The WTO Agreement on TBT recognizes the right of a country to protect its environment, but unfortunately offers no guidelines on that statement. However, all the rules of the TBT will also apply to the requirements used in technical regulations to effect environmental control.
Importing countries have the right to insist that imported products meet the product standards applicable to the goods produced domestically to protect the environment, and the health and safety of its people and animal life. The TBT Agreement does not allow countries to restrict imports on the grounds that the imported products have not been produced to the PPM (Production and Process Methods) standards imposed on domestic industries.
Environmental measures can affect trade in several ways, of which the following are worth noting:
Environmental standards may change the conditions of competition on the markets and in trade, because they may have a significant impact on the cost of production, packaging and labelling.
There is a growing public concern with common global aspects such as ozone depletion, climate change, species diversity, and treatment of animals.
As a result of these concerns, WTO has placed this subject on its agenda of work programmes for study and analysis by the Committee on Trade and Environment (CTE).
As referred to earlier, ISO published system standards for Environmental Management (ISO 14000 series). ISO has also published a series of International Standards on Life cycle assessment and Eco-labelling.
Environmental requirements for packaging and labelling have been accepted in a number of countries, for example, the EU Energy Efficiency Labelling Scheme which was introduced in 1995 and now covers the environmental performance of most white goods (e.g. refrigerators, freezers, washing machines and dishwashers). Labels, ranging from “A” for the most energy efficient to “G” for the least efficient, are granted. It is a mandatory labelling scheme.
Virgin material tax. This tax can be levied on raw materials used for the production of packaging material. The aim of such an input tax is to reduce the use of virgin materials in favour of recycled materials.
Product charges. These charges are levied on packaging materials. They may be designed to encourage the use of packaging materials that are considered environmentally friendly. For instance, packaging recycled material may face lower charges. Higher charges would be payable on containers that are not recyclable or refillable.
Eco-labelling systems and marks, such as Blue Angel (Germany), Environmental Eco Mark (Japan), Eco Mark (India), White Swan (Nordic Countries), Eco-logo (Republic of Korea), Green Seal (USA), Environmental Choice (Canada), EU-Label (EU) to name a few, have been introduced. Most of these eco-labels and environmental requirements are Government sponsored. Governments are in a better position to ensure that the criteria adopted are based on objective considerations reflecting the balanced views of industries, and environmental groups. Currently, products for which eco- labels have been developed are comparatively few, and presently they do not significantly affect trade. This situation could change in future.
Studies have identified many environmental requirements that need to be addressed to increase India’s export performance. Regulations on dyestuffs affect textile and leather sectors. For example, 20 azodyes are banned, mostly based on studies of rodents showing carcinogenic implications. Standards involving the use of certain chemicals based on the ‘precautionary principle’ affect textiles in particular. The presence of formaldehyde, glyoxal and PCP residues in cotton T-shirts led to denial of market access to exporters. The effect is more significant on SMEs, as the costs of compliance could be prohibitive. For example, SMEs found it prohibitive to shift from PCP to Busan-30, the latter costing seven times the former. They also found it not to be viable to install effluent treatment plants in the tanneries sector and the Government had to provide assistance. Tea exports have been affected due to developed countries’ concerns about pesticide content. Although Indian exporters adhered to the maximum pesticide residue levels recommended by the US Environmental Protection Agency (EPA), stricter limits (e.g. 0.01 mg. of tetrafidon and 2 mg. of ethion per kg. of tea) imposed in some European countries became insurmountable, there being, apart from other problems, a cost of $234 per analysis.
South Africa faces an additional challenge based on the size and importance of their wool industry. Pesticides are used to control parasites on sheep and if not applied correctly can have major environmental implications during scouring (from the effluent created). There is consequently an increasing pressure to reduce the level of pesticides on all wool destined for Europe in particular. A pesticide-monitoring programme is in place in South Africa, resulting in a fair management of the problem, but the tightening of standards requires some changes in their farm management practices. The textile industry is facing increasing cost pressures in the market on account of such internationally imposed standards.
