- Date submitted: 1 Nov 2011
- Stakeholder type: United Nations & Other IGOs
- Name: World Trade Organization (WTO)
- Submission Document: Download
World Trade Organization
The World Trade Organization (WTO) is the international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible, with a level playing field for all its Members. The WTO seeks to place developing countries' needs and interests at the heart of its work programme. Sustainable development is an objective of the WTO (as reflected in the Preamble of the Marrakesh Agreement Establishing the WTO).
The United Nations Conference on Sustainable Development (commonly known as Rio+20)is taking place in Brazil from 4 to 6 June 2012. The objective of the Conference is to secure renewed political commitment for sustainable development, assess progress to date and remaining gaps in the implementation of the outcomes of the major summits on sustainable development, and address new and emerging challenges.
The Rio+20 Conference will have two themes: a green economy in the context of sustainable development and poverty eradication; and the institutional framework for sustainable development.
The first United Nations Conference on Environment and Development (UNCED) was held at Rio de Janiero (Rio) in 1992 and adopted a set of Principles as laid out in the Rio Declaration on Environment and Development (Rio Declaration), together with a comprehensive plan of action, Agenda 21, to be implemented globally, nationally and locally.
The World Summit on Sustainable Development (WSSD) was held at Johannesburg in 2002; it renewed the global commitment to sustainable development and agreed a Plan of Implementation to build on the achievements of the previous ten years and expedite the realization of the remaining Rio goals.
This document has been prepared under the WTO Secretariat's own responsibility and without prejudice to the positions of Members and to their rights and obligations under the WTO.
HARNESSING TRADE FOR
SUSTAINABLE DEVELOPMENT AND GREEN ECONOMY1
1 This document has been prepared under the WTO Secretariat's own responsibility and without prejudice to the positions of Members and to their rights and obligations under the WTO.
International trade is a key component of sustainable development. This was recognized at the United Nations Conference on Environment and Development at Rio de Janeiro in 1992 and at the World Summit on Sustainable Development at Johannesburg in 2002.
While the world has changed in fundamental ways over the last two decades, and faces challenges both old and new, furthering mutual supportiveness between sustainable development and trade remains vital.
There were important achievements in the multilateral trade area with implications for the sustainable development agenda. The World Trade Organization (WTO) came into existence with new agreements and a wider coverage of trade policies and measures, an expanded membership, and an emphasis on sustainable development.
The WTO offers a powerful supporting framework for sustainable development and green economy. It provides an enabling environment through its objectives, institutions and monitoring of potential trade protectionism, enforcement mechanism, toolbox of rules, and growing case law in the environment area.
The WTO rules seek to achieve a crucial balance: on the one hand supporting the right of Members to take measures to advance legitimate goals such as protection of the environment; and, on the other, ensuring that such measures are not applied arbitrarily and are not disguised protectionism.
Sustainable development is an objective of the Doha Development Round. The negotiations can help remove environmentally-harmful trade distortionary measures, promote greater access to environmental goods and services at cheaper cost, and further enhance the mutual supportiveness of trade and environment.
Global leaders will reconvene at Rio de Janeiro in 2012 to consider progress made on sustainable development, assess remaining challenges, and reset the world on a path of sustainable development, including through the efforts of countries to green their economies.
The WTO Secretariat is pleased to provide to the preparatory process for the Rio+20 Conference this contribution on harnessing trade for sustainable development and green economy.
II. PROPOSED KEY PRONOUNCEMENTS TO BE MADE BY THE RIO+20 CONFERENCE
The Rio+20 Conference is a crucial opportunity for the international community to reaffirm its shared commitment to an open international trading system, resisting trade protectionism, supporting the Doha Development Agenda, and facilitating developing countries' participation in the trading system.
In responding to new and remaining challenges, it is important to increase transparency on trade-related measures adopted for green economy goals and also to maximise support to developing countries as they adapt their economies to green challenges and opportunities. In both instances, countries can avail themselves of mechanisms and initiatives developed in the multilateral trading system of the WTO.
The Rio+20 Conference should affirm commitment to:
Ø promote an open and equitable rules-based multilateral trading system that is non-discriminatory and predictable and benefits all countries in the pursuit of sustainable development;
Ø ensure that measures with a trade impact taken for environmental purposes do not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade;
Ø utilize WTO mechanisms for monitoring and surveillance of national measures with trade impacts, including green economy measures, so as to enhance understanding and dialogue and avoid risk of trade tensions;
Ø promote an international trading system that takes account of the needs of developing countries, including by ensuring that trade capacity-building initiatives assist developing countries in capturing the benefits from trade in their transition to green economy; and
Ø support the successful conclusion of the Doha Development Round as a powerful contribution to the sustainable development vision.
III. A FRAMEWORK FOR ADVANCING SUSTAINABLE DEVELOPMENT
The multilateral trading system of the WTO supports Members in their efforts to realize the sustainable development and green economy vision and address environmental challenges.
The system of WTO rules seeks to achieve a crucial balance: on the one hand supporting the right of Members to take measures to advance legitimate goals such as protection of the environment; and, on the other, ensuring that such measures are not applied arbitrarily and are not disguised protectionism.
WTO's objectives, institutions, monitoring of trade policies and protectionist risks, enforcement mechanism, toolbox of rules, and growing jurisprudence in the environment area represent a crucial enabling framework.
The importance of a multilateral trading system that supports sustainable development is greater than ever. The multilateral trading system helps governments to open their economies in a system of global trade rules. For more than 60 years, governments have carefully built up this multilateral framework to ensure fairness and non-discrimination in trade relations. The system has done what it was intended to do - save governments from employing the sort of unilateral policies that brought about economic ruin in the Great Depression of the last century.
The WTO recognizes that more open trade is not and should not be an end in itself. It is tied to crucially important human values and welfare goals captured in the WTO's founding document, the Marrakesh Agreement Establishing the WTO. Among these goals are raising living standards, ensuring full employment, using the world's resources sustainably, and protecting the environment.
WTO Members thus established at the outset an explicit link between sustainable development and disciplined trade opening - in order to ensure market opening goes hand-in-hand with environmental and social objectives.
System of Rules
A stable and predictable system for international trade is beneficial for promoting investment, innovation and technological change - vital for sustainable development and the transition to green economy. In this regard, fundamental principles of non-discrimination and transparency - which underpin all WTO Agreements - offer a framework for ensuring predictability and fair implementation of measures that address environmental concerns.
