Philippine Institute for Development Studies
Beyond WTO: Meeting the Challenges of the New Trade and Environment Regime Perspectives From the Philippines and the ASEAN Ponciano S. Intal Jr. DISCUSSION PAPER SERIES NO. 96-08
The PIDS Discussion Paper Series constitutes studies that are preliminary and subject to further revisions. They are being circulated in a limited number of copies only for purposes of soliciting comments and suggestions for further refinements. The studies under the Series are unedited and unreviewed. The views and opinions expressed are those of the author(s) and do not necessarily reflect those of the Institute. Not for quotation without permission from the author(s) and the Institute.
July 1996 For comments, suggestions or further inquiries please contact: The Research Information Staff, Philippine Institute for Development Studies 3rd Floor, NEDA sa Makati Building, 106 Amorsolo Street, Legaspi Village, Makati City, Philippines Tel Nos: 8924059 and 8935705; Fax No: 8939589; E-mail: publications@pidsnet.pids.gov.ph Or visit our website at http://www.pids.gov.ph
Beyond
WTO: Trade
Perspectives
Meeting the Challenges of the and Environment Regime
from
the Philippines
Ponciano
with
the
rules
subsidiarity
trade measures
and the ASEAN
1
S. IntaI, If.
The paper reviews the current environment-related
New
discussion
in the WTO
on reconciling
and trade-related
environment
trading
using the
of the multilateral
system,
and the general rule of optimal
intervention.
measures principle
It presents
the view
that while the debate at the WTO CTE is critical, the most far-reaching and environment issues involve capacity
issues go beyond domestic
building,
the current
economic
concerns
and environmental
and technical
cooperation
of the WTO. reforms,
among countries
of
trade These
institutional which would
t
enable the developing growth
countries
and environment
ongoing
protection
of setting the framework
environmental
trading
disciplines
efforts primarily
joint international
debate
IPaper presented Environment, Singapore 2President,
trading
Institute
for Development
is that the WTO can policy reforms and
on
countries
as
among countries
in
system.
Section One looks into the
on Trade
at the Asia Conference on 27 June 1996.
Philippine
activities
of three main sections.
on key issues at the Committee
In the end, the
in the developing
cooperative
the light of the "greening" of the international
The paper consists
economic
between trade-related
and encourage the needed domestic
capacity building
well as encourage
environment.
on the relationship
measures and multilateraltrade
complement
institutional
the trade off between
as well as allow them to adjust to the
"greening" of the international
contribution
facilitate,
to minimize
and Environment
Competitiveness,
Studies.
Trade
of the
and
the
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perslaectives from the Philippines and the AS_.AdV
World Trade Organization,
and the general rule of optimal
economic
growth,
Three
environment
the "greening"
ASEAN response.
Framing
The
Debate
and the other ASEAN
environmental
and Environment
the heart
trading
agreements
and ecolabelling.
international
level. However,
European
including the
means
trading
remarks.
and the trade
between provisions
because
of GATT's
nexus at the has emerged
issues in the CTE.
and the ex ante "environmental
approaches
developed
Article
the ASEAN countries, for reintroducing
of accommodating
countries.
countries
XX. However,
window
and clarifying
in general, most
oppose it because protectionist
("green protectionism").
favored by developing
in
these issues have
and environment
on these contentious
and
the
(MEAs) as well as on the issues of PPM
in ME,4s vis-a-vis the WTO rules. The latter, preferred
Union
environmentalism
Section
system and the
it appears that very little consensus
are the two contrasting
the trade provisions
system
on the trade
The ex post "waiver approach"
amendment
countries.
(CTE) of the World Trade
This is not surprising
of the debate
so far from the discussions
the
competitiveness
spent a great deal of its efforts on the relationship
multilateral
approach"
and international
of the international
on Trade
of the multilateral
been
Section Two discusses
in WTO
provisions
standards
of the subsidiarity
The paper ends with a brief concluding
The Committee Organization
intervention.
protection
of the Philippines
discusses
2
drawing from the implications
principle
in the context
Regime
requires
developing
by an
countries,
the "window" can become
measures
under
guise
of
The ex post %vaiver approach"
is
It also has its drawbacks,
the
however,
because
Beyond WTO: Meeting the Challenges of the New Trade and Environment Regime Perspectives from the Philippines and the ASEAN
waivers
are meant to be granted
"exceptionally"
have to be approved by two-thirds waiver
approach
negotiators
is ponderous
of multilateral
WTO holds precedence
Clearly,
majority
for a limited period only and
(GATT, 1992). That is, the ex post
and does
not
environmental
provide
agreements.
over the MEAs (Scholz,
the stalemate
separate
"understanding"
measures
may be taken under an MEA, including
(Scholz,
1995)
or specifying
(Canadian
proposal),
MEA-based
trade
evaluation
sets out the
binding
measures
merit to compromise
international
with the WTO
proposals
be noted
principle
that
the policy
transborder, national
a
trade
against nonparties MEA
negotiations
bilateral
laws and regulations,
for after the fact
subsidiarity with trade
problems
applies policy.
or regional
the
agreements
bilateral agreements
principles vis-a-vis nonparticipants.
to The
that are local or
at the local or national
Where
There is
of MEAs.
level using
as long as these laws and regulations
trade.
