Decisions by Topic: Trade
Commission on Sustainable Development
Reference
E/CN.17/2000/20
[Arabic] [Chinese] [English] [French] [Russian] [Spanish] 8th session of the Commission on Sustainable Development
E/CN.17/2000/20 - Economic growth, trade and investment

Decision 8/6
Economic growth, trade and investment


Introduction

1. Activities regarding economic growth, trade and investment should be pursued in accordance with Agenda 21 and the Programme for the Further Implementation of Agenda 21, with the overarching objective of sustainable development. Further steps to achieve this should also build on the outcome of the tenth session of the United Nations Conference on Trade and Development (UNCTAD), taking also into account developments in other international forums. In this regard, cooperation and coordination between UNCTAD, the United Nations Industrial Development Organization (UNIDO), the World Trade Organization, the United Nations Environment Programme (UNEP) and other relevant institutions should be strengthened.
2. Trade and investment are important factors in economic growth and sustainable development. Both economic growth and the lack of it can have adverse environmental effects. Poverty and environmental degradation are closely interrelated. While poverty results in certain kinds of environmental stress, the major cause of the continued deterioration of the global environment is the unsustainable patterns of consumption and production, particularly in industrialized countries, which are a matter of grave concern, aggravating poverty and imbalances.
3. In consequence, there should be a balanced and integrated approach to trade and environment policies in pursuit of sustainable development, taking into account the economic, environmental and social aspects, as well as the different levels of development of countries, without undermining the open, equitable and non-discriminatory character of the multilateral trading system or creating disguised barriers to trade. Developed countries should take the lead in addressing unsustainable production and consumption patterns, taking into account common but differentiated responsibilities as set forth in principle 7 of the Rio Declaration on Environment and Development. One of the main challenges is to promote social equity and ensure that economic growth does not result in environmental degradation. Improved market access for products from developing countries, particularly least developed countries, would make a valuable contribution to sustained economic growth and sustainable development in accordance with the relevant General Assembly resolutions and the outcomes of recent United Nations conferences.
4. In particular, for developing countries and countries with economies in transition it is an important challenge to stimulate domestic investment and attract foreign direct investment (FDI) to promote sustainable development, taking into account the rights and obligations of investors and host countries. At the same time, the international community should strive to avoid the risks that can be associated with the volatility of short-term private capital flows and to enhance the contribution that investment can make to sustainable development.

Priorities for future work

5. Economic growth, trade and investment will be considered as part of the 10-year review of progress since the United Nations Conference on Environment and Development. Priority areas for future work will include the following:
(a) Promoting sustainable development through trade and economic growth;
(b) Making trade and environment policies mutually supportive;
(c) Promoting sustainable development through investment;
(d) Strengthening institutional cooperation, capacity-building and promoting partnerships.

Promoting sustainable development through trade and economic growth

6. Governments and international organizations are urged to support efforts of developing countries, in particular the least developed countries, in building capacity to eradicate poverty, expand productive employment, and improve living standards with a view to achieving sustainable development. The promotion of trade, investment and sustained economic growth is essential to support such efforts. Furthermore, appropriate policies have to be implemented at the national level to ensure environmental protection and sustainable resource management, equitable distribution of benefits and provision of basic social services to all.
7. Governments, particularly in developed countries and, as appropriate, international organizations, are also urged to improve market access, provide technical assistance and establish capacity-building initiatives in favour of developing countries and countries with economies in transition with a view to helping them to increase export opportunities, promote diversified export-oriented production and enhance their ability to trade, and to implement their commitments in existing multilateral agreements, including World Trade Organization agreements. The international community should continue to assist countries seeking integration into the world trade system, in particular accession to the World Trade Organization. Governments and international organizations are encouraged to continue studies and work on impacts of trade liberalization on developing economies in a manner that promotes the equitable distribution between nations of gains from trade in order to achieve sustainable development.
8. Commodity exports, particularly primary commodity exports, are the mainstay of the economies of many developing countries in terms of their export earnings, the livelihoods of their people and the dependence of general economic vitality on these exports. Commodity earnings instability continues to be problematic. Programmes that enhance commodity-based diversification in developing countries, in a manner supportive to sustainable development, inter alia, through improved market access, particularly for least developed countries, can contribute to increased foreign exchange earnings and employment, as well as provide increased income from value-added production.
9. Governments and international organizations should endeavour to improve the functioning of commodity markets with the aim of achieving greater transparency, stability, and predictability, particularly with regard to commodity export earnings. In this regard, UNCTAD should enhance its support to developing countries in accordance with the Plan of Action adopted at the tenth session of UNCTAD. There should be further evaluation of mechanisms for reducing the impacts of price volatility in primary commodities. Countries, particularly developed countries, should provide improved market access for primary commodities from developing countries and particularly from least developed countries, especially in their processed forms. Developed countries should endeavour to respond favourably to requests for technical assistance aimed at enhancing the diversification of exports, in a manner supportive of sustainable development, in those developing countries that are highly dependent on the export of a limited number of commodities. Existing mechanisms for helping to stabilize commodity export earnings should be improved so as to respond to the real concerns of developing-country producers.
10. Governments are urged to pursue continued trade liberalization through, inter alia, the elimination of unjustifiable and discriminatory trade practices and non-tariff barriers to trade, notably in order to improve market access for products of export interest to developing countries. Governments in developed countries should devise policies and measures to assist developing countries, and in particular least developed countries, in diversifying their export base in a sustainable manner taking into account existing agreements and arrangements for special and differential treatment for developing countries.
11. Market access conditions for agricultural and industrial products of export interest to developing countries, in particular least developed countries, should be improved on as broad and liberal basis as possible. Concrete steps need to be urgently taken to implement the commitments by developed countries to grant duty-free and quota-free market access for essentially all exports originating in least developed countries and to further examine options for other proposals to maximize market access for least developed countries. Consideration should also be given to proposals for developing countries to contribute to improved market access for least developed countries? exports. Modernization and operationalization of special and differential treatment, in particular in terms of maintaining and expanding export opportunities for developing countries, may be needed to adapt it to changing international trading conditions and to make special and differential treatment a better instrument for development, enabling developing countries, in particular the least developed countries, to gradually integrate into the multilateral trading system.
12. Food security as a priority area for sustainable agricultural development should be strengthened, in particular both by and for developing countries. More focused financial and technical assistance, as well as the transfer of agricultural technology that is environmentally and economically viable, upon mutually agreed terms, should be provided to address effectively the issue of food security, including development of an enabling policy environment and the problems of net food importing countries, as outlined in the Rome Declaration on World Food Security and the World Food Summit Plan of Action.
13. Governments and international institutions are encouraged to ensure that the benefits arising from increased trade liberalization are equitably distributed and reach those living in poverty, in particular in developing countries, by establishing policies and programmes that will enable their participation. Measures are required to ensure enhanced trade opportunities for developing countries and to provide greater security and predictability in a liberalized trading system, with particular emphasis on vulnerable groups like women and children, and that trade contributes to employment-generation and social development.
14. Governments and international organizations are encouraged to examine ways and means to promote the indigenous development of environmentally sound technologies (ESTs) in developing countries and the transfer and dissemination of ESTs to developing countries. In this regard, Governments are encouraged to implement relevant provisions in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).
15. Governments should fully implement the Plan of Action adopted at the tenth session of UNCTAD and, in particular, examine the use and effect, particularly on trade, of incentives to attract FDI with high technological content. UNCTAD should analyse all aspects of existing international agreements relevant to transfer of technology to be supported, as appropriate, by developed-country funding.
16. Governments and international organizations, in collaboration with the business community and other representatives of civil society, are encouraged, where appropriate, to promote markets for environmentally friendly products, environmentally sound technologies and environmental services.