On the development side, WTO rules include provisions giving special rights to developing countries. Such rights include measures to increase trading opportunities for developing countries and allowing certain flexibilities in their commitments.
On the environment side, WTO Agreements provide policy space for necessary trade-related measures to be adopted by Members for legitimate objectives such as the environment (see Box 1). In certain circumstances Members may be permitted to sidestep basic WTO rules. At the same time, the policy space is subject to conditions aimed at avoiding measures with hidden protectionist intent.
Institutions and Monitoring Mechanisms
The WTO is a repository for trade and trade-related policy information. WTO Members are committed to provide their trading partners with information on their trade and trade-related policies through periodic notifications. Many of these notifications may cover draft measures and requirements being considered under the banner of green economy. The transparency that notifications provide is central to WTO goals to: ensure as much certainty and predictability in trade as possible; monitor the implementation of Members' obligations; and enable Members to take action if measures result in negative trade consequences.
Indeed, Members routinely use regular bodies of the WTO to address concerns about measures that are being developed or considered. This opportunity allows for a multilateral review of measures at an early stage, before they get entrenched and become difficult to change. In many cases, this has effectively facilitated the resolution or diffusion of trade concerns that arise between Members, avoiding unnecessary recourse to formal dispute settlement proceedings.
In addition, the WTO is a platform for Members to exchange views on important issues relating to trade, to assess whether existing arrangements need to be revisited, and to analyse policy challenges facing the international community. Non-confrontational deliberation has helped WTO Members to explore, understand and influence environmental and developmental issues and concerns, and to ensure that measures adopted under the banner of green economy do not restrict trade unnecessarily.
As well, WTO Members have a platform, the Trade Policy Review Mechanism, to carry out periodic collective assessments of each individual Member's trade policies and practices, their consistency with the broad principles of non-discrimination and predictability that underlie the WTO, and their impact on the functioning of the multilateral trading system. These collective exercises achieve greater transparency in, and understanding of, Members' trade and trade-related policies, practices, and measures, including many that relate directly to green economy and sustainable development.
WTO institutions include committees dedicated respectively to trade and development and trade and environment, as well as committees dealing with different areas of non-tariff measures such as technical regulations, subsidies, intellectual property and government procurement. Services and agricultural sectors are also covered.
Enforcement Mechanism and WTO Jurisprudence
The WTO enables enforcement through a legally-binding dispute settlement mechanism and also WTO case law. The jurisprudence shows how integral environmental issues are to the system of trade rules. Since the entry into force of the WTO in 1995, the Dispute Settlement Body has dealt with a number of environment-related measures. Such measures sought to achieve a variety of policy objectives - from conservation of sea turtles from incidental capture in commercial fishing, to the protection of human health from risks posed by asbestos or used tyres.
The jurisprudence confirms that WTO rules allow addressing of environmental concerns and the rules provide for an appropriate balance between, on the one hand, the right of Members to take regulatory measures, including trade restrictions, to achieve legitimate policy objectives and, on the other, the rights of other Members under basic WTO disciplines.
Core Mission of Trade Opening
Greater trade openness leads to a more efficient allocation of natural resources. Trade stimulates growth and raises income levels which over time can help increase demand for improved environmental quality. Trade can also improve access to, and development of, green goods, services
and technologies needed to reduce pollution and energy use. The on-going Doha Round of trade negotiations would further reinforce the contribution of trade to sustainable development and green economy objectives.
Box 1: WTO Disciplines relevant to Environment
There is always the concern that certain measures taken to achieve environmental protection goals may, by their nature, restrict trade and thereby impact on the WTO rights of other Members. This is why exceptions such as GATT Article XX are important (GATT is the core WTO Agreement relating to trade in goods). GATT Article XX on General Exceptions lays out a number of specific instances in which Members' trade measures may be exempted from GATT rules that would otherwise have applied. The provision seeks, among other things, to ensure that environmental measures are not applied arbitrarily and are not used as disguised protectionism.
Rules such as the WTO Agreement on Technical Barriers to Trade (which deals with technical requirements) and the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (dealing with food safety and animal and plant health) providescope for WTO Members to put in place regulatory measures to protect the environment and advance green economy, while at the same time imposing disciplines to ensure such measures are not unnecessary restrictions on international trade.
The WTO Agreement on Subsidies and Countervailing Measures seeks to prevent Members from providing subsidies that distort international trade. Provided certain basic disciplines are respected, the Agreement leaves Members with policy space for inter alia supporting the deployment and diffusion of green technologies.
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provides a framework for applying the intellectual property system to promote access to and dissemination of green technologies, and provides policy space to promote the public interest in sectors of vital importance to socio-economic and technological development, as well as specific incentives for technology transfer and exclusions of environmentally-damaging technologies from IP protection. The framework specifically provides for measures to promote the public interest in sectors of importance to socio-economic development, directs the IP system to promote technological innovation and the transfer and dissemination of technology, provides for exclusions from patent protection on grounds of prejudice to the environment, and specifies possible exceptions from IP rights in the public interest.
The plurilateral WTO Agreement on Government Procurement aims at opening up procurement markets to international competition on a transparent and non-discriminatory basis. Under the Agreement Parties and their procuring entities may prepare, adopt or apply technical specifications aimed at promoting green procurement.
In the 2001 WTO Doha Ministerial Declaration, Ministers recognized that "?under WTO rules no country should be prevented from taking measures for the protection of human, animal or plant life or health, or of the environment at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, and are otherwise in accordance with the provisions of the WTO Agreements." (The language, which is drawn from GATT Article XX, can also be found in Principle 12 of the Rio Declaration: "Trade policy measures for environmental purposes should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade." It is present as well in Article 3.5 of the UN Framework Convention on Climate Change: "Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.")
IV. CONTRIBUTION OF TRADE TO SUSTAINABLE DEVELOPMENT
Proposed Rio+20 Message: Reaffirm commitment to promote an open and equitable rules-based multilateral trading system that is non-discriminatory and predictable and benefits all countries in the pursuit of sustainable development.
The contribution of trade to sustainable development is now well acknowledged and sustainable development is a goal of the WTO. The fundamental message remains that sustainable development and open trade go hand-in-hand and the multilateral trading system helps create the enabling environment for countries to realize the sustainable development and green economy vision.
Rio and Johannesburg
The contribution of trade to sustainable development was recognised at Rio in 1992 and Johannesburg in 2002.
Principle 12 of the Rio Declaration emphasized the importance of open trade and avoiding trade protectionism and Agenda 21 committed governments to promote an open, non-discriminatory and equitable multilateral trading system.
