Is Liberalization of Natural Resources on the Horizon?

The director of the World Trade Organization (WTO), Pascal Lamy, said earlier this month that negotiations for a global free-trade deal are urgently needed to restore confidence in shaken financial markets.

Renewed talks could jumpstart efforts to remove barriers to trade in a wide range of economic sectors, helping to stimulate markets, Lamy said. Sectors being targeted for greater liberalization under the WTO include natural resources such as fisheries and timber as well as agriculture, services, and industrial goods.

Discussions on natural resources trade would take place within the WTO's negotiations on so-called "Non-Agricultural Market Access" (NAMA), a series of talks launched in 2001 at the organization's Fourth Ministerial Meeting in Doha, Qatar. But progress in this and other key trade areas has come to an effective standstill since high-level negotiations broke down in Doha and more recently in Geneva this July.

Free-trade enthusiasts tout the benefits of NAMA's push for the unhindered movement of goods and resources across national borders. But some environmental groups are concerned that the negotiations could pose a serious threat to ecological, social, and economic sustainability.  

According to these organizations, including Friends of the Earth International, Greenpeace International, and the Institute for Agriculture and Trade Policy, reducing and eliminating barriers to trade, including import and export tariffs as well as non-tariff barriers, could override legislation critical to environmental protection. They worry that measures such as the certification of wood products, restrictions on trade in chemicals, and precautions against invasive species could potentially be considered non-tariff barriers to free trade.

A 2004 Friends of the Earth Europe report charges that legislation regulating food, fisheries, minerals, timber, and electronics, as well as chemical testing and recycling standards, could all be challenged as barriers to trade. According to the report's findings, governments that have raised questions about the compatibility of health and environmental standards with trade rules include Argentina, Australia, Bulgaria, Egypt, Hong Kong, India, Japan, Turkey, and the United States. 

But past experience indicates that submitting a complaint to the WTO does not necessarily mean that national environmental legislation will be overturned. In 2006, for example, the European Union presented a legal complaint to the WTO Dispute Settlement Body against Brazil's restrictions on imports of retreaded (used) vehicle tires. Brazil countered that the restrictions were necessary to protect the country's health and environmental standards. The Dispute Settlement Body ultimately voted in favor of Brazil's position.

Environmentalists also worry that greater market access for environmental goods could increase the exploitation of key natural resources. The forest, fisheries, minerals, and aluminum sectors are at particular risk because they are designated for so-called "zero-zero liberalization," a bargaining process whereby one country eliminates its trade barriers in exchange for another country to do the same. Canada, Iceland, New Zealand, Norway, and Thailand have all tabled zero-zero proposals for fish products, and New Zealand and Australia have presented such proposals for forests.

Carin Smaller with the Institute for Agriculture and Trade Policy says a range of government and independent research on the potential impact of trade liberalization on fisheries and forests has found that "further liberalization will have a negative impact on these sectors." Case studies from the United Nations Environment Programme, for example, conclude that fisheries liberalization would be detrimental to the economies and marine diversity of Argentina, Mauritania, and Senegal, she says.

A Greenpeace International study released last year concludes that "while consumers in developed countries should see some short-term economic benefits of less expensive seafood, these will be short-lived because further liberalization will only accelerate resource depletion through continued over-fishing, especially in developing countries."

On the other hand, trade liberalization could benefit fisheries by acting as a forum where countries can present proposals to prohibit harmful subsidies that distort fisheries production and trade. Subsidies to the fishing industry total some $15-20 billion a year and come in the form of direct payments to boat owners as well as tax write-offs to developing-country governments that grant permission to industrial-country fleets to fish in their waters. These subsidies often provide incentives for the industry to exploit already-depleted fisheries. 

At the 2001 WTO Ministerial Meeting in Doha, talks on fish subsidies were integrated into the official trade negotiations, giving governments the opportunity to present alternative proposals. Several delegations have since submitted proposals to the WTO that have successfully eliminated distorting subsidies.

Proponents of NAMA say liberalization could also bring much needed foreign investment to developing countries. This increased investment would generate revenue that, if distributed properly, could foster employment and provide financial support to innovative environmental programs, such as projects to sustainably manage forests and fisheries, market affordable organic products, and develop renewable energy technologies.

As world leaders focus greater attention on the role that trade liberalization could play in boosting the global economy, divergent viewpoints are emerging within the WTO, particularly between industrialized and developing countries. "The text of the NAMA paper would need to be drastically reworded before it becomes acceptable to not just India, but developing countries in general," said India's commerce secretary, Gopal Pillai.

Ambika Chawla is a State of the World 2009 fellow at the Worldwatch Institute. She can be reached at achawla@worldwatch.org.

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