Analysing implications for trade of using economic instruments

This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.

Agenda 21 recommends analysing the implications of economic instruments and incentives for competitiveness and international trade, and potential needs for appropriate future international cooperation and coordination.

One of the main obstacles to advancing the internalization of environmental costs is the concern about international competitiveness. In some economic sectors, an increase of environmental and health taxes would tend to increase the costs of production. Cooperation with economic sectors can help to balance this effect, by identifying acceptable compensatory measures. Trade partners often share the same concerns about environment and health damages resulting from economic activities. Coordination of their policies, and especially of regulatory measures and economic instruments, contributes to avoiding trade distortions among them. Achieving such coordination is one of the major areas of work of the EC.