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Britain, the European Community and the US are about to break their
own green promises by signing a trade agreement without considering the
impact it will have on the environment. Environmentalists believe that the
deal is likely to renew destruction of tropical rainforests and increase
pollution in the industrial North. The deal could also threaten international
agreements to cut emissions of carbon dioxide to prevent global warming.

On 7 December trade ministers from 105 countries will sit down in Brussels
to sign the so-called Uruguay round of the General Agreement on Tariffs
and Trade (GATT). It will establish sweeping extensions to free trade across
the globe. Subsidies will be cut, barriers against imports lowered, and
export controls will virtually disappear. All this will be done without
any consideration of the environmental effects of the changes.

While environmental groups and lobbyists have woken up to the strategic
importance of the International Monetary Fund and the World Bank, they have
paid little attention to GATT, the UN’s third arm of economic policy. The
four-year-long Uruguay round of negotiations now taking place in Geneva
will set the terms of world trade – and its impact on the environment –
for at least the next decade.

Belatedly, environmentalists have discovered the direction the Geneva
talks are taking. They see the Uruguay round leading to renewed logging
and burning of rainforests in the South, and penalties which will deter
Northern countries from cleaning up their industries. Sustainable development,
the key to environmental protection in the Third World, does not get a look
in.

‘We are pretty sure the effect of GATT on the environment is negative
and will be more negative after the Urugay round,’ said Charles Arden-Clarke
of the World Wildlife Fund International. Friends of the Earth in Britain
and leading environment groups in the US share the concern.

The WWF thinks the threat to rainforests is both direct, by weakening
the ability of Third World countries to control their own natural resources,
and indirect, by introducing damaging changes in the pattern of trade. It
wants ministers at the signing ceremony in December to issue a declaration
committing GATT to environmental protection.

Third World countries often use export controls to protect their natural
resources. Indonesia, for example, banned the export, though not the felling,
of raw logs and rattan from its rainforests in 1985. It justified the ban
on environmental grounds but industrialised countries see the move as protectionist.

The EC is using GATT rules to try to overturn the ban. The EC believes
that Indonesia is restricting the supply of raw materials to take over the
manufacture of ‘value added products’, such as furniture, previously made
in Europe and Japan. Such a move would contradict Article 1 of GATT, which
says that foreign and domestic industries be treated equally.

Whatever the motives of the Indonesian government, the WWF strongly
supports its action which, it says, has significantly reduced the extent
of logging in the rainforest. Under the current, comparatively lax GATT
agreement, Indonesia has escaped sanctions. But the Uruguay round aims to
tighten the rules. Proposals would outlaw the Indonesian ban and create
a tougher disputes procedure to enforce the new code.

Similar concerns apply not just to forests but to minerals and, if a
recent Japanese propsal bears fruit, even to fisheries. The WWF believes
that the removal of the power of Third World countries to use export controls
to manage their resources will seriously damage the environment.

In return for giving up control of their natural resources. Southern
countries hope to gain access to the North’s huge food markets, which, despite
the North’s rhetoric on free trade, are heavily protected. For instance,
tariffs are low on the import of coffee – which Northern countries do not
grow – but high on the import of sugar – which they do.

Import quotas restrict the amount of farm produce Northern countries
will accept from the South; this is one reason why food prices in the North
are three times as high as in the rest of the world. The main demand of
Southern countries in the Uruguay round is for the removal of these barriers
to their exports. In particular, they want import quotas removed and cuts
in government subsidies on farm produce.

But as import barriers come down, so do the trees, according to Mark
Ritchie, a lobbyist for the Institute for Agriculture and Trade Policy in
the US. ‘The lifting of beef and sugar controls would mean massive destruction
of tropical rainforest,’ he says. He expects Third World farmers to clear
new areas of forest to grow the newly lucrative crops.

Where controls on the export of natural resources are concerned, environmentalists
are on the same side as the Third World’s trade negotiators. But when it
comes to import controls on beef and sugar the alliance breaks. Third World
governments struggling against huge debts want hard cash from new markets.
‘There is a lot of underlying tension between environment and development
groups,’ says Alastair Smith of the Development and Environment Centre in
Norwich.

In the North, too, GATT’s new provisions will have a powerful effect
on the environment. Japan, for example, has complained that a ban on logging
in the ancient forests of America’s northwest unfairly reduces the supply
of wood to Japanese mills. The ban is designed to protect the habitat of
a threatened species, the northern spotted owl, and it also reduces the
supply to American mills. Although the dispute remains unresolved, Japan
has introduced a proposal into the Uruguay round which would prevent action
of this type.

