Shalmali Guttal, Focus on the Global South*
(Presentation at the Seminar “Alternatives to Neoliberalism,”
Bangkok, Thailand, February 9, 2000)
The Shrimp-Turtle Controversy and Unilateralism
The trade and environment nexus has become seriously contested ground in the North and South alike. While no-one wants the environment sacrificed at the alters of free trade or economic development, serious differences in approaches to environmental protection have divided government and non-government actors engaged in trade, environment and development issues. This divide became particularly pronounced during the shrimp-turtle dispute in 1996, when the U.S. imposed a ban on shrimp imports from producers that did not use Turtle Excluding Devices (TEDs) in fishing operations. The ban affected shrimp exports to the US from at least 50 countries and was lobbied for by the Earth Island Institute on the grounds that since the U.S. had already imposed requirements for the use of TEDs for shrimp imports from the Caribbean, the same requirements should then also be extended to other sources of shrimp imports. The countries most significantly affected by the 1996 ban were from Asia. In response, Thailand, Malaysia, Pakistan and India filed a formal complaint against the U.S. in the WTO, and 25 other countries reserved rights in the dispute as “interested parties.”i
A number of Northern environmental organizations supported the US move on the principle that governments should be able to restrict imports if the imported goods are produced though unsustainable production processes and methods (PPMs). But Asian and other Southern environmentalists-who were also concerned about the endangerment of the sea-turtle-were deeply outraged by the US move to apply its domestic law to activities outside U.S. jurisdiction. In their view, international restrictions, bans, sanctions, etc. concerning the environment should be imposed according to clear-cut rules of multilateral environmental agreements (MEAs) that are negotiated among countries, and not through unilateral action by a single, powerful nation.
i Bello Walden and Marco Mezzera, A View from Asia, paper presented at the Workshop for Civil Society and Government on Trade and Environment, International Center for Trade and Sustainable Development. September, 1998.
As the debate unfolded, the central issue of the dispute moved away from protection of the sea-turtle towards the U.S.’s treatment of its trading partners. The Earth Island Institute’s position was apparently motivated by the need to protect the endangered sea turtle. However, it argued that if the U.S. did not ban shrimp imports from non TED using producers, shrimp producers in the Caribbean would be placed in uncompetitive positions compared with shrimp producers elsewhere. Further, while it was widely accepted that the sea-turtle was indeed endangered, little accurate baseline data was presented by supporters of the ban on the actual numbers of sea turtles in Asian waters, or on the various activities that threatened its existencei. For those who opposed the ban, the issue was clearly one of trade barriers, unilateralism and economic dominance by a powerful Northern country.
Today, while the unfortunate sea-turtle has all but faded from public view, debates about using trade linkages as a means to protect and preserve the environment continue to rage on various fronts.
Many Southern environmentalists and activists see a serious threat to sustainable development emerging not only from unilateral trade actions such as the U.S. shrimp ban, but also from a variety of environmental measures that, while taken for a good cause, become de facto a form of “green protectionism.” Such measures have differential impacts on populations depending upon their respective social, economic and cultural positioning, gender, access to political power, etc.
For many communities in the developing world, sudden shifts in patterns of natural resource use or consumer preferences do not necessarily mean environmental protection; on the contrary, they more often than not lead to reduced livelihoods and greater impoverishment, especially among subsistence or small producers. A long history of expropriation and over-exploitation of natural resources through colonialism and extractive development models have rendered producers in developing countries dependant on the markets of wealthier, industrialised nations. And when these markets are used as negotiating instruments for environmental protection, one is compelled to ask: are trade rules indeed effective in protecting and sustaining healthy environments? If so, who’s environments? And at what costs?
From a political ecology perspective, it is untenable to claim that environment measures linked with trade can be applied on a “one-size-fits-all” basis. Agreements on environmental quality and safety standards, ecologically sound production practices and even sustainable development need to be considered within the widely varying historical, political, socio-cultural and economic contexts in the traditional North and South.