The Johannesburg Plan of Implementation reiterated key messages from Rio and urged support for a successful completion of the work programme contained in the WTO's 2001 Doha Ministerial Declaration.
Box 2: UN Pronouncements on Trade and Sustainable Development
"States should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation. Trade policy measures for environmental purposes should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade. Unilateral actions to deal with environmental challenges outside the jurisdiction of the importing country should be avoided. Environmental measures addressing transboundary or global environmental problems should, as far as possible, be based on an international consensus."
Rio Declaration (Principle 12)
"Governments should continue to strive to meet the following objectives: (a) To promote an open, non-discriminatory and equitable multilateral trading system that will enable all countries - in particular, the developing countries - to improve their economic structures and improve the standard of living of their populations through sustained economic development; (b) To improve access to markets for exports of developing countries;? (d) To promote and support policies, domestic and international, that make economic growth and environmental protection mutually supportive."
Agenda 21 (Chapter 2, paragraph 2.9)
"?This will require urgent action at all levels to: (a) Continue to promote open, equitable, rules-based, predictable and non-discriminatory multilateral trading and financial systems that benefit all countries in the pursuit of sustainable development. Support the successful completion of the work programme contained in the Doha Ministerial Declaration..."
Plan of Implementation of the 2002 World Summit on Sustainable Development (paragraph 47)
Sustainable Development in the Multilateral Trading System
As discussed, the objective of sustainable development is emphasized in the Marrakesh Agreement Establishing the WTO.
Ministers also pronounced on this topic in a separate 1994 Decision on Trade and Environment. They acknowledged the outcomes from Rio. They expressed the view that there should not be, nor need be, any policy contradiction between upholding and safeguarding an open, non-discriminatory and equitable multilateral trading system on the one hand, and acting for the protection of the environment and the promotion of sustainable development on the other. Ministers also decided to establish a WTO Committee on Trade and Environment with a role inter alia of identifying the relationship between trade measures and environmental measures, in order to promote sustainable development.
At the WTO's Fourth Ministerial Conference in Doha in 2001, Members strongly reaffirmed their commitment to the objective of sustainable development. In launching the Doha Development Agenda negotiations, Members also designated the Committee on Trade and Development and the Committee on Trade and Environment each to act as a forum to identify and debate developmental and environmental aspects of the negotiations, in order to help achieve the objective of having sustainable development appropriately reflected.
Box 3: WTO Pronouncements on Trade and Sustainable Development
"The Parties to this Agreement, Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development,"
Marrakesh Agreement Establishing the World Trade Organization (Preamble)
"We strongly reaffirm our commitment to the objective of sustainable development, as stated in the Preamble to the Marrakesh Agreement. We are convinced that the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of sustainable development can and must be mutually supportive."
Doha Ministerial Declaration (paragraph 6)
Trade and Growth
Trade openness leads to more efficient use of resources and stimulates growth and income levels, thus supporting conservation, sustainability and poverty eradication goals.
Trade promotes production efficiency via specialization, exploitation of economies of scale, technology transfer, and enhanced competition. Openness helps countries to compete by not only offering new opportunities for sales (i.e. exports), but also making available to producers the widest range of inputs at the highest quality and lowest prices (i.e. imports). While the link between trade, growth and sustainable development is clear, different studies present varying perspectives of the extent to which trade openness impacts growth.
While openness to trade exposes countries to developments in other economies, including the risk of trade and financial contagion, it also allows for faster recovery: an economy that is more open is more resilient because it is less constrained by the limits of domestic demand.
Trade plays a key role in achieving better environmental outcomes, in part because it serves as a channel for green technology transfer. Openness to trade provides access at lower cost to a greater variety of imported goods and services that embody environmentally-friendly technologies. It also increases the effective size of the markets for intermediate suppliers and final goods producers, raising the returns of innovation for those engaged in production networks involving green goods. The ability to market innovations globally makes it possible to advance specialisation and to engage in research-intensive production of green goods. Such potential benefits of more open trade highlight the importance of the current negotiations under the Doha Round, which inter alia aim to reduce barriers to trade in environmental goods and services.
Moreover, higher income levels associated with trade opening can increase the general public's demand for a cleaner environment. Increased incomes or wealth give populations greater opportunity to address all aspects of their well-being, including the desire for better environmental quality. In addition, higher demand for better environmental outcomes can provide incentives for firms to improve production technologies, adopt greener production methods, and develop greener products and services. For rising income to lead to environmental improvements, governments must respond to the public's demand with the appropriate policy framework.
Box 4: "Trade can be a friend, and not a foe, of conservation."
"?In a world without artificial economic borders, goods can come and go. Trade can take place freely. In that world, a country with an arid climate need not use its scarce water resources to grow water intensive crops that it can instead import. Because of trade, it can save its precious little water. Similarly, in that world, a country with limited access to the sea need not deplete its fish stock to feed its population. Because of trade, it can import fish for its food supply, and manage its own fisheries sustainably. Trade can allow for a more efficient allocation of all resources, including the natural. Contrary to the perception of some members of the public, it can be a friend, and not a foe, of conservation."
WTO Director-General Lamy speech to the 2005 WTO Symposium on Trade and Sustainable Development
Agenda 21 gave special emphasis to promoting an international trading system that takes account of the needs of developing countries. In this context, a fundamental and on-going aim of the WTO is to ensure developing country-Members are provided with the trade opportunities that will enhance their growth and development prospects, thereby assisting global aspirations for poverty eradication.
Over the years, trade openness has contributed considerably to enhancing developing countries' participation in the global economy. From 1990 to 2008, the volume of exports from developing countries grew considerably faster than exports from developed countries or the world as a whole, as did the share of developing countries' exports in the value of total world exports. Trade between developing countries, South-South trade, also saw an increase.
V. GREEN ECONOMY MEASURES AND GUARDING AGAINST TRADE PROTECTIONISM
Proposed Rio+20 Messages: Reaffirm commitment to ensure that measures with a trade impact taken for environmental purposes do not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.
Affirm commitment to utilize WTO mechanisms for monitoring and surveillance of national measures with trade impacts, including green economy measures, so as to enhance understanding and dialogue and avoid risk of trade tensions.
WTO rules give space for countries to pursue legitimate environmental objectives. At the same time, such space is disciplined by specific conditions aimed at ensuring measures are not applied arbitrarily and are not disguised protectionism. As well, the WTO provides Members a unique platform to monitor, explore, discuss, understand and influence green measures with trade impacts.
