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Trade, Investment and the Environment
During the financial year 1998–9 the Energy and Environmental
Programme was supported by generous contributions of finance and
technical advice from the following organizations:
Amerada Hess
BG
Blue Circle Industries
British Nuclear Fuels
British Petroleum
Eastern Electricity
ENI
Enron
Esso/Exxon
LASMO
Mitsubishi Fuels
Mobil Services
Osaka Gas
PowerGen
Ruhrgas
Saudi Aramco
Shell
Statoil
Texaco
Tokyo Electric Power
Veba Oil
Sponsorship for the conference ‘Trade, Investment and the Environ-
ment’ was received from:
The Guardian
UK Department for International Development
UK Department for Trade and Industry
ICI
International Centre for Trade and Sustainable Development
World Wide Fund For Nature (WWF)
Trade, Investment and the Environment
Proceedings of the Royal Institute of
International Affairs conference
Chatham House, London, October 1998
Edited by Halina Ward
and Duncan Brack
Energy and Environmental Programme
First published in the UK in 2000 by
Royal Institute of International Affairs, 10 St James’s Square, London, SW1Y 4LE
(Charity Registration No 208 223)
and
Earthscan
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Copyright © Royal Institute of International Affairs, 2000. Published by Taylor & Francis.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in
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safety of others, including parties for whom they have a professional responsibility.
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for identification and explanation without intent to infringe.
A catalogue record for this book is available from the British Library
ISBN-13: 978-1-853-83628-2 (pbk)
Typesetting by Composition & Design Services, Minsk, Belarus
Cover design by Yvonne Booth
Contents
Preface and acknowledgments........................................................ vii
Contributors..................................................................................... x
Abbreviations and glossary............................................................. xii
Editors’ overview.............................................................................. xvii
Part I A strategic overview of the debate and the key issues for
the future
Renato Ruggiero............................................................................... 3
Brian Wilson ..................................................................................... 11
Gary P. Sampson.............................................................................. 20
David Wakeford................................................................................ 24
Tom Burke......................................................................................... 27
John Gummer................................................................................... 36
Part II Towards win–win solutions?
Poverty and sustainability (David Batt) .......................................... 49
Building sustainable markets (Nick Robins) ................................... 56
‘Green consumerism’ and trade: a Ghanaian forestry
perspective (Moses Adigbli)............................................................. 73
‘Green consumerism’ and labelling: a retailer’s perspective
(David Wheeler) ............................................................................... 83
Part III Resolving key WTO issues
Overview.......................................................................................... 91
A lawyer’s view (Damien Geradin) .......................................... 91
A view from the South (Magda Shahin)................................... 102
Multilateral environmental agreements ........................................... 122
An overview (Duncan Brack) ................................................... 122
An OECD perspective (Michel Potier)......................................138
An industry perspective (Reinhard Quick) ...............................142
vi Contents
Process and production methods.....................................................152
Sizing up the issues from the South (René Vossenaar)............. 152
Reassessing ‘like products’ (Konrad von Moltke) ....................176
The impact of the Shrimp/Turtle dispute
(Charles Arden-Clarke) .............................................................183
Conflict resolution in the World Trade Organization......................187
Assessing the story so far: hope on the horizon?
(Thomas Cottier and Krista Nadakavukaren Schefer) ............. 187
The Shrimp/Turtle dispute and the future
(James Cameron) .......................................................................203
Part IV Environmental regulation and international investment
The role of foreign direct investment..............................................211
The case of India (Veena Jha) ................................................... 211
Liberalization, privatization and the water sector
(David Owen)............................................................................. 230
Lessons from the Multilateral Agreement on Investment...............242
A view from the negotiating table (Jan Huner)........................ 242
An industry view (Kristian Ehinger)......................................... 252
A view from the South (Pradeep S. Mehta)..............................259
An NGO view (Nick Mabey) .....................................................269
Part V Summary of conference discussions
Halina Ward......................................................................................279
Index.................................................................................................291
Preface and acknowledgments
The present volume of papers presents a snapshot of what may, with
hindsight, come to be viewed as a turning point in the ongoing debate
on the relationship between trade, investment and the environment.
It is a companion volume to a collection of papers edited by Duncan
Brack, entitled Trade and Environment: Conflict or Compatibility? (RIIA/
Earthscan, 1998), but it can also be read alone by newcomers to the
area or by policy-makers seeking an enjoyable and readable introduc-
tion to the main issues and their possible solutions.