Environmental Standards, Packaging and Labeling
More and more in the North, due to pressure from environmental groups and environmentally conscious consumers, standards mandating product content, production processes and product packaging are being introduced which, if incorporated into trade regulations, would permit countries to ban or restrict imports of products that do not meet the specified standards. While eco-labeling in the North is still voluntary, its growing preference among environmentally conscious consumers poses a significant threat to market access among producers in developing countries. To compete in potentially environment-friendly markets, these producers would need to invest significant amounts in new technologies, new raw materials, new chemicals, new production processes, testing and certification which would increase the costs of their products, thus making them less competitive in foreign markets .
A study conducted by the United Nations Conference on Trade and Development (UNCTAD) found that in the Indian 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 .ii 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. Further, According to UNCTAD, 60 per cent of Asia’s manufacturing exports originate in areas where new environmental requirements are emerging.
While large manufacturers in developing countries might have the capital and technological capabilities to adjust to higher environmental standards, small and medium enterprises, who have neither the cash nor technological sophistication, will face greater difficulties. Most producers, consumers and workers in developing countries also want cleaner environments, and higher safety and environment standards for production practices and product content. However, research and ownership of new, environment-friendly technologies and materials that can be used for large-scale production are largely concentrated among rich, Northern institutions, thus placing southern producers at a technological and economic disadvantage right from the start.
Existing trade and investment rules-especially those in the World Trade Organisation (WTO)-have been particularly detrimental to developing sustainable environmental standards and implementing existing MEAs. WTO rules can demand that a nation remove existing domestic laws that support socially responsible and ecologically sustainable industries, and introduce new regulations conducive to foreign investment. The threat of WTO trade action was used to delay agreement on both Persistent Organic Pollutants and the Bio-safety Protocol, which deals with genetically modified organisms.iii
Even when environment standards are accepted, they are not applied equally across countries. While the U.S. felt justified to ban the imports of certain types of shrimp, it vigorously contested the labeling of genetically modified foods and filed against the European Union (EU) in the WTO to protest the EU ban on imports of hormonally treated beef. Further, within the framework regional trade agreements such as NAFTA, transnational corporations have been able to obtain exclusions from domestic environmental regulations and from compensatory payments of damages to those who have been negatively affected by violations of domestic laws.
So while on one hand Northern activists argue for higher environmental, safety and labour standards, on the other hand, developing country governments are vigorously urged in the name of free trade and development to create conditions to attract foreign capital and industry, including relaxation of domestic environment and labour regulations. In such a state of affairs, “green” and clean production will continue to remain largely in the hands of large manufacturers and producers (mostly from the North), while small and medium size enterprises (mostly from the South) who are unable to meet the higher environmental and labour standards will be gradually edged out of the market altogether.
Agriculture and the Environment
Free trade rules pertaining to agriculture have had particularly complex impacts on the environment, ranging from environmental degradation and loss of bio-diversity to food crises and outward migration of agricultural labour. The importance of environmental quality and protection are clearly visible in the struggle for food security among subsistence and small farmers, fishers, and other agricultural producers across the world. But global free trade rules have served to undermine both the capacity and the potential for communities and nations to be genuinely food secure.
For a huge proportion of people in the world (especially in developing countries), food security means that families, communities and nations can produce enough food from their own resources, and stock up sufficient surplus for times of scarcity and hardship. Further, agricultural products such as jute, rubber, coconut and natural fibres are crucial raw materials for local/national industries and markets which in turn strengthen local/domestic economies, thus creating conditions for long term food security and sovereignty. And for the majority of subsistence and small agricultural producers, the immediate natural environment is the most important and direct source of food and livelihood.