Principle 12 of the Rio Declaration expresses the international community's concern and resolve that trade policy measures for environmental purposes should not be a disguised restriction on international trade. Many countries are concerned that the transition to green economy may see an increase in the use of measures which may impact on trade.
The transition to a green economy requires the right enabling environment. There is no ?one-size-fits-all? prescription to create the appropriate policy environment to enable the transition to a green economy. The path taken by individual countries depends on their particular policies and institutional setting, level of development, resource endowments, and environmental challenges. Nonetheless, when designing and applying green economy measures, countries are faced with common considerations, including how to ensure these measures are cost-effective and promote new ways of addressing environmental problems through innovation.
Countries are using a wide range of measures to promote the transition to the green economy. Some countries have used taxes and tradable permit schemes to put a price on pollution or on the over-exploitation of natural resources. These instruments have helped to guide consumers and producers towards decisions that result in less pollution or waste, or slower resource depletion, and to provide firms with incentives to find innovative solutions to address environmental challenges.
In addition, countries have relied on environmental requirements to improve resource use and to reduce pollutants by setting technical specifications to improve energy efficiency or emissions performance, minimize waste, improve forestry management, or enhance Soil, wildlife, and natural habitat protection. Many countries have relied on government support as a means to foster innovation and the deployment of green technologies. Public procurement also is increasingly used by governments to promote environmental objectives.
Measures under the green economy banner are becoming more complex, as evidenced by measures adopted in developed and developing countries to foster a low carbon economy and to promote sustainable forestry management. More importantly, these internal measures may affect international trade, for example by segmenting markets or shielding local producers from international competition.
For these reasons, many have expressed concerns about the use of green economy to justify trade protectionism.
The rules and transparency mechanism of the multilateral trading system can make a key contribution to minimize the risk of tension and ensure that open trade continues to support on-going efforts to realize a green economy.
Green Economy Measures and WTO Rules
Broadly, environmental requirements aim to improve resource use and reduce pollutants by setting specifications for products and production methods in terms of environmental objectives such as: energy efficiency; emissions performance; waste minimization and recycling; forestry management; and Soil, wildlife and natural habitat protection. Countries often use environmental requirements because these instruments set specified environmental targets and therefore provide greater certainty about environmental outcomes.
The type of environmental requirement used depends on the desired environmental outcome, the level of governmental involvement and the availability of technological solutions to address specific problems, among other factors. There are countless examples of environmental requirements in both developed and developing countries in the form of product and production method-related specifications, voluntary and mandatory requirements, specific characteristics and performance-level requirements, related information labelling tools and conformity assessment procedures. Typically, environmental requirements are based on process and production methods, including life cycle analysis. New types of often voluntary initiatives have also emerged in response to consumers' considerations, such as food miles programmes and carbon footprint labelling schemes.
Environmental requirements may affect international trade especially when used as a means to shield domestic producers from international competition, or when they are discriminatory. As developed and developing countries continue to adopt measures to facilitate their transition to a green economy, environmental requirements will become increasingly significant determinants of access to foreign markets. This raises concerns about the possible trade impact of these measures due to design, insufficient transparency, or issues related to harmonization or recognition.
At the WTO, the key WTO instrument governing environmental regulations, standards and conformity assessment procedures is the Agreement on Technical Barriers to Trade (TBT Agreement). The TBT Agreement aims to balance concerns related to the trade impact of environmental and other requirements against the wider public policy concerns served by these requirements. At the same time, the Agreement sets out rules to ensure such measures are non-discriminatory and do not create unnecessary obstacles to international trade. As well, the Agreement urges Members to use international standards as a basis for their own regulations and standards, in recognition of the fact that environmental requirements may create trade barriers when they differ from country to country.
Price and Market Mechanisms
Along with technical requirements, countries increasingly are using, or contemplating the use of, price and market mechanisms such as taxes and tradable permits to reduce pollution, waste, and resource depletion as part of policy efforts to foster a green economy. Environmental taxes and tradable permits add to the market price of an economic activity the external cost that the activity imposes on society through environmental damages, thereby influencing the behaviour that causes the environmental damage as directly as possible. Thus, environmental taxes and tradable permits can
guide consumers and producers towards decisions that result in less pollution or waste, or slower resource depletion.
Environmental taxes comprise taxes levied directly on pollution or other environmentally harmful activities and taxes on the sale of goods associated with such externalities. Tradable permit schemes have been mostly used to address air pollution from emissions (such as sulphur dioxide, nitrogen oxides or greenhouse gases), but also exist in the areas of water management, fisheries conservation and agriculture nutrients.
The design features of environmental taxes and trading schemes have far-reaching implications for the cost to participants, the possible trade effects and the environmental effectiveness of the measure. The extent to which price and market mechanisms affect international trade depends, among other things, on the impact of these instruments on production costs and on the prevailing market structure.
The imposition at the domestic level of a price on the environmental damage can raise concerns related to the risk that polluting industries will relocate to countries with less stringent environmental regulations, in accordance with the "pollution haven hypothesis". To minimize this risk, ways to adjust the environmental cost at the border have been debated. However, such adjustments would need to avoid adverse impacts on international trade without unduly weakening the environmental benefits of environmental taxes and trading schemes.
Several WTO disciplines may come into play if a green tax or a trading scheme and/or their adjustments affect international trade. These may include key disciplines of the GATT and WTO Agreements relating to non-discrimination (i.e. Article I on most-favoured-nation treatment and Article III on national treatment), elimination of quantitative restrictions (Article XI) and disciplines on technical barriers to trade (discussed above). For example, the national treatment principle may be particularly relevant in cases where an environmental tax is applied differently to domestic and foreign producers; the most-favoured-nation principle may be relevant where an environmental tax is applied differently to producers from different exporting countries.
GATT Article XX on General Exceptions lays out a number of specific instances in which WTO Members may be exempted from GATT rules, subject to certain conditions being fulfilled.
Most governments use support programmes, along with environmental requirements and price and market mechanisms, as fundamental elements of the policy framework necessary to enable the transition to a green economy. Governments grant support to encourage a switch towards activities that cause less pollution, or to support the development and deployment of green technologies. Renewable energy stands out as an increasingly important focus of green government support programmes. Apart from renewable energies, green government support is also geared towards industrial pollution control, sustainable agriculture and forestry, water and Soil protection, efficient use of energy and natural resources, and waste management.
