Proceedings of a workshop organised by the Foundation for Global Dialogue and the Trade and Industrial Policy Secretariat in conjunction with the Departments of Trade and Industry, Foreign Affairs and Environmental Affairs and Tourism

Basel Convention: Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal
A multilateral environmental agreement adopted in 1989 that regulates trade in hazardous wastes. For a full text on the Basel Convention visit the site http://www.unep.ch/

Cites: Convention on International Trade in Endangered Species of Wild Fauna and Flora
A multilateral environmental agreement signed in 1975 that regulates trade in threatened species of animals and plants. For a full text of Cites visit the site http://www.unep.ch/cites.html

CTE: Committee on trade and environment
Established at the conclusion of the Uruguay Round of trade negotiations in Marrakech in 1994, under the aegis of the newly created World Trade Organisation (WTO). Its purpose is to identify the relationships between trade and environmental measures.

DEAT: Department of Environment and Tourism
South African government department dealing with environmental and tourism issues.

DTI: Department of Trade and Industry
South African government department dealing with trade and industry issues.

DFA: Department of Foreign Affairs
South African government department dealing with all foreign policy issues.

EIA: Environmental Impact Assessment
A process that predicts the effects of a proposed activity on the environment and on human health. The result of this process may prevent an activity from being undertaken if the potential effects are unacceptable.

Gatt: General Agreement on Tariffs and Trade
Legal text of the World Trade Organisation outlining international trade rules. For more information visit the site http://www.wto.org/

ISO: International Organisation for Standardisation
Non-governmental organisation established in 1947 as an international federation of national standards bodies to promote the development of industrial standardisation and related activities throughout the world. ISO 14000 is a series of guideline standards for environmental management. For more information visit the site http://www.iso.ch/welcome.html

MEA: Multilateral Environmental Agreement
A convention, treaty or protocol promoting the protection of the environment and that is signed by more than two countries.

Montreal Protocol: Montreal Protocol on Substances that Deplete the Ozone Layer
A multilateral environmental agreement signed in 1989 to phase out chemicals manufactured by humans that are detrimental to the ozone layer in the stratosphere. For more information visit the site http://www.unepch/ozone

PPM: Process and production method (standards)
The way in which a product is produced or processed. These methods can have negative effects both inside and across national borders.

UNCED: United Nations Conference on Environment and Development
Held in 1992, it is also known as the Rio Earth Summit at which the Rio Declaration and Agenda 21 was adopted. For more information visit the site http://iisd.ca/rio+5/earthsummit.htm

Unep: United Nations Environmental Programme
Established to create a basis for comprehensive consideration and coordinated action within the United Nations on the problems of the human environment. For more information visit the site http://www.unep.org/unep

UNFCCC: United Nations Framework Convention on Climate Change
A multilateral environmental agreement signed in 1992 at the Rio Summit. The 150 governments that signed this treaty have committed themselves to limit progressively the emission of greenhouse gasses in their territories. For more information visit the site http://iisd.ca/trade/fccc.htm

WTO: World Trade Organisation
Established on 1 January 1995 as the successor to the General Agreement on Tariffs and Trade (Gatt). For more information visit the site http://www.wto.org/

The imperatives of sustainable development are increasingly confronting both developed and developing human societies with a Malthusian conundrum: population and economies grow exponentially, but the natural resources that support them do not. The scale of human activity and the ongoing quest to make the earth yield more is said to disrupt planetary systems which support life. Environmental analysts continually paint an apocalyptic picture of the pace and scale of degradation and of the costs associated with modernity. For example, the frightening destruction of the ozone layer, the virtual certainty of global warming, the chronic pollution of land, water and skies, the ongoing extinction of countless numbers of species and the catastrophic destruction of ecosystem diversity and resource bases.

A new wave of environmentalism, crystallising nearly two decades of learning, has resulted in a growing awareness about the excessive pressures on the earth�s natural systems and has given rise to important initiatives with a global impact. For example, the Brundtland Commission of 1987 demonstrated the intricate connections between the environment and development, while the Rio Earth Summit of 1992 addressed a breathtaking array of issues on the relationship between earth and humanity. These efforts in environmental diplomacy, together with many others, thus inaugurate a philosophical and normative agenda for governing human interaction with the environment.

An important development to emerge from this agenda has been the setting of environmental standards in the production and exchange of goods and services. For example, within the General Agreement on Tariffs and Trade (Gatt) negotiations, a so-called �green round� first mooted the nexus between trade and the environment. There was a growing realisation that, while the reduction of government subsidies and other barriers to free trade could make international markets more efficient and increase the foreign exchange earnings of countries, this provided no guarantee that trade would be more environmentally sensitive or socially equitable.

It is true that trade can generate more wealth, especially for developing countries. However, the potential gains from trade are usually offset by negative consequences, in particular by the tendency of trade to foster ecological deficit-financing and unsustainable consumption. As a consequence of its accession to a range of multilateral treaties and bodies, the South African government is challenged to make sense of the complexities that come with the new obligations in its foreign policy. This is especially the case with regard to its trade diplomacy. South Africa has yet to negotiate a very steep learning curve on the complex international regime of rules, protocols and conventions that govern how goods should be produced in an environmentally sound manner.

It was for this reason, in response to a request from the departments of trade and industry and foreign affairs, that the Foundation for Global Dialogue and the Trade and Industrial Policy Secretariat organised a workshop that aimed to explore the implications of emerging international environmental policies for international trade. The workshop highlighted that it was important for the South African government to take into consideration the complex interaction between trade, trade policy and the environment in its planning for sustainable development. As the government is liberalising South Africa�s trade regime, it needs to create technical capacity to evaluate the likely impact of an open trade regime on the environment. Trade liberalisation can aggravate environmental problems, but it can also have a positive effect on sustainable development. To ensure the latter direction, the government has to systematically insert environmental concerns into its policies.

The workshop not only provided a useful orientation for South African policy makers and other interested parties, but was also constructive in developing a research agenda for ongoing study and analysis of trade and environmental concerns. Bringing together a group of researchers and other stakeholders to develop research priorities represents the first step in creating a credible and well-informed trade and environmental policy.

Garth le Pere
Executive Director
Foundation for Global Dialogue

Rachad Cassim
Director
Trade and Industrial Policy Secretariat

Cornelis van der Lugt

Representatives at the ninth session of the United Nations Conference on Trade and Development (Unctad) held in South Africa in May 1996, recognised globalisation and liberalisation as being powerful forces for both integration and marginalisation in the global economy. Yet, they also agreed that the Uruguay Round of global trade talks, which began in 1986 and ended in 1994, through its resultant Multilateral Trade Agreements, set the framework for �an open, rule-based, equitable, secure, non-discriminatory, transparent and predictable multilateral trading system�.

As the embodiment of the outcome of the Uruguay Round, the World Trade Organisation (WTO), established on 1 January 1995, consists of three legs. These are the 1994 General Agreement on Tariffs and Trade (Gatt) -- the amended and updated version of Gatt 1947, the General Agreement on Trade in Services (Gats) and the Trade-Related Aspects of Intellectual Property Rights (Trips) agreements. The WTO therefore has a broader scope in that it covers trade in goods, services and ideas. Inevitably, this broader scope overlaps with the cross-cutting issues of environment. As member states and other international actors are re-examining elements of the WTO agreements and their implementation, the issue of trade and the environment is high on the agenda.

In deliberating on the issue of trade and the environment, the first to remember is that arguments for and against the use of trade restrictions to serve environmental purposes do not simply follow a dividing line between developed and developing countries, or between industrialists and environmentalists. The interaction between trade and the environment is more complex. Newly emerging environmental policies with implications for international trade are waste management, recycling, packaging, eco-labelling and life-cycle-analysis (LCA). These policies become controversial once trade measures pursuant to national environmental goals are in effect applied extra-territorially. Regarding transboundary environmental problems and international environmental goals, the central question concerns the compatibility between WTO rules and trade measures pursuant to multilateral environmental agreements (MEAs).

Various historic events this century have led the governments of industrialised societies to redefine their economic policy goals. The wave of environmental awareness in the late 1960s and late 1980s was no exception. Generally speaking, �economic growth� as opposed to simply �economic progress� became the explicit goal of economic policy in developed societies after the second world war. Yet, the focus on high economic growth rates and an activist growth policy on the part of government authorities, caused the birth of a counter-movement. The 1960s reflected the disillusionment of first world citizens with the results of rapid economic growth following the second world war. By integrating global trends in the field of population growth, food production, industrialisation, pollution and the use of natural resources, the Club of Rome issued a pioneering report in 1972 on The Limits to Growth.

The counter-movement criticised the use of Gross National Product (GNP) as an indicator of economic growth and social well being. It was pointed out that this method did not consider the social and environmental costs of economic growth, which were merely regarded as externalities. The 1980s saw a pronounced call for preventative policies and qualitative economic growth. The latter implied that the so-called externalities become internalities. The natural environment is in effect given financial value, ensuring that market prices correctly capture the real value of environmental resources. This is for instance obtained by the use of taxes. Added to this, first world consumers have since the 1980s displayed a new awareness of the life cycle of products -- their production processes, their contents and their fate after use. First world companies became eager to clean up their act as the �environmentally friendly� market created new opportunities.

Inevitably these �domestic� debates spilled over into the international arena. Since the 1970s, the prominence of the multinational company (MNC) further increased the interdependence between �national� economies. The question then is to what extent states can agree on international standards and to what extent these new ideas can be applied in the global economy? The rapid increase in the number of international environmental agreements since the 1970s represents an effort to establish common principles and norms at the international level in various fields.

The most common form of regulation in domestic environmental law is the method of command-and-control. Standards are set with which polluters have to comply. The regulator has to acquire information from the polluter and it leaves the polluter no flexibility. In contrast to this traditional approach of direct regulation, there is currently a preference for indirect policies. Examples of these are pollution tax and tradable permits. These two forms of regulation can be classified as market-based incentives. Pollution tax encourages tax avoidance behaviour. It is thus an incentive tax rather than a revenue raising tax. The basis on which the tax is assessed is pollution. On the other hand the permit system allows polluters to trade �pollution rights� once an initial allocation has been made.

At the international level, most environmental agreements follow or aim towards the pattern of command-and-control, albeit to various degrees ranging from the mere sharing of information between states to strict and binding commitments. Since there is no world government to enforce command-and-control policies at the international level, the use of market-based mechanisms in the global economy seems to hold much greater promise. We have not reached the stage where environmental taxes are enforced by international organisations. Yet, first attempts at applying a system of tradable permits at the international level can be seen in for example the United Nations Framework Convention on Climate Change (UNFCCC), where there is the possibility of Activities Implemented Jointly (AIJ) ultimately leading to developed countries obtaining credits for assisting developing nations.