Making trade and environment policies mutually supportive

17. Governments and international organizations, such as the World Trade Organization, and the secretariats of multilateral environmental agreements (MEAs), are encouraged to cooperate and to continue to explore ways to enhance the complementarities between trade liberalization and environmental protection and to make the multilateral trading system more responsive to sustainable development concerns. All relevant parties are encouraged to identify and pursue opportunities where trade liberalization holds particular promise for promoting sustainable development, including actions to address subsidies with the aim of eliminating effects that are both trade-distortive and environmentally harmful, in a way that would result in trade, environmental and developmental benefits.
18. Certification and labelling schemes can be important tools for the promotion of sustainable consumption and promotion patterns. If introduced, such schemes, whether voluntary or mandatory, should be designed and implemented in an open and transparent manner and should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade. Governments and international organizations are urged to facilitate effective participation of developing countries in the standard-setting process. They are also urged to further explore the concept of equivalency and its application.
19. The pursuit of effective environmental policies should be ensured both nationally and internationally. However, environmental measures must not be used for protectionist purposes. Governments should also avoid imposing unilateral measures that are inconsistent with the Rio Declaration on Environment and Development, in particular principle 12.
20. Governments and international organizations are urged to further consider the relationship between MEAs and World Trade Organization agreements, including the relationship between the Convention on Biological Diversity and the Agreement on TRIPs, recognizing the importance of trade and environment agreements? being mutually supportive, and taking into account that both trade agreements and MEAs are developed and negotiated in pursuit of legitimate multilateral objectives in support of sustainable development. In this regard, it is essential to improve dialogue and cooperation between trade, environment and other relevant policy makers at the national level, as well as among relevant international organizations, including secretariats of MEAs. UNEP and UNCTAD are urged to continue to study and examine economic and development implications of MEAs.
21. Developed countries and international organizations, in accordance with their commitments under multilateral environmental agreements, are encouraged to assist developing countries in implementing the agreements by promoting the transfer of environmentally sound technology, in particular those arising from publicly funded research and development, as well as promoting capacity-building.

Promoting sustainable development through investment

22. Governments are encouraged to promote a stable, predictable, non-discriminatory and transparent investment climate nationally and internationally that encourages domestic investment and foreign capital flows, including FDI, while addressing, as appropriate, the rights and obligations of investors in order to promote sustainable development. Governments in developed countries and international organizations are encouraged to provide adequate support for developing countries in their efforts to formulate and implement the appropriate domestic policies.
23. Governments and international organizations are encouraged to address the potential risks that may arise from the volatility of short-term capital flows.
24. It is recommended that in order to enhance the potential of investment, including FDI, to contribute to sustainable development, Governments and international organizations, in cooperation with relevant private sector organizations and stakeholders:
(a) Explore ways to ensure that a larger number of developing countries and countries with economies in transition benefit from investment, in particular FDI;
(b) Seek to promote the use of environmental management systems in and transfer of environmentally sound technologies to developing countries and countries with economies in transition;
(c) Encourage companies to take responsibility to promote sustainable development by applying best practices and promoting environmentally responsible corporate behaviour and information policies, especially those related to public disclosure procedures;
(d) Explore the potential for improving environmental performance along the supply chain and in waste management;
(e) Explore the potential role of voluntary guidelines for making investment more broadly supportive of sustainable development.
25. Governments and international organizations are encouraged to develop, as appropriate, mechanisms for the environmental assessment of export credit projects.