Environment-related government support can take several forms. For example, governments may provide financial assistance through non-repayable grants, preferential credit, and loan guarantees. They may provide preferential tax treatment, or adopt price support measures such as feed-in tariffs to secure preferential prices for environmentally sound practices and industries. Green support may be targeted at any stage of the production process, starting with support for research and development of green technologies, and extending all the way to support for firms' output and producers' incomes. In addition, governments often support consumer demand for environmental goods and services. Examples of government support programmes abound across developed and developing countries, and across sectors of economic activity.
Government support for the development and deployment of green goods and technologies may have an impact on the price and production of such goods. From an international trade perspective, such policies lower production costs, leading to lower product prices. In turn, lower prices may reduce exporting countries? access to the market of the subsidizing country, or may increase the exports of the subsidizing country. Moreover, some countries may offer support to domestic firms for the installation of more environmentally friendly technologies, thus enabling these firms to maintain international competitiveness. Unlike support linked to production, government support for consumption will not affect international trade provided that it does not distinguish between domestic and imported goods or services.
The key WTO instrument governing subsidies is the Agreement on Subsidies and Countervailing Measures (SCM). In addition, the WTO Agreement on Agriculture contains a category of permissible green subsidies, known as Green Box, which could allow countries to pursue green economy policies in the area of agriculture. The SCM Agreement aims at striking a balance between the concern that domestic industries should not be put at an unfair disadvantage by competition from goods that benefit from government subsidies, and the concern that countervailing measures to offset those subsidies should not themselves be obstacles to fair trade. The rules of the SCM Agreement define the concept of ?subsidy?, establish the conditions under which WTO Members may or may not employ subsidies, and regulate the remedies (countervailing duties) that may be taken against subsidized imports.
Green public procurement is increasingly used by governments to promote environmental policies, meaning that public authorities use their purchasing power actively to encourage the production and use of environmentally-friendly goods and services. As government procurement accounts for a large proportion of economic activity, in the order of 15-20% of GDP on average in both developed and developing economies, public entities that choose to adopt green procurement policies can make an important contribution to sustainable consumption and production.
The main WTO rules governing government procurement are laid down in the WTO Agreement on Government Procurement (GPA) which provides disciplines on non-discrimination and transparency in procurement of covered goods and services by designated governmental entities. Participation in the GPA, a plurilateral Agreement within the WTO framework that applies only to Parties that have accepted the Agreement, provides legal guarantees of access to the Parties' covered government procurement markets by the goods, services and suppliers of all Parties. The future revision of the text of the Agreement will explicitly state, for greater certainty, that Parties and their procuring entities may prepare, adopt or apply technical specifications to promote the conservation of natural resources or protect the environment. Furthermore, Parties may evaluate offers received based on environmental characteristics set out in notices or tender documentation.
Transparency, Monitoring and Surveillance Mechanisms of the WTO
Several WTO Agreements establish a requirement that Members inform each other about new or forthcoming trade-related measures, including Agreements addressing technical requirements, sanitary and phytosanitary measures, subsidies and agriculture. For example, the value of the WTO's transparency platform for the green economy is particularly evident under the TBT Agreement pursuant to which Members must "notify" or share information on any draft mandatory technical regulation and conformity assessment procedure that may have an impact on trade. Given the increasing complexity of environmental requirements, and their growing role as determinants of market access, the notification process is an important tool to help Members obtain information on measures taken by others under the green economy banner, before these measures result in negative trade consequences.
To illustrate the wide scope of the transparency exercise, between the establishment of the WTO in 1995 and mid-2011, approximately 13,500 notifications have been submitted to the TBT Committee by developing and developed country Members alike. Of the total number of notifications, approximately 18% were about measures related to the environment, in particular requirements on product characteristics and performance, conformity assessment procedures, labelling requirements, and requirements linked to bans. These measures are targeted at key areas of the green economy, including Soil, air, and water pollution abatement, conservation of wild fauna and flora, energy efficiency and conservation, waste reduction and management.
The WTO's contribution to transparency goes beyond the exchange of information. Full transparency also requires an understanding of what is being notified. This is where the WTO's unique system of "peer review" in committees and other bodies comes into play. These deliberations provide a transparency forum which helps Members avoid trade disputes.
Here again, the experience in the area of technical requirements is a good example of how this "deliberative" function of the WTO helps to ensure that requirements contemplated or introduced in support of the green economy do not create unnecessary obstacles to trade. Between 1995 and mid-2011, around one-fifth of the 317 specific trade concerns raised by WTO Members in the TBT Committee were about measures related to the environment. The most common concerns relate to whether the design or application of a particular measure creates an unnecessary barrier to trade, the need for more clarification about the legitimate objective of the measure, and the use of international standards. These concerns also focused on measures related to pollution, collection and recycling, eco-design, and packaging, among others.
WTO tools can be utilized also to monitor and survey national measures with trade impacts, including green economy, so as to enhance understanding and dialogue and avoid risk of trade tension. The utility of the WTO's surveillance tools were particularly evident in recent years. When the financial and economic crisis erupted in 2008, many worried that the kind of protectionism that triggered the Great Depression would rise again. Thanks in large measure to the multilateral trading system which provides both the foundation for countries to maintain their commitment to open trade and a platform to ensure transparency in trade policy developments, protectionist pressures have so far been largely held in check.
At the end of 2008, the WTO set up a system to monitor trade measures taken during the crisis by G-20 economies. This monitoring mechanism has proven to be a highly useful transparency tool and means to encourage continued political resolve to resist protectionism. For example, the most recent report (October 2011) indicates that during the 2008-09 global crisis, G-20 economies were for the most part able to resist protectionist pressures, but their collective commitment is being tested by
weaker economic growth, high unemployment and fiscal austerity. These monitoring mechanisms of WTO could be utilized to focus on green economy measures with trade impacts, so as to enhance understanding and dialogue and avoid risk of trade tensions.
VI. MAXIMISING THE BENEFITS OF THE MULTILATERAL TRADING SYSTEM FOR DEVELOPING COUNTRIES
Proposed Rio+20 Message: Reaffirm commitment to promote an international trading system that takes account of the needs of developing countries, including by ensuring that trade capacity-building initiatives assist developing countries in capturing the benefits from trade in their transition to green economy.
The WTO provides a framework for trade-related capacity-building in developing countries, through initiatives such as the Enhanced Integrated Framework and the Standards and Trade Development Facility. Through the over-arching Aid for Trade initiative, the WTO seeks to mobilize support for developing and Least-developed countries (LDCs) - so that they can overcome supply-side and trade-related infrastructure constraints and benefit from enhanced market access opportunities.
