade -restrictiveness.  The latter should be 
studied with the Secretariat's assistance.  
 
16. The representative of Brazil  stressed the need for substantive re commendations on market access 
in the Report.  The cross -cutting nature of this Item was clear in the papers prepared for this meeting.  
He supported Argentina's proposal to develop a work programme on the ways and means to reduce or 
eliminate environmenta l damage due to trade restrictions and distortions.  Generally, Brazil shared the 
concerns of both Argentina and the Cairns Group concerning agricultural reform and felt Argentina's 
proposals would contribute to future negotiations in the Agreement on Agri culture.  He recalled the 
conclusions in WT/CTE/W/26, which seemed to be incongruent with preceding findings.  Discussion 
in the EMIT Group had shown, to different extends, these measures affected market access due to lack 
of transparency.  Packaging and r ecycling requirements were obstacles to developing country exports as 
they implied additional transportation costs and technological adaptation.  Economic instruments, such 
as eco -taxes also implied market restrictions on developing country products, parti cularly if applied in a 
discriminatory or ill -conceived way.  He referred to the Brazilian UNCTAD case study, which illustrated 
that approximately 25 to 30 per cent of its exports were from sectors affected by emerging environmental 
requirements;  this rei nforced the need for the Report to contain recommendations on this Item.  He 
said the figures in WT/CTE/W/25, which referred to bound and not applied tariffs, were not those 
applied by Brazil.  
 
17. The representative of Hong Kong  said, although a global market was emerging for environmental 
goods, services and technology, trade restrictions might result from environmental measures including 
packaging, labelling, product standards and economic instrum ents.  WT/CTE/W/26 noted the balance 
between new trade opportunities and the potential costs of trade -related environmental measures.  The 
fact some countries were more likely to reap the benefits and others bear the costs deserved reflection.  
Lack of inf ormation on environmental requirements created problems, which were not exclusive to 
developing countries, although they were more vulnerable and less equipped to overcome them.  
Suggestions had been made to harmonize national packaging schemes and to deve lop mutual recognition 
on eco -labelling and criteria for granting eco -labels.  As WT/CTE/W/26 stated, it could not tackle the 
root problem as it did not propose to make any judgement on the necessity or effectiveness of particular 
trade -related environment al measures.  Transparency was not an end in itself and further action entailed 
an assessment of the necessity, effectiveness, proportionality and equivalency of measures and their WTO 
conformity.  He referred to the UNCTAD country case studies, which had found environmental 
regulations could increase developing country costs and the OECD Report which noted foreign suppliers, 
in particular developing countries, might face market access problems due to a proliferation of 
environmental measures.  He inquired whether the observation in paragraph  52 was warranted, given 
the case studies revealed the opposite in some cases.  He noted a similar observation made by the 
Secretariat, in the context of a survey of 5,000 TBT notifications made between 1980 and 1995, th at 
environmental standards had not created difficulties.  The possible proliferation of environmental 
requirements with adverse trade effects should be monitored.  
 
18. The focus of WT/CTE/W/25 could have been on the top four markets and information could 
have provided on applied, rather than bound tariff rates.  The bound rates for developing countries did 
not have a bearing on the present discussion and might be misleading as applied rates were often 
substantially lower than bound ra tes.  Rates applied to processed products could be 5 to 10 times higher 
than on unprocessed products.  Data on tariff escalation should be supplemented by information on 
non-tariff barriers;  work should be targeted on products at the higher stages of prod uction, in major 
markets and taking into account outward processing trade.  Although he agreed agricultural subsidies 
were a key issue, a broader perspective than that in Argentina's paper should be adopted, covering tariffs, 
quantitative restrictions and anti-dumping actions.  Reduction in agricultural subsidies rendered 
immediate environmental benefits and this analysis should be extended to other sectors.  Impeding 
exports of labour -intensive products such as textiles through artificial trade barriers ex tended 
environmental pressures to developing countries by forcing them to intensify exports of primary 
commodities.  Consequently, employment and foreign exchange earnings were restrained such that 
poverty -related environmental problems persisted and envir onmental technology could not be used.  A          WT/CTE/M/8  
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horizontal approach was required to examine how trade distortions could be reduced or eliminated, which 
would also contribute to environmental goals.  Argentina had proposed an appropriate modality for 
action and h e supported the development of a work programme to identify ways to reduce environmental 
damage due to trade distortions which impeded market access.  
 
19. The representative of Switzerland  made preliminary comments on Argentina's pro posal.  He 
said the scope should be broadened under this Item to include trade policy aspects which had an equally 
important environmental impact, such as energy input subsidies.  Given agricultural trade had been 
considerably reformed since the implementa tion of the Uruguay Round, Switzerland did not share 
Argentina's view on this matter.  The implementation of the Agreement on Agriculture would bring about 
far-reaching agricultural reform, which required constant adjustment in the agricultural sector.  As  had 
been recognized by Argentina, trade liberalization alone would not ensure the internalization of 
environmental costs and other necessary measures needed to be elaborated.  The Agreement on 
Agriculture clearly referred to non -trade concerns which were an integral component of agricultural 
policies in many countries.  The fact that the Agreement on Agriculture made it possible to distinguish 
between price support policies promoted lasting agricultural reform to the extent that an effort was being 
made to  diminish price support through decoupled, direct payments.  In this context, he felt at present 
and as a priority the Agreement on Agriculture should be implemented to reduce existing distortions in 
the agricultural sector.  He said in Switzerland the foc us was on providing incentives to promote 
sustainable development, exploited according to biological cultivation and integrated production on the 
basis of a system of direct payments linked to environmental services.  He recalled the CTE's work on 
this iss ue must be placed in a broader, balanced context and should not be focused solely on trade 
liberalization in the agricultural sector.  
 
20. The delegation of India , referring to WT/CTE/W/26, said the lack of systematic evidence made 
it difficult to draw general conclusions.  Paragraphs 7 to 12 revealed the important disadvantages of 
packaging, including significantly higher costs for foreign suppliers compared to domestic suppliers, 
import restrictions on materials which were more comp etitive for producers and lack of transparency and 
harmonization.  Noting observations on product standards used statistics which were more relevant for 
the past than the future, he suggested further analysis was needed on the recent increase in technical 
regulations and on which new products had entered the market.  Paragraph 26 cited OECD evidence 
that competitiveness was only minimally affected by environmental costs and competitiveness benefits for 
developing countries were not clear.  On the tariff tab le of India in WT/CTE/W/25, the maximum 
applied tariff for any product should be 50  per cent;  the applied rather than the bound rate indicated 
the actual level of market access restriction and tariff escalation.  He said tariff reduction should consider 
the following:  (i) the effective rate of tariff protection was relatively high in developed countries, even if 
the nominal rate of tariffs were low, specially for products where inputs were a high proportion of their 
total value and tariffs were high for i nputs which required a subsequent stage of processing in the 
developed countries;  (ii) the import elasticity of demand and the size of the market played a crucial role 
in determining the benefits of tariff reduction.  In developing countries with large ma rkets and where 
import elasticities of demand were relatively high, even a small tariff reduction could result in much higher 
volumes of sales and be of immense benefit;  (iii) some sectors, such as textiles, faced higher level of 
nominal tariffs than othe rs;  and (iv) developing countries had bound a significant number of their tariff 
lines and were committed to progressive liberalization.  
 
21. Argentina's proposals could usefully be examined.  He noted the broad spectrum of 
environm ental measures which had significant effects on market access, especially for developing 
countries.  Positive effects were not easy to exploit and required expertise, technology and resources not 
always available to developing countries.  Negative effects related to the costs incurred to adapt to new 
standards, to acquire the necessary technology and expertise, to non -availability of materials for meeting 
packaging requirements and the administrative apparatus required in the exporting country.  Negative 
effects could be mitigated if measures were based on multilaterally -agreed and equitable criteria and were 
WTO -compatible.  Referring to the concept of like product, he noted PPM -based criteria for 
environmental measures were potentially trade -restrictive an d had implications for market access.  
Empirical analysis had demonstrated trade measures were not necessarily the best way to address WT/CTE/M/8  
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environmental issues;  by enhancing equitable competition among potential users of the same resource, 
trade liberalizatio n could create efficiency.  He recalled GATT Article XX contained environment -
related exceptions to WTO rules.  Positive, trade liberalizing measures were more effective to achieve 
environmental objectives.  Schedules of concessions under GATT Article II, the Agreement on Import 
Licensing Procedures and the Agreement on Agriculture could be considered in this context.  
Environment -related trade measures had the following objectives:  (i) to pursue defined environmental 
objectives;  (ii) to persuade other go vernments to change their environmental behaviour;  (iii) to protect 
domestic industry;  or (iv) to enforce international environmental commitments.  
 
