The Progressive Response

The Progressive Response is a publication of Foreign Policy In Focus, a joint project of the Interhemispheric Resource Center and the Institute for Policy Studies. The project produces Foreign Policy In Focus (FPIF) briefs on various areas of current foreign policy debate. Electronic mail versions are available free of charge for subscribers. The Progressive Response is designed to keep the writers, contributors, and readers of the FPIF series informed about new issues and debates concerning U.S. foreign policy issues.

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Editor: Tom Barry (IRC)

Table of Contents

I. Updates and Out-Takes

U.S.-EU TRADE RELATIONS
By Jonathan P.G. Bach

WTO AND SUSTAINABLE DEVELOPMENT
By John C. Dernbach

I. Updates and Out-Takes

(Editor's Note: As the Battle of Seattle continues, Foreign Policy In Focus is working to present principled and reasoned analysis of the challenges of managing the global economy and fashioning instruments of global economic governance that foster sustainable development and reduce the dominance of the U.S. and its corporations. Two new policy briefs on the WTO and sustainable development issues by John C. Dernbach and Jonathan Bach, both of which are excerpted here, address these issues. Full texts of these policy briefs are posted at the FPIF website: http://www.fpif.org/.)

U.S.-EU TRADE RELATIONS
By Jonathan P.G. Bach

Investment and trade between the U.S. and the European Union (EU) have expanded exponentially since Europe first began to integrate its market in the 1950s. Currently the U.S. and EU account for more than one trillion dollars in two-way trade and investment flows, directly supporting a total of more than six million jobs in the U.S. and the 15 EU countries and resulting in a degree of economic integration higher than that between the U.S. and Asia. The EU and U.S. now exchange roughly 19% of each other's exports and imports.

The EU has gained new vitality since the end of the cold war. It is developing an independent political capacity to supplement its economic might and is seeking to become more of a global player. With economic interests in emerging markets such as Latin America, the EU is the only world region that rivals U.S. economic might and can compete on a par with it.

In 1990, the U.S. rebuffed EU calls for a formalization of relations through a transatlantic treaty, preferring a network of informal relations. The EU, concerned about the effect of the North American Free Trade Agreement (NAFTA), then proposed a Transatlantic Free Trade Agreement (TAFTA) in 1994, and the U.S.--somewhat reluctantly--went along.

There was to be no TAFTA to complement NAFTA, however: only a renewed political gesture in the form of the 1995 New Transatlantic Agenda (NTA).

The New Transatlantic Agenda spawned a transatlantic business dialogue, but it has failed to produce an effective labor dialogue. Consumer and environmental groups are just beginning to be heard. The U.S. and EU should counter this asymmetrical structure with effective labor, consumer, and environmental dialogues. Existing groups, excluded from the U.S.-EU summit in Bonn in June 1999, found their suggestions soundly ignored, leading them to publicly criticize the summit as "a symbolic show of favoritism toward business interests."

The EU has proposed that the WTO's new negotiating agenda not only include social and environmental issues but also duty-free access for goods from the developing world to the developed countries. Also on the EU wish list is the expansion of the WTO for investment and competition policy, though EU social and development proposals challenge the narrow, corporate-friendly globalization embraced by the United States. Yet the very developing countries these proposals are purported to help, such as India and Brazil, continue to oppose the inclusion of social and environmental issues in the new WTO agenda, fearing new forms of protectionism. In an interesting twist, the International Chamber of Commerce and the UN also oppose including such issues in the WTO.

If the U.S. wants to show global leadership, it can strive to ensure that consumer, labor, and environmental groups play a constructive role in setting the agenda.

