Environment and the World Trade Organization (WTO) at Seattle: Issues and Concerns

Environment and the World Trade Organization (WTO) at Seattle: Issues and Concerns

Order Code RS20417
December 21, 1999
CRS Report for Congress
Received through the CRS Web
Environment and the World Trade Organization
(WTO) at Seattle: Issues and Concerns
(name redacted)
Senior Analyst in International Environmental Policy
Resources, Science, and Industry Division
Summary
As the United States prepared for the ministerial meeting of the World Trade
Organization (WTO) in Seattle, Washington, held November 30 - December 3, 1999,
environmental issues were once again a focus of attention. This meeting of the decision
making body of the WTO was expected to make decisions that would lead to another
round of negotiations on a wide variety of trade rules and related issues. Although the
United States continues to assert the necessity of pursuing the twin goals of free trade
and environmental protection and to argue that these need not be in conflict, controversy
remains over how the multilateral trading system should address the specifics of
environmental issues. Widespread demonstrations and events in Seattle by non-
governmental organizations (NGOs) across a wide spectrum of interests involved many
environmental NGOs. The environmental interest groups have expressed a variety of
concerns, from opposing the WTO altogether, to trying to assure inclusion of specific
environmental issues in the Seattle agenda and in subsequent negotiations. Opposition
to including environmental issues in WTO negotiations has also been strong, coming
from many business groups and developing countries, who argue that these concerns
should be addressed outside the WTO. While the demonstrations in Seattle received a
great deal of attention, the specifics of the environmental issues did not–either in
coverage of the demonstrations, or in the official discussions of the WTO ministerial
meetings. These meetings terminated without resolving whether or when a new round
of negotiations would ensue. How the WTO will deal with environmental issues in this
process in the future remains uncertain.
Background
The United States took a leading role in pressing for inclusion of environmental issues
in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) that
concluded in establishment of the WTO in 1994. Environmental advocacy groups in the
United States had mobilized to urge attention to environmental concerns, and to oppose
U.S. approval of an agreement that did not include them. Opposition to including
environmental concerns was also strong, coming from many business organizations, and
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from other nations, particularly developing countries, who feared that environmental goals
could result in “disguised protectionism” or a form of “eco-imperialism.”
In the final agreement that established the WTO, the preamble states the goal of
sustainable development, including seeking to protect and preserve the environment, and
there are limited measures in the agreement to address some processes such as dispute
resolution that are relevant to environmental concerns. However, the main issues of
concern to environmental interests were not addressed directly in the WTO agreement.
Instead, a Committee on Trade and Environment (CTE) was established within the WTO,
with a detailed work plan that included issues such as the relationship between provisions
of the multilateral trading system and trade measures for environmental purposes; issues
related to “processes and production methods” (PPMs--the extent to which it is legitimate
for an importing country to refuse to accept imports that involve unacceptable
environmental consequences during their production); eco-labeling issues; and others. (See
CRS Report 94-165, Trade and Environment: GATT and NAFTA.)
The CTE was designed to the be focal point for WTO discussion, analysis, and
negotiation of the environmental issues on its work plan. It has met several times each
year since its inception but failed to resolve or make substantive recommendations on any
of these issues. Those who expected some decisions on environmental issues within the
WTO express disappointment at the lack of progress in the CTE.
In the years since the WTO agreement, concerns have also been raised by
environmental groups about a number of trade disputes in which U.S. environmental laws
have been challenged, sometimes successfully. As U.S. trade legislation has been
considered, the issue of including environmental goals among U.S. negotiating objectives
has proven to be controversial, often linked to similar controversy over including labor
concerns. As Congress has considered legislation to provide U.S. negotiating authority
(“fast track” authority), a key question has been the extent to which environmental goals
would be explicitly articulated. In the trade bill that governed U.S. participation in the
Uruguay Round, culminating in 1994, environmental goals were not explicit. But
environmental interests had not begun the process of focusing on trade issues at the time
that trade bill was put together. However, when they did mobilize--toward the end of
those negotiations--they successfully influenced the U.S. position and succeeded in
assuring that environmental issues were addressed in a decision by the Trade Negotiating
Committee to establish the CTE.
Environmental Issues in Preparations for Seattle
As attention turned in 1999 to the Seattle Ministerial meeting, congressional hearings
were held that addressed the question of environmental issues related to that meeting.
Issues raised in these hearings have remained in the forefront of the concerns raised by
many environmental groups. While some environmental groups argue that the WTO rules
are so potentially problematic for the environment that no new negotiations should be
undertaken without a thorough review of environmental issues, others have focused on
priorities they would have liked to see at the Seattle meeting or in subsequent negotiations.
Testimony during the year from the National Wildlife Federation, reflecting concerns
voiced by a number of environmental organizations, recommended objectives for U.S.
trade initiatives that constitute most of the current goals for these groups:

