Using Eco-Labels to Promote Producer & Consumer Behavior Modification May Very Well Give Rise to Disguised Trade Barriers, Admits UN

http://www.unep.ch/etb/publications/Ecolabelpap141005f.pdf


The Trade and Environmental Effects of Ecolabels: Assessment and Response


United Nations Environment Program (2004)


Executive Summary


There is no easily accessible, independent body of data on the environmental effectiveness of ecolabelling. Despite the relatively high profile of the five labels that are the focus of this study, adequate data does not even exist on them. Anecdotal evidence and proxy indicators (many of which are imperfect) are not a sufficient basis for evaluating the environmental usefulness or desirability of ecolabelling programmes. In addition, it is currently difficult to isolate the effects of labelling from other variables that could lead to more sustainable production and consumption. There remains an urgent need to collect additional, reliable scientific data on the
environmental effects of existing ecolabelling programmes.


Neither is reliable, quantified evidence available concerning changes in trade flows – positive or negative – related to ecolabelling.


Minimizing undesirable trade effects

Two problems deserve to be given particular attention:

• the lack of checks or balances in regard to the proliferation of ecolabels, including the lack of any way to harmonize existing and new ones; and


• the cost of conformity assessment (often the most significant barrier for developing country producers), which is related to the proliferation of ecolabels.


The discussions on ecolabelling within the World Trade Organization (WTO) seem unlikely to progress in the short to medium term. Discussions on ‘labelling for environmental purposes’ under the Doha agenda are taking place in the Committee on Trade and Environment (CTE). This committee has no authority to create new rules on labelling or to amend existing ones. The Committee on Technical Barriers to Trade (CTBT) has the authority to create new rules in this area, but it remains unconvinced that rules for ecolabelling should differ from those for other types of labelling programmes. In any case, the CTBT is unlikely to turn its attention to
ecolabelling before 2006 at the earliest.


Even if WTO members were to discuss the need for new ecolabelling rules in the CTBT, anything this committee decided would impose rules only on governments. The WTO Agreements do not directly impose obligations on the types of private bodies that develop most ecolabelling programmes, nor do they impose obligations on companies establishing purchasing requirements or buying preferences. The WTO does not provide a forum that includes these bodies and other non-governmental stakeholders in the trade of ecolabelled goods. For all these reasons, the WTO does not appear to be adequately equipped to address the issue of this type of environmental requirement, which is increasingly being imposed through supply chains.


...(pp. 24-26)

Potential impacts of ecolabelling As mentioned earlier, no reliable information is available on the extent to which any of the five ecolabels has affected trade flows from developing countries because of their possible role as technical barriers to trade. To date, almost no concrete concerns have been expressed within the WTO or any other forum regarding a specific Type I ecolabelling programme.


Concerns have tended to be general in nature and to be directed at environmental labelling in general. A review of the potential negative impacts of ecolabelling can do little more than summarize the widely expressed but largely unsubstantiated concerns expressed by WTO members.

[ Polak, John, 2003: ‘Trade as an Environmental Policy Tool? GEN, Ecolabelling and Trade,’ paper presented at the World Trade Organization Public Symposium: Challenges Ahead on the Road to Cancun, ‘Ecolabelling: Trade Opportunities & Challenges’, 16-18 June 2003. One exception has been the March 1998 submission by the Colombian Government to the WTO CTE CTBT setting out its concerns about the various European ecolabelling schemes for flowers. See WT/CTE/W/76 and G/TBT/W/60, World Trade Organization, Geneva, 9 March 1998.]


...To understand the range of concerns expressed by WTO members, it is important to note that within the WTO context an ecolabel is treated as a specific type of standard, accompanied by a mark of conformity. Therefore, virtually all the concerns WTO members have expressed about standards and conformity assessment procedures, and virtually all the problems they have with implementing the Agreement on Technical Barriers to Trade (TBT), exist in the context of ecolabelling.

