UNICE Eco-Label Information Day, 24 June 2002 Trade implications of eco-labelling schemes 1 Contents...

UNICE Eco-Label Information Day, 24 June 2002 1

Trade implications of eco-labelling schemes

Contents

I. Introduction

II. Eco-labelling and the WTO

III. Potential trade distortions

IV. Possible approaches to minimise trade distortive effects

V. Conclusion



I. Introduction

Eco-labelling schemes

are market based and rely on consumer‘s choice

are usually voluntary

are often based on life cycle analysis and therefore awarded on the

basis of non-product related Process and Production Methods

(PPMs)

do not establish direct restrictions at the border

can, however, lead to trade distortions caused by the way the criteria

for awarding a label are determined




Controversy if rules of Agreement on Technical Barriers to Trade

(TBT) or General Agreement on Tariffs and Trade (GATT) do apply for

eco-labelling schemes based on a life cycle analysis

Application of WTO rules: ensure that the criteria for obtaining an

eco-label are non-discriminatory and transparent and that eco-

labelling schemes do not create unnecessary barriers to trade

Eco-Labelling Schemes must comply with non-discrimination

principle

• i.e. a product with an eco-label must be treated in the same way like a

product without eco-label (no different taxation!!). Products remain like

products according to the traditional GATT like-product principle.




Doha Development Agenda (DDA):

The ministers „instruct the Committee on Trade and Environment...to

give particular attention to labelling requirements for environmental

purposes.“

Work includes the identification of any need to clarify relevant WTO

rules

CLARIFICATION is necessary because

• labelling activities by developed countries increase

• unsatisfactory legal situation in WTO / no case law yet



III. Potential trade distortions

Eco-labelling schemes can establish non-tariff barriers to trade!

Direct discrimination

• Foreign companies are ignored when the eco-labelling scheme is set up

• Unequal access to information for domestic and foreign firms

Indirect discrimination

• Criteria for awarding the label are based on domestic environmental conditions and preferences without consideration of differing regional conditions

• Eco-labelling schemes are often biased toward domestic industry and production standards

Special problems for developing countries

• Limited ability to compete with technological more advanced PPMs used in developed countries

• Costs for certification and compliance are especially burdensome for developing countries



IV. Possible approaches to minimise trade distortive effects

All companies (foreign and domestic) must have equal access to information on labelling programmes and procedures

Transparency and consultation during eco-labelling process

Notification of eco-labelling schemes under TBT-Agreement (including schemes based on life cycle analysis)

International harmonisation of criteria for awarding eco-labels

Standards on standard setting (ISO 14 000 series)

Criteria of ecological equivalence: e.g. recognition of exporters’ compliance with their domestic environmental standards

Mutual recognition of eco-labelling schemes among WTO members

Capacity building and technical assistance for developing countries

Clarification of eco-labelling with WTO rules



V. Conclusion

Eco-labelling schemes can be crucial in solving the PPM problem

provided that they meet the following criteria:

Openness

Transparency

Ecological Equivalence

No different treatment of identical products which carry an eco-label

and which do not carry an eco-label

UNICE Eco-Label Information Day, 24 June 2002 Trade implications of eco-labelling schemes 1 Contents...

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