22. Trade restrictions could be used to enforce domestic product standards or to pr ohibit trade where 
it threatened the environment, such as in the case of DPGs.  On the former category, any trade restriction 
should uphold WTO provisions.  Even for Article XX exceptions, the principle of necessity was crucial 
and measures should not be a pplied in arbitrary or discriminatory manner or as a disguised trade 
restriction.  Referring to the TBT Agreement, he said Article 2.2 provided for technical regulations for 
fulfilling legitimate environmental objectives.  In assessing risks of non -fulfilm ent, relevant elements of 
consideration were available scientific and technical information, related processing technology or 
intended end -uses of products.  The CTE could examine the impact of environmental objectives on the 
mandatory nature of technical regulations.  Article 2.10 provided for relaxing notification provisions 
where technical contents of proposed regulations were not based on international standards for urgent 
problems like environmental protection.  He suggested examining if such a relaxat ion of notification 
provisions needed criteria to avoid potential misuse which restricted market access.  Article 5.4 provided 
for procedures for relaxing the use of internationally -accepted technical regulations and standards for 
environmental protection.   He suggested the CTE assess the impact of these procedures on the 
exemption given for environmental reasons on the "positive assurance" requirement for Central 
Government Bodies, especially as they played a significant role in many countries.  An assessm ent could 
examine how these provisions helped provide transparency of regulations and standards, which would 
help overcome market access problems.  A joint informal session with the SPS Committee could 
examine the preamble of the SPS Agreement which referr ed to the impact of SPS measures on developing 
country market access.  Of relevance to developing countries was Article 4, which provided for 
equivalence of different SPS measures.  Developing countries could face market access problems if 
Article 5.2 "rel evant ecological and environmental conditions" for risk assessment were invoked without 
objective criteria.  It might be worthwhile to examine the necessity of formulating criteria in this context.  
 
23. The preamble to the Agreement on Agriculture referred to environmental protection, with 
special and differential treatment for developing countries.  Paragraphs 2(a) and 12 of Annex II 
exempted expenditure on environmental protection programmes from domestic support reduction 
commitmen ts.  While domestic support measures should be least trade -distorting, government 
conservation programmes qualified for exemption.  This could impede the removal of trade restrictions 
and distortions and should be discussed to ensure a competitive and equi table market access regime was 
in place.  A similar provision was contained in the Agreement on Subsidies and Countervailing Measures.  
Article 8.2(a) classified the rendering of assistance to adapt facilities to new domestic environmental 
requirements as a non -actionable subsidy, which had to be notified to the Subsidies Committee and 
scrutinized for a determination, which could be submitted for binding arbitration.  The CTE could 
examine the effect of such disputes on the objectives of using environmental  grounds to make such 
subsidies non -actionable.  Similarly, Article 27.2 of the TRIPS Agreement allowed Members to exclude 
inventions from patentability to avoid serious prejudice to the environment.  Article 27.3(b) allowed 
Members to provide for protecti on to plant varieties through patents or an effective sui generis  system, or 
a combination thereof.  This could be dealt with under Item 8.  The above examples illustrated Item 6 
was cross -cutting and would be a significant part of the Report.  Discussion on creating new disciplines 
for environmental protection should take into account that obstacles to market access were likely to arise 
in the process.  More time was needed to analyze these issues.  
 
24. Trade measures to persuade oth er countries to modify their environmental policies were not 
justified.  Apart from the political consequences of such unilateral actions, there were economic 
consequences associated with PPM -based standards.  A distinction was needed between local and glo bal          WT/CTE/M/8  
         Page  9 
 
environmental problems.  The former should not concern international trade, and the latter were best 
tackled through MEAs.  He supported those Members who had voiced concern over the action by a 
major trading entity to impose an import embargo on wild shrimps on the basis of its national 
environmental objectives.  This involved the concepts of extra -territoriality and discrimination, and prima 
facie was WTO -inconsistent.  The CTE should ensure environmental arguments could not be used by 
protectionists to justify the exclusion of imports.  The only exception could be where special and 
differential treatment was required for economic growth in developing countries.  When discussing the 
relationship between WTO provisions and MEAs, market access concerns s hould also be addressed.  
Although environmental protection was not within WTO jurisdiction, when discussing environment -
related trade measures certain transparency disciplines had to be put in place where necessary.  Market 
access should not be hindered b ecause of environmental protection.  Discussions of other Items should 
ensure there were no obstacles to market access.  Further, all WTO Agreements related to market access 
could be reviewed to incorporate positive measures, especially for developing coun tries.  
 
25. The representative of New Zealand  said a balanced approach should be pursued to ensure the 
implications of all Items were examined and to progress where consensus was possible.  This Item 
provided a basis for making trade  and environment policies mutually supportive and should form a 
substantive part of the Report.  There was a general consensus on the environmental benefits of trade 
liberalization, as stated in Chapter 2 of Agenda 21 and recently by OECD  Environment Minis ters.  
These benefits improved efficiency of resource use, which  lessened demands on the environment;  
generated resources to address poverty and environmental problems;  facilitated exports of 
environmentally -friendly goods and services;  and helped deve loping countries diversify their economies.  
If any negative environmental effects arose, they should be addressed through domestic environmental 
policies targeted at the source of a problem, and not through policies aimed at securing non -
environmental obj ectives, which might contain only incidental environmental benefits.  The conclusions 
in WT/CTE/W/1 noted there was no emphatic evidence from empirical studies that trade liberalization 
had systematically harmed the environment and there was evidence that agricultural trade liberalization 
was particularly environmentally -beneficial and that production -boosting subsidies, border protection and 
tariff escalation could result in negative environmental outcomes.  Production -related subsidies had 
negative impact s on agriculture as they increased the intensity of use of fixed factors of production;  
discouraged agricultural diversification;  resulted in over -grazing and extension of farming to marginal 
land;  led to intensive use of agri -chemicals;  and reduced fa rm incomes by suppressing world prices, 
which created poverty in many developing countries.  Impacts were not confined to the countries 
employing the restrictions and distortions, but affected other producers who could be forced to adopt 
unsustainable prac tices.  Tariff escalation and border protection also had negative environment 
implications in some cases.   
 
26. In considering ways to address the environmental impacts of trade restrictions and distortions, 
New Zealand had proposed  a distinction be made between approaches which yielded environmental 
benefits and were WTO -consistent and approaches which yielded environmental benefits but were 
WTO -inconsistent.  Here, trade measures were not a first -best policy tool and any negative 
environmental impacts should be addressed at their source.  WT/CTE/W/1 noted trade liberalization 
could provide incentives for unsustainable levels of production in countries which did not pursue 
restrictive or distortive trade policies.  Similar concerns r elated to the extent to which liberalization would 
automatically lead to environmental benefits.  In response, New Zealand agreed analysis was required, 
but considered the absence of trade liberalization also had environmental implications and domestic 
environmental regulation provided the best safeguard against any possible environmental costs.  This 
issue should be considered in light of the overall economic benefits from liberalized trade and investment.  
The Report should state that the adverse environm ental impacts of trade distortions meant their reduction 
or elimination provided the basis for a win-win situation for both trade and the environment.  
 
27. The representative of Australia  said discussion in September 1995 had suggested four main areas 
of focus on the environmental benefits of removing trade restrictions:  (i) tariff escalation, especially in 
the forestry, mining, fisheries and agricultural sectors, and increased tariff esc alation in some sectors 
following the Uruguay Round;  (ii) high tariffs for products including processed and agricultural WT/CTE/M/8  
Page 10 
 
commodities subject to tariffication in the Uruguay Round;  (iii) subsidies, especially for agricultural 
products;  (iv) high internal  taxes on tropical commodities.  He felt concerns were misplaced that 
discussion of these areas would divert the CTE from a results -oriented focus.  In many countries, the 
value of trade liberalization was being questioned due to the effects it might have on the environment.  
Issues should not be ignored because they raised difficult problems or immediate results could not be 
achieved.  Recommendations to Ministers should concern the concrete initiatives which could be 
identified under this Item.  Trade lib eralization was not in conflict with the goal of improved 
environmental protection, as recognized in Agenda 21.  The critical issue was that environmental policies 
accompanying trade policies should ensure trade liberalization contributed to improved envir onmental 
performance, which was a conclusion that could be drawn from the UNCTAD case studies.  Import 
liberalization could improve access to inputs and products which were environmentally -friendly and assist 
in the introduction of environmentally -sound te chnologies.   
 
28. A key issue was the failure of markets to adequately value environmental costs and benefits and 
policy action was needed to ensure sustainable management of natural resources and promote 
environmental quality.  The  Report should acknowledge that a strong multilateral trading system that 
contributed to sustainable development needed complementary action at the national level and in other 
international fora to promote environmental protection.  Environmental damage du e to market failure 
was often made worse by inappropriate government interventions, including trade and trade -related 
policies which distorted markets, unfairly affected the economic opportunities of producers in other 
countries and promoted depletion of r esources.  The CTE had a responsibility to identify these policies 
and encourage action at the national level and in the WTO to reform them and promote trade liberalizing 
initiatives that supported sustainable development.  This should be another major ele ment of the Report.  
He noted the commodity -dependence of some countries, which made it difficult for them to ensure 
sustainable resource management.  Here, efforts to improve the environment faced income constraints.  
Policies aimed at internalizing envir onmental costs might be unsuccessful if they reduced the income of 
already poor producers.  Export expansion and diversification into higher value -added products could 
assist in poverty reduction and environmental protection.  Overcoming problems faced by 
commodity -dependent countries required appropriate domestic policies and financial and technical 
assistance, including reduction of tariff escalation.  The Report should address the problems of 
commodity -dependent countries which differed from those of oth er countries.  The Report should 
emphasize the need for the WTO to address tariff escalation and high tariffs for processed commodities 
and other industrial products, and the need for complementary action related to commodity -dependency, 
including technica l assistance.   
 
