Creating environmentally sound trading practices

Sustainable trade implies a trading system that does not harm the environment or deteriorate social conditions while promoting economical growth. The aim is an open, equitable, secure, non-discriminatory and predictable multilateral trading system, supported by the adoption of sound environmental policies which have positive impact on the environment and contribute to sustainable development. Such a system makes possible a more efficient allocation and use of resources and thereby contributes to an increase in production and incomes and to lessening demands on the environment. It leads to optimal distribution of global production in accordance with comparative advantage and of benefit to all trading partners. It thus provides additional resources needed for economic growth and development and improved environmental protection. Conversely, sound environment provides the ecological and other resources needed to sustain growth and underpin a continuing expansion of trade.

Trade policies and trade liberalization should be made more consistent with overall development objectives. In developing countries, ways and means need to be sought to ensure that trade makes a more decisive contribution to alleviating poverty. The role of trade for stimulating economic growth, the distribution of growth effects, and sectoral policies for agricultural and tourism development, and in the longer term for diversification into industry and advanced services, require further attention, including monitoring of the developmental impact of multilateral trade agreements.

One of the greatest challenges is to promote liberal trade yet maintain and strengthen the protection of the environment and natural resources. Some governments are now taking action to reconcile trade and environmental interests through special policies, agreements on product standards, enforcement of the Polluter Pays Principle, and the enforcement of health and sanitary standards for food exports.

Trade and environment policies should be mutually supportive in achieving sustainable development. The preamble to the agreement establishing the WTO commits the Organisation to achieving trade liberalisation that is consistent with environmental and developmental objectives: "expanding the production and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development". The URA agreed to establish a Committee on Trade and Environment whose remit was to examine the effects of environment on trade (but not vice versa). Other Uruguay Round Agreements contain environmental provisions relating to technical barriers to trade, sanitary and phytosanitary measures, subsidies and countervailing duties, and trade-related intellectual property rights.

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.