of
above because they make
of
and such laws and regulations
international then
for
which
and implementation
suggests that environmental
laws and regulations,
to
sanctions
and its linkage
domestic
obstacles
under
but allowing
principle
in scope are best dealt with
principles
that
by negotiating
the criteria have been satisfied.
national
GATT
conditions
such as those stated
environmental
subsidiarity
perhaps
guidelines
a positive force in the formulation
It may
It also suggests
to
and/or setting criteria for the prima facie compatibility
of each MEA on whether
the WTO
clear guidelines
1995).
needs to be resolved,
that
3
follow
do not create unnecessary environmental
problem
is
are in order. Just as for would need to follow GATT
Finally, where the environmental
problem
Beyond WTO: Meeting the Cl, allenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
is global (e.g., ozone depletion), Protocol). prevent
provide teeth to the agreements
which would otherwise
the MEAs. The fact that MEA trade measures WTO panel indicates
4
then an MEA is calied for (e.g., the Montreal
For MEAs, the trade provisions free rider problems
Regime
dilute the effectiveness
have not yet been brought
the de facto compatibility
trade restrictions
a global environmental
Nevertheless, local or national
in character
problems
depletion.
Even some global environmental
national
local
issues
like global
problem.
to global warming,
economy
and destruction and inadequacy
or national
For example,
level in terms
resource degradation,
during
better and experience
to address the worsening
or relevant environmental
local
extensive
which
deforestation,
to local people and the of coastal areas
during heavy rainfall
the dry season.
When
the local
the adverse effects of unwarranted
it is likely that there would be increased
government
of the
have
to the
has greater resonance
water
and ozone
activities that contribute
of coral reefs, flooding in the lowlands
populace understand
by the national
warming
in terms of its effect on soil erosion, siltation
of irrigation
media and
issues like global warming
damage arising from economic
global environmental contributes
environmental
at the
and issues are preponderantly
despite the high profile in international
of global
environmental
accommodate
problem.
environmental
immediacy
to a ,
as part of their joint efforts to address
discourse
greater
of
of the use of trade measures
in MFJks with WTO rules, in the sense that member economies such MEA- mandated
or
private or local entities problem.
calls for action or institutions
Beyond WTO: Meeting tile Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAdV ,,
--
........
,
, ,,.
,,,m,
Art important the economic
insight from the general rule of optimal
literature
approach
is for the government
are externalities
or minimize unwanted
to either
Considering
production suggests
environmental
protection
or barriers
interventions example,
to intervene
that environmental
that
the
best
degradation
addressing
the ideal
is essentially
the general
way
of
antidumping)
problem,
trade
direct policy
the root causes of the environmental
problems.
For
the best course of
say, the imposition
of a
tax instead of a change in tariff which will have an unnecessary
side
effect on domestic
at the source through,
domestic
of international
but through
pollution
related
rule of optimal
strengthening
is not through the imposition
(e.g., tariffs,
in the
side effects of the government
activities,
where there is a production
pollution
or consumption,
in
directly at the source in order to
and distortionary
action is to address it directly
consumption
The general design
in production
or consumption
intervention
sanctions
interventions
is that in the case where there is a distortion
or there
intervention.
5
.......
economy
prevent
Regime
and hence on national
rule of optimal
of MEAs to address
intervention
has implications
a global environment
suggests that even in the case of global commons, still a second-best all concerned
option compared
countries
internationally
appropriate international
or
user charges trade
problem.
to an international
program
of
in the use of natural
measures
(e.g., sanctions,
The framework
agreement
domestic
consumption-related
also on the
the use of trade measures
to address the global environment
coordinated
production-related
welfare.
problem
like
resources, tariffs)
that enjoins through
interventions
measures
is
taxes,
an
using more
etc. The role of
is primarily to prevent
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
or minimize primary
shirking
or free riding among
means of addressing
the problem
A related but more complex treat production trading
and processing
system.
standards
The
WTO
principles
allows
protection,
are respected
unnecessary impose
methods
barriers
product
(production physical
related
environments implementation unnecessary
to impose
and technical
product
standards
final
regulations
also allows member
and processing
to protect
of their
follows WTO
methods
principles
to
or PRPPMs
their
citizens,
are not
countries
where such standards
product)
affect the domestic
as long as the
and does not create
issue is with respect to nonproduct
and processing methods
(NPRPPMs).
Trade and Environment
to put voluntary
(usually
in the multilateral
to trade.
The contentious
analysis
countries
of how to
as long as the MFN and nondiscrimination
and safety
of the PRPPMs obstacles
member
production
and the health
the problem
(PPM) standards
The WTO
of the
than as the
for health and safety purposes as well as for
and processing methods characteristics
rather
of global commons.
and the standards
to trade.
6
governments,
and issue concerns
and technical regulations
domestic environment
Regime
containing
A proposal
NPRPPMs)
related production
in the WTO Committee
ecolabelling under
on
schemes using life cycle the
ambit
of the
WTO
Agreement
on Technical Barriers to Trade (TBT) has been strongly opposed by
developing
countries,
of the
developing
NPRPPMs
under
including countries the
TBT
the ASEAN countries. stems
primarily
Agreement
The strong opposition
from their could
lead
fear that
putting
to
use
the
of
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Phililalaines and the ASEAN
"green protectionism"
as well as to unwanted
trade and labor standards
against
economic,
the use of NPRPPM-based
countries
trade
restrictions.
and production
and processing
comparative
advantage
international
environment
attributes
environments. other
and
and carrying
and processing
(See Stevens
countries
and foreign
methods trade.
capacities, methods
1994.)
oppose).