29. Agricultural subsidies and high tariffs for many agricultural products should also figure 
prominently in the Report.  OECD agricultural support policies imposed high environmental costs by 
encouraging inappropriate resource use, which intensified land use to maximize production, led to 
increased applications of fertilizers and chemical pesticides, promoted monoculture agriculture and 
contributed to loss of biodiversity.  Instead of promoting better environment management, agricultural 
policies often shielde d farmers from market signals and the environmental impacts of agricultural 
practices.  These agricultural policies had contributed to an international trading system which hampered 
more efficient agricultural producers from sustainably managing resources.   Agricultural trade distorting 
policies had combined with other factors to limit the contribution which trade could play in promoting 
sustainable agriculture.  From 1970 to 1994, the share of world trade in agricultural products held by 
developing countri es had fallen from 33 to under 28 per cent, while the share held by developed countries 
had risen from 58 to 70 per cent.  Total transfers associated with agricultural policies in OECD countries, 
which was an important factor in explaining these trends, ha d increased from US$ 24 billion in 1970 to 
$200 billion in the 1980's to over $330 billion in the 1990's.  This had occurred between the 1972 
Stockholm Conference on the Human Environment and UNCED in 1992.  Agriculture accounted for 
3 per cent of the work force in high -income economies, 18 per cent in middle -income economies and 
44 per cent in low -income economies.  Given 80 per cent of the world's poor lived in rural areas, the 
relationship between poverty and environmental degradation was most direct in a griculture.  Issues raised 
by agricultural protection should be a key part of the Report.  Although, the Uruguay Round had taken 
the first steps towards a more sustainable framework for agricultural trade, work was needed to promote          WT/CTE/M/8  
         Page  11 
 
sustainable agriculture .  Further reform should build on reductions in trade -distorting policies being 
complemented by actions to ensure sustainable agriculture, including adoption of domestic policies to 
secure sustainable resource management and to spread the benefits to poore r farmers.  Agricultural 
protection highlighted problems involved in using trade -distorting measures to achieve non -trade 
objectives that were more efficiently achieved by other policy instruments, which was a lesson that should 
be considered for all trade  and environment issues.  Australia expected to circulate a paper before the 
next meeting on the issues under Item 6 which should be brought to Ministers' attention.  
 
30. The representative of Norway  prioritized three issues under th is Item:  (i) the evaluation of the 
environmental consequences of the multilateral trading system, including trade liberalization and trade 
restriction;  (ii) how WTO rules and their modifications might contribute positively to environmental 
and resource -management policies;  and (iii) how potentially negative consequences of trade 
liberalization, especially for least -developed countries, could be avoided taking into account the problems 
of putting into place necessary domestic environmental policy (e.g.  longer implementation periods for 
liberalization, and financial and technical assistance).  Removing trade restrictions in certain cases might 
play a role from an environmental policy perspective as it contributed to internalizing environmental costs.  
Trade  liberalization might yield a double dividend, with economic and environmental gains.  By 
removing trade barriers and distortions, the WTO could contribute to environmental policy.  As the link 
between trade liberalization and environmental protection was not automatic, analysis should proceed 
product -by-product.  Priority should be given to removing barriers in sectors with a potential double 
dividend.  As agriculture had already been mentioned in this regard, she noted the removal of barriers 
in the energ y sector could yield a significant double dividend.  Energy was a key factor for global 
economic development and the global environment.  Measures to enhance efficiency in energy 
production and utilization and to internalize environmental costs were centra l to growth and sustainable 
development.  She noted the challenge to reduce the use of fossil fuels (coal, oil and gas) to minimize 
polluting emissions.  It was rational to have incentives for the use of environmentally -benign resources 
and disincentives f or unfriendly ones.  Currently, the opposite was the case;  coal production could be 
subsidized, whereas the use of oil, and gas was heavily taxed.  Studies had shown the elimination of energy 
subsidies led to higher economic growth and a cleaner environme nt.  Noting the Subsidies Agreement 
prohibited subsidies contingent upon the use of domestic over imported goods, she said it was paradoxical 
that subsidies were allowed to promote adaption to new environmental requirements, but not to qualify 
the use of s ubsidies to environmentally -damaging products where more benign products were 
substitutable.  The conclusion might be reached that WTO rules should include, at least, policy 
statements on how the trading system could promote the use of environmentally -friendly products.  
Here, modifications to WTO rules might be needed.  Although the WTO was not a substitute for an 
MEA on climate change, it should be ensured it did not facilitate the maintenance of policies detrimental 
to sustainable development.  The Repor t should note that further trade liberalization negotiations should 
seek increased market access in sectors and for products where negative environmental effects of trade 
restrictions existed.  Products directly linked to MEAs could be examined to find con sensus as to which 
products, in their end -use or production, were environmentally -friendly and should be given priority for 
increased market access.  To further work on tariffs and non -tariff barriers, Norway would examine the 
energy sector and share the r esults.  
 
31. The representative of Mexico  said this Item was broad and should be treated horizontally.  She 
was open to proposals on how to analyze the market access effects of environmental measures for 
developing countries.  The im portant issue under this Item was the need to safeguard exiting market 
access from the adverse effects of environmental measures, rather than the need for additional market 
access.  On WT/CTE/W/26, she did not agree with the conclusions given in paragraph 52.  The analysis 
of unilateral measures in paragraph 48 was limited and did not refer to discussion in the CTE and the 
EMIT Group.  She referred to the linkages between this Item and Item 3.  Although discussion on Item 
3 had focused on eco -labelling, thi s did not mean other issues included under Item 3 were not important, 
such as eco -packaging.  In order to clarify WTO rules on packaging and labelling requirements, 
discussion in the TBT Committee should be reviewed.  In terms of the applicability of the r ules to these 
new types of measures, transparency should be ensured in the development of criteria.  Transparency 
was a horizontal issue and its effective implementation should be reviewed.  Eco -packaging requirements WT/CTE/M/8  
Page 12 
 
generally were based on conditions whi ch reflected the national priorities in the country which imposed 
them.  Applying these measures to imports might not only be environmentally -inappropriate, but might 
have a negative impact on market access.  Importers were also subject to disproportionate  costs.  
Packaging requirements favoured the use of local materials.  In depth discussion was necessary on 
effectiveness to ensure non -discrimination and national treatment were respected for packaging 
requirements, including in the TBT Agreement.  These r equirements might lead to significant de facto  
trade barriers.  She noted the need to ensure equality of opportunity to compete in this regard.  The 
effective application of the concept of necessity would ensure an objective balance.   
 
32. The delegation of the United States  agreed with the observation in paragraph 5 of 
WT/CTE/W/26, which tracked conclusions in other fora, particularly that environmental measures had 
generally small effects on competitiveness and market access.  Thes e conclusions supported her 
delegation's views that environmental measures did not require greater scrutiny than other measures that 
might affect trade.  She noted in particular the conclusion that the degree of openness of a country's 
economy influenced i ts capacity to adjust to environmental standards due to better access to information, 
inputs and technology.  She agreed with the EC that environmental awareness was creating new markets 
for environmental goods, services and technologies.  While she shared  some of the concerns mentioned 
in paragraph 14 on eco -labelling, she said there was no current basis for the suggestion that eco -labelling 
might force firms to abandon markets.  Examples in paragraphs 40 and 42 did not support such a strong 
statement, whi ch assumed eco -labelling had a level of impact on the market that had yet to be seen.  She 
expressed uncertainty that paragraph 15 was factually correct in its assertion most eco -labelling was 
life-cycle based.  She noted the many examples of product -speci fic claims, such as those governed by 
Federal Trade Commission guidelines.  She agreed with paragraph 15 that transparency in eco -labelling 
was essential, as had been recognized in the US proposal for work in this area.  Noting delegations to 
UNCTAD had no t had an opportunity to analyze the case studies in depth, she recalled some of the 
limitations her delegation had mentioned at UNCTAD meetings.  A distinction should be drawn 
between empirical analysis and raw data.  Most of the case studies involved ex ante analysis, where firms 
were asked what the impact of various environmental measures might be in the future.  This approach 
did not always yield accurate information;  she recalled the difference between what US industry had 
argued was possible before ne w domestic laws had come into effect and what they had accomplished 
thereafter.  The US was not prepared to draw general conclusions from the case studies as they, in large 
part, were anecdotal and targeted sectors where potential problems seemed likely.  Although it was 
valuable to report on work in other fora, it should not be endorsed by the Secretariat.  She agreed with 
paragraph 52.  
 