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! making clear the relationship between multilateral environmental
agreements (MEAs) and trade agreements, using the NAFTA provisions
as a model--which specifically named key MEAs, and asserted their
priority in a challenge using trading rules; resolving the PPM issue by
assuring that WTO rules could allow how a product is produced and the
impacts of production on the environment to be considered by importing
countries (current rules allow only the direct impacts of the imported
product itself--not how it was produced--on the importing country’s
environment to be considered) in limiting imports;
! eliminating subsidies that have perverse environmental impacts;
! using environmental assessments of trade measures and agreements,
providing for rigorous analysis of the likely environmental implications of
the measures discussed in trade negotiations; negotiating as appropriate
parallel environmental side agreements, again using the NAFTA model;
and
! increasing the openness and transparency of the international trading
system and the WTO.
In its presentation to the March WTO High Level Symposium on Trade and
Environment (March 15-16, 1999)--designed as a consultation between the WTO and
NGOs--the United States identified several priorities that matched those of the NGOs:
! specific recognition of the sovereign rights of WTO members to
determine the level of protection environmental standards are to achieve;
assurance that environmental measures in multilateral environmental
agreements are not at risk of challenge under WTO rules;
! support for eco-labeling (which the United States asserted is allowable
under current WTO rules); and increased transparency in the WTO and
the trading system--a longstanding U.S. objective.
White House Policy Announcement. On November 16, 1999, President Clinton
issued a White House Declaration on Environmental Trade Policy that he described in the
accompanying statement as “a declaration of principles to guide our negotiators in the new
round of World Trade Organization negotiations that will begin later this month in Seattle.
Through these principles, we will seek to ensure that trade rules continue to be support
of (sic) environmental protections at home and abroad.”
The White House Declaration outlined the principles (following a long list of
measures being taken outside the trade arena to seek international environmental
protection) as follows:
! taking fully into account environmental implications throughout the
course of negotiations, including a written environmental review;
promoting transparency in the WTO through reforms, notably in dispute
settlement, that assure the public may contribute to its work;
! strengthening cooperation between the WTO and international
organizations with respect to environmental matters; identifying and
pursuing “win-win” opportunities in which reducing or eliminating
subsidies and opening markets can yield direct environmental benefits,