Unacceptable social and environmental costs associated with industrial production underline the limitations of Adam Smith's �hidden hand� and the need for government intervention. This is not only the case in national economies. The same applies in the international or global economy. One cannot assume that unregulated free trade at international level will contribute to the greater good. It is because of this that there is the need for an international body such as the WTO whose aim is to create an open and non-discriminatory rule-based system. Also, attempts to prevent market failure in this system call for a decisive role to be played by organisations such as Unctad, the United Nations Environment Programme (Unep) and the United Nations Development Programme (UNDP), as well as various international conventions and treaties.

The WTO is not a standard setting body, but rather a guardian of certain trade principles. The fundamental principles of non-discrimination and national treatment are laid out in articles 1 and 3 of the Gatt. These are efficiency principles that help prevent the abuse of, for example, environmental arguments for protectionist ends -- they are also advanced in chapters 2 and 39 of Agenda 21. Article 1 (General Most-Favoured-Nation Treatment) prohibits countries from applying trade measures in a discriminatory fashion against trading partners. The provisions of Article 3 (National Treatment on Internal Taxation and Regulation) require that environmental policies applied to foreign products be no more onerous than those applied to similar domestic products.

General exceptions to these prescriptions are provided for under article 20. It points to cases where Gatt rules should cease to apply on account of the existence of an overriding objective. The provisions of Article 20(b), (g) and (h) are particularly relevant to the debate on trade and the environment. Article 20(b) permits the imposition of trade restrictions �necessary to protect human, animal or plant life or health�. The immediate question is whether this can be applied only to product standards, or to processes and production methods (PPMs) as well. Article 20(g) allows the adoption or enforcement by contracting parties of measures �relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption�. This opens the door for constraining trade measures in support of domestic conservation programmes. Article 20(h) envisages the application of trade measures �under any intergovernmental commodity agreement which conforms to criteria submitted to the contracting parties and not disapproved by them or which is itself so submitted and not so disapproved�. The permanent secretariat of the Latin American Economic System argues that this article -- in a broadened and slightly reinterpreted form -- could provide a peg on which to hang the accommodation of MEAs. However, as is stipulated, all contracting parties would have to approve the agreement (even though some of them may not be members to the relevant MEA). The WTO currently has 120 members.

Apart from the Agreement Establishing the WTO, other multilateral trade agreements negotiated under the Uruguay Round that address environmental concerns are the Agreement on Technical Barriers to Trade, the Agreement on the Application of Sanitary and Phytosanitary Measures, the Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures. These agreements reflect the principles included in the Gatt articles discussed above.

In a recent report on �International Trade and the Environment� that was prepared for the DFA by the Development Bank of Southern Africa (DBSA), the distinction is made between (i) production externalities, (ii) consumption externalities and (iii) global externalities. These distinctions assist in considering the varying preferences of different societies and nations. They also point to the importance of a spatial typology when considering the scope of environmental problems.

• Production externalities refer to those externalities that only have negative effects in the exporting country.
• Consumption externalities refer to those externalities that only have negative effects in the importing country.
• Global externalities are those externalities that affect both exporting and importing countries or third party countries.

In the case of product standards one would expect the negative effect (due to the contents of the product) at which it is aimed, to be restricted to the consumer country. In the case of production process standards, the aim may very well be externalities that are not limited to the exporter's national borders. These transboundary externalities may or may not affect the importing country directly or indirectly but are likely to affect third party countries. Accordingly, a spatial distinction has to be made between issues that are regional and those that are truly global. For example, the conservation or destruction of a common good can have a regional value (a river) or global value (rain forests). The protection of humans and nature against pollution can have either a regional effect (acid rain, toxic waste) or a truly global effect (ozone depletion and global warming). Parallel to the distinction between production, consumption and global externalities, one should therefore make a distinction between issues of national, regional and global scope.

Product standards involve market access questions. They refer to technical specifications such as performance, quality and safety dimensions. Amongst others, they relate to toxicity, energy efficiency, the ability to be recycled and capacity for re-use. The level of such standards in a particular society is a function of its consumers' preferences concerning their health and quality of life. More recent product standards, such as eco-labelling give the impression of being �environmental� standards rather than �technical� standards. While trade can contribute to the diffusion of environmental standards globally, the fact remains that there should be room for specific environmental standards to vary as a function of local environmental absorptive capacities. What also remains is the reality that societies and nations have different preferences and perceptions concerning tolerable levels of pollution and environmental degradation.

With reference to different societal preferences it is worth mentioning that there may even be differences of opinion as to what constitutes pollution. Those who are hesitant to take action prefer to define pollution by �the degree of injury or damage caused�. Those who support preventative action would define pollution as the mere �introduction of any substance or energy to the environment that may cause degradation to one or more components of the environment�. International environmental jurisprudence tends to favour the latter interpretation. The next step is to rely on scientific rather than value judgement in defining �environmental standards�. There are objective scientific bases for setting targets or limits for environmental indicators. Even if the extent of its objectivity is questioned, science can at least define a gradient of environmental quality along which each society can set its appropriate limits.

In the application of product standards governments are required, in terms of the Agreement on Technical Barriers to Trade negotiated during the Uruguay Round, to obey key principles. Firstly, the principle of transparency requires national standards organisations to comply with the Code of Good Practice. Secondly, the principle of equivalency requires the acceptance of foreign measures that achieve the appropriate level of sanitary or phytosanitary protection and thirdly, the principle of mutual recognition requires that a county accepts equivalent foreign regulations that adequately fulfil the objectives of domestic regulations.

In their discussion of eco-labelling the DBSA consultants emphasise the need to ensure that measures are based on legitimate environmental concerns and strongly suggest �that an international agency be tasked with reviewing and perhaps certifying all eco-labelling systems�. This would amount to creating an international bureau of standards that monitors national bureaux of standards. It may prove to be a tedious task since not all states would accept the possibility of the International Organisation for Standardisation (ISO) taking on this role, questioning its impartiality due to the limited representation of developing countries' interests.

Whether international standards are harmonised to a greater level or not, any producer who is keen to satisfy its consumer has to give in to rather eccentric foreign preferences at times. This is nothing new to South African exporters in the field of fresh produce, food and beverage. Prescriptions to be complied with include labelling, packaging and recycling requirements. Complying with eco-label criteria for products such as paper, tropical timber, textiles, clothing and footwear is, however, generally more difficult for developing country producers. For this reason Unctad agrees that eco-labelling programmes will be more successful if designed in a cooperative manner, including consultation with exporting countries by the importing country that intends to establish new criteria.

Eco-labelling is often based on a life-cycle approach. LCA is a cradle to grave approach that examines the cumulative impact on the environment that a product generates from the extraction of primary materials needed for production up to its final disposal. In practice this approach tends to focus on a few critical dimensions of a product's environmental impact such as energy consumption, material intensity or emission of ozone depleting or toxic substances. While the �downstream� impact of a product is normally covered by product standards, the �upstream� side of LCA brings us to process and production method (PPM) standards. Under the existing interpretation of Gatt rules PPM standards are not authorised.

As opposed to product regulations, process regulations involve particular issues such as international competitiveness and pollution havens. Product regulations, on the one hand, try to control externalities caused by consumption and are therefore aimed at protecting the domestic environment of the importing country. Process regulations, on the other hand, are intended to control externalities caused by production. High product standards tend to favour domestically produced over imported products, while high PPM standards tend to reduce the competitiveness of domestic industries. In trying to address the latter problem, country X may attempt to encourage other countries to become part of MEAs that commit all member states to preferred standards, thereby �levelling the playing field�. The attempt by country X would be made much easier if the form of pollution concerned is transboundary. Participation by other countries in a multilateral undertaking could also give a competitive edge to those industries in country X that are exploiting the environmental goods and services market, for example, in �clean� technology.

As explained above, a distinction would have to be made between common goods or polluting effects with a regional impact and those with a global impact. A Northern country may refuse to allow the import of goods from a South African company which, through its PPMs, makes a major contribution to ozone depletion or greenhouse gas (GHG) emissions. The Northern country's refusal can thus be seen as a legitimate act of self-defence. It is concerned about the consequences of ozone depletion or global climate change, problems that are truly global and which threaten that particular state.

A Northern country may also refuse to allow the import of goods from a South African company on the grounds that the company's PPMs contribute to chemical pollution of a regional river system or to acid rain in the southern African region. In this case the Northern country would have to present a different argument since these are regional problems, even though their occurrence is a world wide phenomenon. Being an outsider, the country would have to present its argument as a matter of principle. Its action would be akin to the boycott of South African products in the days of apartheid, which was based on the fact that the country's policies were racist and thus represented a crime against humanity.

Most international lawyers would agree that environmental pollution and the unsustainable exploitation of natural resources are not yet being referred to as a �crime against humanity� in terms of international law. Yet, the body of international environmental law is growing. A milestone in this process has been the inclusion of principle 21 in the Stockholm Declaration that was made at the 1972 United Nations Conference on the Human Environment (UNCHE). It reads as follows:

States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their natural resources pursuant to their own environmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other states or of areas beyond the limits of national jurisdiction. While principle 22 of the same declaration obliged states to accept liability for damage in areas beyond their national jurisdiction that resulted from activities in their territories, principle 23 pleaded for the consideration of �he systems of values prevailing in each country and the extent of the applicability of standards which are valid for the most advanced countries but which may be inappropriate and of unwarranted social cost for the developing countries.

Consideration of social and environmental costs in the regional context is legitimate, but a vague notion such as �systems of values� can potentially be used as a tool by obstructionists. The Commission on Sustainable Development (CSD) recognises the former when it argues for �the convergence of environmental standards and regulations at a high level of environmental protection�. Still, at the same time it warns against standards and regulations that �may be inappropriate and have unwarranted economic and social costs� for developing countries.