[Both the Agreement on Technical Barriers to Trade (TBT Agreement) and the Agreement on Sanitary and Phytosanitary Provisions (SPS Agreement) contain provisions relevant to ecolabelling. For the sake of clarity and simplicity, this paper focuses on the TBT Agreement.]


...The TBT Agreement outlines certain procedural obligations that are intended to ensure that standards, technical regulations and conformity assessment procedures are not prepared, adopted or applied by one member in such a way that they impose unnecessary or unjustified barriers to trade on other members. In particular, Annex 3 of the TBT Agreement outlines a Code of Good Practice (Standards Code): a number of requirements relevant to the development of voluntary standards. The first of these procedural requirements is the use of international standards.


Article F of the Standards Code calls on standards bodies to base their work on relevant existing or imminent international standards. This presents problems in the case of ecolabels. One problem is that, apart from the generic ISO 14020 series of ecolabelling template standards and the generic ISO 14040 life-cycle assessment standards, both of which are tools for developing ecolabels rather than actual ecolabels, there are very few international ecolabels. Ecolabels are generally developed based on national environmental priorities and preferences. They have evolved outside the context of traditional national standards bodies, and therefore outside the context of international standardization infrastructure. Moreover, there is no working definition of ‘international standard’ in the TBT Agreement.


Because there is no legal basis for ensuring that new standards do not overlap or conflict with existing ones, there is no check on the proliferation of ecolabels. Since developing countries are standards takers, some in the trading community argue that a proliferation of ecolabels can greatly increase the cost to these countries of accessing different markets. This is one of the main complaints expressed by developing country exporters. In the case of each of the five ecolabels discussed in this report, there is a variable degree of competition between different standards and frequently there is no scientific information available to justify the differences.


Some experts believe that some bodies that develop ecolabels have been set up for the express purpose of offering an alternative to existing ecolabels, either as a way to add confusion to the marketplace or to provide alternatives with less strict criteria.

[‘Building Bridges: Ethical Standards, Sustainable Development and Trade’, meeting report, Geneva, Switzerland, 12-13 June 2003, meeting sponsored by the Rockefeller Brothers Foundation and GTZ; on file with the author.]


Articles J, K, L and M of the Standards Code address issues related to transparency and coordination. They call on standards bodies to publish a work plan every six months, to associate with national members of ISONet, to allow comment periods of at least 60 days, to publish a notice of the comment period, and to provide drafts of standards for comment to any interested party within the territory of a WTO member. Because most ecolabels are developed by non-governmental bodies outside the traditional standards networks and infrastructure, it is likely that many ecolabel practitioners are unaware of (or lack the means to implement) these
procedural provisions. In some cases, traditional national standards bodies (e.g. ISO member bodies) are unwilling to interact with non-traditional standards bodies developing ecolabels, and vice versa. As a result, it is often very difficult for producers in one country to obtain timely information on the existence or specific requirements of an ecolabel in another country.

[ISONet (the ISO Information Network) is an agreement between standardizing bodies to combine their efforts in order to make information on standards, technical regulations and related matters readily available whenever it is required. See http://www.wssn.net/WSSN/RefDocs/isonetdir/introduction.html .]


Article 5.1.2 of the TBT Agreement requires WTO members to encourage non-governmental standards bodies operating within their territory to ensure that conformity assessment procedures are no stricter than necessary.


The cost of third-party certification has been identified generally as a particular concern of SMEs and low-cost producers in developing countries. From a trade barrier perspective, the important issue with regard to certification costs is whether these costs are relatively higher in developing countries than in developed ones. Statistically significant data on the costs of certification does not exist, but it is widely accepted that certification costs are a function of:

• the availability of domestic certification (and hence accreditation) services;

• the size of the facility; and

• the gap between existing practices and the requirements of the ecolabel.