Strengthening institutional cooperation, capacity-building and promotion of partnerships

26. The Commission noted that the tool of environmental impact assessment, following previous recommendations, is being used by many countries and that some are developing other assessment tools. The Commission also noted the work under way in UNEP and UNCTAD on this issue. In response to the concerns expressed by many countries, the Commission stressed that the assessments of trade policies should be conducted with a view to promoting sustainable development and should not serve as a disguised barrier to trade.
27. Governments and international organizations are urged to improve policy coherence and coordination in promoting sustainable development through trade and investment. Countries are also urged, with the full participation of international organizations, to improve coherence and coordination to ensure that technical assistance and capacity-building in developing countries and countries with economies in transition enable them to benefit from globalization and trade liberalization and to better integrate into the world economy. Governments and international organizations are further encouraged to promote capacity-building with a view to enabling recipient countries to implement and enforce effectively environmental policies, inter alia, through the design and use of economic instruments, taking into account the specific conditions and the different levels of development in individual countries.
28. Governments and international organizations should foster partnerships between the public and private sectors at the national and the international level for the promotion of trade and economic growth in a manner conducive to sustainable development. Dialogue, consultations and information-sharing with stakeholder and civil society organizations should also be promoted.
29. International cooperation and support for capacity-building in trade, environment and development policy formulation should be strengthened through renewed system-wide efforts and with enhanced responsiveness to sustainable development objectives by the United Nations, the World Trade Organization, the Bretton Woods institutions and national Governments.


Reference
E/CN.17/1996/38
[Arabic] [Chinese] [English] [French] [Russian] [Spanish] 4th session of the Commission on Sustainable Development
E/CN.17/1996/38 - Trade

Decision 4/1. Trade, environment and sustainable development

1. The Commission on Sustainable Development takes note of the report of the
Secretary-General on trade, environment and sustainable development
(E/CN.17/1996/8 and Add.1) and welcomes with appreciation the analysis contained
therein.

2. The Commission reiterates all the decisions made at its second and third
sessions on issues related to trade, environment and sustainable development.

3. As to trade measures in multilateral environmental agreements (MEAs), the
Commission:
(a) Calls on Governments to ensure appropriate coordination between trade
and environment officials at the national level and to take appropriate steps at
the national and international levels in order to ensure the mutual
supportiveness of trade and environment policies in support of sustainable
development, and looks to the World Trade Organization (WTO) to address the
relationship between WTO provisions and trade measures for environmental
purposes, including those pursuant to multilateral environment agreements;
(b) Recognizes that positive measures, such as improved market access,
capacity-building, improved access to finance, and access to and transfer of
technology, taking into account the relationship between trade-related
agreements and technology, are effective instruments for assisting developing
countries in meeting multilaterally agreed targets in keeping with the principle
of common but differentiated responsibilities;
(c) Notes that trade measures can, in certain cases, play a role in
achieving the objectives of MEAs, while safeguarding a non-discriminatory and
equitable multilateral trading system, and that positive measures should be
employed, as appropriate, to reduce or obviate the necessity for trade measures
to secure compliance with MEAs, and also stresses that the use of trade measures
Recommendations with respect to the United Nations Conference on Trade and
Development (UNCTAD) should bear in mind the outcome of the ninth session of
UNCTAD, which is being held concurrently with the present session of the
Commission.
(d) Recognizes that the different trade provisions in MEAs may have
different objectives and that they may involve broader economic and
developmental issues, and invites the United Nations Conference on Trade and
Development (UNCTAD) and the United Nations Environment Programme (UNEP),
jointly and in cooperation with WTO, in accordance with their respective
mandates and competencies, to undertake further analysis on the issue of trade
and environment, including policy instruments in MEAs, in particular positive
measures, taking into account the specific context of each MEA, with a view to
promoting sustainable development;
(e) Recalls its invitation at its third session to UNCTAD and UNEP, in
cooperation with the United Nations Development Programme (UNDP), international
financial institutions, and other relevant bodies, programmes and organizations,
to examine the effects of trade measures in MEAs on the achievement of
environmental goals and on trade and competitiveness of developing countries and
countries with economies in transition, and to consider how positive measures
could assist those countries in meeting their obligations under the MEAs.

4. As to environmental policies and competitiveness, the Commission:
(a) Recognizes that the link between environmental policies and
competitiveness is a complex one, and notes that there is no available evidence
to suggest that environmental policy generally has a significant detrimental
impact on competitiveness. Efforts could be made to identify "win-win"
opportunities in the design and implementation of environmental policies, which
could improve resource efficiency, competitiveness, employment and market
access;
(b) Firmly rejects the use of "green countervailing duties" or other
protectionist or trade measures inconsistent with WTO to compensate for the
negative competitiveness effects, whether real or perceived, of environmental
policies;
(c) Stresses that it would be inappropriate to relax environmental laws,
regulations and standards or their enforcement in order to encourage foreign
direct investment or to promote exports;
(d) Considering that complying with the environmental requirements of
importing countries may raise particular competitiveness concerns for developing
countries and countries with economies in transition, recommends that
Governments of developed countries facilitate continued market access for
developing countries by ensuring greater transparency and providing them with
technical and financial assistance in the area of environmental capacitybuilding
in accordance with the provisions of relevant chapters of Agenda 21;
(e) Encourages UNCTAD to propose positive measures at the national and
international levels for supporting developing countries in their efforts to
achieve the objectives of sustainable development, focusing on capacity-building
and support for national efforts to internalize environmental costs;
(f) Takes note of the progress report submitted by UNCTAD on the
analytical study of the relationship of environmental protection to
international competitiveness, job creation and development, and invites UNCTAD
to further elaborate the study, with input from Governments and regional
economic integration organizations, as well as the private sector,
non-governmental organizations, and other relevant regional and international
organizations, and to submit the results of the study to future sessions of the
Commission, as appropriate.

5. The Commission recognizes that eco-labelling can have an impact on trade.
The Commission invites Governments to ensure adequate transparency of
eco-labelling, inter alia, by considering inputs from interested parties,
including consumer and environmental groups, domestic and foreign producers, at
an appropriately early stage in the design of the measures, and to encourage
private bodies involved in eco-labelling to do the same. The Commission also
calls upon national Governments and private bodies involved in eco-labelling to
explore the scope for mutual recognition of procedures and approaches on the
basis of equivalency at appropriately high levels of environmental protection,
taking into account differing environmental and developmental conditions in
different countries. The Commission also invites UNCTAD, UNEP, WTO and, as
appropriate, the International Organization for Standardization (ISO) to give
the fullest consideration to such concepts in future work on environmental
labelling in the best interests of transparency.

