1. Product labelling schemes have been introduced in various sectors and for different objectives by non-government agencies, private industry and governments. Their common feature is that the consumers’ purchasing behaviour is directed to take into account attributes of the products other than their price and mandatory quality and health standards. These attributes can relate to economic and social objectives (fair trade; support to small farmers; discouragement of child labour) in addition to environmental and ecological ones. The schemes may comprise specific support programmes to facilitate compliance by the private sector with the labelling criteria, especially in developing countries, as well as temporary measures to compensate individuals and households who might be negatively affected.

2. The potential usefulness of eco-labelling schemes to create market-based incentives for environmentally friendly products and production processes was internationally recognized at the 1992 UN Conference on Environment and Development (UNCED) in Rio de Janeiro, Brazil, where governments agreed to "encourage expansion of environmental labelling and other environmentally related product information programmes designed to assist consumers to make informed choices."¹ Consumers are provided with the opportunity to express their environmental-ecological concerns through their choice of products. The consumers’ preferences are expected to result in price and/or market share differentials between eco-labelled products and those which either do not qualify to be eco-labelled or those whose producers do not seek to obtain such labelling. The label is obtained through a certification process based on a set of criteria (i.e. the desired standard). Potential price and/or market share differentials provide the economic incentive for firms to seek certification of their product(s).

3. Since the first successful eco-labelling scheme was introduced by the Government of Germany in the 1970s, such schemes have proliferated in many countries and for a wide range of products including food items and forest products. The introduction of eco-labelling schemes in forestry was motivated by growing concern about tropical deforestation among environmental organizations, governments and eco-sensitive consumers in the 1980s. Eco-labelling schemes were introduced, on one hand, as a means to reduce the demand for timber from non-managed tropical forests without taking recourse to restrictive trade measures that might be challenged under multilateral trading rules. On the other hand, producing countries with important tropical timber supplies to eco-sensitive consumers in North America and Europe were motivated to introduce such schemes to avoid losing market shares. In more recent years, eco-labelling schemes in forestry have expanded to include products made from temperate and boreal forests.

4. Proposals for action on certification and labelling were adopted by the UN Ad Hoc Intergovernmental Panel on Forests (IPF) at its fourth session, held in February 1997. The Panel urged countries, within their respective legal frameworks, and international organizations to consider the potentially mutually supportive relationship between sustainable forest management, trade, and voluntary certification and labelling schemes operating in accordance with relevant national legislation, and to endeavour to ensure, as necessary, that such schemes are not used as a form of disguised protectionism and do not conflict with international obligations.

5. In agriculture, there is evidence that the demand for organic foodstuff in Europe and North America has been outstripping supplies for many years. As a result, organic food items fetch significant premium prices which have created a strong incentive for expanded production not just in these regions but also in a growing number of developing countries. The rapid increase in labelling schemes indicating "organic" products led to a rather confusing picture for consumers and attempts have been made to produce harmonized standards which would provide organic growers access to global markets through mutual recognition of certification schemes across borders. The two major efforts to arrive at common international standards are the "Basic standards" for organic farming of the International Federation of Organic Agricultural Movements (IFOAM) and the "Draft guidelines for the production, processing, labelling and marketing of organically produced foods" developed by the Committee on Food Labelling of the Codex Alimentarius Commission (CAC). The latter are expected to be submitted to the CAC in 1999.

6. In fisheries, there are presently at least two private initiatives to create eco-labelling schemes: (i) the Marine Stewardship Council (MSC) promoted by the World Wide Fund for Nature (WWF) and Unilever for marine capture fisheries, and (ii) an aquaculture labelling scheme promoted by the Global Aquaculture Alliance, a newly-formed NGO representing primarily firms with interests in shrimp aquaculture. The concerns about reduced supplies from over-exploited fish stocks and the environmental impacts of certain aquaculture practices are likely reasons why industry associations and large-scale fish wholesalers and retailers in some countries are examining the application of eco-labelling schemes for fish and fishery products.