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such as the recent moves to reduce subsidies to fishing industries and
thereby reduce overfishing;
! complementing trade policies with policies that provide for high levels of
environmental protection and effective enforcement of our laws; ensuring
that trade rules do not undermine U.S. ability to maintain and enforce
fully U.S. environmental laws; and
! ensuring appropriate inclusion on U.S. trade negotiation teams of
environmental, health and safety officials, and encouraging U.S. trading
partners to do likewise.
These principles had been espoused by U.S. trade spokespersons at various meetings
over the past year. In addition to the trade and environment declaration, the President
signed an Executive Order requiring environmental reviews of trade agreements. This
made more formal, and outlined specific requirements for, the practice initiated with the
environmental reviews done for the North American Free Trade Agreement (NAFTA) and
the final Uruguay Round agreement. Those reviews had been faulted to some extent for
their hurried and somewhat unsystematic preparation.
The United States position on the CTE at the Seattle meeting, as described by U.S.
officials, was that the committee should be explicitly designed as a forum of discussion and
study and should not be expected to serve as a forum for negotiating positions or
recommendations. U.S. Trade Representative Charlene Barshefsky recently voiced the
U.S. view that the environment “working group” should take a more “proactive” role on
environment, providing input on environmental issues during negotiations across all issue
areas.
Spokespersons from various environmental groups welcomed the Administration’s
declaration, but some also expressed concern that the United States has not taken a strong
leadership role in pushing environmental issues in the WTO. Among the issues
environmental groups wished to see pursued at Seattle that are not included in the
President’s list of principles for action at the meeting are resolving the way in which the
WTO rules relate to multilateral environmental agreements (MEAs), assuring that trade
measures agreed to in such MEAs will not be challenged under WTO rules, and resolving
the PPM and eco-labelling issues. In the case of these issues, the President’s declaration
indicated the Administration’s belief that current WTO rules would accommodate
whatever actions the United States would deem appropriate and that these issues could be
handled satisfactorily on a case-by-case basis.
Business spokespersons remain wary of many of these issues, in particular the PPM
issue and eco-labelling, and express concerns that they open the door to disguised
protectionism and trade barriers that will negatively affect U.S. business exports.
Forest trade issues. Another issue receiving increasing recent attention by
environmental groups, especially during the run-up to Seattle is the possible negative
impact on the world’s forests, especially in poorer developing countries, of further tariff
reductions or elimination in the trade in forest products that might be included in WTO
negotiations. The fear is that increased trade in forest products in the absence of
additional protection for forests could lead to increased indiscriminate deforestation
associated with logging. Threats to forests are also seen by some analysts in the reduction
of non-tariff barriers that could include threats to labelling of forest products and changes

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to phytosanitary standards. A recent report from the World Resources Institute (WRI)
and the Center for International Environmental Law (CIEL), Tree Trade: Liberalization
of International Commerce in Forest Products: Risks and Opportunities spells out these
concerns with a series of recommendations. However, the USTR and the U.S. Council
on Environmental Quality have released a recent report that argues tariff reductions would
have minimal impact on world or U.S. forests.
At Seattle and Beyond: In an early October draft of a declaration for the Seattle
meeting that would spell out negotiating goals, the WTO Secretariat included only minimal
reference to environmental issues, resulting in statements from both U.S. government and
NGO spokespersons that the draft was “insufficient” and needed work to remedy this
deficiency. However, by the beginning of the WTO Seattle meeting, no agreement had
been reached on a revised draft, and the meeting began without an agreed overall agenda.
The discussions at Seattle eventually foundered on a number of difficult issues related to
agriculture, e-commerce, and others; virtually no time was spent on environmental issues,
and the stalemate did not involve them (although if they had come up, these issues would
have presented a set of difficulties of their own).
The sometimes violent demonstrations in Seattle drew attention away from the
specifics of environmental issues, which were largely lost in the fray. Although
environment was often mentioned in headlines of news stories on the “battle of Seattle,”
there was scant attention given within the text of these stories either to the substance of
the concerns of environmental groups or to the environmental issues themselves.
Environmental groups whose goals were to stop the WTO negotiations expressed
satisfaction that the meeting had been ended without a go-ahead for another round of
negotiations. However, those who had argued for specific consideration of environmental
concerns at the Seattle ministerial and in any subsequent negotiations were frustrated by
the lack of attention to their concerns.
In the official meetings themselves--which ended without agreement by WTO
ministers on any of the key issues on whether and how a new round of negotiations might
proceed--environmental issues did not receive major attention. How they will be dealt
with in the coming months remains unclear. While the most noticed focus of dissension
in the streets was on lack of openness in the WTO--and in some cases outright and very
vocal opposition to the WTO as an institution--most of the mainstream environmental
interests continue to argue for the need to focus on how WTO rules can constructively
deal with the issues they have raised. And as the WTO continues to try to resolve what
its next steps will be, continued opposition to including environmental concerns more
explicitly in negotiations on the trading rules will be likely from developing countries and
business groups. However, some observers have concluded that one outcome of the
protests at Seattle is that a variety of social issues, including environmental impacts of
trade, have become more visible and harder to ignore in subsequent negotiations and
deliberations of the WTO.

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