6. The Commission supports the promotion of balanced public awareness and
educational programmes on issues related to eco-friendly classification to
assist both producers and consumers in making environmentally sound decisions.

7. As to trade liberalization and the environment, the Commission:
(a) Recalls the recommendation made in paragraph 67 of the report on its
third session, 5/ in which it invited the UNEP/UNCTAD programme to carry out
further work and report on the development of a framework to facilitate the
assessment of the environmental impact of trade policies, taking into account
the special needs of developing countries and countries with economies in
transition;
(b) Recognizes the usefulness of UNEP and the Food and Agriculture
Organization of the United Nations continuing to examine the environmental
effects on importing countries of the export of goods prohibited for sale on
environmental grounds in the exporting countries;
(c) Invites UNCTAD, in cooperation with UNEP and other relevant
organizations, such as the Organisation for Economic Cooperation and Development
(OECD), taking into account work already under way at WTO, to examine how
further trade liberalization, such as through the reduction or elimination of
tariff escalation, export taxes or restriction, trade-distortive subsidies and
the elimination of tariff and non-tariff barriers to trade, can result in
environmental benefits and contribute to sustainable development, including by
examining recent analyses on such topics;
(d) Reaffirms the importance of efforts aimed at internalizing
environmental costs in order to promote the positive and avoid the negative
environmental effects of trade liberalization.

8. As to sustainable development of the commodity sector, the Commission:
(a) Invites UNCTAD, in cooperation with UNEP, the United Nations
Industrial Development Organization and other relevant organizations, to assist
developing countries in implementing pilot projects in export-oriented
production and processing activities aimed at internalizing environmental costs;
(b) Encourages international organizations, Governments and the business
community to intensify the search for pragmatic methods for increasing
cooperation between exporters and importers with a view to facilitating
developing countries? efforts to internalize environmental costs in their
development process and to assess the scope for the establishment of sectoral
round tables and other formal or informal arrangements for identifying efficient
and cost-effective approaches.

9. As to biological diversity and trade issues, the Commission welcomes the
BIOTRADE initiative of UNCTAD as a collaborative effort, with the secretariat of
the Convention on Biological Diversity, interested United Nations agencies and
other intergovernmental and non-governmental organizations, the private sector,
local communities and academic institutions, aimed at strengthening capacitybuilding,
and encourages further consultations in that area.

10. The Commission invites UNCTAD, UNDP, the International Trade Centre, UNEP
and other relevant United Nations bodies to strengthen cooperation in the
implementation of a programme of technical assistance for capacity-building in
accordance with the mandates and expertise of each agency, inter alia, with a
view to assisting developing countries and countries with economies in
transition in participating effectively in international deliberations on trade
and environment, international trade negotiations and international
environmental negotiations.

11. The Commission takes note of the preliminary background paper prepared by
UNCTAD on research into trade, environment and sustainable development linkages
carried out by international organizations, as well as academic institutions and
non-governmental organizations in developed and developing countries; encourages
additional research in particular areas where gaps exist; and recommends that
international and bilateral aid agencies support research activities in
developing countries and countries with economies in transition, in particular
in these areas.

12. The Commission:
(a) Takes note of the work of the WTO Committee on Trade and Environment,
looks forward to a substantive report on the results of its deliberations,
including further progress in making trade and environmental policies mutually
supportive in order to promote sustainable development, and invites ministers to
consider all items listed in the Marrakesh Decision on Trade and Environment of
15 April 1994, taking into account the objectives of Agenda 21 and the Rio
Declaration on Environment and Development, and to give due consideration to the
results of the deliberations of the Commission at the present session;
(b) Looks to the WTO ministerial meeting in Singapore to continue the
important work of the WTO Committee on Trade and Environment;
(c) Invites UNCTAD and UNEP to transmit the results of their activities in
the area of trade, environment and sustainable development to the WTO Committee
on Trade and Environment for consideration at the WTO ministerial meeting in
Singapore;

(d) Requests UNCTAD, in accordance with operative paragraph 27 of General
Assembly resolution 50/95 of 20 December 1995, to continue its special role in
the field of trade and environment, and invites UNCTAD at its ninth session to
consider appropriate arrangements for carrying out intergovernmental activities,
taking into account its mandate and competence, as well as the need for
continued cooperation and complementarity in the work of UNCTAD, UNEP and WTO;
(e) Invites UNEP to continue its work on trade and environment in
accordance with its mandate;
(f) Invites the regional commissions, within their mandates and taking
into account the specific context of each region, and OECD, in close cooperation
with the competent international organizations, such as UNCTAD, UNEP and WTO, to
organize meetings, as necessary, for the purpose of enhancing coordination on
trade and environment;
(g) Recalls General Assembly resolution 50/95 of 20 December 1995, in
which the Assembly requested UNCTAD and invited WTO, in accordance with their
respective mandates and competence and in close cooperation with other competent
United Nations bodies and the regional commissions, to address trade and
environment matters comprehensively, and to report, through the Commission, to
the Economic and Social Council and to the Assembly at its special session in
1997 on the concrete progress achieved on the issue of trade and environment;
(h) Invites UNCTAD and UNEP to continue their joint programme of work on
trade, environment and sustainable development, in accordance with chapter I,
paragraph 59 of the report on its third session 5/ and paragraph 14 of Assembly
resolution 50/95 of 20 December 1995;
(i) Takes note of the ongoing analytical work being conducted by OECD on
trade and environment, especially that of the Joint Session of Trade and
Environment Experts, including its report to the OECD Council at the ministerial
level in May 1995, and encourages OECD to make available to the Commission the
results of that work.