Differences
thereby
in factor
differ in their
leading to the use of with their respective
do not want
in the
reasons
are the very basis of
Countries
compatible
Nations
groups
strongly
political and environmental
endowments
different production
linkages such as the linkage of
(which developing
There are also compelling
7
Regime
interference
design of their
from
own laws and
regulations.
The only case wherein there is merit in the use of trade restrictions on NPRPPMs
is when the trade restrictions
to address a global environmental this circumstance
joint
environment
are part of an MEA that is meant (e.g., ozone depletion).
nations are willing to diminish
laws and regulations a global
problem
in order to contribute
cooperative
effort
among
based
In effect, in
their "sovereignty"
over their
to the successful implementation nations
in addressing
of
the global
problem.
Because of the sharp conflicting positions of WTO member countries, the issue of PPMs is likely to be addressed voluntary
through
the market place. Specifically,
ecolabelling and the use of environment
of international
business
cost and opportunities
practice
management
(e.g., the ISO 14000)
facing firms and countries
systems as part
could determine
in the international
the
trading
_3eyond WTO: Meeting the Challenges of the New Trade and Environment Perspeetives from the Philippines and the ASEAN
arena. For example, where there is significant
Regime
premium
8
to ecolabels, it is likely
that firms at home and abroad would invest time, resources and effort to meet the requirements are significant these
of ecolabelling. Nevertheless, barriers to the intensive
barriers
include
awareness
barriers, legal barriers, organizational spread of ecolabelling
Rubik (1995) reports that there
use of ecolabels in Europe at present;
barriers,
information
barriers,
economic
barriers, and technical barriers. Thus, the
is likely to be a gradual process. Similarly, it is also likely
that the incorporation
of environmental
practice
and a requirement
because
of the significant
management
of international costs involved
as part of good business
trading will take time to take root in meeting
the requirements
of ISO
14000.
Figure 1 presents between
a summary
framework
for looldng at the relationship
the geographic scope of an environment
trade measures
and standards,
of subsidiarity. allowed
Where
to impose
principles
drawing from
the environment
PRPPM-based
are respected
trade
Stevens (1994)
problem
trade. With respect to transborder
1 states that
the participating
PRPPMs, principles
the
transborder
respected
nonparticipants. environmental context
environment
problem
Figure problems
of MEAs.
in
the
1 indicates
bilateral that
are
as long as the WTO
environment
in a regional
but also, for their firms, NPRPPMs, are
countries
are not unnecessary
international
addressing
and the principle
is national,
restrictions
and the standards
countries
problem and the appropriate
obstacles
problems,
or bilateral can agree
to
Figure
agreement
not only
on
on the proviso that the WTO or
regional
agreement(s)
it is only with respect
that the use of NPRPPMs
is warranted
for
to global under the
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
In sum, the challenge "protectionism
balance
environmental
and the
Environment
of consensus
environmental
within
in the
its framework.
Committee
against
The long
of Trade
and
that it is difficult to strike a happy
objectives in the WTO.
and debate have increasingly resolution
increasingly
is how to be vigilant
the need to control the danger of "green protectionism"
the need to integrate
possible
lack
objectives
of the WTO so far indicates
between
discussions
9
garbed in green" but at the same time be more open and flexible
in accommodating discussions
facing the WTO
Regime
in the
future.
affirm the current
and
Nevertheless,
the
clarified the issues leading towards
Specifically,
GATT/WTO
the
discussions
a
appear
to
rules against the use of unilateral
measures by an importing
country whereby access to its market depends on the
domestic
policies
hence
environmental
influencing
country
(GATT,
or practices
the environmental
of the exporting
policies
or practices
country,
of the exporting
1992). Also, there appears to be a growing consensus
need for greater transparency
in ecolabelling
practices
that such efforts do not become unnecessary
and procedures
obstacles
trade. Finally, analysts have increasingly
that,
trade
measures
pursuing
environmental
primarily
to address global environmental
to the
MEAs,
the
reconciliationbetween should
be done
GATT/WTO perhaps
objectives.
fundamental
ex ante
through
the
rules or ex post through
on multilateral
problems facing
or concerns. the
WTO
amendment the current
either binding
environmental
out
are not the most efficient means
of
measures
With respect
is whether
the trade provisions in MEAs and the GATT/WTO
with clearer guidelines,
negotiations
in order
brought
They are at best supplementary
issue
on the
to, or a discriminatory
practice in, international in many instances,
and
of pertinent
the rules
existing
practice
of waivers but
or nonbinding,
to help future
agreements.