33. She supported progress towards increased agricultural trade liberalization and internalizatio n of 
environmental costs, which would lead to environmental improvements.  Recognizing trade restrictions 
and distortions could cause environmental problems, she felt this issue would play a constructive role in 
furthering both trade and environmental obje ctives.  As such, she supported Argentina's proposals for 
further action.  Since there was a common objective in promoting this issue, from an environmental 
perspective she was disappointed the paper limited its focus to developed country practices, thereb y 
presenting it as North -South issue, which it was not.  Developed countries could be harmed by the 
practices of other developed countries, and developing countries could be harmed by the practices of 
other developing countries.  For example, export taxes and high tariffs were practices employed by 
LDCs.  Since many of the adverse environmental consequences of trade distorting agricultural policies 
were experienced domestically, the distorting policies of a country could have adverse environmental 
consequen ces for that country, regardless of its development status.  Although Argentina's paper focused 
on agricultural subsidies, the same analysis should be applied to other trade distortions, such as tariff 
escalation, state trading, and excessively high tariff s.  Export taxes led to similar results as import barriers.  
She expressed concern with paragraph 7 that market failures could only be addressed after intervention 
failures were removed, as market and intervention failures impacted on one another and shoul d be dealt 
with together, not sequentially.  The United States had recognized the potential environmental problems 
with some of its agricultural policies and was in the process of changing them.  To the quote from Krissoff 
in paragraph 17 should be added t he text which noted the US had been moving away from the practice 
under criticism.           WT/CTE/M/8  
         Page  13 
 
 
34. She said the tables in WT/CTE/W/26 indicated tariff escalation was not limited to developed or 
developing countries;  this was important as devel oping countries were also major consumers of 
unprocessed goods.  As the analysis was on potential environmental benefits of reducing tariff escalation 
based on their impact on the generation of wealth, it presented an incomplete picture.  Trade 
liberalizat ion did not automatically lead to improved environmental protection; many environmental 
benefits were likely indirect, and their realization depended on appropriate environmental policies being 
in place.  Environmental impact of shifting processing depende d on: (i) relative environmental 
sensitivities; (ii) regulatory infrastructure in place to avoid resulting environmental degradation; and (iii) 
the relative success of achieving full cost internalization.  Whether there was an environmental benefit to 
an exporting country depended on the balance between removing pressure to over -exploit natural 
resources versus any additional environmental stress caused by newly generated processing activities.  For 
example, taking marginal land out of cotton production in favour of increased textile manufacturing in 
the exporting country could lead to greater air and water pollution absent adequate environmental controls 
on the production processes.  Policy linkages could be drawn between tariff escalation and export taxes 
and restrictions, which distorted market signals and could lead to inefficient resource allocation.  It would 
be more useful if the tables provided information on applied tariff rates.  The tables suggested that at 
least one country had ceiling bindings, s o any actual tariff escalation was not evident.  She inquired as to 
how the EC base rates and final rates on agricultural products such as grains had been determined as the 
numbers were considerably lower than her delegation understood them to be.  
 
35. The representative of Canada  referred to the potential for trade promotion effects resulting from 
environmental concern and the new global market for environmental goods, services and technology, 
which was noted in WT/CTE/W/26.  Analysi s was required on how developing countries could benefit 
from these market opportunities.  Another point illustrated in WT/CTE/W/26 was the need to 
distinguish between competitiveness impacts of domestic environmental regulations and product 
requirements.  The latter were relevant to the CTE's work.  A distinction was needed between health 
and environmental requirements.  He noted the potential trade effects of the recent Basel Convention 
amendment for developing country recycling industries.  It was precis ely such effects that had led Canada 
to oppose, unsuccessfully, the ban on trade in recyclables.  The conclusions in WT/CTE/W/26 on 
market access and competitiveness, while necessarily tentative in view of the difficulty of making 
generalizations in this a rea, were noteworthy.  He sought clarification from the EC on its proposal in 
September 1995 that the CTE examine how to allow developing countries to comply with environmental 
obligations which had an impact on market access, subject to the environmental goal not being 
undermined.  Also, an environmental de minimis clause had been suggested, whereby if a product from 
a developing country contributed only minimally to the environmental damage attributable to the product 
in question, then its market access o pportunities could be preserved.   
 
36. This issue focused on synergies to achieve both trade and environmental benefits.  He noted the 
point in Argentina's paper that the environmental benefits from the removal of trade restrictions  and 
distortions frequently occurred not only in the territory of the country removing the distortive measure, 
but also in that of its trading partners, which might have been pushed to implement environmentally -
damaging policies by the measure in question.   Canada agreed identifying and eliminating intervention 
or policy failures was essential to correct deficiencies in the price formation system.  Canada's approach 
to sustainable development was based on the recognition that a first step was to ensure econ omic and 
environmental policy signals were similar.  Canada felt agricultural trade liberalization was an important 
achievement of the Uruguay Round and the reform process should be continued, primarily in the 
Agriculture Agreement.  Potential for a positi ve relationship between reduced support and 
environmental benefits was not related solely to agriculture and should be considered in all sectors, such 
as the unfinished zero -for-zero in sectors such as wood.  He noted Canada's "baseline study" which was a 
review of the federal government's policies to identify barriers and disincentives to sound environmental 
practices.  Also, OECD Environment Ministers had called for analysis of the effects of subsidies and tax 
disincentives to sound environmental practice s in various economic sectors, and the costs and benefits of 
their elimination or reform.  These initiatives offered "multiple -win" opportunities and led to policy 
actions which were good for the environment and the economy, in both the country taking the measure WT/CTE/M/8  
Page 14 
 
and its trading partners.  In the case of subsidies, it might also lead to fiscal benefits.  The analysis in 
WT/CTE/W/25 solved the difficulty of being definitive about the environmental impacts of any given set 
of tariffs.  This was a general issu e as the links between trade liberalization and higher environmental 
standards were not automatic.  However, to the extent tariff escalation impeded efficient resource 
allocation, it could also impede the environmental benefits of reducing tariff escalatio n for products 
covered in the tables.  Concerning subsidies and tariff escalation, Canada envisaged the Report might 
remind Members of the desirability of investigating the potential for achieving both trade and environment 
objectives by reviewing domestic  policies.  
 
37. The representative of Argentina , responding to the US comment, acknowledged the continuation 
of the Krissoff reference stated that the US had moved away from the practice which had been mentioned.  
 
 
Item 8 :Relevant provisions in the Agreement on Trade -Related Aspects of Intellectual Property Rights  
 
38. The delegation of India  introduced her delegation's non -paper of 22 March.  As this 
contribution covered only some basic ideas, India would be grateful for suggestions for improvement.  
She recalled the CTE's mandate on this Item and the statement made by India when this Item had initially 
been discussed in June  1995.  While nothing in the TRIPs Agreement prevented a government or an 
international financial mechanism from providing financial assistance to enable transfer of privately -held 
proprietary technology on concessional terms, she suggested there was also nothing in the 
TRIPs  Agreement which provided specific mechanisms for achievi ng the objectives of sustainable 
development and environmental protection.  The CTE should ensure intellectual property (IP) rules in 
the WTO were not in contradiction with the promotion of sustainable development.  The link between 
IP and the environment arose because technologies existed which were covered by IP that directly affected 
the environment.  Effects could cause serious prejudice to the environment or be environmentally -
beneficial.  The CTE should discourage the global use of injurious technolog ies and encourage the use 
of beneficial technologies.  
 
39. She suggested sub -categories of environment -affecting technologies:  those related directly or 
indirectly to an existing MEA and those which were not;  those which were covered by current IP and 
those which were eligible for coverage in future;  and, as di scussed in WT/CTE/W/22, those which were 
easily copied and those which were not.  The non -paper referred to patents, plant variety protection or 
plant breeders' rights, circuit -layout designs and undisclosed information.  Referring to patents for 
technolog ies causing serious prejudice to the environment, she said exclusion from patentability or ban 
on use or commercial exploitation would appear to be prima facie  necessary.  The TRIPs Agreement 
recognized such exclusions could be used to discourage the gener ation of environmentally -injurious 
technologies, subject to safeguards against unwarranted dilution of IP protection.  Referring to the 
safeguard provisions in Article 27.2, she said a similar solution, which safeguarded the environment and 
provided IP pro tection, should be sought for other areas of conflict between IP objectives and sustainable 
development.  The TRIPs Agreement did not clarify whether Members could ban the commercial 
exploitation of environmentally -injurious technologies while granting pat ent protection or whether this 
would give rise to non -violation -type of complaints.  Although such complaints would not be valid for the 
first five years of the TRIPs Agreement, this should be discussed to reach an understanding to assist the 
TRIPs Council .  Environmentally -beneficial technologies were of concern to developing countries in 
relation to the TRIPs Agreement.  While developing countries would adhere to the international 
consensus in phasing out certain environmentally -injurious substances in ME As, substitute technologies 
were not transferred by multinational enterprises (MNEs) on "fair and most favourable terms", as stated 
in Article 16 of the Biodiversity Convention and Article 10A of the Montreal Protocol, or on reasonable 
terms.  Under the Mo ntreal Protocol, certain projects were not being cleared under the financial 
mechanism as they involved very high payments.  They were not judged to be unreasonable or 
unfavourable terms for technology transfer as these technologies were in the "commercial  domain" and 
not the "public domain".  Moreover, R&D projects were not being cleared unless the developing country 
concerned gave an undertaking technology transfer would not later be sought.  No country could 
guarantee indigenous R&D would be successful.  She disagreed with paragraph 35 of WT/CTE/W/22          WT/CTE/M/8  
         Page  15 
 
that there was no evidence of impediments to the flow of technology under the Montreal Protocol, which 
was based on one study and was inconclusive.  She asked how a developing country could acquire the 
necess ary technologies to phase out environmentally -injurious substances.  
 
