Q: Many environmental advocacy organizations
feel the WTO's rules have put a straitjacket on efforts to protect
the environment by restrictions on harmful trade. What does your
study show?
A: As you know, WTO rules clearly permit
countries to put up trade barriers for environmental reasons. The
questions we tried to answer are: how widely are such sanctions
applied, for what products, and what are their effects? Of 4,917
products we examined in world trade, we found only 1,171 that do
not face any environmentally-related trade barriers (ETBs). The
3,746 other products - that do face barriers in at least one
importing country - accounted for 88% of world merchandise trade
(i.e. not including services) in 1999. You could say that the vast
majority of international trade consists of products potentially
affected by ETBs.
Q: That seems an awful lot.
A: We are not suggesting that 88% of products
traded internationally directly face such barriers. The value of
trade directly affected by ETBs, in fact, is US$ 679 billion - 13%
of world trade. Of the 3,746 products I mentioned, 86% of the value
of world exports bypasses these barriers. That means exporters
focus their shipments on markets free of restrictions. To look at
the situation from another perspective, a 1999 WTO study indicated
that of the 2,300 notifications of measures under the Technical
Barriers to Trade (TBT) Agreement, about 11% were environmentally
related.
Q: But are these really environmentally-related
measures? Developing countries have complained - some formally to
WTO - that some industrial nations are using environmental
protection to impose disguised protectionism.
A: We took a practical view. It does not really
matter for the exporter whether injury to the environment is truly
ascertained or whether a measure is protectionism in disguise. What
matters is whether traders can export.
Q: Then there is the question of how widely
such ETBs are applied - in just one country or across a wide
spectrum, for example.
A: We divided products into three categories:
products for which none of the 134 main importing countries of the
world has introduced an ETB; those for which at least one country
has imposed an ETB; and products for which at least 25% of world
imports in value are directly affected by ETBs (irrespective of the
number of importing countries applying such measures). This last
category we term "widely-affected products".
We found 44 products for which 90% or more of world trade was
directly affected by ETBs. These products accounted for
US$ 41 billion - about the size of all Finnish exports or half
the size of Ireland's. We found 258 products for which more than
half of world trade was subject to ETBs. Their combined trade value
was US$ 238 billion - 4% of world trade in 1999.
Q: Where were the ETBs found?
A: Peaks of ETB protection appeared in
particular for food items and for plants, bulbs and cut flowers.
For all these products, at least 90% of world trade was subject to
ETBs in 1999.
Q: And the most affected product?
A: Boneless bovine cuts - US$ 5.2 billion from
US$ 5.4 billion of international trade: a coverage ratio of 97%.
However, the peaks are not limited to agricultural products. Large
automobiles are the major non-agricultural product in our listing:
US$ 57 billion out of US$ 81 billion, an 81% ratio. Trucks, smaller
automobiles and motor vehicle parts appear prominently in other ETB
bands (leading the 70-80%, 50-60% and 10-20% bands of trade value
respectively).
Q: What are the other major products
affected?
A: We have listed 100 in all. The most
prominent are coniferous lumber, natural gas, footwear, medicines
and telephones.
Q: These products do not seem to fall into the
usual interpretation of environmentally sensitive products.
A: We needed to look at the whole range of
environmentally-related trade barriers, that is, all the reasons
that could be invoked - meaning meas-
ures introduced by an importing country to protect the health
and safety of wildlife, plants, animals and humans as well as the
environment generally - all of which are possible under WTO
rules.
The environment in its strictest sense accounts for a limited
part of the restrictive measures imposed. But it would not have
made much sense to limit ourselves to those, since exporting
countries are concerned about the whole range. What must be
underscored, though, is that protection of wildlife, although
concerning a limited number of affected products, is associated
with the highest degree of restrictiveness in the barriers imposed.
Eco-labelling affects up to 1,400 products, accounting for US$ 251
billion in trade.
We also needed to look at the whole spectrum of ETBs that could
be applied, not simply bans on imports: customs surcharges,
additional charges, internal taxes levied on imports - these are
known as para-tariff measures in UNCTAD; finance measures (advance
payment requirements, multiple exchange rates, transfer delays,
etc.), automatic licensing measures (automatic licence, prior
surveillance), quantity control measures (non-automatic licensing
including prior authorizations, quotas, prohibitions, export
restraint arrangements, enterprise specific restrictions);
monopolistic measures (single channel for imports, compulsory
national services); and technical measures (technical regulations,
pre-shipment inspection, special custom formal-ities, obligation to
return used products, obligation on recycling).
ETBs may fall into all these categories. Finance measures, for
instance, may refer to refundable deposits for sensitive products.
Quotas to protect the environment according to the Montreal
Protocol (to protect the ozone layer) would fall under quantity
control measures. In total, 115 measures for environmental reasons
potentially affect international trade; however only 43 measures
are effectively imposed by importing countries.
Q: Who is most affected by these ETBs?
A: The implications from our study are quite
clear: exporters from the 49 least developed countries (LDCs) are
significantly more exposed to ETBs than those from any other group.
Though only half of the LDC exports consist of products potentially
affected by ETBs, among these products some 40% are directly
affected, compared to less than 20% for developing, transition and
developed countries. These poorest countries of the poor may have
to face even tougher hurdles in the future as a result of growing
environmental concern worldwide. This is especially the case for
agricultural products that are among the most exported products by
LDCs.
Friedrich von Kirchbach and Mondher Mimouni of ITC carried
out the study for a chapter of the World Economic Forum's Global
Competitiveness Report with Peter Cornelius of the World Economic
Forum. For more information, contact F. von Kirchbach, Chief, ITC
Market Analysis Section, at vonkirchbach@intracen.org