More generally, the WWF argues that cleaning up an industry costs money.
This cost raises the price of a product in the marketplace and will make
it less competitive. As environmental protection becomes more important
to industralised countries this raises the possibility of conflict with
an important GATT paper, ‘Industrial Pollution Control and International
Trade’ (1977). It states: ‘Protection because of higher costs .. is precisely
what GATT attempts to limit. It is hard to see how .. GATT could permit
individual member governments to set import charges in relationship to costs
of production.’

In other words, discriminating between products on the basis of their
method of production is not allowed. Countries that try to clean up their
industries are likely to find that they lose sales, says the WWF. The Uruguay
round, initiated with the objectives of ‘improving GATT disciplines relating
to all subsidies’ and an ‘elimination in tariffs’, will make the problem
worse.

At a deeper level, the WWF is worried that the expansion of GATT’s power
under the Uruguay round will inevitably bring it into conflict with international
agreements designed to safeguard the environment. The Montreal Protocol
to reduce emissions of CFCs to protect to ozone layer, for example, contains
provisions for trade retaliation against states which do not comply with
the protocol. Such retaliation, as yet untried, would conflict with the
GATT treaty and CFC offenders could claim the protection of GATT against
trade sanctions. Any treaty to limit emissions of carbon dioxide could run
into the same problem.

GATT was formed in 1948 when governments gave little thought to environmental
protection. Though amended several times since, the word environment is
not mentioned.

Environmentalists would like the Uruguay round to agree a new article
guaranteeing ‘environmental conditionality’. This would state that action
to protect the environment which affects trade will not fall foul of the
treaty. The British government, like the EC through which it negotiates
in GATT, and the US, believes there is no need.

The government’s White Paper on the environment puts its faith in clause
XX(b) of the treaty. The paper points out that: ‘GATT allows nations to
take trade measures to protect human, animal or plant life or health.’ This
clause sounds environment-friendly, but the White Paper fails to mention
that it was originally drafted to allow countries to impose quarantine procedures.

The clause has never been invoked during a dispute to defend an environmental
measure. According to Steven Shrybman, a lawyer for the Canadian Environmental
Law Association, it could never be. ‘It is a fundamental tenet of legal
interpretation that the meaning and application of an agreement be determined
by the intent of the parties at the time that it was concluded,’ he said.
‘Environmental protection was simply not an issue in 1947.’

Britain’s Department of Trade and Industry believes that although environmental
protection is not a formal concern of GATT and the Uruguay round has not
considered environmental impact, the environment is nevertheless cared for.
The department says that the Uruguay round will not rule out subsidies to
clean up industry. ‘The Montreal agreement could not be challenged under
GATT,’ said a DTI representative.

The second environmentally sensitive issue in the negotiations which
Britain and other industrialised countries have avoided is sustainable development.
This is widely recognised as the key to long-term environmental protection.
In May, 34 industrialised countries, including Britain, the US and East
and West European countries, signed the Bergen Declaration on sustainable
development. Chris Patten, the British environment minister, said at the
time: ‘This .. reflects our commitment to sustainable development at the
highest level.’

The Bergen signatories agreed ‘to accelerate in .. GATT .. the dialogue
on the interlinkages between environmental and trade policies. The dialogue
should focus on, inter alia, the role of international trade in promoting
sustainable development and how to ensure that trade does not bring about
harmful environmental consequences’. But the DTI admits it has done nothing
to fulfil Chris Patten’s commitment. The same story is true of the EC and
the US.

According to Chakravarthi Raghavan of the UN Conference on Trade and
Development, there is an inevitable conflict between sustainable development
and the objectives of the Uruguay round. ‘Developing countries say protecting
the environment implies sustainable development, which means demand on resources
should be managed,’ he said.

The Indonesian log ban is a case in point. The British trade department
says Indonesia could have avoided the dispute, and protected the environment
under GATT rules, if it had agreed to curb its own logging as well as that
of the EC. But Raghavan believes this dispute shows that what the South
calls sustainable development, the North calls protectionism. ‘Third World
nations have to safeguard the forests and earn revenue,’ said Raghavan.
‘That means exporting value added products rather than raw materials. In
reality, that is sustainable development.’

As the competing claims of the Uruguay round draw to a conclusion, all
the Northern countries are agreed on one thing: environmental protection
is not on the agenda.

In July 1988, the British government said in its response to the Bruntland
Commission’s report on environment and sustainable development: ‘We strongly
agree that environment and development issues must be brought together and
considered at the policy formation stage.’ The DTI admits that, for more
than two years while negotiating potentially the most environmentally damaging
trade deal ever, it has done nothing to further this policy.