Reference
E/CN.17/1995/36
[Arabic] [Chinese] [English] [French] [Russian] [Spanish] 3rd session of the Commission on Sustainable Development
E/CN.17/1995/36 - Trade

5. Trade, environment and sustainable development

47. The Commission reiterates the initial perspectives for consideration in
subsequent work on trade and environment issues contained in its 1994 decision
and stresses that trade and environment policies should be mutually supportive
in promoting sustainable development. This requires that account be taken of
the special conditions and development needs of the developing countries. There
is also a need for support to build institutional capacity in the area of trade
and development and environmental assessment in developing countries and
countries with economies in transition. There is also a need for
complementarity, coordination, transparency and accountability among
international organizations involved in the development of policies on trade and
environment.

48. The Commission considered a number of key issues related to the linkages
among trade, environment and sustainable development. These include product
measures and market access, process standards and competitiveness,
internalization of environmental externalities and trade, multilateral
environmental agreements and trade policy, environmental factors as trading
opportunities, and trade policies and the environment. Each of these issues
involves conceptual and empirical as well as policy questions. Ongoing work in
different international organizations aims at clarifying these issues, through
policy analysis and debate, and at deriving policy conclusions therefrom. Major
groups, such as non-governmental organizations and the private sector, are also
addressing trade and environment linkages and are making important contributions
to a better understanding of them, as well as to awareness-building and public
education.

49. The Commission stresses that States should cooperate to promote a
supportive and open international economic system that would lead to economic
growth and sustainable development in all countries, so as to better address the
problems of environmental degradation.

50. The Commission notes that the Uruguay Round of multilateral trade
negotiations agreements represent a substantial liberalization of international
trade, the strengthening of multilateral rules and disciplines to ensure
stability and predictability in trade relations, the establishing of rules and
disciplines in new areas and the founding of a new institutional framework in
the form of the World Trade Organization, with an integrated dispute-settlement
mechanism that should avert unilateral actions that are against international
trade rules. The agreements thus represent an essential element for the
achievement of global sustained economic growth for the benefit of all
countries, in particular developing countries, which is a fundamental element
for achieving sustainable development. In this context, the Commission calls
for the urgent and full implementation of the agreements contained in the Final
Act Embodying the Results of the Uruguay Round of Multilateral Trade
Negotiations, 5/ stresses the urgent need for trade liberalization, including
through substantial reduction of tariffs and other barriers to trade and the
elimination of discriminatory treatment in international trade relations, and
improved access to markets of all countries, in particular those of developed
countries.

51. The Commission on Sustainable Development stresses the importance of the
work of the Committee on Trade and Environment of the World Trade Organization,
in accordance with its mandate, which calls upon the Committee to make
appropriate recommendations on whether any modifications of the provisions of
the multilateral trading system are required, compatible with the open,
equitable and non-discriminatory nature of the system, as regards, in particular
(a) the need for rules to enhance positive interaction between trade and
environmental measures, for the promotion of sustainable development, with
special consideration given to the needs of developing countries, in particular
those of the least developed among them; and (b) the avoidance of protectionist
trade measures, and the adherence to effective multilateral disciplines to
ensure responsiveness of the multilateral trading system to environmental
objectives set forth in Agenda 21 and the Rio Declaration on Environment and
Development, 6/ in particular principle 12; and (c) surveillance of trade
measures used for environmental purposes, of trade-related aspects of
environmental measures that have significant trade effects, and of effective
implementation of the multilateral disciplines governing those measures.

52. The Commission notes that positive measures, such as improved market
access, improved access to finance, access to and transfer of technology,
capacity-building and special provisions for small firms, are effective
instruments to support developing countries and countries in transition in their
efforts to internalize environmental costs.

53. The Commission reiterates paragraph 32 of its 1994 decision. It further
notes that trade provisions in multilateral environmental agreements (MEAs)
should be transparent and should not constitute a means of arbitrary or
unjustifiable discrimination or a disguised restriction on international trade.
In accordance with principle 12 of the Rio Declaration, 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
international consensus.

54. The Commission recognizes that progress has been made by virtue of the new
World Trade Organization provisions, and underscores the importance of building
on these accomplishments, in particular with regard to transparency and the use
of outside review groups where specialized knowledge is relevant.

55. The Commission reaffirms that efforts should be geared to promoting the
convergence of environmental standards and regulations at a high level of
environmental protection, while bearing in mind that regulations and standards
that are valid in the most advanced countries may be inappropriate and have
unwarranted economic and social costs for the developing countries. It further
notes the importance of transparency of environmental regulations and standards
and of supporting developing countries in the development of effective domestic
regulations and standards.

56. The Commission considers that there is a need to analyse the potential
effects of product-specific policies, in particular those based on life-cycle
approaches, which have emerged recently, such as eco-labelling and certain
packaging and recycling requirements, especially as regards their potential
impacts on the exports of developing countries and countries with economies in
transition. It is also important to analyse how improved transparency and
international cooperation could be strengthened so as to facilitate the export
prospects of developing countries and as a means of strengthening environmental
protection.

57. The Commission notes that consumer preferences for "environment-friendly"
products may create trading opportunities including for developing countries.
More work is needed to specify ways and means by which the credibility of
environmental claims relating to products and technologies can be substantiated.
58. The Commission considers that further trade liberalization is a necessary
but not sufficient condition for sustainable development. Trade liberalization
along with sustained economic growth can be expected to pave the way for the
gradual raising of environmental standards at the national and the global level.
At the same time, trade liberalization needs to be complemented by the adoption
of sound environmental policies. National Governments have an interest in
analysing environmental and social effects of significant changes in the volume
and composition in production and consumption patterns, including those
resulting from trade policy reforms, and making, if required, the necessary
policy adjustments with a view to correcting market and policy failures and
internalizing environmental costs.