40. In light of the above, India had suggested amendments to the TRIPs Agreement be considered, 
which were recommended to achieve the larger objective of implementi ng MEAs in a feasible manner.  
There was a fine balance between IP protection, environmental protection and the promotion of 
sustainable development, especially in the case of technologies directly or indirectly related to an MEA.  
Concerning financial sub sidies to private IP owners, she said there might be a need to incorporate easier 
compulsory licensing, shortening of the term of protection or revocation or exclusion from protection.  
The TRIPs Agreement needed to be flexible to deal with such contingenc ies.  Although in cases where 
technologies were not easily copied, the cooperation of the IP right owner was required, Members should 
be allowed to relax protection of trade secrets under Article 39 so compulsory licensing or revocation or 
reduction of the  IP term and dilution of IP for trade secrets could aid voluntary technology transfer on 
fair and favourable terms.  The points made in WT/CTE/W/22 on patents engendering full disclosure 
and reducing transaction costs should be weighted against the larger issues raised in India's non -paper.  
Referring to the empirical evidence on the direct link between foreign direct investment (FDI) and IP 
protection in paragraph 22, she said other studies showed there was no evidence of such a link.  
Paragraphs 21 and 22  of India's non -paper noted countries could incorporate plant variety protection and 
biotechnological inventions as necessary to protect the environment, provided these measures did not 
detract from the effectiveness of protection.  It was possible to reco ncile IP protection and environmental 
concerns as illustrated by Article 27.2.   
 
41. Concerning IP rights of traditional communities, which arose in the Biodiversity Convention and 
for patents, she cited the case of the "neem seed",  from which an MNE had patented a process to make a 
pesticide.  Whether such a process or product was "novel" in terms of criteria for patentability was under 
discussion.  Sharing the benefits with traditional communities which preserved such knowledge and  
maintained genetic resources also needed to be addressed.  She referred to the environmental effect of 
integrated circuits of layout design, mentioned in paragraph 52 of WT/CTE/W/8. For environmentally -
injurious technologies, solutions would be the same a s those advocated for patents, the difference being 
that while in the case of patents, the TRIPs Agreement made an explicit provision for exclusion, this was 
not done for layout designs.  Here, there was no reason for differential treatment, and the use of  
measures such as exclusion from and revocation of existing protection must be provided for in addition 
to the ban of their commercial exploitation.  Similarly, when the use or commercial exploitation of layout 
designs or products incorporating such design s was environmentally -beneficial, Members might revoke 
existing protection or use compulsory licensing, the difference being that under the TRIPs Agreement, 
compulsory licensing for semi -conductor technology was restricted on two grounds:  public non -
comme rcial use or to remedy an adjudicated anti -competitive practice.  This prohibited Members from 
granting a compulsory licence on the grounds that voluntary transfer of environmentally -sound 
technologies (ESTs) was not taking place on fair and most favourabl e terms.  The restrictions and 
unnecessarily burdensome conditions should be removed to make Article 31 applicable to this IP area.  
Turning to protection of undisclosed information, she noted this was crucial for developing countries.  
Members should be f lexible to lower IP standards for trade secrets to increase accessibility to ESTs.  The 
TRIPs Agreement had strict disciplines on breach of contract and confidence, inducement to such breach 
and acquisition of undisclosed information by third parties.  As no exceptions to such protection existed, 
the CTE should examine a limited environmental exception.  On test or other data submitted for 
obtaining marketing approval of pharmaceutical or agricultural chemical products which used new 
chemicals, Members had an obligation to protect the public.  The CTE needed only to interpret the 
term "protect the public" to include the environment.   
 
42. She said WT/CTE/W/22 was an analysis of the transfer of technology under commercial 
conditions, a nd it did not address the exceptional situation raised by India where developing countries 
had problems with the transfer of technology required to meet MEA obligations.  For technologies which 
could be copied, IP was a legal obstacle to copying and transf erring technology, as IP laws in the TRIPs 
Agreement would not allow this.  For technologies which could not easily be copied, cooperation of the WT/CTE/M/8  
Page 16 
 
technology supplier was required.  It was relevant to examine existing disciplines under trade secrets in 
the WTO to seek a solution to transfer of ESTs with global benefit as decided by an existing MEA.  On 
paragraph 7, she said copying would be hindered by IP technology, which would be relevant only to 
'copiable' technologies, except, as noted in paragraph 28, w here compulsory licences were granted.  
Compulsory licences enabled EST use even without the cooperation of the right owner.  She said Article 
31(k) of the TRIPs Agreement was a useful starting point for discussion.  It was for non 'copiable' 
technology wh ere the government of the home country (in terms of FDI) would have to convince the 
MNEs who held such technologies that it would be in their interest or in the global interest to transfer 
such technologies on reasonable terms.  In return, that country or the MNE would gain publicity that 
they had taken this step in the interests of the global environment.  The scope of India's  
non-paper was limited to technologies which were not in the public domain, which were covered by IP 
protection or trade secret pro tection, for which there was no time limit on the protection.   
 
43. Paragraph 18 referred to public financial assistance where technology was privately -owned, for 
which the TRIPs Agreement did not impede public financing of voluntar y transfer on concessional terms.  
Even though she said this was not feasible, India was open to be convinced that such financial assistance 
would be forthcoming.  On paragraph 20, the likelihood of such technology being made available on 
reasonable terms or at all was greater if adequate and effective IP protection was provided.  Although this 
was normally the case, she had referred to technology transfer that was urgently required to be widely 
disseminated as mandated in an MEA.  She cited the example of an MEA -related substance where a 
country obliged to phase it out was not getting technology transfer and thousands of SMEs required it at 
a reasonable cost.  Here, cost was the primary concern.  WT/CTE/W/22 noted the importance of a 
functioning IP regime, particularly for patents which encouraged inventors to disclose new technologies.  
However, only some parts of technological know -how were disclosed in the patent applications process.  
Based on studies of which she was aware, it was a generalization to st ate FDI would not take place without 
IP protection.  She cited a study which revealed that there was no link between IP protection and FDI.  
Studies based on surveys and questionnaires were not decisive evidence.  She cited paragraph 28 which 
stated that f or 'copiable' technologies, costs would be lower if they were not subject to patents.  This 
proved that IPRs were not an obstacle to 'copiable' technology and compulsory licensing would be a way 
out in areas where ESTs were required pursuant to an MEA.  Sh e said it was clear Article 31 of the 
TRIPs Agreement did not specify any grounds for compulsory licensing, so Members were free to 
prescribe any grounds including meeting a national or international objective.  So presumably transfer of 
ESTs was permitted  under Article 31, subject to various conditions.  She cited the case of anti -
competitive practices in Article 31(k), which gave a certain flexibility to the conditions that applied.  The 
idea in paragraph 29 could be extended to cover ESTs through the use  of Article 31(k), to include ESTs 
required pursuant to an MEA.  Although there was not much empirical evidence on the effect of IPRs 
on the transfer of ESTs, this issue should be studied.  Concerning the suggestion that a solution would 
be to implement Ar ticle 67 of the TRIPs Agreement, on technical assistance, she said this did not cover 
technology transfer.  Although India had no intention of undermining the TRIPs Agreement, solutions 
for transfer of ESTs were needed.  India was prepared to be convinced that no problem existed or there 
were more feasible solutions.  
 
44. The representative of Chile  said the TRIPs Agreement did not refer to, or promote incentives 
for the transfer of ESTs.  From an environmental perspective, the TRIPs Agreement contained a 
cautionary principle in Article 8.1, whereby Members were granted the authority to limit R&D activities 
or approval of technology on grounds of environmental protection.  The rights of the IP owner of ESTs 
were not affected, but the p ossibility to apply the technology in a given jurisdiction was restricted.  
Measures for environmental protection had to be WTO -consistent.  It could not be disregarded that 
environmental standards would be established that regulated technology transfer.  In this case, a group 
of countries or a country unilaterally could establish criteria regarding R&D which would regulate the 
transfer of ESTs.  The development of such standards, which were not based on international consensus, 
would create trade distortio ns and impede technology transfer to developing countries.  Chile's 
preliminary analysis suggested there could be at least two situations which were negative for developing 
countries.  LDC products which did not respect these standards could be discriminat ed against 
compared with similar products from industrialized countries which had incorporated ESTs.  Also, there          WT/CTE/M/8  
         Page  17 
 
was the risk of restricting the capacity of developing countries to acquire technology which was the most 
adequate for their environmental con ditions.  
 