The Philippines has had experiences related either to conformance with voluntary environmental management systems or to primarily local environmental problems affecting their trade and needing increased domestic policy support and both leading to higher costs. The most visible is ISO 14001 certification adopted in the export area of semiconductors. Although voluntary, ISO 14001 has become a pre-requisite for them due to a greening of the supply chain and a strong cross-border force for allied industries in this business. However, setting up an ISO 14000 environmental management system (EMS) is expensive.
RoHS is the acronym for Restriction of Hazardous Substances. RoHS, Directive 2002/95/EC, of the European Union. It restricts the use of specific hazardous materials - Lead, Mercury, Cadmium, Hexavalent Chromium, Polybrominated Biphenyls (PBB) & Polybrominated Diphenyl Ether (PBDE) - in electrical and electronic products. This directive requires that the following products must meet RoHS requirements in the EU market after 1 July 2006:
- Large and small household appliances.
- IT equipment.
- Telecommunications equipment
- Consumer equipment.
- Lighting equipment—including light bulbs.
- Electronic and electrical tools.
- Toys, leisure, and sports equipment.
- Medical devices (currently exempt)
- Monitoring and control instruments (currently exempt)
- Automatic dispensers.
Developing countries are more vulnerable to the adverse effects of environmental measures on market access and competitiveness. Some reasons:
Lack of infrastructural, limited technology choices, inadequate access to (and relatively more expensive) environmentally friendly raw materials and information. Developing countries also lack data on life cycle assessment of various products, facilities for monitoring environmental performance, conformity assessment infrastructure etc
SMEs face more formidable compliance costs and there is an increasing emergence of environmental standards of export interest to them.
Developing country enterprise lacks the skill and technology required for exploiting the positive trading opportunities generated by environmental measures.
Sri Lanka packaging requirements, an example as to how environmental measures on packaging material adopted by a country can impact the exports:
Sri Lanka was a major importer of apples from Pakistan. Pakistan packed and transported the apples in wooden crates. Sri Lanka suddenly demanded that all apples must in future be packed in cardboard boxes only, to facilitate environmentally friendly packaging which would not have deleterious effects when it decays on dumping sites. This requirement had big repercussions on the trade between the two countries, because Pakistan could not comply and the export of apples to Sri Lanka came to an end.
For reducing the environmental damage due to disposal of packaging material, countries are increasingly developing technical regulations for prohibiting use of, for example:
Packaging materials containing lead, mercury, cadmium;
Containers that are not refillable or recyclable; and
Packaging material that does not contain or has less than a specific proportion of recycled material.
Deposit refund systems (DRS ). A number of countries have adopted mandatory deposit refund systems for beer and soft-drink containers. Some countries have extended the system to cover containers for detergents and paints. As the consumer can claim the deposit only by returning the containers, the system creates an incentive for them to do this.
Mandatory recycling or recovery laws. In order to facilitate the recycling of packaging waste, the laws of a few countries require households to sort packaging waste (e.g. cans, bottles and paper containers) for separate collection.
Cooperative arrangements. In addition, the industry may agree to abide by a voluntary code of conduct negotiated by private sector associations with a view to reducing the generation of new packaging waste and to increasing the use of refillable or recyclable packaging material.
Related articles:
- Technical Barriers to Trade - Part 1
- Technical Barriers to Trade - Part 2
- Technical Barriers to Trade - Part 2 (Contd)
- Technical Barriers to Trade - Part 3
- Technical Barriers to Trade - Part 3 (Contd)
- Technical Barriers to Trade - Part 4
- Technical Barriers to Trade - Part 4/2
- Technical Barriers to Trade - Part 4/3
- Technical Barriers to Trade - Part 4/4
- Technical Barriers to Trade - Part 4/5
- Technical Barriers to Trade - Part 4/6
- Technical Barriers to Trade - Part 4/7
- Technical Barriers to Trade - Part 5