10
Beyond WTO: Meeting the Challenges of the New Trade and Environment Regime Perspectives from the Philippines and the ASEAN
The stalemate in the discussions in the WTO CTE reflects the essentially second best nature of the use of international trade measures for environmental purposes; i.e., trade measures are not the ideal and most effective means of protecting the environment. Consideringthat
much of environmentalproblems
are local or national in scope, improving the environment and generating economic growth especially in developing countries is best tackled in these countries through domestic socioeconomic and environmental policy reforms, as well as by strengthening the capacity of the bureaucracy and the private sector in environmental
management in order to meet the demands of an
increasingly competitive and environmentally
conscious international
trading
system. These issues are not at the center of the discussions in the WTO as they go beyond the current concerns of the WTO.
Economic
Growth,
Environment
and International
Competitiveness
Recent researches have shown the inverted U shape pattern of the relationship
between
per capita
degradation.
Many pollutant
income
and measures
of environment
levels tend to increase at first with rising per
capita, then level off to eventually decline as per capita incomes increase further. This pattern reflects the varied effects of the scale of production, shifts in pattern of production, shifts in demand for goods and services, technological change, demand
for environmental
amenities
and the capability
government to enforce increasingly more stringent environmental
of the
regulations
(O' Connor, 1994).
The inverted U pattern has one important implication: the reversibility of many sources of pollution. Thus, development
and economic growth are
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives.from the Phililalaines and the ASEAN
Regime
1]
needed to ensure that countries
attain the level of per capita income that allows
for secular
levels. Nevertheless,
given
decline in pollution
the
better
environmental inverted
understanding
degradation,
U pattern
consumption
of
the
the challenge
by reducing
and
the environment
cumulative
level of environmental
experience.
In this regard, the developing
latecomers,
can draw from both product countries.
social
is in reducing
at each level of per capita
the developed
for developing economic
the amplitude
and income.
of
of the and
Thus, the
can be lower than the historical
countries,
which are the industrial
and process innovations
These innovations
cost
cost of production
production
degradation
countries,
are increasingly
primarily
concerned
in
with
greater energy efficiency, higher material recovery and lower waste generation, thereby
providing
economic
the technological
growth and environmental
the policy and institutional support
basis for reducing
higher
capital
protection.
environment
accumulation
of machines
stronger
protection,
and more robust and sustainable
historical
for resource
the inverted U pattern.
growth
from the less pollutive food and light manufacturing the more pollutive chemicals, in the
1960s
manufacturing more
pollutive
and
then
industries industries
and environmental
(intal
1995).
Asia. The
like Japan and Taiwan
of production
and
environmental
in East and Southeast
of East Asian countries Japan's pattern
that encourage
with better
regeneration
exports and the environment
experience
The challenge is in instituting
and mechanisms
attributes,
Growth,
incentives
the trade off between
in manufacturing industries
followed shifted
in the 1950s to
oil, pulp and paper, and primary metals industries to the
less
pollutive
electronics
as well as to the service industries. in the
1960s
in Japan
brought
and
electrical
The shift to the such
infamous
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives j6"om the Philippines and the ASEAN
incidents
of pollution
followed
the
same
manufacturing output
as the pattern
production
Minamata
mercury
of rising
then
less pollutive
1980s (O' Connor,
case. Taiwan intensity
of
during the past four decades, as the composition
of
like chemicals, industries
poisoning
falling
changed from food, textiles and garments
to industries
12
Regime
petroleum
pollution
during the 1950s and 1960s
and steel during the 1970s and then to
like electronics
and electrical
industries
during the
1994).
During the past two decades, the middle income ASEAN countries been
experiencing
economic
growing
growth or, inthe
in environmental
quaiity
is significant
from fast drawdown
problems
and to pollution levels are higher
Philippines,
Indonesia,
stress
case of the Philippines,
ranging
matter
environmental
of natural problems
than
ambient
Thailand
arising
either
fast
sluggish growth. The decline
and occurs resource
in various
dimensions,
stocks to water resource
(see Table
particulate
in the capital
cities of the
while sulfur
highest in Metro Manila (Table 2). Much of Thailand's because
of overexploitation
(Phantumvanit,
percent
of the agricultural
land in the Philippines
use
1). For example,
standards
and Malaysia
from
have
dioxide level is
land surface is degraded
et. al., 1994);
similarly, nearly 50
is subiect
to moderate
to
severe erosion (Intal, et.al., 1994 ).
In
many
environmental exports
cases,
there
is a linkage
stress in the ASEAN.
from Thailand,
Indonesia
between
For example,
and the Philippines
export
the expansion
substantially
and
of shrimp
has been accompanied
to some extent by the shift of mangrove forests into aquaculture contributing
expansion
to the decline in the hectarage
farms, thereby
of mangrove
forests
Beyond WTO: Meeting the Challenges of the New Trade and Em, ironment Perspectives from the Philippines and the ASEAdV
Regime
in the three
it is logging and shift to
agriculture mangrove
countriesl which
(In the case of Indonesia,
are the two most important
forest area; see CSIS,
former major
exporters
become net importers
The textile industry In Thailand,
Bangkok
and between
(Phantumvanit,
contrast,
is a major export industry
32% to 38% in Samut
Clean
accounts
industry
the Philippines constitute
and Thailand,
are substantial materials and
(which is dominated
ASEAN,
In
of the total BOD
the semiconductors
and
the
industry
by multinationals
in the three
conscious among the major export isa
major
user
of highly
toxic
raising the issue of proper waste disposal facilities. There
health
in electronics
urine
1995).
the largest share to total exports in recent years.
is probably the most environment
thereby
(CSIS,
in the Philippines.
countries)
in the
Sakhon
accounts for about
for only 9 percent
the industry
substances,
and Samut
Rivers Program
Although
industries
Prakam
(Intal, et.al., 1994); to some extent, this reflects the
state of the textile industry
in Malaysia,
and
load of the West Java rivers that are included
government's
the textile industry
electronics
in both Indonesia
textiles account for 45 percent of total BOD loading in
loading in Metro Manila moribund
and Thailand,
until the 1970s have now largely
et. aI., 1994). Similarly, the textile industry
indonesian
in
of massive deforestation.