However, the free trade approach to agriculture seems to assume that it is more desirable for a country to import food if it is cheaper compared to its own production. Coupled with the still popular “comparative advantage” theory of production, this approach pushes producers to move from agricultural diversity and seasonal cropping towards mono-cropping and homogenised production for export and large domestic markets. This calls for significant changes in production and resource management methods, and increased (often indiscriminate) use of costly, imported inputs such as chemical pesticides and fertilisers which seriously damage land, forests, water, and human and animal health.
But what really is the meaning of “cheaper” production? The main food exporters in the world today are the European Union (EU) and the USA, whose agricultural sectors receive substantial domestic supports from their governments for production, distribution and export through a variety of mechanisms such as direct payments for controlled production, price guarantees, subsidies and grants for research and development, tax incentives, testing and certification of environmental health and safety standards, services for environmental protection and clean-ups, and so on. Insulated from market forces (and in many cases, from social responsibility), these producers have been able to increase their production to levels high enough to give them significant competitive edges in world agriculture markets. In effect, domestic agricultural supports in rich countries absorb the environmental costs of large-scale agricultural production. In cases where these costs cannot be fully absorbed, they are transferred to the producers of developing countries through environmental standards, trade restrictions and quotas.
A study of fisheries and trade by Greenpeace and the Center for International Environmental Law (CIEL) points out that government subsidies to the fishing industry in developed countries are one of the underlying causes of overexploitation of fisheriesiv. Subsidies undermine the adoption of ecologically sound fishing practices, encourage over-capacity, attract more people to enter and remain in the industry, and induce producers to adopt new technologies by reducing the risks of investing. Since the cost of subsidised fishing is less than its real cost, producers have no incentive to adopt resource and energy saving production and processing methods. The overall result is over-fishing and inefficient fishing. A serious consequence of this is that these subsidised producers then move to other waters–often in developing countries—thereby threatening the livelihoods of non-subsidised, local and smaller fishers.
Most developing countries do not have the capacity and resources to provide supports that would enable their own domestic producers to compete with subsidised (“cheaper”) products from wealthy, developed countries. Their way forward has been to hasten the integration of their unprotected rural economies into global trade regimes with the hope that despite market Darwinism, benefits will somehow trickle down to the weaker producers. The more common aspects of this integration include: replacement of diverse, combination crops with mono, cash crops and plantation farming; incentives for commercial fisheries and aqua-culture over localised, seasonal harvesting of fish, shrimps, etc.; increased use of chemical inputs, commercial seeds and commercial animal breeds; expansions of large scale irrigation schemes and water management infrastructure; privatisation of land, forests, wetlands, and water; deregulation of commodity prices and agricultural credit; and, the introduction of new, legally enforceable property regimes. These measures are resulting in the loss of local species varieties and traditional knowledge, degradations in soil and water quality, deforestation, altered ecological systems, decreased access to productive assets and reduced availability of local foods.
Many developing countries have natural resources that industrialised countries need to feed their economies. Tariff structures on agricultural imports in industrialised countries show that tariffs on imports of raw materials are significantly lower than those on processed goods v. Continuing and large-scale exports of resources such as timber, forest and aquatic products, and minerals from developing countries have resulted in restricted access of local populations to much needed natural resources, widespread environmental degradation and an overall diminishing of the natural resource base in these countries.
While relatively better off producers in developing countries have been able to adjust to and even benefit from these trends, small scale and subsistence producers have been seriously affected by the re-configuration of agricultural production by free trade principles. More and more, in an effort to compete and serve fickle markets, small farmers and fishers are producing food and other products that they simply cannot afford to consume themselves. In order to purchase the inputs and technology required to produce for large domestic and export markets, agricultural producers all over the world are going deeper into debt to banks and agro-business companies, and in many cases have lost their lands and other assets altogether.
For small-scale and subsistence producers, “cheaper” means that they are able to produce, consume and trade primarily through the use of their own resources, which include land, water, labour and capital. Equally important, it means that they have a significant measure of control over how their natural environment and resources-both private and common pool–are used and managed.
