|Agricultural Trade Fact Sheet|
TRADE, ENVIRONMENT, AND SUSTAINABLE DEVELOPMENT
ENVIRONMENTAL SUSTAINABILITYFAO is fully devoted to environmental sustainability in the use of natural resources for agriculture, forestry, and fisheries products. The number of FAO programs and projects that focus on environmental sustainability are too numerous to enumerate here, but they range from normative studies and policy advice to working with farmers and rural communities to develop and implement sustainable production systems. The organizing framework for these activities is sustainable agriculture and rural development or SARD. FAO has defined SARD as:
"... the management and conservation of the natural resource base, and the orientation of technological and institutional change in such a manner as to ensure the attainment and continued satisfaction of human needs for present and future generations… Such sustainable development (in the agriculture, forestry and fisheries sectors) conserves land, water, plant and animal genetic resources, is environmentally non-degrading, technically appropriate, economically viable and socially acceptable."
A principle of sustainable development is that we pass on to the next generation a stock of resources that is at least as productive as the stock we have.
ENVIRONMENTAL PROTECTION AND TRADEA number of GATT articles are of direct relevance to trade-related environmental issues. The GATT principle of non-discrimination has a fundamental bearing on the formulation and enforcement of environmental policies by WTO Members. With respect to trade-related environmental issues, the principle of non-discrimination ensures that national environmental protection policies are not adopted with a view to arbitrarily discriminate between like products of foreign and domestic origin or between like products imported from different trading partners. Thus, the principle of non-discrimination helps in preventing the use of environmental policies as disguised restrictions on international trade.
The WTO Agreements provide for specific types of environmental protection in a number of places, and such measures are subject to the following conditions:
ISSUES OF CONCERN FOR DEVELOPING COUNTRIESThe debate surrounding agricultural trade liberalisation and environmental protection is complicated by the fact that the perspectives of developed and developing countries are often quite different. Some issues of concern to developing countries are as follows:
MULTILATERAL ENVIRONMENTAL AGREEMENTSMultilateral Environmental Agreements (MEAs) are regarded as the preferred vehicle for handling transboundary environmental issues, at either the regional or global level, because unilateral solutions run the risk of arbitrary discrimination and disguised protectionism. Disputes about consistency with WTO provisions could arise when an MEA requires its signatories to apply trade measures against non-signatories for failure to comply with the MEA. To date no legal challenges have arisen within the WTO over trade provisions applied pursuant to an MEA, but the potential for friction exists. Trade sanctions imposed unilaterally on environmental grounds have been challenged and over-turned.
Of the some 200 MEAs currently in force, about 20 contain trade provisions. Those with particular relevance for agriculture include the Montreal Protocol on Substances that Deplete the Ozone Layer, the Convention on International Trade in Endangered Species (CITES), and the Convention on Biological Diversity (CBD).
The CBD entered into force in 1993 and has now been ratified by 176 countries. The CBD is a legally binding commitment which aims to ensure the conservation and sustainable use of biological diversity, and the equitable sharing of its benefits. FAO cooperates closely with the Secretariat of the CBD, and is fully committed to work with all parties to the Convention in areas relevant to its mandate.
To ensure the objectives of the CBD are met, the convention sets out broad categories of obligation which parties must implement: they must establish rules governing access to biological resources, systems recognizing the rights of local communities, mechanisms ensuring the transfer of appropriate technologies, and procedures for "the safe handling, use and transfer of living modified organisms." The relationship between the CBD and the WTO is still being defined, especially as regards the TRIPS Agreement.
ENVIRONMENTAL AND SOCIAL COSTSIn a well-functioning market-based economy, prices register the relative scarcity of resources and the preferences of consumers (at a given income level), and serve to allocate resources efficiently among competing uses. However, the market alone does not lead to an optimal resource allocation unless social as well as private costs and benefits are fully reflected in product prices.
Environmental costs and benefits - "externalities"- are often not reflected in market prices in the agricultural sector. Thus, "market failures" may result in inappropriate patterns of production and consumption unless a judicious mix of economic and environmental policies are used to correct them. At the same time domestic "policy failures", however, may have adverse consequences, either by directly harming the environment or by distorting price signals and causing a misallocation of resources. Trade liberalization could have implications for the environment and SARD to the extent that it stimulates significant changes in the current patterns of agricultural production and trade.
THE WAY FORWARDThe reform process in agriculture is predicated upon the understanding that reduced policy distortions and market failures will lead to more efficient allocation of resources and more sustainable patterns of production. Trade liberalisation as a tool, not a goal in itself can be an important mechanism in support of sustainable agricultural development.