70 percent of the total pollution in the
for the decline
Both the Philippines
of forest products because
Thailand.
1995.)
reasons
13
risks to improper manufacturing.
of electronic
factory
utilization
and disposal
For example,
workers
of the toxic
lead levels in the blood
in Thailand
in 1987
were
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philiplaines and the ASEAN
multiples
Regime
]4
of the levels in rural residents and Bangkok residents
(Phantumvanit,
et.al., 1994).
The above examples indicate have incurred
environmental
costs for their export success. This is consistent
with the inverted U relationship degradation.
exports
in the
predeterminate exporting
ASEAN
are being quantified
adequately
surveillance
been formulated
in developed
The environmental
countries
is partly
are also, in
countries)
of the
cost of the export
unintended
rather
than
on the true social cost of production
only now and the government
Similarly,
are generally
the
legal
and management
institutions
and tasked
recent creations
framework
for
(e.g., environment
and international
competitiveness.
welfare analysis of trade and environmental
open economy
countries
and
stronger
laws) have
only in recent years in the ASEAN countries.
Cost internalization
The standard
policies in a small and
suggests that the drive for open trade needs to be complemented
with improved reflect
countries.
and the environment
staffed.
environmental
economic
(primarily
because information
to deal with pollution not
costs to the ASEAN
to the consumers
from the ASEAN
expansion
between per capita income and environmental
The environmental
effect, subsidies
that to some extent the ASEAN countries
environment
as much
as possible
management the social
damages from domestic production are environmental
such that domestic cost of pollution
and consumption.
damages from production, stress if the industry
Otherwise,
is an export industry.
environmental
damage comes from the consumption
prices
or environmental
export expansion
environmental
market
where there would lead to
Similarly,
of an import
if the
product,
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
then
reduction
consumption
in tariffs and nontarrif thereby worsening
An important comparative
concern
advantage
environmental
concern is probably a nonissue
exporting
and
internalization
a country
loses its revealed
as a result of the internalization
of the
in the sense that there is no compelling
is that an industry
environmental
reason
if in fact the social cost of producing
it is even higher than the social benefit
efficiencies
and
Of course, from a social point of view, this
to export a product
more likely scenario
imports
further.
however is whether
in an industry
15
would increase
the environment
costs of the industry.
for continuing
barriers
Regime
consists
externality
could l_urt the international
(or returns)
and
from exports. A
of many firms with varying effects.
In
this
competitiveness
case,
cost
of some of the
firms but not the more efficient producers.
Estimation competitiveness
of the impact of a country's
export
et.al.,
1994).
industry
Philippines
(see
Environment
and Natural Resource Accounting
Intal,
Intal
of cost internalization
et. al. study and a subsequent
pollution
abatement
mostly less than
0.5 percent
1.2 percent,
nonelectrical
machinery,
beverages
mining
high for logging
from about
the
results
(Medalla,
10 percent
nonmetallic
1995)
industries
of the
indicate
the that
output
is
(except for wood
mining at 0.8 percent
and paper products (at about
for the
Project for the Philippines,
for manufacturing
at about
(ranging
from
cost as a ratio of the total value of industry
manufactures
but significantly
has been attempted
Drawing
update
on the international
and
at about 0.6 percent)
29 percent),
metallic
mining
for copper mining to 33 percent for metallic
other than copper and gold) and agricultural
crops (at 2.3 percent).
Beyond WTO: Meeting the Cl*allenges of the New Trade and Environment Perspectives from the Philippines and ttle ASEAN
Simulations
of alternative
levels of "pollution
Regime
16
taxes" given domestic
resource
costs of earning or saving foreign exchange in selected export industries coconut,
garments)
suggest that in most cases (with the principal
logging) internalization unduly jeopardize
of the environmental
the international
The results should be considered on national Moreover,
need to be extended
the new export sectors. Of course, countries advantage. other
Nevertheless,
countries,
environmental
assuming
then _-worries cost of production
export industries
the
that
production cost cutting;
competitiveness
differ in their areas of comparative
impact
results
are indicative
of internalization
for
of the
competitiveness
is a multidimensional
cost be internalized reason why foreign
competitiveness
concept.
of
it is important is minimized,
the
because
should be implicitly
negative
environmental
that the
there is no subsidized. impact
of
then it is better to look into the other cost factors for
that is, improve the
that
Various
of an industry or finn
by export producers
consumers
other
efficiency.
Philippines
and
transactions
cost of doing business
(transport,
including
It is clear that from a social point of view, it is important
environmental
Given
to more industries,
on the international
cost factors impinge on the international
compelling
among firms.
may have been overblown.