45. The representative of Switzerland  said he would comment on India's proposal at the next 
meeting.  Among the positive measures in MEAs which would contribute to environmental measures, 
reference had been made to technolo gy transfer.  In order for technology to be transferred, it had to 
exist.  An effective IPR regime would support the development of new ESTs.  As stated in Article 7, 
one of the objectives of the TRIPs Agreement was to contribute to the promotion of techno logical 
innovation.  He agreed with paragraphs 19 -22 of WT/CTE/W/22.  There was little practical evidence, 
and to the extent conclusions could be drawn from practice, the existence of an IPR regime increased the 
security of enterprises involved in technolo gy transfer.  He said that the existence of an IP system was 
only one of the factors which supported technology transfer.  Other factors such as economic and 
political stability in the country of destination and infrastructure, access to financial resource s and 
vocational training had a greater influence.  There were other rules which figured in the WTO 
Agreements on investment, market access and trade in services which supported technology transfer.  
Strengthening the legal certainty of the TRIPs Agreement  for enterprises operating abroad would 
contribute to technology transfer in general, particularly for ESTs.  Also, technical cooperation should 
be considered.  Paragraph 18 distinguished between private and public sector technologies.  Even in the 
case of  private technology, it was possible to envisage public financing for voluntary technology transfer.  
If the technology concerned was particularly important for the enterprise, an adequate legal framework 
was important in the decision -making process of an enterprise.  He welcomed contact between the 
Secretariats of the WTO and the Biodiversity Convention, which would contribute to work in both.  
There should be a process of mutual education and the derestriction of WT/CTE/W/8 was a step in the 
right directi on.  This document did not, however, answer all the  questions which the Biodiversity 
Convention had directed to the WTO.  It was important that the objectives of both agreements were 
fully realized and a synergy created between them.  In this respect, the  CTE should further examine the 
TRIPs Agreement's impact on biodiversity.   
 
46. The representative of Egypt  said India's non -paper was a good basis on which to guide further 
discussion on this Item.  Although the TRIPs Agreement, pa rticularly for patents, provided incentives 
for the generation of new technology, including ESTs, transfer of such technology was expensive and 
cumbersome.  This did not conform with Agenda 21, which regarded access to, and transfer of EST on 
concessional terms as essential for sustainable development.  IPRs were only one factor, usually not the 
most important one, which affected technology transfer.  However, IPRs should not obstruct the transfer 
of technology, which should be made affordable to developing  countries, particularly SMEs, to help them 
adapt to new environmental measures.  As India's non -paper exemplified, Articles 7, 27, 31 and 33 of 
the TRIPs Agreement should be examined to determine their effect on the transfer of ESTs.  This might 
lead to a n examination of the relevant articles in MEAs which contained IPR -related obligations, notably 
Articles 1, 15 and 16 of the Biodiversity Convention.  Generally, the TRIPs  Agreement was felt to be 
flexible concerning the environment;  it did not hinder any  action to address the adverse environmental 
effects.  She asked if the TRIPs Agreement put ESTs beyond the reach of developing countries, which 
would have a negative impact on the environment and on their efforts to cope with MEA requirements.  
Such conce rns would be compounded where the result of an IPR regime was that payment had to be 
made to use technology that would otherwise be available at no, or little cost, as noted in paragraph 19 of 
WT/CTE/W/22.  She noted the relationship between the transfer o f biotechnology essential to the 
Biodiversity Convention and Article 33 of the TRIPs Agreement.  The extent to which Article 31 on 
compulsory licensing was applicable was relevant to the distinction made in WT/CTE/W/22 on easily 
and non -easily 'copiable' t echnology.  The effectiveness of Article 31 might become obsolete for non -
easily 'copiable' technology.  It would be worthwhile to examine Article 27.2 exceptions, and whether 
they should be narrowly interpreted, placing the burden of proof mainly on devel oping countries to prove 
the link between exclusion from patentability of certain inventions and the protection of human, animal 
or plant life or health or to avoid serious prejudice to the environment.  Or, should exceptions be 
interpreted broadly, in a m anner consistent with the precautionary principle, a guiding principle in the 
Biodiversity Convention.  She noted questions for a future work programme:  whether the 
TRIPs  Agreement was compatible with sustainable development, i.e. did it help environmenta l WT/CTE/M/8  
Page 18 
 
conservation; whether the TRIPs Agreement struck a balance between the producer of technology and 
the welfare of society, in terms of preservation of genetic resources and access to, and transfer of 
biotechnology;  and whether the TRIPs Agreement set the  framework for conservation and development 
of biodiversity.  
 
47. The representative of  Korea  felt India's non -paper had merit since its was confined to 
technologies related to MEAs.   Commenting on WT/CTE/W/22, he said paragraph 6 stated factors 
affecting technology transfer were essentially the same regardless of the area of technology and suggested 
there were no special incentives for facilitating access to, and transfer of ESTs.  S ince the paper's focus 
was on factors affecting the transfer of ESTs, it should have explored the promotion of EST transfer.  
Regarding the distinction between readily 'copiable' and non -easily 'copiable' technologies, he said 
although the degree of 'copia bility' differed between countries based on differing capacities, this was a 
useful analytical tool.  He agreed with paragraph 29 that touched on issues related to the compulsory 
licensing of different types of technologies.  In the case of anti -competitiv e practices or if access to 
technologies was not being provided in a reasonable period by IPR owners, it was clear such technologies 
should be available through compulsory licensing.  However, he asked whether Articles 31 and 40 of the 
TRIPs Agreement were  sufficient for access to, and transfer of ESTs required to meet MEA obligations.  
As noted by India, some elements of Article 31 of the TRIPs Agreement were considered to be possible 
impediments to the transfer of ESTs.  The concept of " ex ante  licensing and ex post  compensation" 
should be studied to promote the efficient transfer of ESTs that replaced restricted technologies under 
MEAs which were not accessible even on reasonable commercial terms.  For non -easily 'copiable' 
technologies, arrangements to c omplement the existing compulsory licensing regime should be devised 
for securing access to ESTs.  He noted the importance of striking a balance between rights and 
obligations of IPR holders and users, and between the need to promote inventions and prevent  abuse of 
IPRs for the promotion of access to and transfer of ESTs.  
 
48. The representative of Brazil  recalled the request (reproduced in WT/CTE/W/18) by the 
Conference of the Parties to the Biodiversity Convention Secretariat to its  Secretariat to liaise with and 
invite the WTO Secretariat to provide input in the preparation of a paper that identified the synergies 
and relationship between the objectives of the Biodiversity Convention and the TRIPs  Agreement.  The 
CTE's decision to d erestrict WT/CTE/W/8 and the Report of the CTE meeting at which this document 
had been discussed could be the basis for a dialogue between the WTO and the Biodiversity Convention 
Secretariats.  Discussion on this Item would result in more substantive input s to the Biodiversity 
Secretariat to assist in preparing its paper.  Brazil hoped the dialogue with the Biodiversity Convention 
could serve as a model for cooperation between the WTO and MEAs.  In this regard, he supported 
Argentina's proposal in June 1995  to identify possible areas of cooperation between the TRIPs Agreement 
and MEAs which contained IPR -related obligations.  The implementation of IPR -related obligations in 
MEAs should be notified to the TRIPs Agreement under Articles 63.1 and 63.2, which wo uld be a 
substantive input to the debate on the synergies between the TRIPs Agreement and relevant MEAs.   
 
