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POLITICAL ANALYSIS International
Dimension
The Seattle Ministerial Conference marked a change in
the political dynamic between industrialized and developing countries. Feeling
that 1) the costs of free trade are beginning to outweigh the benefits for
developing countries and that 2) bringing social issues into the WTO’s ambit
would further erode these benefits, developing countries formed alliances to
fight against the establishment of a trade and labor working party, and they
began using the consensus-based procedures of the WTO to defend their
interests. Following this development, as well as the Ministerial’s
failure to launch a new round of negotiations, it sems unrealistic to expect
that WTO negotiations on a separate protocol for voluntary eco-labeling
schemes will begin any time in the foreseeable future. The Seattle fight over
labor issues only solidified the battle that awaits any effort to bring trade
related social issues to the negotiating table. A voluntary, private-sector based global eco-labeling scheme that incorporates the concept of mutual recognition, as well as other principles of the TBT agreement, would partially circumvent the need for a negotiated agreement and could help set the stage for negotiations in the future. The proposed scheme has been crafted so that it can serve as a working model for future negotiations within the WTO. The proposed implementation plan also accounts for the practical and technical concerns of developing countries. The Domestic DimensionThe massive and violent demonstrations that took place
outside the Seattle Ministerial meeting illustrate the political importance of
trade related social issues, including environmental issues, for American
citizens. Indeed, grassroots environmental organizations, in coordination with
organized labor and human rights organizations, have effectively lobbied
Congress to block approval of fast track negotiating authority for the Clinton
Administration. To date, the United States has remained officially neutral on the issue of voluntary eco-labeling schemes within the WTO. Eco-labels have been used in the United States in relation to trade dispute issues (dolphin safe tuna and sea turtle safe shrimp), but the government remains concerned that eco-labels could be used to discriminate against U.S. products—particularly beef products and genetically modified organisms GMOs. It is conceivable that, if Vice President Gore wins the presidential election, he might bow to pressure from environmental groups and support the EU’s bid to negotiate a separate TBT protocol on eco-labeling. If Bush wins the race, however, he will likely support the beef industry and remain neutral on the issue. THE GLOBAL ECO-LABEL: A NEW APPROACH
By establishing a voluntary global eco-label, the private
sector can address the current problems associated with eco-labeling, as well as
help build developing country confidence in the benefits of eco-labels and
create a model on which a future WTO agreement might be based. However, in order for such an experiment to succeed, the global eco-label program will need to be carefully constructed. The criteria for allowing national product criteria to be recognized by the global eco-labeling scheme will need to be based on the principles of transparency, equal treatment for like products, scientific evidence, least trade restrictive measures, and environmental effectiveness. The framework for the program should be consistent with the TBT Agreement, be based on the concept of mutual recognition, conform to the International Standards Organization’s environmental management standards (the ISO 14000 series),[1] and employ life-cycle analysis (LCA).
The
Global Eco-labeling Scheme Under the proposed global
scheme, independent eco-labeling programs would continue to draft product
criteria and submit them to the global program for approval. Similarly,
producers would continue to obtain certification from national schemes.
However once the global scheme approves an individual program’s product
criteria, producers that meet those criteria would be granted the right to use
the common global seal. Producers would have to apply just once (through their
home eco-labeling program) to obtain approval to use a globally recognized
eco-label. Foreign companies with overseas operations would apply for
certification for their products within the country in which they manufacture
those products. Each national scheme would
be judged on an industry specific basis (i.e. forestry, fisheries, industrial
products, agricultural products, etc.) and by an industry specific committee
that includes representatives from all members of the global eco-labeling
program. Committees will review incoming applications and form their
recommendations within 30 days of receipt of an application.
In turn, recommendations will be forwarded to a committee of
experts, which would consist of environmental, economic development
and international trade experts, as well as industry representatives
and consumer advocates. Notification provisions in the WTO TBT agreement require that eco-labeling schemes notify the WTO and member governments of product certification criteria and certified products. Accordingly, once the global program accepts a member program’s product criteria, the global scheme will make the proper notifications to the WTO. The product criteria also will be made available on the global program’s Internet site. The following organizational chart outlines the application process.