Both volumes were based on RIIA conferences, but, in contrast to
the earlier volume, this book features a wider range of issues and a
greater depth of debate (largely because this second conference was
twice as long as the first). In particular, the topic of international invest-
ment, as well as trade, is covered here. Increasingly, and significantly,
the flow of economic activity across national frontiers includes the
movement of capital for investment as well as that of goods and ser-
vices for sale. The ever more fraught progress of the negotiations
around the OECD’s proposed Multilateral Agreement on Investment
(MAI) during 1998 made it clear that, although the trade–environment
and investment–environment debates are not the same, they are very
closely interlinked.
The Chatham House conference on which this book is based took
place in late October 1998, just a fortnight after two defining moments:
the final collapse of the MAI, and the World Trade Organization Appel-
late Body’s report on the Shrimp/Turtle dispute. These critical events
are reflected in some of the key questions that the authors return to
again and again in their papers. What are the implications of the Appel-
late Body report, in a dispute that focused on a trade embargo applied
in the name of the conservation of endangered species, for any future
reform of the World Trade Organization – is it evolutionary or poten-
tially revolutionary? What lessons does the failed MAI offer negotia-
tors of trade and investment liberalization in the future? Did the envi-
ronmental dimension feature adequately in each set of discussions?
viii Preface and acknowledgments
Many of the papers look forward too. How can options for addressing
the relationship between trade, environment and investment be designed
so as to move beyond stale adversarial discussions to offer genuinely
‘win–win’ solutions? The varied aspirations for a ‘High Level Meeting’
on trade and sustainable development make thought-provoking read-
ing in the light of the WTO Director General’s two symposia on trade
and environment and trade and development held in March 1999. At
the time of going to press, the 1999 Seattle Ministerial Conference of
the WTO and the beginning of the next ‘Millennium Round’ of trade
negotiations are drawing ever nearer. It is striking that the ideas put
forward in this book on ‘environment in the Millennium Round’ are
as fresh as they were at the time of the Chatham House conference a
year ago.
A number of the papers in this volume have been rearranged from
the order in which they originally appeared, to reflect the core themes
of the authors’ ideas and recommendations. Some have been edited,
revised or updated by their authors, and a small number of the confer-
ence presentations have been omitted from this book to avoid duplica-
tion of authors. Additionally, a conference presentation by Michael
Grubb on trade issues related to the Climate Change Convention, sub-
stantially based as it was on research at Chatham House led by Duncan
Brack, has been omitted; the results of that research are being pub-
lished by RIIA/Earthscan in parallel with this book (Duncan Brack,
with Craig Windram and Michael Grubb, International Trade and Cli-
mate Change Policies).
Part I contains six papers which present a strategic overview of the
key issues, the state of the debate and the big issues for the future.
They include the three keynote papers from the Chatham House con-
ference: by Renato Ruggiero, at the time the Director-General of the
WTO; Brian Wilson MP, then UK minister for trade; and John Gummer
MP, former UK secretary of state for the environment. Part II seeks to
explore some of the main ideas and positions in the rapidly evolving
debate on how to secure ‘win–win’ solutions: how can solutions be
devised that offer everyone, including the environment, more than tra-
ditional competitive bargaining? Part III contains a series of papers that
focus on how to resolve some of the more technical issues as they re-
Preface and acknowledgments ix
late to the rules of the multilateral trading system. After an overview of
the issues – one from a developing country perspective and one from a
lawyer – separate chapters consider the debates concerning multilat-
eral environmental agreements, process and production methods and
conflict resolution in the WTO. Part IV looks at the relationship be-
tween investment and sustainable development in two lights: the issues
relating to foreign direct investment itself; and lessons from the Multi-
lateral Agreement on Investment. Finally, Part V contains a short note
on the discussions at the conference. The audience included Chatham
House’s normal wide range of participants, drawn from national gov-
ernments and international organizations, industries, academia and
NGOs, from developed and developing countries; and the presenta-
tions and discussions reflect a rich variety of backgrounds and per-
spectives.
The Institute gratefully acknowledges the sponsorship and support
of the six conference sponsors: the Guardian; the UK Departments for
International Development (DFID) and Trade and Industry (DTI); ICI;
the International Centre for Trade and Sustainable Development; and
the World Wide Fund For Nature (WWF). Without their support, the
conference could not have included such a wide range of participants.
Our sincere thanks are also due to all those who have contributed
their time, energy and ideas, both to this book and to the October 1998
Chatham House conference; the speakers and authors themselves;
Charles Arden-Clarke, James Cameron, Steve Charnovitz, Caroline
Lequesne and Nick Robins for helpful comments on various draft
conference agendas; and to colleagues at Chatham House for their vital
work in making the conference and this book happen: Philippa Challen,
Julia Thomas and the Conference Unit; Nikki Kerrigan, Matt Thomas
and Laura Shiver in the Energy and Environmental Programme; and
Margaret May and her colleagues in the Publications Department.
September 1999 Halina Ward and Duncan Brack