7. The ultimate objective of eco-labelling of fish and fishery products should be to achieve the goal of sustainable fisheries and aquaculture. This is in line with the objectives pursued by the FAO Code of Conduct for Responsible Fisheries and other international and national instruments, which generally place emphasis on achieving sustainability objectives through public policy interventions comprising, inter alia, regulatory instruments such as limit licensing schemes, effluent standards, land use regulations as well as market-based measures such as the establishment of tradable fishing rights (e.g. ITQs) and the charging of resource use and pollution fees or taxes. Voluntary eco-labelling schemes can complement public policy interventions by providing added economic incentives for sustainable production practices, but cannot normally substitute the management functions of the State because of the public or common property nature of fishery resources and their habitats. Moreover, the exploitation of transboundary fish stocks by more than one State necessitates that they co-operate bilaterally or through regional fishery arrangements in the management of these stocks.

8. Pertinent objectives of the Code of Conduct for Responsible Fisheries as stated in Article 2 that have a bearing on the issue of eco-labelling include the following :

a) establish principles, in accordance with the relevant rules of international law, for responsible fishing and fisheries activities, taking into account all their relevant biological, technological, economic, social, environmental and commercial aspects;

h) promote the trade of fish and fishery products in conformity with relevant international rules and avoid the use of measures that constitute hidden barriers to such trade.

Reference should also be made to the following general principles of the Code:

• Fisheries management should promote the maintenance of the quality, diversity and availability of fishery resources in sufficient quantities for present and future generations in the context of food security, poverty alleviation and sustainable development. Management measures should not only ensure the conservation of target species but also of species belonging to the same ecosystem or associated with or dependent upon the target species (Article 6.2);
• States should consider aquaculture, including culture-based fisheries, as a means to promote diversification of income and diet. In so doing, States should ensure that resources are used responsibly and adverse impacts on the environment and on local communities are minimized (Article 6.19).

9. In adressing responsible fish utilization, Article 11.1.11 of the Code of Conduct calls upon States to "ensure that international and domestic trade in fish and fishery products accords with sound conservation and management practices through improving the identification of the origin of fish and fishery products traded". Article 11.1.3 says "States should set minimum standards for safety and quality assurance and make sure that these standards are effectively applied throughout the industry. They should promote the implementation of quality standards agreed within the context of the FAO/WHO Codex Alimentarius Commission and other relevant organizations or arrangements". Further, Article 11.1.4 provides that "States should cooperate to achieve harmonization, or mutual recognition, or both of national sanitary measures and certification programmes as appropriate and explore possibilities for the establishment of mutually recognized control and certification agencies". With respect to responsible international trade, Article 11.2.2 states that "[i]nternational trade in fish and fishery products should not compromise the sustainable development of fisheries and responsible utilization of living aquatic resources." Improved information on the origin of fish and fishery products can result in more informed purchasing behaviour by consumers and intermediaries taking into account the status of specific fish stocks or their supply from certain aquaculture practices.

10. The following paragraphs discuss some issues that might need consideration if and when a system of eco-labelling fish and fishery products from marine capture fisheries is introduced. Some of them could be applicable mutatis mutandis to aquaculture products.

11. If applied to marine capture fisheries, the goal of eco-labelling would be to achieve certain specific fisheries management objectives. These objectives find expression in the criteria underlying certification standards. The setting of fisheries management objectives is, in principle, the prerogative of States. However, in various binding and voluntary international instruments, States have given the undertaking to pursue certain objectives related to the conservation and management of marine fisheries resources. These include, inter alia, the 1982 United Nations Convention on the Law of the Sea, the 1995 Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, and the Code of Conduct for Responsible Fisheries. Other international instruments that contain provisions related to the conservation and management of marine living resources and their habitats include the Convention on Biological Diversity and Agenda 21 of UNCED.