59. Within the context of the overall aims of sustainable development, the
Commission welcomes the substantial progress achieved in the World Trade
Organization, UNCTAD and UNEP, in particular through the work of the World Trade
Organization Committee on Trade and the Environment, the UNCTAD Ad Hoc Working
Group on Trade, Environment and Development and the joint UNEP/UNCTAD programme,
as well as the important role of UNEP, in particular in relation to multilateral
environmental agreements, and invites the institutions concerned, as well as
OECD, to continue their work on trade and the environment. It further
emphasizes efforts to make trade and environment mutually supportive through,
inter alia, strengthening technical assistance for capacity-building undertaken
by UNCTAD, UNDP and UNEP, including in integrating the consideration of all
factors relevant to the formulation of trade and sustainable development
policies. The Commission considers that the present division of labour in the
international discussions on trade and the environment is generally satisfactory
and stresses the need for continued close cooperation and complementarity in the
work of the World Trade Organization, UNEP and UNCTAD. In this context, the
Commission invites UNEP and UNCTAD to continue their joint initiative,
preferably at a technical level with a focused agenda.

60. The Commission invites UNCTAD, the task manager for trade and environment,
in cooperation with UNEP, the World Trade Organization, FAO, WHO, the Department
for Policy Coordination and Sustainable Development of the United Nations
Secretariat and other appropriate institutions, to prepare a background paper
for the Commission that would review the growing volume of research on trade,
environment and sustainable development linkages carried out by international
organizations, as well as academic institutions and non-governmental
organizations in developed and developing countries, including within the
framework of projects supported by international and bilateral aid agencies with
a view to identifying possible gaps, including through the use of independent
trade and environment expert groups.

61. As called for in Agenda 21, the Commission recommends that Governments of
developed countries and multilateral aid agencies strengthen efforts to improve
access to markets, finance and access to and transfer of technology and to build
capacity in order to support developing countries and countries with economies
in transition in their efforts to internalize environmental costs. UNCTAD in
cooperation with UNDP, FAO and UNEP and other international bodies, programmes
and organizations is invited to undertake further work in this area with a view
to identifying innovative approaches. The joint UNEP/UNCTAD programme is also
invited to carry out further work in this area, giving particular attention to
principle 16 of the Rio Declaration and capacity-building in developing
countries and countries with economies in transition, in cooperation with other
relevant organizations, such as FAO.

62. In order to gain better understanding on the impact of the internalization
of environmental costs on competitiveness and trade earnings, particularly in
developing countries, UNCTAD is invited to carry out an analytical study on the
relationship of environmental protection to international competitiveness, job
creation and development, with the input of Governments, regional economic
integration organizations, the private sector and non-governmental organizations
as well as other relevant regional and international organizations.

63. The Commission invites UNCTAD and UNEP in cooperation with the World Trade
Organization, the International Organization for Standardization (ISO), and
other relevant international organizations to analyse how transparency and
international cooperation could be strengthened with respect to product-specific
policies, in particular to eco-labelling and certain packaging and recycling
requirements, so as to avoid or mitigate adverse trade effects, including
through the provision of technical assistance to developing countries and
countries with economies in transition and other measures aimed at facilitating
their exports.

64. The Commission recognizes that eco-labelling and recycling requirements
must be transparent and should take into account the special situation and needs
of the developing countries and countries with economies in transition. The
Commission encourages UNCTAD and UNEP, in cooperation with other relevant
international organizations, to continue to explore the scope for mutual
recognition among eco-labelling schemes on the basis of environmental
equivalencies or appropriately high levels of environmental protection.

65. The Commission invites UNCTAD and UNEP, in cooperation with UNDP,
international financial institutions (IFIs) and other international bodies,
programmes and organizations to examine the effects of trade measures in MEAs on
the achievement of environmental goals and on trade and competitiveness of
developing countries and countries with economies in transition and how positive
measures can assist those countries in meeting their obligations under the
agreements.

66. With respect to eco-labelling and environment-friendly products, the
Commission invites multilateral and bilateral development institutions to
provide technical assistance, as appropriate, to developing countries and
countries with economies in transition in order to facilitate their
participation in international work on eco-labelling and environment-friendly
products carried out by ISO and other relevant international organizations.

67. The Commission invites the joint UNEP/UNCTAD programme to carry out further
work, in cooperation with UNDP and other relevant international organizations,
on the development of a framework to facilitate the assessment of the
environmental impact of trade policies, taking into account the special needs of
developing countries and countries with economies in transition. Such work
should take into account the different elements mentioned in paragraph 33 of the
1994 Commission on Sustainable Development decision.

68. The Commission notes the ongoing work of OECD on trade and environment and
encourages it to submit the results of its work to the Commission on Sustainable
Development.

69. The Commission encourages Governments to develop or strengthen processes to
assess the environmental effects of trade policies, enhance coordination between
environmental and trade policies, including cooperation between environmental
and trade officials in the policy development process, and promote transparency
and openness to the public in these processes.

70. The Commission encourages cooperation and exchange of experiences among
countries to develop and strengthen environmental protection laws and programmes
in the pursuit of the mutual supportiveness of trade and environment.

71. The Commission encourages international organizations, Governments and the
business community, and non-governmental organizations, to promote the
implementation of trade and sustainable development principles consistent with
Agenda 21.

72. The Commission reiterates the importance of achieving transparency,
openness and the active involvement of the public and experts in relation to
work on trade and environment.


Reference
E/CN.17/1994/20
[Arabic] [Chinese] [English] [French] [Russian] [Spanish] 2nd session of the Commission on Sustainable Development
E/CN.17/1994/20 - Trade, environment and sustainable development

4. Trade, environment and sustainable development

25. As the organ responsible for monitoring progress in the implementation of
Agenda 21, the Commission sets forth some initial perspectives for consideration
in subsequent work on trade and environment issues.

26. In the framework of the implementation of chapter 2 of Agenda 21, the
Commission emphasizes the aim of moving towards the overall concept of
sustainable development. In aiming at sustainability, full consideration should
be given to the special conditions and development needs of the developing
countries and the countries with economies in transition. An open, balanced and
integrated approach towards sustainability through an open, equitable and
non-discriminatory multilateral trading system, improved market access for
products from developing countries, effective environmental protection and
mutually supportive trade and environment policies should ensure close
cooperation with all policy makers involved, as well as with the private sector
and non-governmental organizations.

