Ariadne BenAissa
Class of 2001
Email: ariadne.benaissa@miis.edu
Phone:375-2812

Statement of Ariadne BenAissa, Director
National Wildlife Federation


Testimony before the Senate Finance Committee

Hearing on Bill XXXX Calling for the U.S. to Withdraw from the World Trade Organization

March 24, 2000

Mr. Chairman and members of the Committee, thank you for this opportunity to testify on
behalf of the National Wildlife Federation's four million members and supporters on the issue of U.S. membership in the World Trade Organization.
  
How is it that we have come today to be asking the question of whether the United States should continue its membership in the World Trade Organization? For the past half century the U.S. has not just been involved with the multilateral trading system, it has been the key leader moving the system forward. Why then are we now uncertain about our future participation in it?

It is clear that the influence of the WTO has been growing. Ordinary citizens who did not
think much about trade issues in the past are now keenly aware of the potential for WTO
decisions to impact their lives - often in ways inconsistent with their values. This was evidenced in Seattle. People are legitimately concerned about what they see as the exclusive/secretive, and undemocratic operations of the WTO. Furthermore, people are increasingly concerned about the effects of globalization. They are fearful of the so-called race to the bottom -corporations moving overseas in search of lower wages and labor and environmental standards. They are worried that governments are losing their ability to set their own high standards. In as much as the WTO is seen as the symbol of increasing globalization, it has become a lightning rod for all of society's concerns.

Environmentalists have been at the forefront of opposition to the WTO. They are concerned that the WTO, in promoting growth, increases the overall scale and pace of resource consumption without ensuring adequate environmental safeguards. They believe that WTO rules and procedures have been used to attack environmental laws and that global trade policies undermine the capacity of nations to develop progressive and responsible environmental laws. Many environmentalists believe that the WTO is controlled by multinational corporations out for private gain at public expense, and that countries weaken environmental protections in their attempts to seek international advantage in wooing these corporations. They are unhappy with the nontransparent nature of the WTO, where closed-door tribunals of trade experts decide the fate of the environment.

While these are valid concerns, and ones that need to be addressed, we should not allow this debate to make us lose sight of the fact that trade is not a bad thing. The promise of trade is that it can improve our quality of life. It can increase living standards, and with them, our respect for conservation values. There is no doubt that trade liberalization has contributed to the U.S. economy. It holds out the promise of growth for developing countries that will provide them with the economic means to implement policies for sustainable development and environmental protection.

Those who think that environmental issues do not belong in the WTO are inadvertently
undermining support for the organization. The overwhelming majority of the American public wants trade agreements to protect the environment. They understand that international trade and the environment are inextricably linked and that we can not deny the environmental impact of trade policies. On the most obvious level, reducing tariffs and trade barriers lowers prices, which increases demand, which increases production. That increased production often has environmental consequences in terms of the use of resources and the creation of pollution.

Trade policy must be developed with a holistic understanding of the complex systems it impacts and with a firm commitment to sustainable development. Economic development and environmental protection can and must go hand in hand. In fact, experience has shown that greater attention to environmental concerns is directly correlated with better economic results at the national, industry and company levels. For example, the Montreal Protocol's success in protecting the ozone layer saved several hundreds of billions of dollars in monetary damages in fisheries, agricultural and other economic sectors that would have resulted from reduced plant photosynthesis and a disruption of aquatic food chains.

No other organization or country has the WTO's ability to promote both economic growth and environmental protection. And U.S. leadership provides the best opportunity for the WTO to realize this potential. The WTO is not inherently anti-environment. Quite the contrary, the importance of the environment is laid out in the opening lines of the Agreement Establishing the World Trade Organization. It begins with the parties to the agreement "recognizing that their relations in the field of trade and economic endeavor should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, [and] seeking both to protect and preserve the environment."

There are a number of ways in which the WTO can work to benefit the environment.
One of the stated goals of the organization is to raise living standards and increase real income. In as much as higher living standards are associated with increased concern for the
environment, economic growth alone can have a beneficial effect on the environment. It is
estimated that half of the world's poor live in "ecologically fragile" rural areas, including tropical forests, upland areas, and arid and semi-arid regions. Poverty and environmental degradation can be closely interlinked in these areas. Reform to subsidy policies and improvements in market access opportunities that expand the economic prospects of developing countries could be vital elements in the promotion of sustainable development.

The WTO has already taken on a significant threat to the environment - subsidies. The
potential for further environmental benefit through the elimination of subsidies in agriculture,
fisheries, nuclear energy, fossil fuels, timber sales, grazing permits, mineral rights, flood insurance, and irrigation is tremendous. Subsidies, particularly those tied to input and output
levels, stimulate high levels of resource use, promote inefficient production processes and
generate greater levels of pollution and waste. They also often hinder technological change by locking-in particular production processes or inputs.

Agricultural subsidies, particularly production-linked ones, encourage overproduction,
overuse of fertilizers and farming of environmentally sensitive lands. In addition, export
subsidies depress international prices and displace the exports of more efficient, non-subsidized suppliers, including those in developing countries. In fact, agricultural subsidies hit developing countries the hardest by keeping world prices low. At artificially low prices they gain little for their commodities and are often excluded from food markets in rich countries. Higher agricultural incomes in rural areas would enable developing countries to undertake both productivity and conservation investments which would not otherwise be possible. This would be an important step toward promoting ecologically sustainable patterns of development.