The accepted wisdom is that conditions in developing countries are such that each of these factors contributes to relatively higher certification costs vis-à-vis those in developed countries. It is also significant that the only conformity assessment procedure accepted by most ecolabelling programmes, and all of the programmes addressed in this report, is independent third-party certification. It would be worthwhile to assess whether some markets would accept second-party certification or self-declarations of conformity for some types of ecolabels under some circumstances.


Article 6.3 of the TBT Agreement requires WTO members to encourage non-governmental standards bodies operating within their territory to be willing to enter into negotiations for the conclusion of agreements on the mutual recognition of conformity assessments procedures. As mentioned above, many ecolabels, including those of the FSC, MSC and FLO, maintain a monopoly over the accreditation of conformity assessment service providers and therefore do not enter into mutual recognition agreements with other competent bodies. FSC auditors are also forbidden from certifying to any other SFM standard. Experience with mutual recognition
agreements is very thin on the ground. However, a system for mutual recognition has been established under the Japanese national organics regulation, whereby Japanese-accredited conformity assessment bodies can enter into ‘trust contract of providing inspection data’ with International Organic Accreditation Service (IOAS)-accredited certifiers in the country of production.

[See, for example, OECD, 2002: Government Regulations Affecting Trade in Products of Organic Agriculture, COM/ENV/TD (2002)86/FINAL, p. 22.]


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NOTWITHSTANDING THESE WTO LOOPHOLES, THE EUROPEAN COMMISSION CONTINUALLY ENDEAVORS TO EXPLOIT THEM IN AS MANY INDUSTRY SECTORS AS POSSIBLE:


See Eco-Fashion or Eco-Fashism: How Involved is the EU Commission in Promoting 'Market-Based' Eco-Labels as Disguised Trade Barriers?
http://itssddisguisedtradebarriers.blogspot.com/2008/03/eco-fashion-or-eco-fashism-how.html

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READERS SHOULD ALSO CONSIDER HOW THE UNITED NATIONS ENVIRONMENT PROGRAM (UNEP) CONTINUES TO PROMOTE NATIONAL / REGIONAL GOVERNMENTAL USE OF SUSTAINABLE DEVELOPMENT-CENTRIC ECO-LABELING SCHEMES AS A FORM OF PUBLIC BEHAVIOR MODIFICATION, APPARENTLY TO EXPLOIT WTO LOOPHOLES


At the World Summit on Sustainable Development in Johannesburg last year, governments urged active work to speed the shift to sustainable production and consumption. They noted
that while all countries must be involved in this effort, the developed countries should take the lead. In February [2003], at UNEP’s Governing Council meeting, ministers voted to strengthen work on sustainable consumption, promote design of sustainable products and services, reinforce voluntary work with business sectors, and increase support for awareness-raising campaigns.


UNEP is also working through the UNEP-SETAC Life Cycle Initiative – and an exciting new project to enhance the image of green lifestyles – to increase the availability and impact of information in this area. As part of the effort to promote more sustainable production and consumption, UNEP has stepped up its activities with the retail sector, whose role lies particularly in helping change consumption patterns.


To realize the importance of this sector, just think about your last retail transaction. It may have involved something as small and simple as a cotton T-shirt or a packet of ground coffee. Or perhaps it was a major purchase – a leather-and-wood armchair or a refrigerator-freezer. We do not ordinarily stop to consider the multitude of environmental and social effects that a single,
seemingly simple transaction can have.


For instance:

resource use – from metal extraction to consumption of water and wood (the latter possibly involving unsustainable forestry);


energy use – by your car if you drove to the store where the purchase was made; by the store itself, any vehicles involved in delivering products to the store, and employees’ personal
vehicles;


by wholesalers;


and by the furniture assembler, leather producer, animal breeder, wood cutter, fabric mill, coffee packager, and so on.