The Rio process confirmed that trade can be a powerful engine for economic growth, poverty reduction and sustainable development. But it also recognised that harnessing its power is often difficult for many developing countries. To deliver on the sustainable development vision, Agenda 21 called for an international trading system that takes account of the needs of developing countries.
It is widely acknowledged that market access opportunities alone will not be sufficient for some countries. Many developing countries do not have the capacity to take advantage of new market access opportunities.
In this regard, and consistent with Rio pronouncements, the WTO provides extensive trade-related technical assistance and capacity-building support to developing country Members. WTO is also a leading player in a range of trade-related international capacity-building initiatives.
Through this work, WTO connects with efforts by international organizations to help developing countries identify trade opportunities, including green export opportunities, and develop capacities in the production and export of related goods and services.
WTO membership has increased from 123 Members in 1995 to now include 153 Members, representing almost 90 per cent of global trade. Around two-thirds of WTO Members are developing countries.
Technical Assistance and Capacity-Building
Technical assistance and capacity-building, including training, are core elements of the development dimension of the multilateral trading system, as confirmed at WTO Ministerial Conferences in 2001 and 2005.
The WTO Secretariat has substantially enhanced its capacity to design and deliver an effective programme of capacity-building over the past decade, allowing Members to better understand their rights and obligations within the multilateral trading system, strengthen their institutional capacities to deal with all the challenges emerging from such obligations, and help them to derive significant benefits from the trading system. Between 2002 and 2009, the number of technical assistance activities delivered by the WTO Secretariat was between 450 and 500 per year.
Products delivered by the WTO include general technical assistance and training (e.g., e-Training courses, Geneva-based and regional trade policy courses), specialized and advanced technical assistance (e.g., Geneva-based as well as national and regional technical assistance activities) and academic support for training and capacity-building. In addition, the particular needs of LDCs are addressed through inter alia trainee and internship programmes, the WTO Reference Centres programme and the "Geneva Week" initiative, which supports those WTO Members and Observers that do not have representation in Geneva.
Activities frequently have trade and environment components, focusing on environmental requirements and market access, the WTO-MEA relationship, environmental goods and services, and fisheries subsidies. As well, the WTO regularly engages in outreach to developing countries through events of MEA secretariats.
The WTO's capacity-building is based on country needs and coherence with activities of other international organizations. Current concrete initiatives include Aid for Trade, the Enhanced Integrated Framework, and the Standards and Trade Development Facility.
Aid for Trade
The Aid for Trade initiative directly supports the Agenda 21 call for the integration of developing countries into the international trading system. The initiative was launched by Ministers at the 2005 WTO Ministerial Conference. It aims to help developing countries, particularly LDCs, overcome their supply-side and trade-related infrastructure constraints which restrict their ability to implement and benefit from WTO Agreements and expand their trade. The initiative has raised awareness about the support developing countries need to overcome the barriers constraining their ability to benefit from trade expansion.
The WTO's role in Aid for Trade is that of advocacy, analysis and debate, using its convening power and monitoring function to mobilize Aid for Trade financing, to highlight the needs of its Members and Observers, and to showcase effective implementation, including through regular reviews. In this function, the WTO works closely with a broad range of different actors, including developing countries and LDCs, regional organizations, multilateral development banks, bilateral donors, International Trade Center, OECD, and a broad range of UN agencies. The WTO's implementing role in Aid for Trade is through its technical assistance and capacity-building activity.
Aid for Trade implementation lies in the hands of developing countries, regional economic communities and their development partners. It is multi-faceted, encompassing a diverse range of delivery mechanisms and development partner organizations including, inter alia, bilateral donors, international financial institutions (including the World Bank Group and regional development banks), and multilateral agencies. No new mechanism was established to deliver Aid for Trade. Instead, the focus is on making existing mechanisms work better.
Aid for Trade flows reached US$40 billion in 2009 - a 60 per cent increase in real terms since 2005.
Box 5: Aid for Trade
"We need to listen to the development community and make the case why trade is important for economic growth. We can do a better job of explaining why Aid for Trade can support broader policy objectives like poverty alleviation, social welfare, food security, gender empowerment, climate change adaptation, energy generation and sustainable development. In so doing, we will be promoting deeper coherence within the initiative and with the broader international context.
Equally though, we must not lose sight of the fact that in making the case for Aid for Trade, we are really making the argument for the multilateral trading system. Aid for Trade is all about logging on to this world-wide trading system."
WTO Director-General Pascal Lamy closing remarks, 2011 Third Global Review of Aid for Trade
Enhanced Integrated Framework
The Enhanced Integrated Framework (EIF) under the global Aid for Trade framework supports Agenda 21 through its trade and development partnership, with countries in the driving seat on sustainable development.
The EIF is a programme that works to promote sustainable economic development in LDCs and recently graduated countries. Working in 47 countries in Africa, Asia and the Pacific, the EIF helps LDCs to build national institutional and technical capacity to trade on their own terms, contributing to lifting communities out of poverty. Within the framework of global Aid for Trade, EIF countries, in collaboration with development partners and international partner agencies (IMF, ITC, UNCTAD, UNDP, World Bank and the WTO, plus UNIDO), the private sector and civil society, are strengthening their institutional and supply-side capacity to create economic future prosperity for local people.
The EIF works through tools including the Diagnostic Trade Integration Study (DTIS) and Action Matrix of priority areas to address national supply-side blockages to trade, including issues around trade and the environment. To take forward these priorities, the EIF works on building local capacity and developing projects in support of the trade mainstreaming agenda. Putting in place the right trade foundations, the EIF supports countries in driving targeted projects on the ground focusing on results and impact that leads to more businesses, higher incomes and stronger livelihoods. All the while, taking into account issues on sustainable land management and an inclusive community approach, involving local farmers, traders and entrepreneurs, that respects the environment in line with Agenda 21.
Standards and Trade Development Facility
Improved sanitary and phytosanitary (SPS) capacity in developing countries supports sustainable economic growth, poverty reduction, food security and environmental protection. The Standards and Trade Development Facility (STDF) is a global partnership that supports developing countries in building their capacity to implement international SPS standards, guidelines and recommendations as a means to improve their human, animal and plant health status, and ability to gain and maintain access to markets.
The STDF's mandate is to: (i) increase awareness about the importance of SPS capacity-building, mobilize resources, strengthen collaboration, and identify and disseminate good practice; and (ii) provide support and funding for the development and implementation of projects that promote compliance with international SPS requirements. Some 40 per cent of the STDF's project resources are devoted to LDCs and other low income countries. The STDF was established in 2002 by the Food and Agriculture Organization of the United Nations (FAO), World Organisation for Animal Health (OIE), World Bank, World Health Organization (WHO) and the WTO. The Facility is committed to the Paris Principles on Aid Effectiveness and to achieving the Millennium Development Goals.