International
in a country.
would not
because they are based
in efficiencies
the simulation
on
of
of the selected industries.
as approximate
averages and gloss over the variations the simulations
exception
cost of production
competitiveness
(e.g.,
communications,
ASEAN
The most promising
countries
are the
with the government
and customs
transactions)
areas for the
reduction
in the
as well as in the cost of exporting
or
Beyond WTO: Meeting the Challenges of the Ne_v Trade and Environment Perspectives from the Philippines and the ASEAN
importing.
17
Regime
In effect, it is better to improve efficiency of production
government infrastructure to environmental competitiveness
and administrative
degradation
and
support systems than to resort
as a way of ensuring
the international
of an industry.
Indeed, with the growing "greening" of the international it is likely that one attribute
of international
would be the adoption of environment
trading system,
competitiveness
management
in the future
systems at the firm or
industry level.
The "Greening" Countries
of the International
Trading
System and the ASEAN
Despite the controversies raised by the advent of "green protectionism," the more enduring impact of environmentalism
on the international
trading
system is the intrusion of "green" considerations in consumers' preferences. This is best exemplified by the rise in ecolabelling, which puts the burden of influencing production processes and product standards on the consumers. Product
standards
environmental
in developed countries have also toughened
considerations.
in view of
The greening of the international
trading
environment will push ahead forcefully further when the ISO 14000 under the International
Organization
for Standardization
(ISO)
is adopted
and
implemented. The ISO 14000 is a series of environmental standards. With the adoption of the ISO 14000, there is a possibility that purchasers, contractors, and businesses may require conformance to ISO 14000, thereby significantly influencing the parameters of international
trading.
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
The ASEAN economies makes
them vulnerable
international
trading
Regime
have become markedly
to the integration
18
outward-oriented
of environment
concerns
system. The shares of exports and imports
rose substantially
which in the
to the Gross
Domestic
Product
during the past two and a half decades.
Singapore
and Malaysia are now two of the most open economies in the world,
with export to GDP ratio of 158 percent and 77 percent, respectively, Even the previously inward-oriented
Indonesia
and the Philippines
in 1990.
experienced
sharp rise in export shares, from 13 percent in 1970 to 26 percent in 1990 for Indonesia,
and from
Philippines.
19 percent
Thailand's
from 15 percent
export share more than doubled
and need to be responsive
primarily
exporters
nevertheless
were
endeavored
that
aimed
it
tuna
during 1970 - 1990,
to the changing
Phantumvanit,
tuna
caught
et.al., 1994.)
of the
consumer
trading
system,
institutionally
to the challenge.
indications the ASEAN
Thailand's tuna
tuna
processors
from "dolphin
friendly"
A leading tuna exporter
to assure its American
"dolphin
of the industry
exports,
by it. The
boycott.
The response
growing
international
affected
campaign
through
reflects the heavy dependence
In view
Mexico's
fish requirements
consumer
an expensive advertising uses
against
heavily
to source their
in order to prevent
launched
in 1990 for the
in key export markets is exemplified by the case of the tuna dolphin
issue. Although
sources
to 28 percent
in 1970 to 34 percent in 1990 (Table 3).
The vulnerability preferences
in 1970
friendly"
of the Thailand
even
customers
techniques.
(See
tuna processors
on the US export market.
toward countries
the
"greening"
have started
of the
to adjust
For example, given the growing popularity
of
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from tile Philippines and the ASEAN
ecolabelling, their
Singapore
countries.
program.
timber
Thus,
Indonesia
institutions
and Indonesia Singapore
has started
designated
products
ecolabelling pressures
criteria
markets
Similarly,
the
to domestic
toughening
implementation
of ISO 14000
the facilitation
process
recognition
products
has particularly
product
certification. (SIRIM) procedure
economy.
SIRIM
Among
SIRIM's certification
Standards
drawing
to ensure
standards
and
the
the
helps facilitate Finally, Malaysia
product
support
standards
for of
following an
with
they follow strictly
of the
regular
the requirements
spot of
of mutual recognition
agencies of Canada,
trade and minimizes
Institute
of all sectors
certifications
Mutual recognition
countries,
mechanism
Research
participation
has established
possible
of improving
income ASEAN
scheme. SIRIM also has agreements
Standards
the
and the need for mutual
and Industrial
product
that
New Zealand for selected products.
Environmental
(BADEPAL);
is partly in response to
its institutional
schemes with the standards
countries
for
(CSIS, 1995).
the middle
strengthened
and
with two
system to improve forest
for certification
also undertakes
on factories
nontariffbarriers.
pressures
is tasked to set Malaysia's
elaborate
of certification
inspection
of product
at home
The
Label
for an ecolabel
by 1997 highlights the importance
of certifications.