12. In addition to the above global instruments, fisheries management objectives for certain marine fishery resources have been laid down by regional fishery management organizations and within bilateral and multilateral treaties among States sharing one or several fish stocks.

13. These global, regional and bilateral instruments, generally, do not express fisheries management objectives in sufficient detail and with the required precision to serve as certification criteria for eco-labelling schemes of specific fish and fishery products obtained from marine capture fisheries.

14. Where criteria cannot be directly derived from international instruments for certification purposes, the issue arises of how and by whom management objectives should be set in eco-labelling schemes. The UN Convention on the Law of the Sea confirms the sovereign right of the Coastal State for the purpose of conserving and managing the living resources within its EEZ. The 1984 Strategy for Fisheries Management and Development of the FAO World Conference on Fisheries Management and Development states that "States have sovereign rights to determine their policies for the development and use of their fishery resources." From this, one may draw the conclusion that, in general, States might consider, if appropriate, or be involved in establishing, management objectives and criteria of any labelling scheme for fish and fishery products derived from marine fishery resources within their own EEZs.

15. If fisheries management objectives were to be achieved through eco-labelling schemes, certain requirements would have to be met. The economic incentive created by the labelling scheme needs to be sufficiently high to be attractive to the fishery management authority and to the participants in the fishery to seek certification and cover the related fisheries management and labelling costs. The fishery management authority could rest with a State or delegated by it to a regional fishery management organization, a private entity, a fishing industry association, a fishing community, a fishing cooperative or a combination thereof. The economic incentive may not necessarily be solely the result of a higher price and/or market share of the labelled product but could derive from financial support of the State and donor agencies including non-governmental organizations, investments into fisheries management by financial agencies including development banks, as well as through the direct gain of resource rents by the participants in the fishery and/or the management authority. Resource rents may only accrue with a time lag after the instituting of an effective management regime. The duration of this time lag would depend on various factors including the time needed to restore the abundance of the fishery resource(s) to the desired level.

16. Consumers’ product choices and their willingness to pay a higher price for an eco-labelled product will depend on their general responsiveness and capacity to address environmental concerns through their purchasing behaviour and their awareness and understanding of the specific objectives pursued through the labelling scheme. Consumers need also to be confident that these objectives are being reached through such a scheme. This requires that consumers are provided with accurate information about the labelling scheme and have trust in the procedures to (i) set objectives and establish appropriate standards and criteria; (ii) ensure compliance with these standards and criteria; and (iii) maintain the chain of custody through all stages of the product cycle.

17. In the absence of sufficient and accurate information, consumers may be misled about the environmental benefits resulting from their product choices. Consumer confusion could result, inter alia, from the existence of competing labelling schemes which are based on different sets of criteria and standards. For example, consumers may associate a label indicating that a certain species is not taken as by-catch in the capture of a target species as evidence for the sustainability of the target fishery. Consumers may also be misled about the environmental impacts of purchasing unlabelled fish and fishery products which could not be assumed, a priori, to come from unsustainable fisheries.

18. Principle 12 of the Rio Declaration on Environment and Development of 1992 explicitly refers to the requirement of non-discrimination in trade policies for environmental purposes and calls for an international consensus for environmental measures addressing transboundary and global problems. It states:

"Trade policy measures for environmental purposes should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade. 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 an international consensus."

19. Concern has been expressed that eco-labelling could create barriers to market access, especially by producers from developing countries. Eco-labelling mandated by States would come within the scope of the rules of the World Trade Organization (WTO), specifically those contained in the Agreement on Technical Barriers to Trade (TBT Agreement) and its Code of Good Practice for the Preparation, Adoption and Application of Standards (Annex 3 of the TBT Agreement). The TBT Agreement also makes reference to private and voluntary labelling schemes and requires States to ensure that standard setting bodies, public or private, comply with the Code of Good Practice.