VII. DOHA DEVELOPMENT ROUND
Proposed Rio+20 Message: Affirm support for the successful conclusion of the Doha Development Round as a powerful contribution to the sustainable development vision.
Sustainable development permeates all aspects of the Round. There are trade and environment negotiations. Environmentally-harmful trade distortionary measures are being addressed. Other aspects of the negotiations, ranging across agriculture, industrial goods, services and trade facilitation also support the sustainable development and green economy vision. Other WTO work also bears upon sustainable development.
At Johannesburg, leaders recognized the need for action at all levels to support the successful completion of the work programme contained in the 2001 Doha Ministerial Declaration. While WTO Members presently are considering possible next steps in the Doha Development Round, potential gains for sustainable development remain clear.
The Doha Development Round and Sustainable Development
At the WTO's Fourth Ministerial Conference in Doha, Qatar, in 2001, Ministers recognized that international trade can play a major role in the promotion of economic development and the alleviation of poverty. Acknowledging that the majority of WTO Members are developing countries, they agreed to continue making positive efforts to ensure developing countries, and especially LDCs, secure a share in the growth of world trade commensurate with their development needs. Thus, in launching the Doha Development Round, they placed developing countries' needs and interests at the heart of the work programme.
As well, sustainable development is an explicit, overarching objective of the Round and Ministers established a specific mechanism (involving committees dealing with trade and development and trade and environment) to help ensure this objective is appropriately reflected in the Doha outcome.
In general terms, a successful outcome of the Doha Development Round will greatly support the sustainable development vision. Further tariff reductions and strengthening of the rules will help all Members reap the maximum gains from trade. A more level playing field and open markets will improve efficiency of resource use. As well, the Round addresses issues of concern to developing countries and also specific environmental and green economy objectives comprehensively, including through the removal of trade barriers and distortions and promotion of green goods and services.
The following paragraphs provide examples of areas of the Doha negotiations offering very real potential for ensuring that the WTO's trade liberalization mission and rules help to address environmental problems as well as advance development goals.
Trade and Environment
The trade and environment negotiations target three key areas: liberalization of environmental goods and services; negotiations on the relationship between multilateral environmental agreements (MEAs) and the WTO; and fisheries subsidies.
Environmental Goods and Services
A major focus of work has been on liberalizing trade in the goods and services that can benefit the environment - goods like solar panels and solar water heaters, hydropower turbines and equipment for biogas production; and services like environmental consulting or Soil conservation services and nature and landscape protection services. The elimination of tariff and non-tariff barriers to trade in these areas can facilitate access to products and services which directly impact on the protection of air, water and Soil, and natural resources conservation.
These negotiations could result in fewer and lower barriers to trade in environmental goods and services, thereby improving global market access to more efficient, diverse, and less expensive goods and services that can contribute to environmental objectives. Increasing access to, and use of environmental goods and services can yield a range of benefits including reducing air and water pollution, facilitating resource conservation and improving energy efficiency.
In addition, market opening in these sectors can be a powerful tool for economic development by generating economic growth and employment and enabling the diffusion of valuable skills and technology embedded in such goods and services. As well, international trade may facilitate the dissemination of environmentally-friendly technologies and know-how, thus contributing to environmental protection and sustainable development.
Box 6: Environmental Goods and Services
The Intergovernmental Panel on Climate Change (IPCC) has identified a range of mitigation and adaption technologies that can assist in the challenge of climate change. Many of these technologies involve products being discussed in the WTO trade and environment negotiations. Some examples include landfill liners for methane collection, wind hydropower turbines, solar water heaters, and tanks for the production of biogas. Lowering barriers to trade in these types of products will reduce their price and make them more accessible. Increased competition will foster technological innovation in areas related to protection of the environment and climate change.
WTO and Multilateral Environmental Agreements (MEAs)
As part of the trade and environment work, WTO Members are also negotiating ways to ensure a harmonious coexistence between WTO rules and specific trade obligations in various agreements that have been negotiated multilaterally to protect the environment. There are over 250 MEAs currently in force and around 20 include trade provisions (such as bans, licensing requirements, and notification, packaging or labelling requirements).
WTO Members have long recognized the need for coherence amongst international institutions in addressing global environmental challenges. While there has been no conflict between trade and environmental regimes - and the WTO's Appellate Body has repeatedly confirmed that WTO can take other bodies of international law into account when interpreting its own rules - the negotiations on the WTO-MEA relationship provide a unique opportunity for creating synergies between the trade and environment agendas at the international level. In this regard, WTO's work is directly relevant to Rio Principle 12 which inter alia expresses the preference of nations that environmental measures addressing transboundary or global environmental problems should, as far as possible, be based on international consensus.
Negotiations under the fisheries chapter of the Round demonstrate how the trade and environmental agendas can meet, with elimination of trade distortions contributing to natural resource conservation. In the negotiations, Members are aiming to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. The mandate reflects the increasing attention being paid in many international fora, including the WTO, to the grave problems of overcapacity and overfishing in today's modern fisheries fleets, and the role that subsidies could play in contributing to those problems. While the negotiations are on-going (for example, different Members have very different views as to whether, and if so which, subsidies in fact contribute to overcapacity and overfishing, and what sorts of disciplines should apply to different kinds of subsidies), multilateral disciplines could help ensure the sustainability of fish stocks so all countries, including fishing-dependent developing countries, can have long-term access to a reliable supply of fisheries resources.
Other Negotiating Areas
Agriculturehas traditionally been a highly protected sector in some countries. While agriculture makes a significant contribution to the economies of many countries, including a large number of developing countries, many of the world's agricultural producers are disadvantaged in the world trading environment because of high tariff barriers and competition from other producers that receive high levels of domestic or export-related support. Not only are efficient agricultural producers deprived of developmental benefits of trade, but over-production in certain parts of the world due to production-linked subsidies can have negative environmental effects. A reduction in protection and support can thus lead to important gains for both developed and developing country agricultural producers, including environmental benefits.
In the agriculture negotiations, Members are committed to achieve substantial cuts in tariff barriers and trade-distorting domestic support. They have also already agreed as part of the overall package to eliminate agricultural export subsidies. The negotiations could thus have a profound impact. They would lead to a more efficient allocation of global resources and production. They would create increased trade opportunities for developing countries with competitive agricultural sectors, and this could lead to important income gains for these countries. In addition, LDCs would enjoy significant improvements in market access for their agricultural products, in particular from the implementation of a duty-free, quota-free decision taken by Members in 2005.