Malaysia
a Green
and partly from the desire of the Indonesian
an independent
in response
schemes in
program,
and standards
(LEI) as well as for nontimber
to establish
management
between
instituted
program for timber, or timber certification,
government
checks
already
ecolabelling
to set up an ecolabelling
to develop
from European
Malaysia
have instituted has
19
Regime
Australia
of certification
schemes
the use of standards
a National
to study the impact on Malaysia
and
Committee
of the adoption
as on of
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
ISO
14000;
standard
it is likely to recommend
as provisional
to be launched
ASEAN provisions
Malaysian
countries
For example,
the import
Standards,
have
also been
environmental Singapore
the electronics
shift to non-ODS
assiduous
agreements,
industry
and provided
in 1989
scheme contracted
prohibition
of
in 1989; it
semi-aquaeous
assistance
to
and no-
to help domestic
firms
processes in order to conserve succeeded
to reduce
as an Article 5 country upon its accession to the Montreal because
of Policy Studies,
of its high per capita
Malaysia,
as an Article
Thailand,
of the Montreal
the
local
5 country
Philippines
since
firms
and
depleting 1994.
Indonesia
to reduce the use of controlled Protocol.
All four
and have used the grants provided to help
use of ozone
(See
1996.)
policies and programs
the objectives countries
the Montreal
beginning
for CFCs. Singapore
has been reclassified
Similarly, instituted
of progressive
the
its use of CFCs and halons so much so that the country, which was
denied classification
Institute
scheme
(the major user of CFCs in Singapore)
financial
CFCs or shift to new substitutes
substances,
especially
CFCs and halons
modify or retrofit their machines and production
Protocol
series
in implementing
or CFC-free processes (i.e., aqueous,
clean technologies);
significantly
of ISO 14000
with a pilot certification
set a schedule
and use of controlled
encouraged
the adoption
20
in 1996. (See ISIS, 1996.)
of multilateral
Protocol.
Regime
to shift
to
under
CFC-free
countries
ODS to meet are Article
the Montreal substitutes.
have
5
Protocol Indonesia
a World Bank loan to help provide financing to affected local firms
to be able to shift to CFC-free
substitutes.
The export-oriented
electronics
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the AS "E_N
industries
in Malaysia, Thailand
multinationals, corporate
import quotas
Finally, environmental international
headquarters
of controlled of the Montreal
it is worth
that
partly
the
management
violations
to the imposition
the government is understaffed
to the
of an alternative
consisting
of to
approach
environmental
management.
bureau .charged with industrial and with inadequate
skills; there
and the monitoring
by the lack of laboratory
t'o industrial
of a) the use of programmatic
of the
in the Philippines with
impact assessment
is hampered
industrial
"greening"
especially in the regions. In view of the above, the Philippines adoption
pursuant
for improved
rethinking
to industrial
are delays in required environmental environmental
drive
in response
approach
in the Philippines
of
Protocol.
noting
management
by
either because
by the ASEAN countries
trading system has encouraged
environmental
which are dominated
or in response
substances
respect to the government's Presently,
and the Philippines,
21
have also been shifting to new technologies
policy of their
the objectives
Regime
facilities
is exploring the
environmental
environmental
of
management
impact assessments
especially for industrial
estates in order to reduce the cost of EIAs to individual
private
encouragement
investors,
management
appraisals
approaches
rather
laboratories
and
pollution
b)
than
(PMAs)
by
emphasize
organizations
and d) the development
In sum, the ASEAN countries international
which
use
end of the pipe investments,
non-government
and violations
of the
firms waste
of pollution minimization
c) the use of private
in monitoring
industrial
of market based instruments.
have tried to adjust to the "greening" of the
trading system in a forward looking manner,
consistent
with the
'
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
heavy export institutions
orientation
of the economies,
to international
as by instituting the domestic
by strengthening
trade and to environmental
policies that encourage the integration
production
and consumption
their support
management
as well
of the environment
in
decisions of firms and consumers;
i.e., the start of the "greening" of the domestic
Concluding
22
Reghne
economies
themselves.
Remarks
In the run up to the Singapore WTO Ministerial the interrelationship
between
trade and environment
resolution
of the issues. This paper takes the view that with respect to trade-
concerns,
measures
to address
the current GATT/WTO
little modification
concerning
bodes well towards
become
and ideologically
environmental
which
has increasingly
less shrill
related
based,
Meeting, the debate on
principles
purely
agreements,
provisions
environmental
of multilateral
environment
agreements
principles
addressing
guidelines
that negotiators
provisions
of the MEAs.
the hoped-for
issues in the WTO, greater attention
of the current
global
through
with at least a nonbinding
of MEAs need to consider
resolution
and
in the GATT/WTO,
of Article XX or indirectly
possibly
a
countries
of the current waiver system (but perhaps with less stringent
for the case of MEAs) together
With
With
'
It is only the case of the
problems which need to be accommodated
either directly through the amendment continuation
of participating
GATT/WTO
rules similarly apply with respect to nonparticipants. trade
environmental
and rules remain robust.
the mutual agreements
in bilateral or regional environmental
domestic
a successful
the rules
set of
in forging the trade
trade
and environment
can then be given to the more important
Beyond W'TO: Meeting the Challenges of the New Trade and Environment Perspectives from the Philippines and the ASEAN
issues of policy and institutional the developing among
countries
countries
international
trading
to
Regime
reforms and capacity building particularly
as well as the strengthening reduce
system.
23
the
adjustment
costs
of cooperative toward
in
efforts
a "greener"
B_ond WTO: Meeting tile Challenges of the New Trade and Em,ironment Perspecti_,es fi'om the Philippines and tile ASEAN
Regime
24
REFERENCES Anderson, K. (1992). "Welfare Analysis of Trade and Environment Policies" in K. Anderson and J. Bloclchuest (eds.) The Greening of World Trade Issues. London: Harester-Wheatsheaf. Center
for Strategic and International Environment Linkages: A Case prepared for the ASEAN Secretariat.
