Recognizing different situation of developing countries in environment and trade policies

Special factors affecting environment and trade policies in developing countries should be borne in mind in the application of environmental standards as well as in the use of any trade measures. Standards that are valid in the most advanced countries may be inappropriate and of unwarranted social cost for developing countries.

Developing countries may benefit economically from a World Trade Organization (WTO) rules framework covering the use of trade-related measures for environmental policy objectives, which provides redress against unilateral implementation of measures that affect the import or export of goods and services. Developing countries may lack, however, the resources or regulatory ability to ensure that their exports meet environmental standards, and so exports may be disrupted for these reasons. This could have significant negative economic and social impacts following from the decline in production and employment. The environmental impact is likely to be positive. There is also a risk associated with the imposition of uniform environmental standards on developing countries and at the same time removing some of the financial assistance which has been provided to facilitate their participation in the MEAs. This could lead to environmental gains but economic losses.

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.

In 1993, the European Commission introduced a new import regime for bananas that favoured ACP countries at the expense of Latin American producers. The WTO declared this regime illegal in 1997, which led to the introduction of a revised regime in 1999. This in turn was also declared to be illegal by the WTO, which in April 1999 authorized the US to impose sanctions on the EU to a value of US$ 191 million. The resolution of the dispute occurred in 2001 when the US suspended the trade sanctions in return for the EU introducing a licensing system based on historical trade patterns and an adjustment of quota quantities in order to expand market access for Latin American countries whilst securing market share for a specific quantity of bananas from ACP countries.