As far as consumer preferences for product standards are concerned, national values are certainly relevant. In this case the harmonisation of policies and standards at the global level seems like a vague and questionable ideal, even though it might be feasible and/or desirable within regional economic integration organisations. The international harmonisation of PPM standards seems even more daunting. However, the de facto nature of existing environmental problems dictates the need to set certain basic international principles and norms. Before considering the level of such common denominators, one should note the importance of multilateral action. Principle 12 of the Rio Declaration, made at the 1992 United Nations Conference on Environment and Development (UNCED), declares that �unilateral actions to deal with environmental challenges outside the territory of the importing country should be avoided�. Unilateral measures constitute a form of sanction that asks for clear justification. At most unilateral action should only be seen as a last-best option to address transboundary environmental problems. Multilateral action would be better than trade sanctions to deal with a member state that does not honour its obligations or a non-member �free rider�.

It is often asked whether trade has a negative or positive effect on the environment and, conversely, whether the environment has a negative or positive effect on trade. Starting with the latter of the four options, it can be argued that the �environmentally friendly� or �green� market creates new possibilities for international trade, �clean technology� included. As far as a negative influence is concerned, it can be argued that attempts at international harmonisation of environmental standards will undermine the commercial aspirations of developing countries. The bona fides of states that impose restrictions may also be questioned should they be suspected of opportunist protectionism under the guise of environmental protection.

Some argue that trade has a positive effect on the environment. It contributes to growth that allows more resources to be allocated to the protection of the environment and promotes the transfer of technologies for better environmental management. Furthermore, the increased competition from trade improves innovation and productivity for sustainable resource use, for example in agriculture. The following table lists the potential positive and negative contributions that trade liberalisation can make to environmental protection and sustainable development.

(Source: summary of various studies in the WTO)

Some view trade restrictions as an instrument to solve environmental problems. Trade measures can be used as a means (i) to pursue defined environmental objectives, such as enforcing domestic standards or prohibiting trade that is intrinsically undesirable, such as trade in hazardous waste, (ii) to persuade other governments to change their environmental behaviour and (iii) to enforce international environmental commitments.

As far as the latter two points are concerned, some MEAs notably include the threat of trade measures. Trade provisions are most explicitly used in the Convention on International Trade in Endangered Species of Wild Fauna and Flora (Cites), the Montreal Protocol on Substances that Deplete the Ozone Layer, and the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. Even though some distinction is made, in practice, these agreements impose the same restrictions and requirements on trade with non-parties as those that apply to parties. Trade measures are also likely to be included in new agreements currently being negotiated, such as the Biosafety Protocol to the Convention on Biodiversity, the Convention on Prior Informed Consent (PIC) and the Convention on Trade in Certain Hazardous Chemicals. There are both intentional and unintentional consequences of using trade policy for environmental purposes. While trade policy creating trade restrictions intends to harmonise international environmental policies and standards at a higher level, it can also have the unintended consequence of marginalising developing country economies. Similarly, while trade policy abolishing trade restrictions intends to enhance sustainable utilisation of natural resources globally, it can have the unintended consequence of encouraging the existence of pollution havens.

The final and probably most common question is whether trade has a negative effect on the environment. This is a misleading question that causes policy makers to focus on symptoms rather than root causes. If the answer to the question whether there is a direct link between the removal of trade barriers and environmental degradation is positive, should one conclude that free trade is to be done away with? Otherwise stated, if trade becomes highly regulated, will environmental degradation also decline? Clearly, it is rather the quality of economic growth and its associated production processes that is at the root of the problem. Trade per se is not good or bad for the environment, although it might have a magnifying influence on environmental degradation. Even though trade restrictions might have some useful instrumental functions, policy interventions should rather deal with environmental problems at their source than addressing them indirectly by suppressing trade or growth.

The question around growth and the environment typically divides the WTO (whose documentation refers to �trade and environment�) and UNEP (whose documentation refers to �environment and trade�). This question also divides the Committee on Trade and Environment (CTE) and the Committee on Technical Barriers to Trade, departments of environmental affairs and trade and industry, as well as the development and economic affairs branches in foreign ministries. Government would have to do its utmost to ensure that it transcends thinking and acting in these �either/or� terms.

Debates in the 1970s typically opposed economic growth and protection of the environment. These were followed by the exploration of a potentially complementary relationship between the two. David Pearce and his colleagues noted in their famous report to the British government that �in reality both approaches are unlikely to be correct�. While the environmental �doomsayers� have oversold the negative relationship between economic growth and environmental quality, the advocates of �environmental quality through wealth creation� have similarly understated the potential of economic change to damage the environment. A middle road was found in the concept �sustainable development� that can be defined as �development that meets the needs of the present without compromising the ability of future generations to meet their own needs�. Integrating (not opposing) economic growth and environmental protection in the concept of sustainable development is seen as the distinctive contribution made by the Brundtland Commission in its 1987 report Our Common Future, probably the most provoking since the 1972 Limits to Growth report by the Club of Rome. The CSD today follows this pattern of thought when constantly asking for trade and environment policies to be mutually supportive in promoting sustainable development. United Nations (UN) environmental language calls for �mutually supportive� environment and trade policies, while WTO language often calls for �positive interaction� between trade and environmental policies.

It is possible for a regional economic organisation such as the European Union (EU) to have a treaty provision stating that harmonisation of environmental measures should take as a base a high level of environmental protection. One would, however, expect the harmonisation of environmental standards and policies at the international or global level to be of a minimalist nature, representing a lower common denominator. It can be in the form of negative harmonisation -- the removal of barriers to trade -- or positive harmonisation -- the approximation of national environmental standards and policies. The former is the priority of the WTO. The latter is the goal of various MEAs, aiming at specified levels of protection. Yet the WTO also has an interest in the latter for the sake of removing competitive distortions and levelling the playing field in international trade. What level of protection should this playing field then be based upon? The answer lies in the basic principles and norms included in various MEAs. The relevant governmental departments have a responsibility to ensure that their fellow departments as well as civil society in general are informed about the existing and desired (from a national point of view) international environmental principles and norms.

When PPM standards are queried because they could possibly result in transboundary environmental problems, it should be remembered that no party to an MEA is in a position to discriminate against the produce of another party to the agreement when the latter complies with its requirements. In South Africa, in this regard, the department of environmental affairs and tourism (DEAT) -- assisted by the DFA -- has a watchdog function. Both have to monitor South Africa's track record with respect to compliance to MEA obligations and any international criticism directed at the country. The following table indicates South Africa�s relations to some prominent international non-marine environmental conventions:

The WTO Committee on Trade and Environment (CTE) has, in terms of its mandate as set out in the 1994 Marrakech Decision on Trade and Environment, a broader task than its predecessor, the Gatt Group on Environmental Measures in International Trade (EMIT). Between 1991 and 1994, the EMIT Group focused on trade provisions in MEAs. The CTE, however, has the mandate to consider �trade measures for environmental purposes, including those pursuant to multilateral environmental agreements�. The CTE can make recommendations on modifications to the provisions of the multilateral trading system required to further the objective of making international trade and environmental policies mutually supportive. As far as existing trade measures in MEAs are concerned, the CTE is likely to pursue a combination of the two approaches considered in the EMIT Group, namely the waiver or ex post approach (case-by-case response) and the �environmental window� or ex ante approach (defining acceptable conditions beforehand). Magda Shahin discusses both of these approaches in detail in her contribution. Whatever direction the CTE takes, it must be remembered -- as was mentioned above -- that the WTO is not a standard setting body, but rather a guardian of certain trade principles. International standards are set in MEAs. While the WTO is interested in procedure, MEAs are interested in substance.

The seventh principle of the Rio Declaration recognises that, in view of different contributions to global environmental degradation, states have common but differentiated responsibilities. South Africa's level of industrialisation and accompanying level of pollution relative to other African countries makes it imperative that the country reaches clarity on what its differentiated responsibility is.

Apart from South African exports sensitive to eco-labelling (such as textiles, paper and plastic products) and packaging requirements (fresh produce, food and beverage), the above-mentioned DBSA report singled out pollution caused by the South African energy sector as the most significant sector to be penalised by environmental regulations. As the country's industrial base shifts towards increased production of semi-processed and manufactured (carbon-intensive) goods for the export market, criteria that are based on energy per unit of production or the externalities associated with energy production are likely to severely penalise South African products. This is due to South Africa's worrying performance in energy efficiency -- the country�s energy use per unit of GDP is currently higher than that of countries such as Poland, India and Mexico.

The commonness of environmental responsibility referred to in principle seven of the Rio Declaration is spelt out in MEAs. However, the energy situation sketched above underlines the importance of South Africa's differentiated responsibility to ratify and effectively implement one such MEA, namely the UNFCCC.

Finally, the DBSA report also recommended that mechanisms and structures be established for reporting back to South African exporters and for obtaining their inputs in the preparation of international positions. The cross-cutting nature of �environment� makes it inevitable that various actors and governmental departments need to be involved. Core activities could be undertaken between the departments of trade and industry, environmental affairs and tourism and foreign affairs. It needs to be emphasised that in their endeavours these departments should take care not to think in terms of trade expansion versus environmental protection. Re-establishing this unhelpful dichotomy will undermine the goals of sustainable development.

Magda Shahin

The World Trade Organisation (WTO), established on 1 January 1995 at the Marrakesh Ministerial Conference as the successor to the General Agreement on Tariffs and Trade (Gatt), is the legal and institutional foundation of the multilateral trading system. It provides the platform for the negotiation and adjudication of trade relations among member states and sets obligations determining how governments should frame and implement domestic trade legislation and regulations.

When addressing issues related to trade and the environment in the WTO, one should make reference to those environment-related provisions included in the WTO apart from the comprehensive work programme agreed upon by trade ministers in Marrakech. These include the preamble to the Marrakech Agreement establishing the WTO, which notes the importance of

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 to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.

Explicit references to environmental priorities are also included in the agreements on Subsidies and Countervailing Measures and Agriculture.

Work in the WTO on trade and the environment focuses primarily on the Uruguay Round Final Act, which called for the establishment of the Committee on Trade and Environment (CTE). Its purpose was �to identify the relationship between trade measures and environmental measures in order to promote sustainable development� and �to make appropriate recommendations on whether any modifications of the provisions of the multilateral trading system (MTS) are required, compatible with the open, equitable and non-discriminatory nature of the system�.

Before addressing the issue of the relationship between the WTO and multilateral environmental agreements (MEAs), the questions of who brought environment onto the WTO agenda and for what purpose need to be addressed briefly. At the onset, it was the environmentalists and in particular United States environmental non-governmental organisations (NGOs) that sought to integrate environmental issues into the WTO agenda and pressed for the establishment of the CTE. They aimed at �Greening the Gatt�. Today, these same groups refuse to have the environment disciplined by WTO rules and regulations. They do not want to subject the environment to trade restrictive measures, follow WTO guidelines or to be accountable to the WTO for the trade measures they advocate in MEAs, including those undertaken unilaterally under the pretext of protecting and preserving the environment.