Trade Related Intellectual Property Rights (TRIPS)
Introduced in the WTO in 1994, the agreement on Trade Related Intellectual Property Rights (TRIPs) covers protection of intellectual property for both products and production processes through patents and copyrights, and extends to pharmaceutical products, micro-organisms and micro-biological transformations. Attempts to extend TRIPs coverage to plant genetic and other living species were blocked by developing countries in the past. Most significant of the consequences of this agreement are the privatisation of collective knowledge, practices and natural resources, and deterrence of technological innovation among poorer, developing countries.
The TRIPs agreement is in the interests of large companies engaged in research and development. It is extremely problematic for developing countries who not only lack the economic and human resource capacity to do little original research, but also, who have not used patenting as a widespread legal form of ownership to begin with. About 95 percent of all patents in the world today are held in industrialised countries, with more than half of all royalties going to the USA vi. However, a significant number of patented products originate in developing countries, who never share in any of the benefits of patents and copyrights.
The application of TRIPs to pharmaceuticals has been a significant blow to developing countries with national pharmaceutical industries such as India, Brazil and Argentina. In these countries, patents–when granted–have been for production processes and not the product per se. As a result, by producing drugs through slightly different processes from transnational corporations, countries have been able to encourage the availability of essential drugs at domestically affordable prices. However, since the TRIPs agreement stipulates patenting for both products and processes, royalty payments must be made even if a drug is manufactured through a different route vii.
Another major problem area is patents for biotechnology and genetically engineered and modified organisms. Northern companies are claiming patents on genetic materials, biological varieties, knowledge and production processes which originate in developing countries and are often results of generations of communal technological innovation. Through TRIPs, not only will countries have to pay royalties on patents of their own, indigenous intellectual and biological properties, but also, there is no mechanism by which these countries and local communities–the real innovators–might obtain a share of the profits. This is particularly evident in cases of extracts from local flora and fauna which have rarely been protected by patents in their countries of origin, but are now claimed as the intellectual property of multinational corporations.
WR Grace, a US multinational company, has received a process patent for extracting an active ingredient from the Neem tree, a tree which has been widely used for medical, agricultural and cosmetic purposes for centuries in India. Similarly, Merck , another leading western pharmaceutical firm has applied to patent an anti-coagulant developed from the Tikluba plan which has long been used by indigenous people in the Amazon. The case of Jasmati rice is already well known where a US firm has cross bred traditional Basmati and Jasmine varieties from India and Thailand, and patented the final product.viii
Like other WTO agreements, the TRIPs agreement contravenes already existing conventions on protection of bio-diversity, genetic varieties and intellectual property rights such as the Convention on Biological Diversity and the FAO International Undertaking for Plant Genetic Resources. It offers a clear example of how trade rules are manipulated not to protect or uphold environment standards, but rather to exploit environmental wealth and foster corporate control over resources.
Collective Responsibility for Collective Concerns
It is abundantly clear that the lives of a significant proportion of the world’s population are inextricably intertwined with the natural environment. Environmental degradation and loss of natural resources threaten the very survival of these populations.
In majority of these situations, women bear the brunt of hardships because of their dual roles as productive and reproductive labour. In subsistence communities, meeting the family’s daily food and livelihood needs is largely the responsibility of women. Women gather herbs, plants, insects, small fish, frogs, crabs, shrimps, etc. for domestic consumption, local barter and sale. The loss of local plant and animal species is a serious blow to women since they depend on seasonal diversity and variation to ensure food, income and health for their families. When communities are displaced or relocated, women are particularly disempowered since their sphere of activity is usually limited to local forests, rivers and common lands. As agricultural labourers, women are usually responsible for the least mechanised tasks and the introduction of new technologies often displaces them from traditional areas of control. The introduction of new resource tenure systems often marginalises women from access to and control over all types of resources-natural, economic and political.