49. Referring to protection of traditional knowledge, he noted that Articles 8(j) and 15 of the 
Biodiversity Convention and n egotiations on "farmer rights" in the FAO Global System for Plant Genetic 
Resources might develop in a way in which accommodation to TRIPs obligations might be sought through 
the built -in review system in Article 27.3 of the TRIPs Agreement.  He quoted fro m a Biodiversity 
Secretariat document (E/CN.17/IPF/1996/9) to the Second Session of the CSD Intergovernmental Panel 
on Forests (IPF) on Traditional forest -related knowledge , which stated:   "one way to forge effective links 
with local communities could be through the development of sui generis  systems to protect indigenous 
and local communities and ensure benefit -sharing from the wider use and application of their knowledge 
about forest use and management, as well as of biogenetic resources conserved on the ir lands and 
territories.  Adequate and effective protection and benefit -sharing mechanisms would inevitably require 
a shift from economic or ecologically determined legal and political frameworks to rights -driven systems.  
Adopting such a course would, ho wever, enable commitments made by countries under human rights 
conventions, covenants and agreements to be harmonized at the national level with international 
commitments on environment, development and trade.  It should also enable the provisions of the 
Convention on Biological Diversity to generate options for stimulating the equitable use and application          WT/CTE/M/8  
         Page  19 
 
of the traditional knowledge, innovations and practices of forest -dwellers."  This would be further 
examined at the next IPF session when a "report for substantive discussion [...] contain[ing] well -defined 
proposals for action, including an exploration of the need for and feasibility of mechanisms in the field of 
traditional forest -related knowledge and forest management practices, and its relationship t o biological 
diversity, that can be recognized, protected and compensated for" should be produced.  Relevant issues 
were being dealt with in the context of the Biodiversity Convention and the CSD, in light of the General 
Assembly's special session to revie w Agenda 21 implementation in 1997. Recalling Chapters 26 and 34 
of Agenda 21 which addressed issues related to traditional knowledge and technology transfer, he said the 
CTE should consider contributing to discussions held at the CSD and the Conference of  the Parties of 
relevant MEAs.  As a recommendation to Ministers, Brazil would like this issue to be given full 
consideration in future WTO activities, particularly if joint sessions of the CTE and the TRIPs Council 
were to be convened after Singapore.  Co ncerning the conclusions in WT/CTE/W/22 related to the 
consequences of IPR protection to access to, and transfer of ESTs not in the public domain, he said they 
were based on preliminary empirical evidence and were speculative.  Further study was needed on 
availability of financial resources, the role of governments in facilitating access to technology, and lack of 
capacity to absorb advanced technologies as an impediment for their use.  He recalled Article 67 of the 
TRIPs  Agreement contained commitments on technical cooperation which required developed 
countries to provide, on request and on mutually -agreed terms, technical and financial cooperation for 
developing countries.  Capacity -building was fundamental so the recipient could identify and have access 
to technology most suitable to its needs.  The TRIPs Council should monitor implementation of this 
obligation, specifically for ESTs.  Brazil welcomed India's contribution to addressing problems posed by 
the implementation of the TRIPs Agreement in relation  to access to, and transfer of ESTs.  
 
50. The representative of Norway  said issues related to the TRIPs Agreement illustrated how trade 
issues interlinked with other important areas, such as conservation and sustainable use of genetic 
resources.  She noted that the implementation of the TRIPs Agreement could have implication s for the 
Biodiversity Convention and vice versa.  Links between the Biodiversity Convention and the TRIPs 
Agreement concerned protection and transfer of, and access to technology subject to IPRs.  Article 16.5 
of the Biodiversity Convention stated Parties  should cooperate, subject to national and international law, 
to ensure IPRs were supportive of, and did not run counter to the Convention's objectives; Article 8(j) 
stated Parties should maintain knowledge, innovations and practices of indigenous and loca l communities 
and encourage the equitable sharing of benefits which arose therefrom.  The latter task was influenced 
by how IPR -systems would be developed and implemented.  She recalled Resolution 3 of the Nairobi 
Final Act, which had concluded the Biodive rsity Convention's negotiation, recognized the need to seek 
solutions to outstanding matters including the question of farmers' rights, which was linked to the 
renegotiation of the International Undertaking on Plant Genetic Resources for Food and Agricultu re, a 
process which dealt with IPR -related issues.  The CTE's challenge was to give guidance to prevent the 
objectives of the TRIPs Agreement and the Biodiversity Convention from being undermined.  IPR 
regimes should be developed in a way that was supporti ve of the Biodiversity Convention's objectives.  
This related in particular to the implementation of the sui generis  principle.  Benefits arising from 
informal knowledge, innovations and practices of indigenous and local communities should not be 
derestric ted.  An important element was how to develop adequate and effective sui generis  systems 
which did not undermine the UPOV Convention regarding rights of farmers to save seeds from one 
growing season to another.  She felt the CTE and the WTO Secretariat sho uld respond positively to the 
request from the Parties to the Biodiversity Convention to cooperate with the WTO Secretariat in the 
preparation of a paper on the relationship between the objectives of the Convention and the TRIPs 
Agreement.  Members should encourage meetings of experts on the Convention to support coordination 
in capitals, which would encourage mutually supportive interpretations of the TRIPs Agreement and the 
Biodiversity Convention, acceptable to members of both instruments.  
 
51. The representative of Japan  said environmental protection and IPR protection were basically 
compatible; the latter led to technical innovation which contributed to the former.  Both issues were new 
fields and Japan was prepared to fully consi der developing countries' views.  Experience in implementing 
the TRIPs Agreement and the Biodiversity Convention would permit analysis based on empirical data.  WT/CTE/M/8  
Page 20 
 
At this stage, a cautious approach should be taken concerning the relationship between the two 
agreements.  
 
52. The representative of the United States  said the development of technology, which was one of 
the principle aims of the TRIPs Agreement, must precede its transfer.  Paragraph 5 of WT/CTE/W/22 
correctly observed IP was  only one of the factors that determined whether technology transfer took place.  
Paragraphs 5 and 21 accurately noted effective IP protection facilitated technology transfer by improving 
the willingness of the IP owner to place products on the market base d on the IP, to share technological 
information and know -how, and to provide FDI related to technology transfer.  Paragraphs 21 -29 noted 
several factors that could affect technology transfer, including the identity of the participants and whether 
the techn ology was susceptible to easy misappropriation.  She addressed a few issues that were not 
completely or accurately addressed in the paper.  A comprehensive TRIPs -based IP regime was essential 
to technological development, which fostered technology transfer .  While WT/CTE/W/22 focused 
primarily on the value of protecting patents and trade secrets, the analysis was also valid for other IP 
forms, such as copyright protection for computer software and layout designs for integrated circuits.  On 
paragraph 28, th e United States did not agree with the idea that the TRIPs Agreement was unlikely to be 
important where technology was not transferred, but was embodied in a product that was sold.  Many 
entities would be reluctant to sell products that might be reverse en gineered in a market that did not 
provide effective IP protection.  In categorizing the types of technology transfer, WT/CTE/W/22 failed 
to note that a third party might exploit technology without the voluntary participation of its owner, but 
such efforts were inefficient and resulted in lower quality or even harmful products.  WT/CTE/W/22 
incorrectly noted higher IPR standards would implicitly lead to higher prices for some technology.  This 
was not the case for technology that was subject to IPRs.  She re called technology might not have been 
created at all without the incentives offered by effective IP systems, and improved products or processes, 
developed due to these incentives, might be more cost effective than predecessors, e.g. new 
pharmaceuticals mig ht be cheaper than earlier therapies such as surgery.  
 
53. The representative of Canada  said an examination of the relationship between IP and WTO 
rules was necessary.  IPRs were concerned with the right to information.  An IPR had t wo aspects:  a 
right to prevent the relevant information's unauthorized use and the right to authorize its use via licensing 
or assignment.  Every IP law was a special regime of rights with respect to an information category which 
was authoritatively defin ed, for example, by the statutory criteria determining a work's eligibility for 
copyright protection.  IPRs ensured publication of new knowledge, provided R&D returns and provided 
an incentive for technological diffusion.  IPRs meant copyright and related rights, trademark rights, 
patent rights, rights in layout designs of semiconductor integrated circuits, trade secret rights, plant 
breeders' rights, rights in geographical indications and industrial design rights.  Most of these recognized 
some form of inn ovation and granted the innovator the right to prevent unauthorized persons from 
exploiting the information, usually for a set period.  IPRs were constructed on national laws and bilateral 
and multilateral agreements, with almost every country having some form of IPR protection.   
 
54. The CTE should determine whether IPRs or other instruments were an effective means of 
encouraging biodiversity conservation and the fair and equitable use of genetic resources.  Rather than 
being an obs tacle to environmental protection, the TRIPs Agreement provided an incentive to EST 
development.  Effective IPR systems encouraged innovation by ensuring adequate protection for the 
innovator and generally supported access to, and transfer of technology.  Where there was considerable 
demand for ESTs, the competition to improve know -how and products would compel innovation.  
Other factors were cited more often than IPRs as crucial in the acquisition of technologies, including a 
suitable investment environmen t, availability of natural resources and skilled labour, availability of 
financing and domestic technological capacities in the customer country.  An IPR regime in any country 
enhanced the willingness of a technology supplier to transfer it.  Canada suppor ted efforts in the WTO 
and WIPO to assist developing countries to develop effective IPR regimes.  Information sharing on IPR 
practices, technology transfer and capacity -building should be encouraged.  An important issue was how 
technology that might have a dverse environmental effects should be treated under IPR regimes.  Article 
27.2 of the TRIPs  Agreement permitted the exclusion from patentability inventions which could be 
prejudicial to the environment.  Canada questioned the need for further provisions t o the TRIPs          WT/CTE/M/8  
         Page  21 
 
Agreement to deal with environmentally -unfriendly inventions.  While the granting of a patent for an 
invention recognized the patent holder's right to exclude third parties from manufacturing and selling it, 
it did not guarantee a permit for ma rketing by the patent holder;  national health, safety and 
environmental agreements were sufficient protection from environmentally -unfriendly inventions.  
Canada felt the Biodiversity Convention was not inconsistent with the TRIPs Agreement.  Referring to  
the request from the Biodiversity Convention to the WTO Secretariat to assist in the preparation of a 
paper on the relationship between the objectives of the Biodiversity Convention and the TRIPs 
Agreement, he said this work should be undertaken to better  define the role of IPRs, if any, with respect 
to the environment.  The Biodiversity Convention was also studying the impact of IPR systems on the 
conservation and sustainable use of biodiversity.  These studies would help determine the extent, if any, 
IPR systems obstructed EST transfer and biodiversity preservation.  Any conclusions should be 
developed by the Biodiversity Convention, the WTO and WIPO.   
 