And don’t forget the CO2 emissions connected with all that energy consumption;


waste generation – any packaging you throw away when you get home is just the tail end of a long stream that begins in the mine, the coffee grove, the farmyard or the forest;


negative land use effects – e.g. damage to the landscape from suburban megastores and surface sealing by their huge parking lots;


possibly, dubious labour standards at the store or farther up the supply chain;


the risk of health effects for you and your family, as well as store and supplier employees, if the use of hazardous substances (e.g. arsenic in wood treatment, heavy metals in appliance
manufacture) is involved.


See Shopping for a better world: sustainability and retailing, Industry and Environment Volume 26 No. 1 January – March 2003, United Nations Environment Program at: http://www.uneptie.org/media/review/vol26no1/UNEP0103.PDF .

Discerning the Forest From the Trees: How Governments Use Ostensibly Private and Voluntary Standards to Avoid WTO Culpability

http://www.itssd.org/GTCJ_03-offprints%20KOGAN%20-%20Discerning%20the%20Forest%20from%20the%20Trees.pdf


By Lawrence A. Kogan


Global Trade and Customs Journal


VOL 2; NUMBER 9, pages 319-337 (2007)

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[This international law journal article has been catalogued by the British Public Library and may be accessed in hardcopy. See: http://direct.bl.uk/bld/OrderDetails.do?did=1&uin=215946290 ].


[Article title :Discerning the Forest From the Trees How Governments Use Ostensibly Private and Voluntary Standards to Avoid WTO Culpability

Author: Kogan, L. A.

Journal title: GLOBAL TRADE AND CUSTOMS JOURNAL

Bibliographic details: 2007, VOL 2; NUMBER 9, pages 319-337

Publisher: ASPEN PUBLISHING INC

Country of publication: Netherlands

ISBN: ISSN 1569-755X

Unique item number: RN215946290

Shelfmark: 4195.476860

Language: English

Pricing: To buy the full text of this article you pay:£12.50 copyright fee + service charge (from £7.85) + VAT, if applicable ]

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Excerpts:


I. INTRODUCTION


A. The Purpose of This Article


The purpose of this article is to explore whether national and/or regional governments can be held responsible under the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO)1 law if it can be proven that their official policies and activities directly or indirectly permit, support or otherwise influence the adoption, promulgation and/or maintenance of ostensibly private and voluntary standards that result in discriminatory trade
practices or in the creation of unnecessary obstacles to international trade.


It is generally agreed that official government regulatory policymaking and private standard setting activities currently taking place within many WTO member countries are not sufficiently transparent and inclusive of foreign stakeholder input. It is also generally agreed that regulations and standards (whether technical, social or environmental) can materially impact international (cross-border) trade flows when not drafted and implemented in a benchmarked and balanced manner.2


Some governments, more than others, recognize that standards can improve their countries’ industrial and technological global competitiveness and have increasingly synchronized their use with official regulations. 3 As a result, such countries may have more than acquiesced in the development of ‘private’ environmental and corporate social responsibility (CSR) certification and labelling standards regimes that have had the effect of denying market access to a host of foreign products and services. In particular, companies operating within natural resource-based
developing countries have incurred significant and unnecessary costs and administrative burdens to satisfy such developed country environmental certification and eco-labelling standards. According to a recent study, ‘making certification a condition for trade in international
markets could reduce exports of wood products from these countries – with considerable negative impacts on forest-dependent populations’.4


This article focuses strictly on the relationship between private European-centric sustainable forest management (SFM) schemes that have arisen during the past twenty years and the official policy goals articulated by the European Community (EC), and later by the European Union (Eu)5 within its Fifth and Sixth Environmental Action Programmes (EAPs). The analysis and findings which follow, however, are equally relevant to ascertaining whether a nexus exists between official EU government sustainable development and corporate governance policies and
currently evolving private EU-centric (CSR) standards. The establishment of such a link is required before culpability can be ascribed for alleged violations of WTO law. This article does not address the merits of any claim of trade discrimination or disguised trade protectionism (i.e., the purported effects on international trade flows in forest/wood products) that could conceivably be brought against the EC and its Member States by an aggrieved GATT/WTO member as a consequence of such standards.6



...V. CONCLUSION


During the past twenty years, European governments created a national, regional and global policy framework that facilitated and promoted the development, adoption and implementation of private Euro-centric SFMcertification and eco-labelling standards. SFM standards-related activities were undertaken within the borders of specific EUMember States and the European region by recognized private standardization bodies, namely the FSC and the PEFC. These activities were, at the very least, indirectly funded by European governments. They also clearly
reflected a key regional EU policy priority: the global promotion of SFM as part of environment-focused negative SD.