The Singapore Ministerial Conference (SMC) in December 1996 finally ensured the place of the CTE in the WTO. A report, which was the culmination of two years of work, was submitted to the conference for the consideration and approval of all ministers. The last paragraph of the report, which reflected on the future of the CTE, clearly asserted that work in the WTO on the relationship between trade, the environment and sustainable development needed to continue. It directed the CTE to continue its work, reporting to the General Council, under the existing mandate and terms of reference, as contained in the Ministerial Decision on Trade and Environment of April 1994.

Having become an integral part of the WTO agenda certainly holds both benefits and disadvantages for the future of the entire debate on trade and the environment. The debate may lose some of the political clout and attractiveness it carried over the last two years. The reason for this is that the CTE will now have to follow the regular course of work of WTO committees, which only meet two or three times a year at most. However, it will certainly gain by becoming an integral part of the WTO framework of rights and obligations in the sense that, sooner or later, the contracting parties will see themselves obliged to negotiate clear guidelines and disciplines on and criteria for trade and the environment. Hopefully, in view of the forthcoming �substantive� ministerial meeting scheduled for late 1999, by 1998 trade and the environment would be part of the so-called new �mini round�, which is expected to include negotiations in the areas of, among others, agriculture, services, investment and competition policies.

The debate on trade and the environment in the WTO remains unsettled. Since the beginning of 1997, closely following debates in the CTE, one could sense a gradual disengagement by developed countries from those issues that they were identifying with strongly only a few months before. For some of these governments, the debate in the CTE has already served its purpose, firstly by taking off some of the pressure put on them by NGOs and pressure groups in their own countries and secondly by clarifying the limits of the WTO�s scope and coverage of the issue. It had also shown that environmental NGOs clearly did not want to subject trade measures for environmental purposes to WTO disciplines and rules and certainly did not want to impose any guidelines drawn in the WTO on MEA negotiators.

Developing countries, however, have become more aware of the issues at hand. They have even started to articulate their interests and demands on a number of issues such as market access, transfer of technology and the removal of trade distorting measures and trade restrictions in order to assist their efforts to protect the environment. While it is true that developing countries entered this debate at a late stage, they entered it with constructive proposals and argued for a win-win relationship between trade and the environment that would sustain the interests of both developed and developing countries.

Unfortunately, NGOs in developed countries have not taken up these issues with their customary vigour and vigilance. In addition, the representatives of developed countries have reduced those trade and environment-related issues of interest to developing countries to non-issues. It is therefore in the interest of developing countries that this debate be continued beyond the SMC on a sounder basis and on balanced and fair terms. It is also in the interest of both Northern and Southern NGOs that are working in the area of sustainable development, that the debate on the relationship between trade and the environment should be pursued in the WTO. A balanced and comprehensive work programme should not only examine issues such as MEAs and eco-labeling, but also how to secure market access for exports of interest to developing countries and transfer �clean� technology to developing countries in order to achieve sustainable development.

The �shrimp-turtle� dispute, as was the case with the �tuna-dolphin� dispute before, will act as a yardstick in the work of the WTO on trade and the environment and will also give a clear indication as to the future of the trade and environment debate in the WTO. In February 1997, the WTO dispute settlement body (DSB) agreed to constitute a panel to rule on the legitimacy of a partial US ban on the importation of shrimp, as well as shrimp products, that are caught in countries without sea turtle conservation measures comparable to those in place in the US. The complainants cited the violation of several WTO provisions -- including article 11 (prohibition of quantitative restrictions), article 1 (the most-favoured-nation principle) and article 13 (the non-discrimination principle) -- and the fact that WTO rules do not allow for discrimination on the basis of the methods of production (PPMs) as reasons for the dispute. A varied group of countries, in addition to the complainants, have taken an interest in the case since it could provide a watershed precedent on the application of unilateral trade measures and the principle of extra-territoriality, that is the extension of domestic laws and standards beyond national borders.

The shrimp-turtle case is the first conflict that has arisen between the WTO and an MEA, in this case the Convention on International Trade in Endangered Species (Cites). Cites clearly states that countries are allowed to take restrictive trade measures where the conservation and protection of the environment is at stake. Based on this provision, the US argues maintains that it acted legitimately by unilaterally restricting the import of shrimp that are caught with devices that kill sea turtles -- classified as an endangered species under annex two of Cites. The US is also the only country that interprets article 20 so broadly as to allow for extra-territorial and jurisdictional measures to protect, among others, the environment. The problem of how to rule on trade measures that are in conflict with the most-favoured-nation principle, but pursuant to the goals of MEAs, will be central to the panel�s deliberations. This is a case in point of a clear conflict between two legal regimes -- the international environmental regime that allows a government jurisdiction beyond its territorial borders, due to the fact that environmental problems transcend territorial boundaries, and the international trade regime which does not permit extra-territorial measures.

Environmentalists will be lobbying hard for the US case in the WTO and some NGOs have already, without being solicited, submitted their views to the established panel, thus placing it in an awkward position. They are arguing that:

• enough data exists that prove the necessity for the conservation of turtles;
• the United States is correct in taking all necessary measures, including those that are �unspecific�, to preserve the turtles, irrespective of whether they conform to WTO regulations or not. They will even have recourse to the appellate body ruling on the reformulated gasoline case between the United States and Venezuela and Brazil which stipulated that the WTO did not act in a vacuum and had to look at other international law. The appellate body on the reformulated gasoline case therefore added some flexibility to the ruling of the panel, though did not alter the substance of the ruling and
• international law relating to turtle conservation (Cites and other regional agreements) rules that countries are under obligation to preserve the endangered species.

Environmentalists therefore argue that countries are entitled to take �unspecific� measures to preserve the turtles beyond their borders and that Cites allows for stronger measures than those prescribed by the Gatt. This panel, however, will have to look into the definition of �measures pursuant to MEAs� and whether these include only �specific� measures that are basically in conformity with WTO rules or whether it also includes measures that go beyond these rules, that is unilateral and extra-territorial measures.

The intergovernmental debate in the CTE on �the relationship between the provisions of the multilateral trading system and trade measures for environmental purposes, including those pursuant to multilateral environmental agreements� has been the most significant to date on this subject. The widely divergent views among countries and groups of countries have clearly indicated the difficulties of defining the relationship between MEAs and the WTO. Thus far, the debate has been dominated by two issues: firstly, the compatibility or incompatibility of trade measures used in MEAs with the rules of the trading system and, secondly, the effectiveness of trade measures relative to non-trade measures, used in MEAs to address negative environmental externalities. The conflict between trade and environment objectives lies in the fact that, whereas trade policy is increasingly oriented towards deregulation and removing obstacles to trade, environmental objectives require some form of regulation to deal with environmental degradation, viewed as a global crisis.

The challenge of reconciling these competing views is compounded by differences between developing and industrialised countries. To understand these differences, one should distinguish between:

1. trade measures which are applied unilaterally versus those which are applied in the context of a cooperative international agreement (unilateral versus multilateral),
2. environmental problems of a domestic nature versus environmental problems of a global or transboundary nature (domestic versus transboundary).

Developing countries viewed the debate in a much wider context than it was being addressed in the CTE in wanting to address and elaborate upon what had been recognised as positive measures. The issue of positive measures has emerged in discussions in the CTE on the basis of two different perspectives:

1. positive measures can help to prevent or diffuse conflicts between trade measures and the provisions of the MTS by reducing or obviating the need for trade measures;
2. the implementation of positive measures such as the transfer of environmentally sound technologies and products may be affected by multilateral trade rules concerning trade related intellectual property rights.

Hence, dealing with a balanced policy package in MEAs was one of the main issues of interest to developing countries that attracted a lengthy debate. The difficulty lied in how to strike the balance in such a package, so as not to give prominence to trade measures taken pursuant to MEAs over the more comprehensive and coordinated policies and actions within the framework of MEAs.

The Gatt allows for any action to be taken at the national level to protect the environment. Gatt rules place little constraint on a country's right to protect its own environment against damage from either domestic production or the consumption of domestically produced or imported products. Generally speaking, a country can apply any rules that it does to its own products to imports and exports (national treatment), and it can also take any action considered necessary to ensure that its own production processes are environmentally friendly. However, trade-related environmental measures (Trems) may conflict with some fundamental Gatt obligations. For example, an agreement allowing for trade in certain products among its parties, but banning trade in the same products among its parties and non-parties is discriminating among parties and non-parties, thereby violating one of the fundamental principles and obligations of Gatt, that of the most-favoured-nation (MFN). Similarly, a state that imposes more burdens on imported products than on those domestically produced violates Gatt article 3, which requires equal national treatment for imported and domestic products. The reformulated gasoline dispute is a case in point.

Once a substantive Gatt requirement has been violated, analysis usually shifts to article 20 (General Exceptions). The latter permits countries to depart from their Gatt obligations to serve legitimate policy objectives, including measures necessary to protect human, animal, or plant life or health and the conservation of exhaustible natural resources. This article has been the cause of the greatest uncertainty in the long-fought debate. No consensus has yet been reached on whether to leave the panels decide on exceptions on a case by case basis, while establishing a history of judicial argumentation, or to alter article 20 to accommodate inconsistent WTO trade measures. So far, the rulings were decisive and specific on a number of environmental cases, which in fact did establish some history refuting unilateral and extra-territorial measures, as incompatible with Gatt/WTO rules and regulations.

Unilateral Trade Related Environmental Measures (Trems) are perceived to increase the risk of arbitrary discrimination, disguised protectionism or violations of sovereign rights to determine domestic environmental policy. Essentially, such Trems are power-based, rather than rule-based. In contrast, Trems taken pursuant to MEAs negotiated by many diverse states are considered more likely to be intended for environmental purposes and less likely to arbitrarily discriminate among states. Such measures were labelled �unspecific� as opposed to �specific� measures taken pursuant to MEAs and enjoying an international consent within their own framework.

