The global impact of achieving greater clarity between trade and environment policy at the multilateral level will depend on the terms of agreement reached. The distribution of impacts is also difficult to predict, in part, because some of the gains will be in terms of the enhanced protection of 'global commons'. In the developing and least developed countries, the realisation of environmental gains is likely to be linked to negative economic impact, at least in the short and medium term. Non-trade distorting mitigation measures will need to be identified and applied if these potential adverse economic effects are not to act as a brake on reaching agreement within the WTO on the use of trade measures for environmental policy purposes.
2. For the developing and least developed countries, the clarification of rules could have a positive environmental effect, but a negative social and economic impact, at least in the short and medium term. This emphasises the role of international coherence and coordination in providing resources and technical assistance to enable developing and least developed countries to meet environmental standards and rules applied to traded goods and services, and becomes particularly important in the liberalisation scenario.
3. The full liberalisation scenario could lead to increased economic gains and environmental losses. If, however, environmental rules were effectively applied, there could be a net environmental gain, with the elimination of subsidies which encourage over production and over-use of pollution-intensive and resource-intensive products.