The WTO alone has the ability to discipline such detrimental subsidies. Past successes
are the evidence of this. The U.S. has been and needs to continue to be at the forefront of the crusade against remaining subsidies. Markets can not achieve true efficiency if prices do not reflect the full cost of goods and services. 

Another way the WTO can benefit the environment is by helping spread less-polluting
technologies from developed to developing countries. The U.S. needs to be allowed to continue in its drive to remove all barriers in the trade of environmental goods and services. Providing a free market for such goods and services fosters technology transfer, provides access to the latest approaches to pollution prevention and lowers the cost of achieving environmental objectives.

The WTO is not going to collapse if the U.S. withdraws. The U.S. has a lot to gain as an  integral part of the WTO and has quite a bit to lose outside of it. Unilateral withdrawal from the organization would hurt U.S. corporations, consumers, and government tax revenues, weakening the U.S.'s financial ability to support its values. Additionally, by leaving the WTO, the U.S. would lose a valuable tool for positively impacting the environment at the international level.

There should be no doubt about the critical importance of continued U.S. involvement in the WTO. However, there should also be no doubt about the need for changes in the WTO to further protect the environment. Without that, there will not be the public support necessary to sustain U.S. involvement in the WTO. We need to determine how the multilateral trading system can accommodate fundamental environmental principles, and we need to ensure that trade and environmental policies are mutually supportive in favor of sustainable development.

Thorough, open, and balanced environmental impact assessments of both existing trade agreements and future trade negotiations are an absolute requirement, and must involve extensive participation by the public and by affected government agencies.

The U.S. must champion a framework for the interaction of trade rules and Multilateral Environmental Agreements (MEAs). We can not allow WTO decisions to undermine MEAs. WTO rules must be written and interpreted so that they accord proper deference to national and international standards that serve legitimate environmental objectives. In disputes involving environmental issues, WTO panels and appellate bodies should consult with independent institutions of established environmental expertise and with the secretariats of MEAs. Interested parties should be allowed to provide oral and written testimony in such disputes. Additionally, there needs to be increased interaction between the WTO and the United Nations Environmental Program.

One of the roles of government is to harness the power of market efficiencies - through
intervention and regulation - in the service ofsustainable development. In order to do this,
obligations under international trade agreements should support, not interfere with, the ability of governments at the central and sub-central level to maintain and enforce the high levels of domestic protection that they deem appropriate. To that end, a country's right to choose a specific quantifiable risk level should not be subject to review by WTO dispute settlement panels. Furthermore, the WTO must ensure the right of governments to use social and environmental criteria in making government procurement decisions (such as buying recycled paper or not buying products made with child labor).

The WTO has to be made more open and democratic. This can be achieved by improving public distribution of WTO documents and enhancing public participation in WTO dispute settlement proceedings. Public interest groups should be allowed to make direct submissions to WTO working groups and to the general council.

The WTO must take the precautionary principle into consideration. Policy makers often
operate at the cutting edge of science and technology, where relevant scientific information may not yet be sufficient. The Sanitary and Phyto-sanitary (SPS) Agreement should recognize the right of countries to take provisional measures in such cases. Countries must be able to make decisions and take environmentally protective actions in the absence of full scientific certainty in order to achieve health safety and environmental objectives.

WTO rules need to allow countries to regulate imports from other countries based on the
way a product is produced, provided that standards are set in an open and transparent manner and are not discriminatory. The argument that production processes that have negative environmental effects for the exporting country but that are not inherent in the product do not impact the environment of the importing country is just not valid. We are all connected by one global environment and environmental impacts can not be measured solely in the short-term. Production processes that reduce rainforests undisputedly lead to global warming. It is just a matter of time before we all feel the impact.

At a minimum, WTO rules have to allow the use of ecolabeling as a tool for environmental protection. This would let markets operate freely while providing consumers with the information they need to make educated purchasing decisions.

It is critical that none of these measures be used as a disguise for protectionism. It is this fear that is at the heart of most opposition to including environmental considerations in trade
agreements. Developing countries in particular are concerned about this. Their opposition to environmental considerations does not come from a lack of concern for the environment. Most governments in fact, are trying to develop and implement environmental protections. They are legitimately concerned about protectionism in addition to being concerned about not having the resources necessary to meet regulatory requirements. It is imperative that any environmental measures be developed and implemented in an open and transparent way and that they not be abused for protectionist purposes. Such abuse would threaten to undermine the legitimacy of the trade system and would hurt our ability to protect the environment through trade. Additionally, protectionist measures that prohibit developing countries from fully benefiting from international trade work directly against environmental objectives by not allowing those countries to raise their living standards. It is incumbent upon the developed country members of the WTO, through U.S. leadership, to demonstrate to developing countries that environmental safeguards are also in their interest. This can be done in part by the elimination of subsidies and opening markets to their products.

In withdrawing from the WTO, the U.S. would be reverting to old isolationist tendencies.
It is critical that we not allow this to happen. It is impossible for the U.S. to seal itself off from the rest of the world. We should not let the current weaknesses in the organization lead us to abandon it when there is so much good it can do. The U.S. must not only stay engaged in the multilateral trading system, it must reaffirm its leadership role in it. The U. S. must be instrumental in developing ways for all stakeholders to be involved in formulating a trade policy that supports rather than undermines environmental protection. We all enjoy the benefits of a clean environment. We all enjoy the benefits of economic growth. These things can and must move forward together. The U.S. has the ability to ensure that they do. Nothing less than our future depends on it.

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