A case in point was the tuna-dolphin dispute between Mexico and the US that brought environmental concerns to the attention of the Gatt. The tuna panel's rulings was based on a number of issues, including attempts to exercise extraterritoriality for the US�s environmental protection laws. The panel considered that if the broad interpretation of article 20(b) suggested by the United States was accepted, each contracting party could unilaterally determine the life or health protection policies which other contracting parties should follow. The panel held also the view that the ban on imports constituted a quantitative restriction prohibited by Gatt article 11. In addition, these measures could not be considered domestic legislation neutrally applied to domestic and foreign tuna (as required by Gatt article 3), because it distinguished between the tuna on the basis of how the it was caught, as opposed to the product as such. The panel also noted that the trade ban could not be considered �necessary� within the meaning of article 20(b), since the US had not exhausted avenues to resolve the problem through international negotiations. This suggested that the Gatt prefers actions taken pursuant to multilateral agreements -- environmental protection or conservation of natural resources beyond national jurisdictions should therefore be sought through international cooperation and agreements in multilateral forums and not unilaterally. The panel concluded that:

1. the Gatt does not permit states to take measures affecting trade if they distinguish among products on their PPMs;
2. the Gatt's general exceptions (article 20) do not apply to measures intended to achieve their aims by inducing other states to change their policies; and
3. states seeking to address problems outside their jurisdiction should first seek to negotiate international agreements with other relevant states before resorting to trade restrictions.

Should there be a choice between �environment� and �trade�, or should one look for a synergy between them as two equal policy objectives? Do trade-related environmental measures (Trems) conflict with international trade rules? If so, one should ask whether and how to resolve such conflicts without unduly hampering either environmental or free trade objectives. On the one hand, the US and the European Commission strongly argued that countries should be able to make recourse to trade measures unconditionally and they stressed that no ruling should be made that could be prejudicial to their use in the future. On the other hand, developing countries wanted to make sure that recourse to trade measures would be part of an integral policy package and conditional to trade being the root cause of environment degradation. They soon realised that the argument actively pursued by developed countries boiled down, in essence, to the latter wanting to assert their jurisdiction over priorities and policies of other countries. To that end, they attempted, in different ways and through different means to �legitimise� trade restrictions that would otherwise be inconsistent with WTO obligations and lie outside the member state�s jurisdiction, for the purpose of protecting environmental resources. Formally, they tried to legitimise trade restriction through amending the law and informally, through developing common understanding and practices.

Developing countries insisted that parties should fully respect the consistency of trade measures with WTO rules to avoid the acceptance of some kind of inconsistency in the WTO. So far, however, this has proven to be difficult to obtain, in view of the resistance put by developed countries, although any trade measure that is not consistent with WTO rules, can still be challenged legitimately in the WTO. This is one of the reasons why many developing countries found it difficult to agree to an opening of an environmental window, which would have basically meant legitimising inconsistent trade measures in the WTO. Developing countries also stressed time and again that trade measures should be proportionate and directly related to the environmental problems with the sole aim to avoid giving a blank check for the use of trade measures for environmental purposes.

Should article 20 be changed in order to accommodate trade measures taken pursuant to MEAs? So far, the debate in the WTO on the subject of trade measures pursuant to MEAs has been conducted on a purely legal basis. The questions being pushed to the forefront by the proponents of this issue -- mainly the European Commission -- were focused on how to legalise those trade measures taken pursuant to MEAs for environmental objectives in the framework of WTO rules and regulations. To that end, the idea of amending article 20 or adding an �understanding� on the relationship between trade measures in MEAs and WTO rules or setting out certain basic criteria which MEAs have to meet in order to be accommodated by the WTO were advanced.

Before discussing the various positions of countries and groups of countries in more detail, it would be worthwhile to juxtapose the positions of the US and the European Commission in this regard. They both had as their basic objective the smoothing of the relationship between the WTO and MEAs. For them this could only be realised through legitimising inconsistent trade measures in the WTO as a way to resolve any threat of conflict between global trade and environmental rules. However, they differed with regard to the implementation of their objectives. The European Commission wanted to either amend WTO rules to bring environmental issues into the mainstream of the trade body or develop a common 'understanding' that would ensure that there was no conflict between the trade regime and environmental agreements and conventions through, for example, opening a so-called 'environmental window'. The US argued that any trade measures, including trade sanctions, trade restrictions and defying WTO rules and regulations where necessary, are justified in order to protect the environment that lies outside of a country's jurisdiction. A country should therefore be able to assert its jurisdiction over priorities and policies of other countries for the sake of the environment under the exceptions provided for in article 20.

Thus, from the US perspective the �environmental window� sought by the European Commission already exists. Renegotiating such an opening would mean the possibility of attaching new and stricter conditions and criteria, which the US strongly rejects. Thus, it argues for the status quo and does not see the necessity for any change in WTO provisions to adapt to environmental needs and policies. It also argues that no steps are necessary to integrate the environment into the WTO regime as this could add disciplines to the use of trade measures for environmental purposes. The European Commission is of the view, however, that article 20 does not permit unilateral actions to address extra-jurisdictional environmental problems and the need thus arises to legitimise actions to allow for the protection of the environment beyond a country�s own territory, either formally or informally.

Other positions vary between the status quo ante, ex-post and ex-ante (with strict criteria) approaches.

(a) Maintaining the status quo ante

The proponents of this school of thought asserts that Gatt rules do not preclude members of the WTO from establishing non-discriminatory Trems at the domestic level. With regard to environmental problems beyond national jurisdiction, Gatt rules simply urge states to rely on multilateral solutions rather than resorting to coercive measures such as trade restrictions as illustrated by the tuna/dolphin dispute. They point out that there has never been a dispute arising from of the use of Trems in conjunction with an MEA, acknowledging that only a minority of MEAs (18 out of 180 agreements) incorporate such measures. The de facto potential for conflict is therefore low since most WTO members are parties to those MEAs that incorporate Trems. Nonetheless, some legal uncertainty remains. The outcome of the shrimp/turtle conservation dispute, for example, will compel the proponents of this category -- be it Egypt and India, on one hand, or the United States, on the other hand -- to reconsider their position.

(b) Ex-ante approach

The ex-ante approach advocates the establishment of rules and procedures to prevent a dispute from arising in the first place. Its main proponents, the European Commission, advanced the following proposal:

• Amendment of Gatt article 20, the general exception clause. Such an amendment to article 20(b) could include, for instance, adding a reference to �protection of the environment�.
• A non-binding understanding on the interpretation of Gatt article 20 to assist dispute resolution panels to clarify when MEAs incorporating Trems do or do not violate the Gatt.

Such an approach -- though it lacks a strict legal force -- might offer some of the benefits of an amendment without the difficulty of securing formal consent of all the parties. It would be an authoritative expression of WTO members, to be referred to in cases of disputes between members. It also offers the advantage of flexibility, in that it could be modified relatively easily over the course of time as need be.

(c) Ex-ante approach with strict criteria

In order for those trade measures applied pursuant to an MEA to qualify for additional flexibility under WTO rules, a number of countries, including developed countries such as New Zealand, Australia and Canada and a number of developing countries, opted for elaborated and strict criteria to be taken into account. These criteria would include the necessity and effectiveness of the trade measures in addition to their being least trade restrictive and not constituting arbitrary or unjustifiable discrimination. This was, however, strongly opposed by the US that was against setting any criteria that went beyond obligations governing measures applied at the national level, as this would have meant involving the WTO in activities that lay outside its competence;

(d) Ex post approach

Countries of the Association of Southeast Asian Nations (Asean) and Hong Kong proposed this procedural-type approach which seeks to resolve any conflict between MEA and WTO provisions by granting a specific waiver for each MEA containing trade measures. The Asean and Hong Kong proposals include guidelines for the granting of such a waiver to relevant MEAs, including necessity, being least-trade restrictive, effectiveness, proportionality and genuine international consensus. The legal mechanism would involve invoking Gatt article 25 on a case-by-case basis.

Many developing countries favour also such an approach, where granting a waiver could provide an adequate and reasonable solution for trade measures taken pursuant to MEAs. Such an approach is also based on the rationale that no challenge has been raised -- so far -- against MEAs containing trade measures. Thus, the urge or even the need to change or even reinterpret or amend article 20 in order to accommodate environmental objectives is based on no strong or valid argument since this debate concerns only a few MEAs that contain trade provision.

A waiver approach effectively seeks to redress an exception and not to address the norm. The shrimp/turtle dispute may, however, alter the course of thinking in this respect.

(e) Mixture of status quo and ex-post approach:

This approach proposes a mixture between granting a normal waiver and multi-year waiver by changing the waiver provision in order to have it granted more easily and for longer periods and a waiver with specific criteria.

New-Zealand raised the issue in the CTE of distinguishing between measures specifically mandated and those not specifically mandated by an MEA. In fact, the definition of a �measure pursuant to� will be the core of any possible conflict arising between an MEA and WTO. Will these measures also include �unspecified� unilaterally imposed measures? This will be the subject matter of the shrimp-turtle dispute.

Developing countries positions in general vary between the status quo and the waiver approach, but, at this stage, no developing country wants to start mending any article, least of all article 20. The basic objective of opening an environmental window will be to make the exception clause of article 20 the norm rather than the exception in the WTO and to give it a legitimate status as an agreed multilateral measure to address extra-jurisdictional and extra-territorial environmental problems.

In summary, though the debate was quite complex and highly legalistic with regard to the amendment of article 20, one could identify four broad categories under which the positions of countries and groups of countries can be classified. These were a straight yes, a conditional yes, a straight no and a conditional no to the amendment of article 20. Country positions fell within these four categories as follows:

1. The European Commission supported an amendment of article 20 by adding �environment� to article 20(b), thus opening an �environmental window;
2. Canada and to a certain extent New Zealand were conditional in their support for an amendment of article 20 in proposing that an �understanding� be annexed to WTO rules giving leeway to the use of trade measures for environmental purposes under certain conditions and criteria;
3. Egypt and India categorically disapproved of an amendment to article 20 by proposing the maintenance of the status quo. The US had joined the this camp, its position counting among the most antagonistic against any amendment of article 20;
4. Korea, Hong Kong and the Asean group of countries were conditional in their disapproval of the amendment of article 20 by opting for a multi-year negotiated waiver, on a case by case basis and subject to certain criteria.

After having discussed the relationship between the WTO and MEAs and having reflected on what has been a very tedious debate, the question of whether trade is a valid instrument for environmental purposes remains as pertinent as before. Although, in recent years, there has been a growing interest in the use of �positive measures� to assist developing countries in implementing policies and measures aimed at promoting sustainable development, little has been done so far in this regard. The failure of the mid-term review of the Rio Conference to reach any results, was but a reflection of the reluctance of developed countries to implement their numerous pledges to assist developing countries in preserving the environment. Instead, they have been promulgating the consistency and legitimacy of trade sanctions.