U.S. foreign policy should emphasize inclusive dialogue and should rein in domestic constituencies whose interests force the government into often indefensible positions, from unqualified support of hormonally and genetically altered food to politically motivated sanctions. The EU should neither be treated as a partner superpower with whom the U.S. can share the spoils of unfettered trade nor should it be underestimated as a subordinate global power. EU concerns about those left behind by globalization should compel U.S. policymakers to be more receptive to critics at home and abroad. And as U.S. negotiators wrangle with the EU over bananas, beef, and biotechnology in the WTO, they should keep in mind that more is at stake than the economic interests of the U.S. or EU. The resolution of these disputes is shaping the future of the global economy, for better or worse.

(Jonathan P. G. Bach is currently a postdoctoral fellow at the Saltzman Center for the Study of Constitutional Democracy at Columbia University. He is author of Between Sovereignty and Integration: German Foreign Policy and National Identity (St. Martin's Press, 1999).)

Sources for More Information

Centre for the Study of Globalisation and Regionalisation (CSGR)
Email: csgr@warwick.ac.uk
Website: http://www.csgr.org/

Council on European Studies
Email: ces@columbia.edu
Website: http://www.EuropaNet.org/

Transatlantic Business Dialogue
Website: http://www.tabd.com/

Transnational Institute
Email: stichele@worldcom.nl
Website: http://www.tni.org/

The European Union Directorate General for Trade
Website: http://europa.eu.int/comm/dg01/dg1.htm

The European Union in the U.S.
Website: http://www.eurunion.org/

Non-EU Economic and Monetary Union Information
Website: http://www.euro-emu.co.uk/index.htm

U.S. Mission to the EU
Website: http://www.useu.be/

U.S. State Department Bureau of European Affairs
Website: http://www.state.gov/www/regions/eur/index.html

World Trade Organization
Website: http://www.wto.org/

WTO AND SUSTAINABLE DEVELOPMENT
By John C. Dernbach

The U.S. should articulate a positive and compelling vision of what sustainable development would mean for the world's nations and integrate that vision into its domestic and foreign policy, including its trade policy. The United States should exercise that leadership in the WTO and other forums.

U.S. Leadership in the WTO

The WTO needs to be part of the effort to achieve sustainable development, not part of the problem. The United States should exercise leadership in the WTO to achieve the following outcomes. Although many of the examples relate to environment, these recommendations also apply to labor, health, and other aspects of sustainable development.

Elimination of Subsidies That Contribute to Unsustainable Development.
WTO parties should phase out subsidies for environmentally unsustainable activities, including subsidies that contribute to fisheries overcapacity. The elimination of such fishing subsidies has been proposed by New Zealand, Iceland, and the United States.

The parties should find other ways to apply the WTO's legal authority concerning subsidies to support sustainable development. For example, it is widely recognized that the use of fossil fuels is subsidized by governments in ways that often increase their use and that the use of fossil fuels contributes to global warming. The Kyoto Protocol specifically identifies elimination of national subsidies as one means of achieving greenhouse gas reductions. Subsidies for fossil fuels distort the prices charged for those fuels and create substantial economic distortions in the debate over the cost of Kyoto Protocol compliance.

Consideration of Sustainable Development in New Trade Agreements.
No trade-related agreement should be negotiated or allowed to go into effect unless a sustainable development impact assessment is first prepared and subjected to public review. The assessment should describe the impact of the proposed agreement on the environment, on social development and human rights (including labor), on peace and security, and on national governance that is supportive of those goals. The assessment should also describe alternatives to the proposed agreement, including alternatives relating to the special situation of developing countries, and particularly the least developed countries.

Integration of Sustainable Development Goals into New Trade Agreements.
No trade-related agreement should be allowed to go into effect unless the parties are satisfied, after public review, that the agreement would actually further not just economic development but also environmental protection, social development and human rights, peace and security, and supportive national governance. It is not enough to consider the effects on these goals. Trade agreements should actually further these goals, or at least not interfere with them. Procedural reforms to WTO's Committee on Trade and Environment will not achieve this result.