Studies (1995). Trade and Study from Indonesia. Report
Intal,
P. (1995). Towards INTESEP Research and Integrated Paper prepared for the International Development Research Canada.
Policies. Center of
Intal, P., et. aI. (1994). Trade and Environment Linkages: The Case of the Philippines. Draft Report to UNCTAD. Philippine Institute for Development Studies. Intal,
P. et. al. (1996). Trade and Environment Linkages: Perspective. Paper submitted to the ASEAN Secretariat,
Institute for Policy Studies (1996). ASP5 Singapore's prepared for the ASEAN Secretariat, Jakarta.
Country
The ASEAN Jakarta. Study. Report
Institute of Strategic and International Studies (1996). ASEAN SubProgramme on Trade and Environment: Malaysia. Report prepared for the ASEAN Secretariat,. Jakarta. Medalla, E. (1996). Simulation of Effects of Trade and Liberalization on Natural-Base Production and Pollution Intensity. Paper presented at the National Level Workshop on Trade and Environment, Manila, 1516 April. Phantumvanit, D., et. al. (1994). The Linkages Between Environment: Thailand. Report prepared for UNCTAD,
Trade and Geneva.
Beyond WTO: Meeting the Challenges of the New Trade and Environment Perspec_ves from the PhiliptJines and the ASEAN
Rubik,
Regime
F. (1996). Eco-labelling in Europe; Standards, Prospects in the European Union. Institute Wirtschafts-forschung (10W) gGmbH.
Scholz,
I. (1996). Standards Related to Processes Methods. German Development Institute.
Stevens,
C. (1994).
Trade
and Environment:
The PPMS
25
Experiences and for Okologische
and
Production
Debate.
mimeo.
RELATIVE.
.........................
SIGNIFICANCE
7
OF RESOURCE
............
Table 1 AND ENVIRONMENT
r
Indonesia
.....................
ISSUES
r..........
IN ASEAN
,
.........
Malaysia
Philippines
Thailand
High High Medium Medium High Medium Medium Low
High Low Low Low Medium Medium Medium
High Medium High Medium High Medium Medium Low
Medium
Low
Medium
High High Medium Medium High Medium Medium Low Low Medium
I
,
Deforestation Water Resource Problems Land/Soil Resource Problems Pesticides/Fertilizers Urban Congestion/Pollution Industrial Pollution Marine/Coastal Resource Degradation Waste Disposal Acid Rain Rising Sea Level
Source: ADB ADO 1991 pp. 212-213
filename:
phltab8
Table SELECTED ASEAN
• "
2
INDICATORS, COUNTRIES
i
] ,_
IndonesiA,
i
.............................. MalaysiaJ Philippines
!
Thailand
i i
Suspended Particulate Matter (SPM) Mean Daily (90 mg/cu.m.) Peak Levels (230 mg/cu.m.) No. of days over 230 mg/cu.m.
i l
, I
243 551
101 259
100 276
198 386
173
37
I4
97
4 16
83 161
18 48
0
24
0
0.5
1.2
1.0
2.4
, !
70
60
67
60
{
29
42
42'
Sulfur Dioxide Mean Daily (40 mg/cu.m.) Peak Levels (150 mg/cu.m.) No. of days over 150 mg/cu.m. Annual Rate of Deforestation
(%) I
Percent of Population in Coastal Zone Urban Population
Living
(% of total)
!
23 i
'........... I
Note: Capital cities for SPM and SO2; numbers in parentheses indicate ambient standards. Sources: WRI 1988-89; ADB ADO 1991; Soegia,-to (1994) in IntaI, de Ios Angeles and Medalla
Fdename:
plfitab7
RATIO OF EXPORTS
Table 3 AND IMPORTS OF GOODS
(at current
prices),
SELECTED
AND SERVICES
TO GDP
COUNTRIES i
1970 1980 " -Exp째rts (%)
199ff,
10.8 5.6
13.7 10.2
10.7 9.9
Hongkong Korea
92.9 14.0
87.8 34.0
Singapore Taiwan
81.9 30,3
Indonesia Malaysia Philippines Thailand
........
--
Japan United
States
China
Note:
Source: fllename:
1980 -(-%) -
1990 |[
9.5 5.5
14.6 I0.7
10.7 11.2
" 1 i3.0 31.6
89.4 23,6
95.4 41.5
113.4 32.2
165.2 52.5
157.5 47.7
129.8 30.4
204.6 53.7
175.1 42.2
12.8
30.5
26.4
15.8
22,2
25.9
46.1 19.1 15.0
57.5 20,2 24.3
77.3 27,9 34.2
44.4 19.3 19.4
55.0 26.0 30,6
76.8 33.5 41.7
3.9
7.4
I4.8
3.0
8.1
16.6
The 1990 data for Hongkong, Indonesia, Malaysia, from data from ADB Key Indicators 1993.
p_fitab2
W. James, M. Kreinin and M. Plummer
(1993).
1970
[
Philippines
Imp째rts
and Thailand
were computed