Only in recent years -- and as a result of the establishment of the WTO as a so-called organisation with �teeth�, due to its strong dispute settlement procedure -- have trade measures become very fashionable and powerful. They allow politicians to take a tough and visible stance and win popular approval by putting the environment first. Their implementation, however, entails an equity problem, since only powerful countries are capable of making use of trade sanctions. While the WTO was supposed to put an end to unilateralism and power-based relations, today one is witnessing attempts to legitimise the trading practices of the powerful.

These attempts have met fierce resistance. Developing countries are constantly arguing for a comprehensive framework and a holistic approach to deal with the environment, combining positive measures with specific trade measures taken pursuant to relevant MEAs and subject to international approval. On the one hand, trade measures should respond to, and be compatible with, the rules and disciplines of the WTO in the sense that they should be effective, necessary, proportionate to the damage inflicted and least-trade-restrictive. On the other hand, the concept of �positive measures� should form and integral part of MEAs such as is the case in the Montreal Protocol, the Convention on Biological Diversity (CBD) and the United Nations Framework Convention on Climate Change (UNFCCC). Positive measures would include building institutional, personnel, managerial and information management capacity, transferring �clean� technology as providing technical and financial assistance as incentives for developing countries to meet the requirements of MEAs.

MEAs should continue to preserve their comprehensive character and to advocate positive measures within the framework of international cooperation for the pursuit of environmental objectives and protection. Attempting to give trade measures a special status goes against the overall goals and balance of MEAs and undermines the rationale of their existence. Such a special status can only amount to elevating trade sanctions, which are basically negative measures, over the whole range of positive measures, mentioned above, already incorporated in the relevant MEAs.

The ruling of the shrimp/turtle dispute panel is expected in January 1998. If the panel rules against the US, compelling the government to urge Congress to amend its �Species Act� after having been obliged to introduce changes to its �Clean Air Act� to conform with a previous panel ruling, one could very well expect a confidence crisis in Washington vis-à-vis the WTO. This would pose a serious problem to the organisation. If, however, the panel sides with the US action -- a position strongly advocated by environmental NGOs through their various informal and unsolicited submissions to the panel -- it would mean, in the view of many, the end of the rules-based system which metes out equal and fair treatment to small and big countries alike. Siding with the US, however, seems a very remote possibility, as assessed by those following the debate closely in the WTO, be it on the side of WTO delegations side or the secretariat, as this would provide legal authority to override existing Gatt or WTO rights and obligations. The obligation in question is that of non-discrimination, which is the cornerstone of the Gatt legal system and the principal means of protecting the rights of the smaller and weaker members of the multilateral trading system.

Informally, the members of the Committee have agreed to group the ten items of the agenda into two main clusters. The first cluster, taken up in the May 1997 meeting of the CTE, focused on the effect of environmental measures on market access as well as on eco-labeling and the relationship between the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement and the environment, including transfer of environmentally-sound technology. The second cluster, taken up at the second meeting in September, was devoted to the relationship between MEAs and the WTO. A third meeting at the end of 1997 would discuss so-called unfinished business.

If governments and NGOs are serious in their environmental concerns and want to make best use of WTO, they should view the WTO and MEAs as mutually supportive measures to achieve environmental sustainability. The WTO can be positively used for environmental purposes by prying open developed country markets and dismantling barriers to the transfer of technology which would help developing countries in their endeavours to clean their environment. The above paper shows that the debate on trade and the environment has not yet been exhausted.

Aaron Cosbey

The central questions that this paper will address are whether there are legitimate links between trade and the environment and, if that is the case, why South African policy makers should pay attention to these linkages.

To answer these questions, I will first show the key trade-environment linkages at a theoretical level. Then I will argue that they are important since, like most market changes, they represent both a threat and an opportunity for those willing and able to act upon them. I will then argue that the discussion needs to be broadened from trade and the environment to trade and sustainable development. Finally, I will make the case that trade openness is a necessary but not sufficient precondition for sustainable development.

While the linkages between trade and the environment are many and complex, those between trade and sustainable development grow exponentially. It is possible to group the majority of those linkages into three broad themes. They are:

1. The so-called �magnifier effect� whereby trade, in the absence of proper pricing, can lead to environmental degradation.
2. The competitiveness effect whereby trade can bring pressure to bear on environmental standards in one of two ways. First, foreign purchasers or customers and multinational corporations (MNCs) can spur demands for better environmental performance. Second, trade can bring pressure to lower standards or to poorly enforce existing ones through the �pollution haven� effect.
3. Markets that are closed or protected may impair sustainable development in two ways: by protecting inefficient, polluting domestic industries and by denying exporters, particularly in developing countries, the opportunity to sell to the protected market.

The magnifier effect involves damage to the environment not from trade itself, but through trade acting as a magnifier of existing inadequacies of environmental policy. Perfect environmental policy would price environmental resources and services at their proper value, forcing producers to pay for emitting effluents which pollute air, water and soils or degrade renewable environmental resources such as forests and fisheries. These prices can be attached by including charges, taxes, emission fees, deposit and refund schemes and so on. If not, then environmental resources such as forests, fisheries and minerals and environmental services such as climate stabilisation and fertility of soils, will in effect be valued at zero.

Herein lies the problem. Any input to a final good is used in relation to its cost to the producer. If palm oil is cheaper than soybean oil, food transformation industries will use palm oil. Similarly, if it is cheaper for a manufacturer to use the nearby river as a dumping ground for effluent than it is to use a process that produces no effluent, then the choice is obvious. When environmental resources are not priced or when they are under priced by poor existing environmental legislation, producers of goods and services will overuse environmental resources. Environmental economists would call this an inefficient outcome.

International trade allows the scale of this inefficiency to be magnified beyond what it could be in a closed domestic setting. The fewer environmental costs a producer bears, the cheaper will be the final product and the more of it will be demanded by a global market, particularly if foreign competitors are made to bear the proper environmental costs of production.

This brings one to the competitiveness effect, one element of which results from the magnifier effect. If regulators and producers understand that competitive advantage can be gained by avoiding the payment of environmental costs, there is pressure to keep such costs as low as possible. This can be done through non-enforcement, lowering of existing regulations or through �regulatory freeze� -- the reluctance of environmental regulators to propound new and stricter environmental regulations, even in the face of evidence that they are needed.

This leads to the infamous �pollution haven� where pollution-intensive manufacturing processes congregate in countries or jurisdictions which offer the lowest environmental costs. Evidence of the actual existence of such havens has been difficult to find since most studies have focused on industries which relocate looking for lower environmental costs, rather than on those which merely threaten to relocate unless environmental regulations are relaxed -- probably a far more common case. Also, environmental cost is just one of many factors a firm considers when deciding to relocate.

Another type of competitiveness effect works in the opposite direction, encouraging improved environmental performance. Domestic producers may face a market demand for products which are �greener� than products that they would otherwise produce. In markets such as the European Union (EU) and North America, both retailers and manufacturers are increasingly demanding that their suppliers abroad produce to the high standards that are the norm in European and North American markets. They may, for example, demand that certain toxic textile dyes not be used in the manufacturing process or even that the cotton used be organically grown.

Quasi-regulatory regimes such as eco-labels also exert environmental pressures. To be awarded an eco-label in a foreign market, manufacturers need to meet the criteria -- often production-related -- that are set in those markets. These may have little relation to the environmental or social reality in the place of manufacture, but they are sometimes important nonetheless to winning export market share.

Laws in a foreign market could dictate that certain environment-related conditions be met as a condition of market access. Packaging and labeling requirements are the most common regulations of this type. Exporters to Germany, for example, have to package their products in 100 per cent recyclable materials.

Finally, another competitiveness effect comes from foreign investors or MNCs that have established production facilities in a country. These often bring with them production techniques, technology or standards of operation which are the norm in their home country, but which exceed the environmental regulations in the country of operation.

The third linkage between trade and the environment occurs in the context of closed or protected markets. It can be of two types. First, a protected market can impair sustainable development domestically, by protecting local industries that are inefficient and polluting. The US steel industry, for example, is far less energy efficient than its counterpart in Japan, but thrives nonetheless in part because of protectionist barriers. The results are less than optimal for US citizens who have to foot the bill by paying higher steel prices and higher taxes and for the environment that has to sustain the damage inherent in excess production of energy.

Second, a protected or closed market can impair sustainable development in foreign countries by denying them the opportunity to export. For example, the Multi-Fibre Agreement (MFA), a long-standing carve-out exception to the multilateral rules of trade, effectively limits the imports of textiles and clothing allowed by developed countries. The costs of this single piece of legislation in terms of lost economic development, particularly in developing countries, is enormous. For example, a Canadian study has found that the cost to Bangladesh of Canada�s participation in the MFA exceeded the amount of Canadian official development assistance bound for that country.

The linkages discussed in the previous section clearly show that the trade-environment relationship is not straightforward. It is neither a case of trade always being the enemy of the environment nor of environment legislation always being a barrier to trade. The actual effects vary according to the circumstances. The inevitable presence of several effects working simultaneously mean that any such cut-and-dried portrayals of the relationship are bound to be so inaccurate as to be worthless. This points to the need for research and to better inform industry and governments of the realities in their particular settings. Without this, policies and investment decisions may have unintended and unwanted results, such as environmental degradation or lost market share.

How then do these linkages concern South African policy makers? First, it bears arguing that these linkages, for better or for worse, are real. Whatever the result of the theoretical debate over whether trade and the environment are in fact related, the reality is that the two policy areas are inextricably wedded.

This was first demonstrated in a trade dispute, heard by the General Agreement on Tariffs and Trade (Gatt) in 1991, over US attempts to implement domestic legislation that tried to change marine environmental practices abroad. In the now famous US-Mexico tuna-dolphin dispute, the US sought to ban the import of tuna from Mexico, arguing that the incidental killing of dolphins during the fishing process was higher than that allowed in the US. Another such case is currently before the new WTO dispute resolution panel --the US has banned the import of shrimp from any country that does not have a regime comparable to its own for protecting sea turtles.

Furthermore, the ISO 14000 system of environmental management may soon become the guideline for the environmental management of operations for companies in certain sectors that want to be internationally competitive. There is an ever-growing number of national-level eco-labeling schemes (over 25 world wide) which many countries worry can act as non-tariff barriers to imports. There are also regulatory linkages between trade and the environment, for example Germany�s strict environmental laws on packaging and labeling.