20. The management of many marine fisheries in developing countries poses special difficulties, particularly for small scale fisheries with large number of participants operating from numerous landing places concurrently exploiting multiple fish stocks. Furthermore, the capacities of fisheries administrations are often insufficient and existing infrastructure facilities inadequate for effective fisheries management. While many small-scale fisheries produce primarily for domestic markets, the catches of certain high priced species for export markets often make a significant contribution to revenue and income.

21. The management of large-scale industrial fisheries of developing countries and of countries in transition, generally, poses less difficulties but these are still substantial in many instances in view of the constraints which fisheries administrations often face. Therefore, while certification of certain specific fisheries may entail significant business opportunities, the prospect of developing and transition countries to apply or adhere to eco-labelling schemes of products from marine capture fisheries is, in general, less favourable than that of developed countries. For this reason, special considerations may need to be given to allow developing and transition countries to participate in eco-labelling schemes on an equal footing. These considerations may relate to the criteria underlying the required labelling standards, specific capacity-building measures through technical and financial assistance and appropriate funding arrangements which ensure that adequate financial resources are available for marine fisheries management. In this respect, note should be taken, inter alia, of the provisions of Article 5 of the Code of Conduct for Responsible Fisheries on the special requirements of developing countries and the provisions of Article 12 of the TBT Agreement regarding the special and differential treatment of developing country members.

22. At its 6^th Session, the COFI Sub-Committee on Fish Trade, Bremen, Germany, 3-6 June 1998, agreed that FAO should organize a technical consultation to investigate the feasibility and practicability of developing non-discriminatory, globally applicable technical guidelines for the eco-labelling of fish and fishery products from marine capture fisheries.

23. In pursuance of the recommendation of the Sub-Committee, FAO convened with extra-budgetary support from the Nordic Council of Ministers the Technical Consultation on the Feasibility of Developing Non-discriminatory Technical Guidelines for Eco-labelling of Products from Marine Capture Fisheries, Rome, Italy, 21-23 October 1998. The Report of the Consultation has been issued as document COFI/99/Inf.16 Part I.

24. While the Consultation did not reach an agreement on making a recommendation to the Committee on Fisheries with respect to this matter, there was a consensus that if an agreement was eventually reached on the feasibility of elaborating guidelines for eco-labelling this should be consistent with the Code of Conduct for Responsible Fisheries, and, in addition, should consider inter alia the following principles:

• be of a voluntary nature and market driven;
• be transparent;
• be non-discriminatory, do not create obstacles to trade and allow for fair competition;
• establish clear accountability for the promoters of schemes and for the certifying bodies in conformity with international standards;
• there should be a reliable auditing and verification process;
• recognize the sovereign rights of States and comply with all relevant laws and regulations;
• ensure equivalence of standards between countries;
• be based on the best scientific evidence;
• be practical, viable and verifiable;
• ensure that labels communicate truthful information;
• must provide for clarity.

25. It was stressed that, if so decided by COFI, the development of technical guidelines should take into account and be consistent with on-going related work by other inter-governmental organizations, in particular the WTO. The need was also emphasized to take into account the work of the International Organization for Standardization (ISO) and the procedures adopted by the Codex Alimentarius Commission as well as other relevant experiences in the subject, such as those mentioned in the Introduction.

26. It was suggested that if guidelines were to be developed, they should aim to provide globally applicable minimum criteria to be included in any eco-labelling scheme. These minimum criteria would then serve as a reference for the elaboration of detailed criteria needed for specific eco-labelling schemes. There was unanimity that FAO would have no role to play in the implementation of any scheme. It was also recognized that the guidelines would need to consider the process by which eco-labelling would be undertaken.

27. The Ministerial Meeting will be informed of any pertinent point which may emanate from the discussions on the subject at COFI's Twenty-third Session.

28. The Ministerial Meeting is invited to provide guidance on the possible role of eco-labelling of fish and fishery products in promoting responsible fisheries and to consider whether global action is needed to ensure that eco-labelling schemes effectively contribute to sustainability of fisheries and aquaculture, are non-discriminatory and do not create new barriers to trade.