by Walden Bello, in The Nation Newspaper, 6 June, 1997, Bangkok, Thailand
Banning the imports of products produced in environmentally harmful ways sounds fine. But not when this is used as an excuse for economic protectionism. The rise of such green protectionism will only punish the technologically-disadvantaged Third World producers.
Thailand is a central actor in a dispute that is shaping up as a landmark battle in the volatile area of trade and the environment the so-called shrimp-turtle controversy.
The World Trade Organisation (WTO) recently agreed to a request to form a dispute settlement panel to rule on the compatibility with WTO trading rules of a US ban on the import of shrimps caught in the wild with nets that are not equipped with ”turtle excluding” devices.
The move, which also covers products from shrimps caught in such a fashion, is meant to protect an internationally recognised endangered species, the sea turtle, and is based on the US Endangered Species Act which requires US shrimp fishermen to equip their nets with such devices.
The shrimp-turtle issue is widely regarded as Round Two of the trade-environment dispute, the first round being the tuna-dolphin case that played out in the early 1980s, which was instigated by the US ban, based on its Marine Mammal Protection Act, which bans nets which are supposed to entrap large numbers of dolphins.
In that case, a Gatt (General Agreement on Tariffs and Trade) disputes resolution panel ruled against Washington, but the decision was never adopted by Gatt (the precursor of the WTO), leaving the US technically unconstrained by the ruling.
The current move affects shrimp exports to the US from an estimated 40 countries, the most significantly affected being Asian countries. While Thailand, Malaysia, and Pakistan are the formal complainants, some 25 other countries have already reserved their rights as ”interested parties”.
Although Washington has lifted the ban on shrimps from Thailand because it is already equipping its fishing fleet with turtle-excluding devices, Bangkok is joining Malaysia and Pakistan as a complainant ”out of principle”.
Most likely, it is from self-interest, since the Thais would like to pre-empt the application of the US law to shrimp that are raised in aquaculture farms, which account for 75 per cent of Thailand’s shrimp production. This is not an unreasonable fear since environmentalists also contend that shrimp farms are extremely damaging to mangrove ecosystems.
The Philippines has come on as an interested party for the same reason. As one Geneva-based Filipino diplomat said, ”We’re not affected now. But if the Americans extend the ban to aquaculture products, then we will really be hit hard since most of our shrimp exports are produced in aquaculture farms.”
Environmentalists at odds
Like Asian trade officials, though for more complex reasons, Asian environmentalists have also been drawn to the dispute, which has split the global environmental community.
Many Northern environmental organisations either explicitly or tacitly support the US move. For them, the issue is not unilateralism but the principle that trade restrictions can be placed on imports not only on the basis of the nature of a product per se but also on the basis on how it is produced that is, government ought to be able to restrict imports if they are produced with unsustainable production processes and methods (PPM’s).
Asian and other Southern environmentalists are caught in a dilemma. On the one hand, they are concerned that the sea turtle is indeed in danger of extinction and deep-sea shrimp fishing without turtle-excluding devices does contribute seriously to their decimation. On the other hand, they are bothered greatly by the US move to apply its domestic law to activities that take place outside US jurisdiction. The US ban, to them, seeks to achieve a fine objective with the wrong approach unilateralism.
For them, restrictions ought to be applied not only to shrimps harvested in the wild but also to those that are produced in environmentally damaging aquaculture farms, but this should be done according to clearcut rules of multilateral environmental agreements (MEAs) that are negotiated among countries. Moreover, trade restrictions should be compliment by moves that compensate the affected producers with technology transfer that would assist them to shift to more sustainable PPMs.
The tendency among Southern environmental NGOs to line up against the US ban is more pronounced now than during the tuna-dolphin conflict. Perhaps one reason is that the shrimp ban takes place in the context of a US trade strategy that has in the very recent past become more unilateralist and more aggressive towards the South, especially Asian countries.
This trend has accelerated despite the founding of the WTO, which was supposed to strengthen and expand a ”rule-based” multilateral system of international trade governance.
Prying open markets
Since the WTO came into being in January 1995, the US has threatened to impose Special 301 sanctions on China twice for alleged intellectual property rights (IPR) violations and threatened Super 301 sanctions against Japan and Korea for restrictions on the imports of automobiles and automobile parts.
In the last two years, Washington has also placed practically all of its other partners in the Asia Pacific Economic Cooperation (Apec) on the ”priority watch list” or ”watch list” of ”IPR violators,” a move which makes them candidates for sanctions under the Special 301 Section of the US Trade Act.
Moreover, the US has used the WTO in fairly blatant ways to push its trade interests. It had, for instance, set itself up as the key arbiter of whether or not China will be able to join the WTO. And Washington has shamelessly used key WTO gatherings, such as the First Ministerial Meeting in Singapore last December, to push through initiatives which will principally benefit US corporations, like the landmark Information Technology Agreement (ITA) to reduce tariffs on IT products to zero by the year 2000 among the countries that control over 95 per cent of IT trade.
Despite pleas from the WTO Secretariat and other WTO members that it disavows Super 301 and Special 301, Washington had affirmed their use and explicitly confirmed unilateralism as the main prong of the US trade strategy. Shortly after the ratification of the Gatt-WTO agreement, for instance, then US Trade Representative Mickey Kantor told the US Senate Finance committee in April 1995: ”We will continue to use every tool at our disposal 301, Super 301, Title VII, GSP, the Telecommunications Trade Act, or WTO accession to open markets around the globe.”