There are also non-regulatory examples of trade-environment linkages. Consumer bans and boycotts, all too familiar to South Africans, are increasingly being based on environmental grounds. For example, a European consumer boycott of fur seal pelts decimated Canada�s sealing industry and a recent effort by Greenpeace to publicize inadequacies in Canada�s forestry practices led to the loss of a $5m contract with European purchasers.

Finally, at some point the WTO will be forced to formally begin the process of writing law that tries to separate legitimate environmental protection from protectionism disguised as environmental concern. When the general rules of trade were insufficient to address the specialised case of intellectual property rights or the agricultural sector, the member states drafted special agreements addressing these areas. In the same way the WTO will eventually have to set out rules that dictate under what conditions the environment may be used as a basis for trade measures and what form the latter might take.

WTO members have so far shown little desire for such a process of negotiation, primarily because developing country members fear that any such law would end up legitimising, rather than protecting them against protectionism masquerading as environmentalism. They would understandably prefer no agreement to a bad agreement.

However, such an agreement has to be negotiated eventually, both for the good of the environment and the multilateral system of trade rules. Unilateral measures such as the US shrimp ban are becoming more common and will continue to proliferate as environmental concerns heighten world wide. The current system, which by default allows WTO dispute settlement panels to decide on what does or does not constitute protectionism, is already straining under increasingly fractious disputes. When the WTO does begin to address the issue seriously, resource exporting and smaller countries had better be in a position to articulate their interests.

South African policy makers therefore has a number of good reasons as a resource exporting country to probe and to worry about the complex relationship between trade and the environment as well as the forums in which these issues are debated.

Apart from the threat of lost market share, there are other compelling reasons to pay attention to the relationship between trade and the environment. National policy must be informed by a solid understanding of the national interest. It is not enough, for example, to assume that rising exports and gross domestic product (GDP) are beneficial, without taking account of the associated environmental costs and benefits of these activities. The World Commission on Environment and Development, also called the Brundtland Commission, first pointed out that the environment, the economy and development are inextricably linked and that policies which ignore this fact risk failure even by their own narrow criteria. A wealth of empirical evidence has since accumulated in testimony to this fact. An understanding of the relationship between trade and the environment will help to properly define the national interest to include environmental goods on the balance sheet.

As an aside, it is important to note that the Brundtland Commission includes issues of development in the trade and environmental equation. In effect, the debate needs to broaden from a discussion about trade and the environment to one about trade and sustainable development. The distinction is crucial. The heart of the trade-environment debate is differences in environmental standards across developing and developed countries. For example, the trade-environment perspective produces solutions in the form of environment-based trade bans. A trade and sustainable development perspective, however, enables a better understanding of the roots of the differences. Clearly, many developing countries have less capacity -- technical, administrative and financial -- to address environmental concerns. Also, many simply have different priorities due to lower income levels, focusing for example more keenly on clean water issues than on issues such as global warming. Seen from this perspective, differences in environmental standards across countries should obviously be addressed not by trade bans, but by development assistance that builds capacity to address these issues. This may take the form of technical or administrative assistance, the transfer of environmentally preferable technology, producer-consumer agreements on production methods and financial assistance.

The WTO shrimp-turtle dispute is an example of the above distinction. The trade and environment linkages in this case are not complex -- the production of some of the shrimp the US imports causes the death of endangered sea turtles. A trade solution to the problematic linkage would therefore entail a ban or threat of a ban on the import of these products. There are many problems with this approach, not the least of which that it poisons the atmosphere of international cooperation on sustainable development matters.

Adding a developmental perspective changes the picture. Those that fish the shrimp have poor capacity to implement the changes mandated by the US legislation and the ministries involved have little administrative, technical or financial capacity to assist or monitor them. There is also little domestic constituency for such conservation measures, since income levels in the shrimp exporting countries are relatively low.

Policy solutions resulting from a sustainable development analysis of the problem will be quite different. They might involve building capacity to use different fishing technology via financial transfers, technology transfer or training. They might also involve assisting to build a domestic constituency for the conservation concerns at hand. Such policy solutions, built on a trade and sustainable development analysis of the issue, are likely to be more robust in promoting sustainable development overall. They attack the real root of the problem, and by their nature they promote international cooperation.

The International Institute for Sustainable Development (IISD) has been promoting a sustainable development approach for a number of years. It has reached the conclusion that trade liberalisation and market access is necessary but not sufficient conditions for sustainable development. This position has not endeared the organisation to those in either the environmental or the free-trade camps and bears some explanation.

Trade openness is necessary for sustainable development because more sustainable forms of development will not emerge without the growth brought by trade, particularly in developing countries. Openness to foreign trade also has a number of positive environmental effects:

• increased availability of resources to invest in environmental protection;
• the transfer of more efficient and cleaner production technologies via foreign direct investment, joint ventures and imports;
• the learning and norm building that occurs through cross-border exchanges of goods, services, capital and ideas;
• transmission of higher environmental standards through import requirements from other countries and through �best practice� multinational corporations; and
• increases in eco-efficiency (production efficiency in the use of environmental resources) due to increased competition from global competitors

But trade openness is not in and of itself sufficient to guarantee the achievement of sustainable development. Growth brought by trade only makes it possible for a country to increase its efforts at environmental protection and if prices of environmental resources are distorted by poor environmental regulation or by subsidies for environmentally damaging industries, increased trade may in fact exacerbate environmental problems.

In fact, much of the remarkable surge in economic growth in Asia seems to have done just that. Between 1981 and 1990, the rate of deforestation in East Asia was more than 50 per cent higher than in Latin America, acid rain is a growing problem in Northeast Asia and China's rapid economic growth could make it the world's largest single emitter of carbon dioxide within 25 years. Also, as the Brundtland Commission has warned, even the economic costs of these rates of pollution growth can be very high. Vaclav Smil, the Canadian economist, estimates that the costs to China may be as high as 20 per cent of gross national product (GNP) a year.

There are clearly a number of important ways in which trade and sustainable development are related as well as important reasons for exploring this relationship. One is the threat to export market-share inherent in the greening of major developed country markets. The greening of markets also create new market niches and improved efficiency via environmental concerns and the competitiveness effect. Furthermore, there is a close relationship at the domestic level between economic growth, environmental integrity and development.

There is an urgent need for more research to identify the ways in which trade and sustainable development are linked at the local level and how these linkages are played out on the global stage in all parts of the world, but particularly in resource-exporting countries. This research should inform policy-makers in trade, foreign affairs and environment ministries and should make the case for better integrated policy formulation. Dialogues such as this workshop are an important step in the process of defining national strategies. Only through such efforts will vulnerable countries be able to avoid and preempt the threats inherent in the trade-sustainable development relationship and exploit the opportunities for improved economies, environment and development.

David Fig

When historians look back at the twentieth century they will need to take a long view of how human beings solved their key challenges. Attention will be focused on the rise and fall of fascism, apartheid, the League of Nations and the Soviet Union. But we will also be scrutinised for human responses to broader questions such as famine and food security, drought and desertification, inequitable development and income levels and the ways in which we access and utilise our natural resources. Certainly in the last third of the century the world has come to link development with the management of natural resource use. At an interstate level this linkage was manifest in the 1992 Earth Summit in Rio, known officially as the United Nations Conference on Environment and Development (UNCED).

Since then there has been no turning back in the undoing of that linkage. The recognition that the natural resource base links with every aspect of development is now common ideological currency in the UN system and beyond.

I have been asked to assess the global debates from a South African perspective. This begs the question as to how one comes to formulate a national perspective on any of these debates. So, instead of presuming to talk authoritatively in the name of the nation on issues of substance, I want to address the question of why we have no national policy and what we should do about this.

In broad terms South Africans for the most part, and certainly officially, have failed to make the important linkage between trade and the environment. South African politicians, economists and planners have in general not kept pace with changing paradigms that acknowledge the fundamental need to protect and enhance the quality of the country�s natural resources. In planning South Africa�s development there still do not exist clear objectives and commitments regarding environmental protection. The government�s key post-apartheid strategies, whether the Reconstruction and Development Programme (RDP) or the Growth, Employment and Redistribution (Gear) strategy, place little emphasis on this. With few exceptions, key decision-makers regard the environment as a side issue, a tertiary consideration, to be the purview of either an antisocial white bourgeoisie or a fringe minority of green activists and not to be mainstreamed or regarded as sufficiently important to warrant more serious treatment.

The sphere of �trade and the environment� is a typical example of how these attitudes manifest officially. During the apartheid era the department of trade and industry (DTI), because of many years of sanctions, isolation and inadequate intellectual leadership, was completely oblivious of the linkage between trade and the environment linkage. One example of this was the official reaction of the DTI to a delegation from the Environmental Policy Mission, a think tank for the ANC alliance, to the department in September 1993. Its opening reaction was one of complete astonishment that anyone concerned with environmental policy should be talking to the department: �We simply cannot see the reason for you being here�, mission members were told. This was at a time of maximum world attention to the Uruguay Round of negotiations. During these negotiations, the role of social and environmental issues in the forthcoming agreement establishing the World Trade Organisation (WTO) was hotly contested. It was abundantly clear that the apartheid era DTI's isolation from global developments had blighted its understanding of key strategic issues.

Since then, however, the leadership of the department has changed dramatically, leading one to anticipate that the issue of trade and the environment would be handled with renewed systemic vigour. After all, a number of key figures in the department of trade and industry have some level of understanding of the importance of these linkages. For example, the current minister of trade and industry was a key contributor in 1991 to the volume Going Green: People, Politics and the Environment in South Africa. In an article co-authored with Rod Crompton, now the director for chemical and allied industries in the department, he warned that:

First, if environmental issues are ignored in the formulation of the growth path, the future costs of environmental degradation will strangle the growth prospect. Second, environmental considerations will be forcibly brought to the attention of South African industry by development itself, by international agencies and by consumer resistance, and this will have an impact on employment. Third, it is in the interests of a strong civil society that worker organisations and a green movement act in concert and not in opposition to each other.

Indeed, the director-general of the DTI, Zav Rustomjee, has also been mindful of the importance of the environment in South Africa's commercial and investment strategies. He was a key speaker on this topic at the Greening the RDP conference hosted by the Environmental Justice Networking Forum at Kempton Park in November 1994.

Alan Hirsch, chief director of industrial and technology strategy in the DTI, has also acknowledged that the 1994 Marrakech Agreement provided an important opportunity for South Africa to take a lead in the process of including reasonable environmental and social standards in the rules of international transactions. It is therefore in South Africa's interests to address urgently the challenge of developing a social and environmental clause system that does not support selfish protectionism in the better-off countries.