In
this example, a Zimbabwean eco-labeling scheme has submitted forestry-related
product criteria to the global eco-label for approval and mutual recognition
among the members. The criteria are first considered by industry representatives
of each member scheme (in this case the forestry committee). Then the
committee drafts a recommendation for the committee of experts, which
makes a final decision on whether to accept the criteria based on review
of the application and consideration of the forestry committee recommendations.
Once a set of product criteria is approved, the committee of experts
forwards the relevant information to the notification committees for
information dissemination to the public. Certification
Criteria
In order for an eco-label program to gain approval to use
the global eco-label, its product criteria will need to meet the following
requirements:
Life Cycle Analysis
(LCA) The decision to use life cycle analysis as part of the
certification criteria will be somewhat controversial. Opponents of voluntary
eco-labeling schemes have questioned the scientific validity of such analysis.
Developing countries in particular are convinced that LCA is not uniform in
nature, nor scientific in its evaluation. In their view, developed countries are
likely to use LCA as a basis for protectionist purposes. It is true that scientists lack concrete scientific data related to the environmental benefits of eco-labeling schemes. To date, experts have been unable to separate the scientific data regarding the benefits of eco-labeling from data regarding the environmental effectiveness of alternative environmental measures,[3] and because eco-labels distinguish only between the relative environmental impacts of products, it is possible that they have only limited actual impact on the environment. Nonetheless,
many developed countries see LCA as a valuable tool for evaluating the
environmental impacts of a product “from cradle to grave.” According to the
EU’s Groupe de Sages, “Life-Cycle Assessment can make a significant contribution in providing a scientific, unifying and transparent basis for the EU eco-labelling program. It is central to this program because it compares different products on the basis of their common function. It relates environmental impacts, at all stages from cradle to grave, to both market changes and technology improvements.”[4] Given that LCA is the only means of at least attempting to determine, on a scientific basis, the environmental impacts of a product, the global eco-labeling program should adopt LCA as part of its product evaluation process. However given developing country concerns about LCA, the global program will need to be willing to evaluate other evidence of a product’s environmental impact. Mutual Recognition
Mutual
recognition agreements provide recognition of the equivalency of two different
standards or criteria. Using mutual recognition for the global eco-label program
will save manufacturers a great deal of time and resources by allowing products
that are certified by their local eco-labeling scheme to be exported with the
universally recognized global eco-label. Such an approach also helps minimize
potential trade effects and maximize the environmental effectiveness of
voluntary eco-labeling schemes (by allowing countries to tailor their own
eco-labeling criteria to their own specific environmental problems). For
the global eco-labeling program, the determination of the equivalency of
different programs should include consideration of local levels of economic
development, access to environmentally sound technologies, and local
environmental priorities. Critics of mutual recognition practices are concerned
that such practices will allow developing countries to maintain weak
environmental standards, thereby reducing the environmental effectiveness of
eco-labels. However developing countries cannot afford to squander precious
economic resources on policies and regulations that do not reflect the immediate
economic and environmental conditions within the country. Moreover, developing
country governments will be less inclined to establish eco-labeling programs if
they do not believe their own environment and businesses will benefit from them. The
Global Seal Products
that meet global eco-label approved certification requirements would receive two
seals: A seal that depicts plant Earth with a smiling face, and an adjacent seal
that indicates that a product complies with industry specific requirements. For
example, a bunny would denote that no animals were used in the testing of a
product; a tree would denote compliance with the forestry criteria; and a fish
would certify a product’s compliance with the fishery criteria. Coverage Ideally, voluntary eco-labeling schemes should maintain environmental standards that 5 to 30 percent of the product market can meet.[5] This ensures that the market for eco-labeled products is big enough that producers will have an incentive to keep using eco-labels, but also ensures that the market is not so large that consumers perceive that the labels don’t mean anything. Once product criteria cover more than 30 percent of the product market, voluntary eco-labeling schemes change their criteria in order to encourage innovation of environmental PPM’s and clean technologies. This allows consumers to reward innovation and leadership among producers who continue to reduce their environmental impacts. In addition, this protects the marketing incentive for producers, whose advantage is diminished by the proliferation of eco-labels on the market. The global eco-label program should include a mechanism for continually reviewing its product criteria ACTION