There is also plenty of evidence to show that the diversity and quality of environments–particularly in developing countries– have been endangered by concurrent trade and investment liberalisation regimes fostered by the WTO and its global/regional allies. Claims that the environment can be protected and sustained through trade linked environment measures are as contradictory as they are far-fetched. Past attempts to link environmental standards with trade actions in the WTO have not led to any significant improvements in environmental quality. Instead, they have transferred the burden of new environmental conscientiousness and green consumerism on to small, unprotected producers in the South–and some in the North as well–who are already disadvantaged by economic policies that favour the rich over the poor.
While establishing sound environmental standards is necessary, such standards need to be determined through broad based, multilateral efforts that take into account historic inequalities of political and economic power, and include positive measures to prevent further entrenchment of these imbalances. A number of MEAs already exist, but have been bypassed and rendered ineffective through the expansion of neo-liberal trade and investment policies. These MEAs need to be revived, reviewed and where necessary, new agreements and guidelines need to be developed with active participation from governments, civil society and multilateral institutions.
If the environment is indeed to be a collective concern, then there must also be collective responsibility to ensure that environmental standards do not become de facto green protectionism that discriminate against developing country producers and populations. Environment agreements must be accompanied by support for affordable technology transfer to upgrade and render more environmentally friendly the production processes in the South. This would include loosening patent and copyright rules held by Northern companies so that small producers could also adopt at reasonable prices, new, Northern-owned, eco-friendly technologies. Another positive measure would be financial support for indigenous research and development in the South in order to develop appropriate technologies to meet higher environmental standards. At the same time, far greater recognition needs to be given to already existing indigenous knowledge systems and production practices. The contributions of local populations in advancing new technologies and science must be acknowledged and compensated, as must their rights to natural resources. Equally important, the rights of these populations to protect and where necessary, fashion new resource tenure systems must be supported by State and civil society alike.
In summary, the trade-environment debate needs to move beyond narrow environmentalism that may ease the consciences of those worried about endangered species, but does little to address more fundamental questions of food and livelihood security for a large portion of the world’s population. The debate must acknowledge how different types of environment linked trade measures would entrench already deteriorating terms of trade against poor countries in the South. If environmental standards are a high priority for sustainable development, then they should receive genuine attention as such and not be used as tools for facilitating or prohibiting market access.
By the same token, disputes related to environmental standards should be addressed in independent, multilateral fora and not in the WTO. As an institution, the WTO is structurally incapable of supporting dispute resolutions that can simultaneously address the complexities of environmental sustainability, equitable development and economic justice. It is imperative that trade-environment conflicts be resolved through multilateral and pluralistic approaches that involve a variety of civil society and State actors, and not through unilateral linkages that permit punitive actions by a powerful few.
i Poh, Likheng and Susanne Ebling, Report on the Impact of the US Trad ban on Shrimp and Shrimp Products, October 1997.
ii Bello, Walden, The “Shrimp-Turtle Controversy” and the Rise of Green Unilateralism, World Trade Monitor, 1997.
iii International Network of Forsts and Comunnities, Focus on Forests and Communities, November, 1999
iv Downes, David R. and Brennan Van Dyke, Fisheries Conservation and Trade Rules; Ensuring that Trade Law Promotes Sustainable Fisheries, Greepeace Germany and Center for International Environment Law, March, 1998.
v Chaudhuri, Rajat and Bipul Chatterjee, Trade Liberalisation; Market Access and Non-tariff barriers, CUTS Center for International Trade, Economics and Environment, April, 1998.
vi Oxfam Solidarity-Belgium, The Challenges of a New Round of International Trade Negotiations: Trade for Development? October, 1999.
vii Hilary, John (Ed) More Power to the World Trade Organisation? The International Trade Controversy, Panos Briefing, November, 1999.
viii Bello, Walden, The Iron Cage: The WTO, the Bretton Woods Institutions, and the South, November, 1999.