27. The Commission recognizes that 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 the respective needs and concerns of countries at
different levels of economic development.

28. The Commission considers that trade liberalization can make a major
contribution to sustainable development and stresses that protectionism should
be resisted. The Commission also regards the achievement of a safe and healthy
environment, through strong and effective international and domestic
environmental protection efforts, as an essential component of sustainable
development. The Commission further stresses that there is a need to decrease
subsidies that have harmful environmental and trade-distorting effects. In
addition, market opportunities and export prospects could be improved by
complementing trade policies through sound domestic economic and environmental
policies. The Commission points out that an open, equitable and
non-discriminatory multilateral trading system and the adoption of sound
environmental policies are important means of addressing the environmental
implications of trade. The Commission urges national authorities to endeavour
to promote the internalization of environmental costs and the use of economic
instruments, taking into account the approach that the polluter should, in
principle, bear the cost of pollution, with due regard to the public interest
and without distorting international trade and investment.

29. The Commission welcomes the successful conclusion of the Uruguay Round of
multilateral trade negotiations, which is expected to bring about the further
liberalization and expansion of world trade; its full implementation will
enhance the trade and development possibilities of developing countries and
provide greater security and predictability to the international trading system.
It notes that regional and subregional economic integration processes, including
those among developing countries, have the potential of contributing to an
improvement in the medium-term prospects for world economic growth and for an
even more rapid expansion of world trade.

30. The Commission also notes with concern that the benefits of trade
liberalization will accrue more to those developing countries that have already
been pursuing more export-oriented policies than to certain developing countries
that will continue to face major difficulties, particularly those highly
dependent on trade preferences, those that are net food-importers and those
dependent on primary commodity exports, particularly in Africa. In this regard,
the Commission takes note of the decision on measures concerning the possible
negative effects of the reform programme on the least developed and net foodimporting
developing countries, taken at the Marrakesh Ministerial Meeting in
April 1994. The Commission emphasizes that for all developing countries to
benefit more fully from trade liberalization, the achievement of other
objectives identified in Agenda 21, particularly better functioning of commodity
markets, increasing foreign direct investment in developing countries and
financial assistance, including debt relief, are important. It notes that
mutually supportive trade and environment policies and structural adjustment
policies that would, inter alia, remove biases against exports, discourage
inefficient import substitution, improve infrastructure important to trade,
diversify economies to reduce dependence on primary commodities, particularly in
Africa, and improve domestic market efficiency would also increase the potential
for gains from trade liberalization. It hopes that the promotion of trade in
environmentally friendly products and technologies would also further improve
trading opportunities for developing countries. Bearing in mind the objective
of making trade and environment mutually supportive, the Commission underlines
the importance of effective multilateral cooperation to protect the environment
and also of preserving and enhancing the ability of countries to achieve and
maintain high levels of environmental protection while pursuing an open,
non-discriminatory, multilateral trade system.

31. The Commission notes that important progress was made in addressing trade
and environment issues in the Uruguay Round but recognizes that further progress
is needed to address unresolved issues and ensure that the international trading
system is responsive to environmental concerns. In this regard, the Commission
supports the decision taken at the Marrakesh Ministerial Meeting in April 1994
to establish the Committee on Trade and Environment. The Committee has a broad
mandate and will report to the first Ministerial Conference of the World Trade
Organization (WTO), to be held probably in 1997. Together with the improved
framework for dispute settlement, the Uruguay Round agreements and the decision
on trade and environment advance several of the trade, development and
environment issues of Agenda 21. The Commission recognizes that it needs to
interact with WTO in future work on these matters. It also considers that work
undertaken in the Committee on Trade and Environment would benefit from
cooperation with the United Nations Conference on Trade and Development (UNCTAD)
and the United Nations Environment Programme (UNEP).

32. The Commission emphasizes the results of UNCED relating to trade,
environment and sustainable development, including Principle 12 of the Rio
Declaration and Agenda 21, paragraph 2.22 of which calls upon Governments to
encourage the General Agreement on Tariffs and Trade (GATT), UNCTAD and other
relevant international and regional economic institutions to examine, in
accordance with their respective mandates and competences, a number of
propositions and principles, such as ensuring that environment-related
regulations or standards, including those related to health and safety
standards, do not constitute a means of arbitrary or unjustifiable
discrimination or a disguised restriction on trade and avoiding unilateral
actions to deal with environmental challenges outside the jurisdiction of the
importing country. Environmental measures addressing transborder or global
environmental problems should, as far as possible, be based on an international
consensus. Domestic measures targeted to achieve certain environmental
objectives may need trade measures to render them effective. Should trade
policy measures be found necessary for the enforcement of environmental
policies, certain principles and rules should apply. These could include,
inter alia, the principle of non-discrimination; the principle that the trade
measure chosen should be the least trade-restrictive necessary to achieve the
objectives; an obligation to ensure transparency in the use of trade measures
related to the environment and to provide adequate notification of national
regulations; and the need to give consideration to the special conditions and
developmental requirements of developing countries as they move towards
internationally agreed environmental objectives.

33. The Commission notes the importance of developing a framework to facilitate
the assessment of the environmental impact of trade policies, taking into
account the special needs and conditions of developing countries. Any such
assessment should be carried out within the overall perspective of promoting
sustainable development. In this context, there is a need to foster a better
understanding of the trade implications of a number of environmental concepts
and principles, such as the polluter pays principle, the precautionary principle
and life-cycle management. In this context, there is also a need to consider
the interactions between trade, technological cooperation and changes in
production and consumption patterns. Further work in this area by UNEP and
UNCTAD, in cooperation with other relevant organizations, would represent a
valuable contribution to the objective of making trade and environment policies
mutually supportive in promoting sustainable development.