The parties should also find additional ways to make GATT and multilateral environmental agreements mutually supportive. When negotiations relating to a particular economic sector begin, for example, and there is no multilateral environmental agreement in place concerning that sector, there should be preliminary discussion on whether it would be appropriate to have multilateral environmental standards and procedures applicable to that sector. (These standards would include process and production methods.) Environmental ministries should participate directly in such discussions. If so, then those standards could be negotiated at the same time as, or perhaps even as part of, the trade discussions for that sector. Such negotiations should also include appropriate standards and financial or technical assistance for developing countries.

The standards should include air pollution, water pollution, sanitation, and drinking water--environmental problems that developing countries experience more severely and immediately than most other environmental problems. These problems generally are also not directly covered by multilateral environmental agreements. The quid pro quo for increased trade, in short, should be progress in addressing such problems and assistance by developed countries in doing so.

Integration of Sustainable Development Goals into Existing Trade Agreements.
Where trade agreements already exist (e.g., for products), the parties should facilitate the negotiation of international agreements concerning process and production agreements relating to products. These agreements should include, but not necessarily be limited to, extended producer responsibility, ecolabeling, and the greening of public purchasing. These agreements also should apply to air pollution, water pollution, and similar problems experienced severely by developing countries, and should include appropriate assistance. The WTO agreements should also be amended, or interpreted by the parties, to provide a more balanced test for the availability of the Article XX(b) and XX(g) exemptions for measures to protect "human, animal or plant life or health" or conserve "exhaustible natural resources." In addition, the WTO agreements should expressly protect domestic actions taken pursuant to multilateral agreements and allow unilateral actions where necessary to protect the national interest.

U.S. Leadership in Other Forums

Many of the changes required to make trade supportive of environmental and social goals cannot be achieved by WTO alone. Unless the United States exercises leadership for sustainable development in all relevant international and domestic forums, it will continue to miss many opportunities to improve the environmental and social effects of trade.

Greater Assistance to Developing Countries for Sustainable Development.
The Earth Summit bargain between developed and developing countries was that developed countries would provide financial and technical assistance to developing countries to help developing countries achieve environmental and social goals. The developed countries have not kept that bargain. Developed countries (including the U.S.) need to increase official development assistance, to assist technical and governmental capacity building, and to provide access to environmental technology and know-how on preferential terms. Creative means of financing this assistance should also be seriously considered (e.g., debt for environmental and health protection swaps, or a small tax on global trade and capital flows).

Creation of International Institution for Sustainable Development Comparable to WTO.
There is no organization equal in influence to the World Trade Organization concerning the environmental aspects of sustainable development. Such an institution should thus be created, probably by combining existing organizations (e.g., Commission on Sustainable Development, U.N. Environment Programme, secretariats of various multilateral environmental agreements). The consolidation of environmental organizations would be in addition to the integration of environment into existing WTO operations.

Domestic Efforts to Achieve Sustainable Development.
The U.S. and other developed countries must demonstrate by their own domestic actions, including actions concerning trade, that sustainable development provides better quality of life for their citizens and for succeeding generations.

(John C. Dernbach is Associate Professor of Law at Widener University Law School. He has written extensively in the areas of administrative law, environmental law, international law, and sustainability and the law.)

Sources for More Information

Center for International Environmental Law
Email: cielus@igc.apc.org

Friends of the Earth
Website: http://www.foe.org/

Institute for Agriculture and Trade Policy
Website: http://www.iatp.org/iatp/

National Wildlife Federation
Website: http://www.nwf.org/international/trade/

Nautilus Institute for Security and Sustainable Development
Email: lzarsky@nautilus.org
Website: http://www.nautilus.org/

Worldwatch Institute
Website: http://www.worldwatch.org/

World Resources Institute
Website: http://www.wri.org./wri/governance/iffe.html

Trade and Environment Database
Website: http://www.american.edu/projects/mandala/TED/ted.htm

International Centre for Trade and Sustainable Development
Website: http://www.ictsd.org/

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This page was last modified on Thursday, February 15, 2001 3:30 PM