PLAN FOR ESTABLISHING A GLOBAL ECO-LABEL: OVERVIEW
Education and Marketing Campaigns According
to an OECD study, eco-labeling programs have been more successful in countries
or regions in which there is a high degree of consumer awareness about
environmentally preferable products.[6]
Accordingly, education campaigns can be vital to the economic success of
voluntary eco-labeling schemes. The
global eco-label program should launch education campaigns aimed specifically at
increasing awareness of the link between PPMs and environmental damage. The
campaign could be modeled on Sweden’s successful “Environmental Choice”
program, which has made a substantial impact on the market. The global eco-label program should also launch marketing campaigns designed to build consumer recognition of the global eco-label as a credible label that can be trusted. These marketing campaigns should target consumers who consider environmental factors the second or third most important factor in their purchasing decisions. Technical & Financial
Aid
The
global program should work in coordination with GEN to provide technical and
financial aid to developing countries that wish to participate in the global
eco-label program. GPA itself should sponsor several studies of market demand
for green products in developing countries, the obstacles to technical
transfers, the effectiveness of creating local standards to address local
environmental problems, the potential markets for developing countries’ green
products, and the procedures of developing a certified voluntary eco-labeling
scheme. To
coordinate financial and technical aid for developing countries, GPA and GEN
should coordinate and cooperate with grassroots development agencies, as well
the following international organizations:
The
focus of this work should be capacity building that enables developing countries
to establish their own national eco-labeling schemes and to encourage increased
production of environmentally sound products. GEN
already offers assistance programs to countries that are in the process of
establishing voluntary eco-labeling schemes. This assistance could be augmented
by charging reduced application fees to developing country eco-label programs
that apply for the right to use the global seal. Transparency
The global eco-labeling scheme will need to provide information concerning its product criteria to consumer watchdog groups, environmental organizations and other relevant NGO’s. This gesture will lend credibility to the scheme, as well as increase consumer exposure to relevant environmental problems. This information should be published on the global program’s website, which publishes the product criteria of every member scheme. Consumers must visually recognize the seal and associate that seal with credibility and high environmental protection. Building Government Support for the
Global Eco-Label In
order to boost governmental support for the global eco-labeling scheme, the GPA
should also provide information on the scheme to national governments. Within
the United States, the GPA should seek out meetings with relevant officials at
USTR and the EPA, as well as with members of Congress (especially members of the
Senate Finance and House Ways and Means Committees).
[1] The International Organization for Standardization (ISO) is an international federation of national standards organizations. ISO seeks to create voluntary global harmonized standards in order to facilitate international trade. ISO has created international standards for products such as debit and credit cards and nuts and bolts, as well as for quality management issues (ISO 9000), and for environmental management (ISO 14000). [2]
ISO 14000 provides guidance for the following aspects of environmental
management standards: Environmental Management Systems (EMS); Environmental Auditing &
Related Investigations (EA&RI); Environmental Labels and Declarations
(EL); Environmental Performance Evaluation (EPE); Life Cycle Assessment (LCA);
and Terms and Definitions (T&D). ISO’s voluntary eco-labeling
standards address common global issues yet provide flexibility for national
schemes to establish product criteria that are relevant to their own
environmental priorities and economic development status.
ISO lays out the following criteria for the establishment of
voluntary eco-labeling programs:
[3] OECD, pp. 33-34. [4] The group cautioned, however, that “LCA . . . is a methodology still in the process of development, requiring additional research and systematic data collection. Therefore policy makers, competent bodies and practitioners must remain aware of the current capabilities and limitations of LCA and should support its continuous development.” “The Methodology,” EU Eco-labeling Scheme, http://www.europa.eu.int/comm/environment/ecolabel/meth.htm. [5] OECD, p.37. [6] OECD, p. 40. |
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