34. In the context of the overall aims of sustainable development, the
Commission welcomes the substantial progress achieved in GATT/WTO, UNCTAD and
UNEP. The Commission further underlines efforts to make trade and environment
mutually supportive through, inter alia, strengthening technical assistance in
the capacity-building undertaken by UNCTAD, UNDP and UNEP. As GATT/WTO, UNEP
and UNCTAD are key actors in the implementation of chapter 2, sections A and B,
of Agenda 21, the Commission emphasizes the need for close cooperation and
complementarity in their work, as well as the need for appropriate inputs from
other organizations involved, such as UNDP, the World Bank and the Organisation
for Economic Cooperation and Development (OECD). The Commission underlines the
importance of complementarity in work on the identification and development of
international trade rules and international environmental law. For the purpose
of fostering cooperation, the Commission, UNCTAD and UNEP should be
appropriately represented at the WTO Committee on Trade and Environment. In
addition, there should be close cooperation between GATT/WTO and UNEP, in
particular, when considering the relationship between the provisions and dispute
settlement mechanisms of the multilateral trading system and those of
multilateral environment agreements, including with respect to the question of
compliance with the trade provisions in multilateral environmental agreements
negotiated under the auspices of the United Nations.

35. Regarding national environmental requirements and international trade, the
Commission notes that further examination and work are needed to ensure that the
trading system is adequately responsive to the needs and possibilities of
Governments in taking action to protect the environment in accordance with
international law, including health and environmental requirements. Further
consideration will have to take into account that: (a) there are legitimate
reasons for diversity in environmental regulations across countries;
(b) differences in the relative costs of production constitute the very basis
for gains from international trade; (c) the effects of national environmental
regulations should be studied to determine whether they have a greater potential
impact on trade competitiveness than other non-trade policy measures;
(d) disguised protectionism in the name of environmental standards should be
avoided; (e) efforts should be geared to promoting the convergence of
environmental standards and regulations at a high level of environmental
protection, while bearing in mind that regulations and standards that are valid
in the most advanced countries may be inappropriate and have unwarranted social
costs for the developing countries; (f) the transparency of environmental
regulations and standards should be ensured and adequate information should be
provided in particular to developing countries.

36. Regarding further international cooperation in the field of environmental
requirements, the Commission notes the need for a careful examination of the
issues relating to competitiveness, particularly in the light of evidence that,
in some cases, environmental compliance costs are a small proportion of total
costs. It should, on the other hand, be clearly seen that investing in
environmental activities has many positive effects, such as the improvement of
market opportunities and job creation.

37. The Commission takes note of the ongoing consultative process in UNCTAD on
the establishment of an ad hoc working group on trade, environment and
development as a result of the mid-term review at the eighth session of UNCTAD
and encourages interaction with GATT/WTO and UNEP. The Commission welcomes the
joint UNEP/UNCTAD programme and welcomes the participation of GATT/WTO as well
as other relevant organizations, including OECD, the private sector and
non-governmental organizations. In this regard the Commission supports the
proposal of UNEP and UNCTAD to hold, in a forum complementary to WTO and other
forums as a follow-up activity of the joint informal ministerial meeting in
February 1994 in Geneva, a working-level session and a high-level/ministerial
meeting on trade, environment and sustainable development to examine (a) the
role of environmental policies as they relate to trade liberalization policies,
(b) the promotion of trade in environmentally friendly products and technologies
and (c) the promotion of international cooperation in the field of productrelated
environmental policy instruments.

38. The Commission also welcomes the relevant provisions of the Programme of
Action for the Sustainable Development of Small Island Developing States 2/
and calls for adequate support for the implementation of the provisions of the
Programme.

39. The Commission suggests that consideration be given by Governments and
relevant organizations to (a) further development of trade-compatible
environmental instruments, such as non-discriminatory eco-labelling as well as
non-discriminatory certification and verification schemes, taking into account
the financial and institutional capacity of developing countries to do so; and
(b) cooperative work on environmental standards based, inter alia, on input from
the International Standardization Organization (ISO), with due regard to the
differentiated responsibilities of developed and developing countries.

40. The Commission reaffirms its role, in accordance with General Assembly
resolution 47/191, in monitoring progress in the implementation of Agenda 21 and
activities related to the integration of environmental and developmental goals
throughout the United Nations system. The Commission agrees to review annually
developments in the area of trade, development and environment, according to its
mandate, with a view to identifying possible gaps, and to promote cooperation
and coordination. The Commission recommends that GATT/WTO, UNCTAD and UNEP
continue to provide annual reports to the Commission on their activities
concerning trade and environment. The Commission recommends that relevant
reports from the international financial institutions should be made available
to facilitate its work. The Commission calls on the Secretary-General to ensure
an appropriate division of labour within the United Nations system in the area
of trade and environment through the IACSD and its task-manager approach.

41. In order to gain a better understanding of the impact of internalization of
environmental costs on competitiveness and trade earnings, particularly in
developing countries, the Commission recommends that the Secretary-General,
through the Economic and Social Council, seek the views of Governments, regional
economic integration organizations, the private sector and non-governmental
organizations, on an analytical study to be undertaken on the relationship of
environmental protection to international competitiveness, job creation and
development. The Commission stresses that this work could benefit from the
input of various relevant institutions, such as the World Bank, GATT/WTO,
UNCTAD, UNEP, UNIDO, UNDP, OECD and ILO.

42. Finally, the Commission highlights the importance of achieving
transparency, openness and the active involvement of the public and experts, in
relation to work on trade and environment, including work within WTO, UNEP and
UNCTAD, and to dispute settlement processes. The Commission recognizes that
there is a considerable need for improvement in these areas, and looks forward
to the development of specific recommendations in this regard by Governments and
the appropriate organizations, in accordance with chapter 38 of Agenda 21.


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