The GATT case law and the TBT Agreement provide that when governments, which are charged with the responsibility of preventing private standards setting activities undertaken within their jurisdictions from creating unnecessary obstacles to international trade, become sufficiently involved in those activities, they may be attributed to them as a matter of law. Consequently, if it can be proven that such activities gave rise to discrimination against ‘like’ foreign products or constituted disguised trade protectionism, governments may be held accountable in a WTO dispute settlement proceeding initiated by aggrieved WTO members.


The evidence in this case reveals that the EU Brussels institutions and Member State governments have been sufficiently involved in the ostensibly private SFM standards setting and implementation activities of the FSC and the PEFC to have those activities and their market effects on developing country forest/wood products attributed to them. As a result, the SFM standards activities of such groups can fairly be characterized as part of an overall EU governmental regime, and thus, as an extension of EU ‘governmental conduct’. Therefore, to the extent aggrieved WTO developing country members can prove that the FSC or PEFC standards resulted in actual trade discrimination or that they were intended to create or had the effect of creating unnecessary obstacles to trade, they may hold the EU and its participating Member States culpable under GATT/WTO law.170



Related Endnotes:



1 General Agreement on Tariffs and Trade, 33 I.L.M. 1125 (1994) (GATT); World Trade Organization (WTO).
2 Lawrence A. Kogan, National Foreign Trade Council, Looking Behind the Curtain: The Growth of Trade Barriers That Ignore Sound Science (May
2003) available at www.wto.org/english/forums_e/ngo_e/posp47_nftc_looking_behind_e.pdf .
3 Erkki Liikanen, European Enterprise Commissioner, Commission Marks World Standards Day With Focus on Environment and Standards, in IP/01/1408 (12 October 2001) available at www.europa.eu/rapid/start/cgi/guesten.ksh?p_action.gettxt¼gt&doc¼IP/01/1408%7C0%7CRAPID&lg¼EN .
4 Carolyn Fischer, Francisco Aguilar, Puja Jawahar and Roger Sedjo, Resources for the Future – Forest Certification: Toward Common Standards?, World Bank Foreign Investment Advisory Group Discussion Paper 05-10 (Washington, DC: World Bank, April 2005), available at
www.rff.org/Documents/RFF-DP-05-10.pdf .
5 The European Community (EC) was previously known as the European Economic Community (EEC),whichwas formed pursuant to the Treaty of Rome, on 25March 1957. It consisted of six ‘commonmarket’ countries: Belgium, France, Italy, Luxembourg, the Netherlands and former West Germany. The EEC was renamed the EC on the signing of the Maastricht Treaty, on 7 February 1992, which led to the formation of the unique political union now recognized as the European Union (EU). The EC remains one of three pillars of the EU–i.e., the Community pillar, which concerns economic, social and environmental policies. See e.g., ’European Community’, Wikipedia at: www.en.wikipedia.org/wiki/European_Community ; ‘The Three Pillars of the European Union’ Wikipedia at: www.en.wikipedia.org/wiki/Three_pillars , last visited on 15 July 2007.
170 See Brien, as note 8 above. -- Laurel A. Brien, Understanding the International Agreement on Technical Barriers to Trade and Related Provisions of the US Trade Agreements Act of 1979 (Washington, DC: US Department of Commerce, International Trade Administration, Office of Trade Policy, September 1984) (explaining the barriers to trade requirements).