As well, many existing and newly emerging forms of subsidies in the agriculture sector are potentially destructive of the environment, encouraging a faster pace of land conversion, loss of forests and loss of biological diversity. It is critical for sustainable development that as part of the agriculture negotiations, Members persevere in addressing these harmful subsidies.
Important market access opportunities can be expected for developing countries in the non-agricultural area. Trade in industrial products accounts for more than 90 per cent of world trade in goods and encompasses some key products of export interest to many developing countries. Thanks to previous rounds of trade negotiations, tariffs in developed countries on industrial products are today on average relatively low. However, this average can sometimes hide remaining high tariffs on products in which developing countries have a particular stake. Also, the reduction of non-tariff barriers (NTBs) that affect international trade has been considered important. In on-going
negotiations in the area of NTBs, countries are, among other things, considering ways of increasing transparency of such measures (for example by improving on existing notification procedures and finding ways of further enhancing the use of international standards). A reduction in both tariffs and unnecessary non-tariff barriers to industrial trade could provide important export opportunities for developing countries, thereby assisting their growth, poverty alleviation and sustainability ambitions.
Services have become the most dynamic segment of international trade and opening of services markets can provide many new opportunities to both developed and developing countries. The Doha mandate instructs that the services negotiations shall be conducted with a view to promoting the economic growth of all trading partners and the development of developing countries and LDCs. In the negotiations, developing countries have voiced their interests in several sectors and modes of supply, in particular cross-border supply and the temporary movement of professionals across borders. From an environmental perspective, services activities may have both negative and positive impacts. Examples of negative environmental externalities may include contamination arising from transportation or over-use of natural resources caused by mass tourism. On the other hand, various services activities aim to protect the environment and prevent or remedy pollution (treatment of wastewater, remediation of Soil, water and air, for instance).
The WTO's commitment to supporting the international community?s work on sustainable development and poverty reduction also takes the form of cutting distortive red tape. The aim of the trade facilitation negotiations is to lift the efficiency of transactions by expediting the movement, release and clearance of goods across borders. The negotiations could support the achievement of sustainable development and poverty reduction in several ways. The emphasis on simplifying procedures would allow for a better allocation of scarce resources and result in important efficiency gains. Governments would be able to dedicate more resources to the pursuit of other development goals, both in terms of manpower and with respect to their financial investments. There would also be a significant decrease in trade transaction costs per se. The work on trade facilitation is further expected to increase government revenue by enhancing transparency, reducing corruption and boosting legitimate trade.
Other Areas of WTO Work related to Sustainable Development
In addition to the specific negotiations launched at Doha in 2001, Ministers also mandated work under the Doha Development Agenda in other trade-related areas that bear upon sustainable development and green economy.
WTO Committee on Trade and Environment
With the Doha Development Agenda, sustainable development has become a standing item on the agenda of the WTO's Committee on Trade and Environment. The Committee has been looking at the subject by sector, in particular developments in the following areas of the negotiations: agriculture, market access for non-agricultural products, rules, services, fisheries subsidies and environmental goods and services. In addition, the Committee's discussions address a range of issues relevant to environmental requirements and market access, including environmental taxes and labelling, and sustainability aspects of trade in individual sectors such as forestry and energy.
Working Group on Trade and Transfer of Technology
In the global economy, technology and innovation have become important factors of production that help achieve economies of scale, better product quality, competitiveness and share in niche markets. No country can move up the development ladder without having built a sound technological base. Pursuant to a mandate contained in the Doha Ministerial Declaration, the WTO Working Group on Trade and Transfer of Technology is examining the relationship between trade and transfer of technology, while also considering any possible recommendations on steps that might be taken within the mandate of the WTO to increase flows of technology to developing countries. Considerable analytical work has been undertaken. Possible recommendations to increase flows of technology to developing countries that may come out of the work in the Working Group could have immense development potential, and thus help put these countries on the path to sustainable development.
Special and Differential Treatment
WTO Members have been undertaking a review of all special and differential treatment (S&D)provisions in the WTO Agreements with a view to making them more precise, operational and effective. For trade ? and trade liberalization ? to deliver economic growth and development, the constraints that prevent poorer countries from integrating into the international trading system must be addressed. While developing countries continue to negotiate S&D in different areas of the negotiations under the Doha Round, a positive outcome to the negotiations under the S&D Work Programme would play an important role in providing developing countries and LDCs with further flexibilities in their multilateral trade obligations - that will allow them a more development-oriented integration into the multilateral trading system and facilitate the attainment of their development objectives, including in the area of sustainable development.
Ministers in Doha recognized that the integration of LDCs into the multilateral trading system requires meaningful market access, support for the diversification of their production and export base, and trade-related technical assistance. Since the adoption of the Doha Development Agenda, the Sub-Committee on LDCs has been implementing a Work Programme for LDCs. The activities that are being carried out under this Work Programme are enhancing the understanding of Members on the trade and development challenges of the LDCs and are making a contribution towards achieving the goal of poverty alleviation and sustainable development in LDCs. One important aspect of the Sub-Committee's work is to regularly review the market access conditions of LDC exports. Greater market opening creates opportunities for increased trade and investment, bringing in technology, resources and other spill-over benefits which contribute to harnessing sustainable development in LDCs.
The main concerns of the small vulnerable economies (SVEs) relate to what they consider is their high vulnerability, concentration of exports in a few products, high transportation costs to reach their main markets, and a general lack of capacity. Accordingly, SVEs would like to receive treatment that is comparable to that which is given to the weaker and vulnerable Members of the WTO. A Work Programme on Small Economies was launched with a mandate provided in the Doha Ministerial Declaration, with the objective to "frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not to create a sub-category of WTO Members." The SVEs have made various proposals to the Doha negotiating groups and have also made proposals for decisions by the regular bodies of the WTO, including the General Council and the Committee on Subsidies and Countervailing Measures.
TRIPS and the Convention on Biological Diversity
The Doha Ministerial Declaration mandated work on the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD), to be guided by the public policy objectives and principles set out in TRIPS, and taking fully into account the development dimension. Work is taking place on proposed amendments to the TRIPS Agreement that would link the CBD principles of prior informed consent and equitable sharing of benefits to the patent provisions of the TRIPS Agreement, through a proposed mandatory disclosure mechanism.