55. Traditional ecological knowledge was relevant to conserving forest ecosyste ms.  In Canada, 
several initiatives related to traditional forest knowledge and practices, measures taken to protect them 
and ways to share in their benefits were underway.  Priority areas for action were:  the identification of 
principles, guidelines and mechanisms to develop systems like traditional resource rights;  the provision 
of advice on the acquisition, evaluation, and analysis of traditional technologies (the storage, retrieval, and 
dissemination of information;  identification of stakeholders, us ers and beneficiaries);  development of 
new approaches to resource management and benefit sharing (such as co -management with government 
and the private sector;  community forests;  watershed protection, remediation and restoration;  model 
forests, includi ng international cooperation through establishment of aboriginal networks;  conservation 
and protection measures).  Of importance also were sources of funding for indigenous and local 
communities to finance forest and biodiversity conservation efforts, for  studies and wider application of 
traditional knowledge, including education and training, and to determine which traditional knowledge 
was reflected in current policies, regulations and legislation.  The use and protection of traditional 
knowledge was rel ated to a range of issues, for example land tenure.  Application of IPRs to plant genetic 
material had also been raised in the Biodiversity Convention and FAO.  Canada felt that unrestricted 
and unpaid access to plant genetic resources for food and agricul ture needed to be maintained and was 
to the advantage of all countries and that an open exchange of such genetic material led to better research, 
improved knowledge, more productive crop cultivars and, more and better food.  Free movement of 
plant genetic resources for research and breeding facilitated gene conservation, including the 
improvement of crop gene banks.  Terms of access to samples of these genetic resources had to be 
negotiated by governments at the FAO Commission on Genetic Resources for Food and Agriculture, in 
the context of revising the International Undertaking of Plant Genetic Resources.  However, the 
commercial exchange of plant products was best supported by IPRs as agreed in the WTO, WIPO and 
UPOV.  Canada felt the TRIPs Agreement enhan ced environmental protection.  Feasible ways in which 
benefits could be shared were important, without assuming new IPRs were necessarily the best solution.  
Joint work of the Secretariats of the Biodiversity Convention and the WTO would help define these 
issues further.  
 
56. The representative of the European Communities  said, given the complexity of the issue and the 
lack of experience in the implementation of the TRIPs Agreement and the Biodiversity Convention, it 
was understandabl e that a comprehensive analysis of all TRIPs -related issues had not yet been achieved.  
Adequate IPR protection should be considered as supporting environmental protection and as necessary 
to promote ESTs, without which it was not possible to meet the chal lenge of rapidly generating 
technologies for sustainable development and to achieve their transfer on a large scale.  Without 
adequate rules, EST transfer would be impeded by the fear of piracy.  Correct and timely 
implementation of the TRIPs Agreement was  crucial.  However, the TRIPs Agreement did not prevent 
the control of potentially detrimental effects of inventions on the environment.  Certain provisions of the 
TRIPs Agreement took into account environmental concerns and provided a certain flexibility.   Article 
27 allowed Members to exclude, in certain cases, technologies from patentability, and specifically 
mentioned the environment.  Interlinkages between the TRIPs Agreement and the Biodiversity 
Convention deserved attention to ensure their mutual sup portiveness and effective implementation.  The 
achievement of the MEA objectives, such as the Biodiversity Convention, should not conflict with effective WT/CTE/M/8  
Page 22 
 
IPR protection.  The EC felt effective IPR protection in relation to access and transfer of technology  was 
achievable.  One of the means for ensuring technology transfer was financial assistance, e.g. through the 
Global Environment Facility.  The EC recalled its suggestion to encourage cooperation between the 
Secretariats of the WTO and the Biodiversity Co nvention through regular exchange of information.  He 
welcomed Decision II/12 of the Parties to the Biodiversity Convention to liaise with the WTO in the 
preparation of its paper on the relationship between the objectives of the two agreements.  He said th ere 
was no contradiction between effective IPR protection and the pursuit of environmental policies.  The 
EC encouraged further examination of this Item in a cooperative spirit, which should be reflected in the 
Report in the context of a balanced package.   
 
57. The representative of India  recognized technology must exist in order for it to be transferred.  
He agreed the TRIPs Agreement provided appropriate incentives for technological development.  
However, India was not convinced th e current TRIPs Agreement necessarily promoted technology 
transfer in areas of environmental concern.  Concerning the US comment that no problems existed 
between sustainable development and the TRIPs Agreement, he said this had been identified as an issue 
which needed to be addressed.  Although India's non -paper was not a proposal, it examined possible 
solutions to the concerns of many developing countries in this area.   
 
58. The Chairman  said informal consultations would be conducte d on the issue of derestriction of 
documentation in the context of the request from the Parties to the Biodiversity Convention.  
 
Other Items  
 
Item 1 :  The relationship between the provisions of the multilateral trading 
system and trade measures for environmental purposes, including those 
pursuant to multilateral environmental agreements  
 
59. The representative of Japan  recalled the  guideline approach which his delegation had proposed.  
Although he agreed Items 6 and 8 were important for developing countries, the worst result would be if 
there were no substantial results on the core issues under Items 1, 3 and 5, and only general com ments 
on other Items.  Although the EC non -paper contributed to the discussion, it was too close to a blank 
cheque approach.  Nevertheless, it would not be constructive to do nothing under this Item.  Japan 
would have to explore further whether it was best  to have an ex post  or ex ante  approach.   
 
60. The representative of India  said there should not be any value judgements on which Item was 
the most important.  
 
Item 3(b) : The relationship between the provisions of the multilateral t rading system and 
requirements for environmental purposes relating to products, including standards and 
technical regulations, packaging, labelling and recycling   
 
61. The representative of the United States  introduced her delegation 's proposal on transparency and 
eco-labelling (WT/CTE/W/27), which she requested be derestricted.  At the last CTE meeting, her 
delegation had noted divergent views on the interpretation of the TBT  Agreement vis -a-vis eco -labelling.  
Nevertheless, there wa s useful work to be done, which would not prejudice any delegation's views of the 
coverage of the TBT Agreement.  As such, the US proposed the CTE/CTBT determine the adequacy 
of the TBT Agreement's transparency requirements with respect to eco -labelling.  As a starting point, the 
paper set out a framework of critical points in the creation and implementation of eco -labelling 
programmes and proposed an exchange of views on the extent to which each of these points was covered 
by the TBT Agreement.  She looked  forward to hearing other delegations' views.  
 
62. The representative of Canada  commented on discussion of his delegation's proposal 
(WT/CTE/W/21), which had been derestricted upon Canada's request at the CTBT meeting of 
1 March.  In formation was needed on work in other fora and equivalency and mutual recognition.  He 
presented a paper prepared by the Canadian Environmental Choice programme.  Referring to concerns          WT/CTE/M/8  
         Page  23 
 
raised regarding the ISO as the possible source for multilateral guidel ines for unincorporated PPMs, he 
recognized the need for intergovernmental review of non -governmental fora's work on developing 
guidelines.  In the context of the pre -conference text for UNCTAD IX, Canada would be proposing the 
following:  "a meeting of tr ade policy and eco -labelling experts should be held to discuss the work 
underway in other relevant governmental and non -governmental organizations on the issue of multilateral 
guidelines for eco -labelling programmes with a view to taking into account the i nterests of all parties, 
including the developing countries and countries with economies in transition.  On the basis of that 
meeting, it might be determined by UNCTAD member countries that specific further work was required 
on this issue."   He said the U S proposal contributed to work on transparency of eco -labelling.  Given 
the large degree of consensus in the CTE/CTBT in favour of increased transparency, discussion should 
continue in joint meetings with the CTBT.  He felt that the May stocktaking would h elp define possible 
recommendations on this issue in the context of a balanced package.  
 
63. The representative of Japan  said his delegation would study the US proposal further.  
 
64. The representative of Argentina , commenting on the US proposal, said it would be useful to 
identify critical stages in the development of eco -labelling criteria to focus work on those separate stages.  
However, there were issues other than transparency which should be examined.  As such, Canada's 
proposal for UNCTAD IX was appropriate.    
 
65. The representative of Switzerland  said the US proposal wa s a useful contribution.  He felt this 
issue was eligible to be part of the recommendations to Ministers.  Transparency contributed to 
preventing trade disputes concerning not only eco -labelling but all labelling schemes and should be 
encouraged.  Thus, he  welcomed the US proposal for further work on transparency of eco -labelling and 
would comment on this paper at a later stage.  
 
66. It was agreed  to derestrict the proposal of the United States (WT/CTE/W/27).  