How does the World Trade Organisation view ethical trade? Do Eco-labelling and forest certification schemes break WTO rules? Do they create trade impediments? What external factors might alter the impact of ethical trade?

Research by the Natural Resources Institute examines WTO rules relating to environmental and social standards in the forest sector focusing on the debate on eco-labels in the WTO, especially in relation to the Technical Barriers to Trade Agreement (TBT).

What is the legal position of ethical trade schemes in trade law? The scope of WTO rules in relation to ethical trade schemes are not clear leading to controversy amongst the Members of the WTO. Some argue that if ethical trade schemes are voluntary and open to all, they may not contravene WTO rules. Some southern stakeholders see ethical trade schemes, however, as protectionist due to a lack of southern participation (often through lack of financial and technical resources). TBT does specify conditions under which WTO members may restrict imports and exports using product standards and technical regulations. WTO rules also prevent members from distinguishing between goods on the basis of production and processing methods (PPMs). Eco-labelling, however, also distinguishes between products in this way, as well as in the effects of their consumption.

Changes to WTO rules have been proposed to clarify the position of eco-labels, but what would be the implications for the different approaches to forest certification?

The article uses recent WTO debates and interpretations of trade law to explore different scenarios for the Forest Stewardship Council and ISO 14001 schemes. Might the TBT be amended to specify forest certification schemes, or might special rules be adopted for Eco-labelling? There is an alternative approach: equity based voluntary codes of practice or procedural guidelines for non-government initiatives in the forest sector.

Research findings include:

• The use of PPMs is extremely contentious. It will be necessary to convince sceptics that trade impediments will not ensue.
• Equity approach guidelines could ensure that eco-labelling initiatives include the needs of the smallest producers, ensure southern participation, and contribute to the development of institutional capacity.
• Guidelines should be drawn up by commercial, community, non-government and government stakeholders working together.
• Current confusion about millennium round talks suggests that imminent change in the TBT is unlikely.

Policy pointers are:

• WTO should not prevent the growth of ethical trade so long as such schemes do not impede trade and are inclusive.
• Eco-labelling and forest certification schemes should develop standards promoting trade that is environmentally sustainable and provides livelihood opportunities for Southern producers.
• Equity approaches would ensure that small producers are not excluded and quell allegations of protectionism as a wider range of stakeholders would be involved in the development of standards

Source(s):
‘Will the WTO prevent the growth of ethical trade? Implications of potential changes to WTO rules for environmental and social standards in the forest sector’ Journal of International Development #12 by Anne Tallontire and Mick Blowfield Full document.

Funded by: UK Department for International Development, Forest Research Programme.

id21 Research Highlight: 22 May 2001

Further Information:
Anne Tallontire
Social and Economic Development Department
Natural Resources Institute
Chatham Maritime
Kent ME4 4TB
UK

Fax: +44 (0)1634 883 377
Contact the contributor: A.M.Tallontire@greenwich.ac.uk

Natural Resources Institute, University of Greenwich, UK

Other related links:
Visit the World Trade Organisation

The Forestry Stewardship Council promotes certification and responsible forestry

'Do fair trade partnerships work?'

See Insights #36 'Richer or poorer? Achievements and challenges of ethical trade'

NRI specialises in ethical trade in natural resources and trade

Ethical Trade Initiative promotes good practice in the implementation of codes of labour practice