This stance has recently been reaffirmed by Kantor’s successor, Charlene Barshefsky, who told a US House of Representatives Committee on March 18: ”There are some who believe that simply opening markets on a global scale is the be-all-and-end-all, no matter how it is done or no matter who benefits. I subscribe to a different view. It is imperative that we open markets in a manner consistent with the rules of the WTO, but we must make sure Americans benefit directly from the process, and to do that Americans must drive the rules of the new global landscape and the opening of markets.”
It is in the context of accelerating American unilateralism that many Southern environmental NGOs are staking their positions in shrimp-turtle debate. For them, it is on the shrimp-turtle issue the lines are being drawn in the struggle against unilateralism, and to make an exception of this case would be tantamount to conciliating unilateralism, with all the potential perils this would pose to the well-being of Southern societies and environments.
Threat of green protectionism
Many Southern environmentalists seek a harmonious relationship between environment and development, and they see a serious threat to sustainable development emanating not only from unilateral trade measures like the shrimp ban but also from a whole set of environmental measures that, while taken for a good cause, become a de-facto form of ”green protectionism”.
Environmental product standards are going up more and more in the North, with detrimental effects on Third World producers. For instance, a study on the impact of such measures on Indian industry done by the United Nations Conference on Trade and Development (UNCTAD) has found that in the leather tanning and textile industries, which are key export earners, the costs of eco-friendly dyes required to meet international standards in the leather-tanning industry are approximately three times higher than the costs of the dyes currently being used.
Also likely to have a negative impact are new packaging laws which are meant to reduce the quantity of packaging and promote its recovery and recycling. Here simply getting information on and understanding packaging requirements in different Northern markets is difficult and costly. Meeting new rules on recycled or recyclable content for packaging often adds significant costs, especially when Southern producers have to import green packaging material to be able to export their goods to certain markets.
The reduction of market access posed by packaging requirements is already very real for some countries. In Thailand, for instance, exports of frozen fishery products have been negatively affected, and other sectors dependent on significant quantities of plastic and non-biodegradable matter for packaging are likely to suffer as well.
”Eco-labelling”, or specifying the environmentally relevant contents or production method of a product, is also perceived as posing new threats to market access although most significant eco-labelling programmes in the North are still voluntary. This is especially the case in premium markets made up of environmentally discriminating middle-class consumers.
To compete, Southern producers find that they must invest significant amounts in raw materials, new chemicals, new production processes, and testing and certification. For Indian leather products, the cost of testing and certification alone is said to be as high as 33 per cent of the current export price.
Thailand and other Asian countries need to take the trend towards higher environmental product standards and eco-labelling in the North seriously since according to Unctad, 60 per cent of Asia’s manufacturing exports originate in areas where new environmental requirements are emerging.
Governments have to pay special attention to the needs of their small and medium entrepreneurs. As a study of the secretariat of the WTO’s Committee on Trade and the Environment has underlined, while the big Southern manufacturers might have the capital and technological capabilities to adjust to higher environmental standards, small and medium enterprises, which have neither the cash not technological sophistication, will face difficulties.
Green marshall plan
Most Southern environmentalists do not oppose the raising of environmental product standards in the North. In fact, they support it. But in order to prevent this trend from turning into a situation of a de-facto green protectionism that discriminates against producers in developing country, they underline the importance of positive measures, such as technology transfer aimed at upgrading and rendering more environmentally friendly the production processes in the South.
This would include loosening patent and copyright rules so as to facilitate the adoption, at low or reasonable prices, of Northern-owned eco-friendly technology something that Northern corporations may be loathe to do. But support may not only be in the form of the transfer of packaged technology but also in that of financial assistance for indigenous research and development activities in the South meant to come up with appropriate technology that meet higher environmental standards.
Such measures would not only benefit developing country exporters, say Southern environmentalists, but they would have the effect of bringing about higher environmental industrial standards and production processes in Southern countries, where old industrial technologies have contributed significantly to making cities like Bangkok, Sao Paulo, and Manila ecological disaster areas.
The problem is: Are the Northern countries willing to come up with the resources to facilitate this environmental upgrading of industry in the South? Many Southern environmentalists are sceptical, pointing to the fact that at the United Nations Conference on Environment and Development in Rio in 1992, the North promised billions of dollars in environmental aid for the South, part of which was meant to support the spread of environmentally friendly industrial technology. Very little, if any, of this aid has materialised, they emphasise.
Very little too has come as a result of the Montreal Protocol of 1986, which promised assistance to Southern countries to ease their transition from the production and use of CFC’s and other ozone-depleting substances.
It is clear, however, that without the equivalent of an environmental ”Marshall Plan”, higher environmental product standards in the North will, in fact, result in a de-facto green protectionism, with tremendous negative consequences for the well-being of developing countries that are increasingly following export-oriented development strategies.
Dr Walden Bello is co-director of Focus on the Global South, a programme of policy research and analysis of the Chulalongkorn University Social Research Institute in Bangkok and a professor of sociology and public administration at the University of the Philippines.