Given these declaratory insights and intellectual commitments, it is remarkable that the DTI has done so little since the renewal of its leadership to implement a new vision of sustainable development in the sphere of trade and industry. On the contrary, the department�s behaviour in practice has contained a number of critical shortcomings:

• The department has actively supported the importation of waste materials from the North on the grounds that the reworking of these materials would provide livelihoods, despite being well aware that South Africa is not managing its own domestic wastes adequately.
• The department has been virtually indifferent to the Consultative National Environmental Policy Process, playing little role in the development of this or other policies which fall under the aegis of the department of environmental affairs and tourism.
• The department established and then rapidly abolished its own advisory committee on trade and environment whose brief was to oversee the development of a national multi-stakeholder policy on trade and environment. The formulation of such a policy has been postponed indefinitely by the department.
• The department has not been able to appoint adequate experts in the field of trade and environment, neither has it established an adequate database on these issues. Its representatives to important global processes and conferences are therefore ill prepared to represent a national position on these questions. Those of its representatives who are sent to participate in important national policy processes are either silent or fail to make an informed contribution.
• There is no proactive leadership in the department on the question of the environmental sustainability and/or impact of new large-scale investments. It is left to civil society to place pressure on the relevant government authorities to pay due attention to this issue. In particular, the spatial development initiatives driven by the department have been heavily criticised for their failure to build in any up front social and environment strategic assessment.

Given the minister's current leadership of the United Nations Conference on Trade and Development (Unctad), it is important for South Africa that renewed attention is paid to overcoming these deficiencies. The DTI needs quite urgently to renew its commitment to a multi-stakeholder process to develop a national policy on trade and sustainable development. This process needs to display evidence of the DTI's renewed commitment to more participatory governance, and to repair relations with those sectors who feel compromised by the department's mishandling of relationships. Holding this workshop is not going to be a sufficient means of ensuring a happy reconciliation. Neither will it do in the long run to sideline important sectors like the trade unions, business and industry, or environmental and other NGOs from policy development.

Further, the department needs to review how it will factor its commitments to sustainable development into existing and future initiatives involving infrastructural and other investments, whether spatial or otherwise. There are growing calls to legislate these commitments.

The DTI needs to establish a competent complement of officials who are able to manage South Africa's trade and environmental policy and represent the department in the important environmental policy processes that are under way domestically and globally. These officials also need to be able to build capacity across the whole of the department to ensure that the national policy is understood and implemented across the board. For these reasons the department should put in place mechanisms to build its own and civil society's competence to participate in ongoing discussions in this very dynamic field. The minister needs to review his own and his department's responsibilities in this area, ensure that the requisite human and other resources are available and champion participatory policy development more vigorously.

These expectations of the minister and the department need to be matched by a more serious commitment by non-governmental organisations. Both the Trade and Investment Policy Secretariat and the Group for Environmental Monitoring have already committed themselves to run research and capacity building projects on trade and sustainable development. These projects need to build on the excellent track record of the labour, industry and environment work undertaken by the Industrial Strategy Project, whose new book is about to be launched. Active South African researchers and non-governmental organisations need to link up with each other, as well as with continental and regional initiatives. These include the African Network on Trade, Environment and Development based in Accra, Ghana and set up in the wake of Unctad IX, as well as with the Zimbabwe Environmental Research Organisation's regional networks. In addition, there are further advantages in firming links with some of the South-South international trade networks and international non-governmental environmental organisations. The World Wide Fund for Nature (WWF), for example, has established research and advocacy projects on trade in Geneva from where it can effectively monitor the work of the WTO. NGOs also have a role in raising the profile of the issue, building greater capacity of civil society to shape policy and in monitoring the government.

Both government and NGOs need to press for a national policy that aims to:

• improve the environmental standards of managing industrial production,
• substitute cleaner for dirtier technologies,
• ensure that all key domestic and external investments are environmentally sustainable and that renewal of South Africa�s infrastructure is in line with sustainable development.

The important challenge of building environmental considerations into all aspects of South Africa's macro-economic planning and policies needs to be understood and implemented by a number of key government agencies. Some of these principles are contained in the new White Paper on Environmental Management Policy for South Africa, published in the Government Gazette in July 1997. The policy also needs to respond to trade-related commitments contained in the Rio Agreement and other multilateral environmental agreements (MEAs) which South Africa already adheres to or is about to ratify. South Africa should be playing a proactive role in strengthening the WTO Committee on Trade and Environment (CTE) and in ensuring its greater transparency and responsiveness to civil society inputs. National policy should take into account the need to ensure employment and support a competitive framework for exporters, in which neither labour nor environmental standards are compromised. This needs to be borne in mind in all discussions of the creation of export processing zones or any of their newer incarnations.

The contours of such a national policy still need to be recognised and adopted by a wide variety of stakeholders. This can only happen under the DTI's leadership, for which no NGO can substitute. This workshop can play an important role in galvanising new commitment from the DTI to put such a policy in place and ensure that there are resources, both human and financial, to implement it. But the onus will be on both government and civil society to ensure active support for a national policy. As the century closes and South Africa moves from its blighted past, South Africans need to be mindful of their responsibility to future generations and hence for building sustainability into all development planning. One of the measures of a commitment to sustainability will be the way in which South Africa conducts its international commerce. Only when it has developed a national policy on these issues can South Africa begin to resume its place in international debates with more conviction.

Some participants observed that environmental considerations only start to be taken seriously by governments and societies at a certain level of development. At the Rio Conference, developed countries have pledged to assist developing countries through positive measures that will enable them to produce according to similar environmental standards than those of their developed counterparts. However, very little has resulted from these pledges and developed countries have been imposing process and production method (PPM) standards on developing countries without offering adjustment assistance.

The WTO only has authority within the rights and obligations of its own regime. Multilateral environmental agreements (MEAs) can therefore not be challenged in the WTO. Generally, trade and environmental legal systems operate hierarchically and need to be coordinated at national level. However, developing countries are less represented and can offer less resources and skills than developed countries to the WTO process. This constrains their effective participation. At the December 1996 WTO meeting in Singapore, developing countries did not participate to the same extent as developed countries in the drafting of the Ministerial Declaration. Legally, however, developing countries can participate on equal footing with developed countries in WTO deliberations and regulations in the organisation are all set by consensus. The role of NGOs should be to increase the understanding and capacity of developing countries with regard to issues dealt with by the WTO. The Organisation for Economic Cooperation and Development (OECD) is the developed countries� think tank on these issues. This imbalance between developed and developing countries would inevitably result in an agenda which reflects primarily developed country interests and needs. Many African countries, for example, are not active members of the WTO. The United Nations Conference on Trade and Development (Unctad) can only offer limited assistance to developing countries in negotiating WTO agreements. However, the legal instruments do exist and poorer countries have won cases against richer countries through the dispute settling mechanism. WTO decision-making is also more sound than that of, for example, the International Standards Organisation (ISO).

The issue of the impact of environmental standards on trade is highly politicised, often dividing South and North in the international community. This is due to the North�s unilateral imposition of restrictive trade measures based, according to them, on environmental concerns, but perceived as protectionism. In this context, it is more important to examine alternative cooperative or positive measures to deal with issues of environmental standards than to impose trade sanctions. An example of a positive measure is the multilateral fund established by the Montreal Protocol to financially assist countries to import �clean technology� though technology transfers and to adjust to the costs of phasing out certain modes of production. Such measures are less divisive than trade sanctions. However, it remains much easier for politicians to implement and capitalise on trade measures than on positive measures. This has translated into a general lack of political will from the side of developed countries to address issues of sustainable development in poorer countries.

When implemented, trade measures should be proportional, based on commonly agreed criteria and restrict trade as little as possible. In principle, all environmental measures need to be internationally accepted. Also, when considering negative measures in pursuing environmental standards, the cost to the recipient as well as the proportionality to the act needs to be taken into account. When advocating the use of negative measures, the question of policing of MEAs needs to be addressed. The US, for example, cannot fulfill a policing function in a ruling on environmentally engineered exports, since it has a vested interest in this issue as an exporter of such products. Furthermore, negative measures are at most a short-term solution and can also create mistrust. A cooperative spirit is needed to promote environmental responsibility and to this end trade sanctions are counterproductive.

Many participants maintained that current praxis in the WTO points to a redefinition of the South-North debate in terms of common interests and positions and that the North-South divide is not that clear. For example, most of Canada�s exports are based on natural resources -- an interest it shares with the developing world.

It was suggested that countries that do not view a specific MEA to be a priority or that do not have the resources to undertake the process of signing and ratifying such an agreement, cannot be regarded as �free riders�. The latter are countries that do not participate financially or otherwise in the negotiation and signing of MEAs. It is, however, often difficult to determine the motives of governments.

Environmental groups in industrialised countries often promote environmental regulatory measures that could lead to protectionist trade regimes, whereas environmental groups in developing countries take a more balanced approach and are generally more conscious of linkages between trade and the environment than their northern counterparts. There are hundreds of environmental organisations in North America, but very few explore sustainable development and only one, the Institute for Sustainable Development, concentrates on trade and the environment.

In South Africa there is a need for:

• more research on trade and environmental issues,
• an inventory of existing research on this topic
• technical training to facilitate more effective government participation in the WTO and
• enhanced capacity to deal with trade and environmental issues in the department of trade and industry in the form of, for example, resource economists to better understand, debate and implement environmental standards. Since the first priority of the DTI is to create employment, it has not yet developed sufficient institutional mechanisms to deal with environmental concerns. A stakeholder committee was established to deal with industrial and environmental issues but had to disband due to lack of capacity in the department of trade and industry (DTI) to manage such a committee. It was suggested that the National Labour and Economic Development Committee (Nedlac) might offer a more manageable institutional process.

The absolute measurements of permissible harmful gas emissions set out in the Montreal Protocol are of limited use since the impact of emissions are predicated on the location of factories. Furthermore, environmental impact assessments in South Africa are often based on the current situation and do not take account of future projections.

It was suggested that more incentives should be offered to governments to sign MEAs, using the example of the withdrawal of loan programmes by the World Bank and the IMF when governments do not implement policy changes

Some argued that regional economic blocs such as the European Union (EU), the North American Free Trade Area (NAFTA) and Mercosur cannot facilitate environmental agreements and that regional environmental agreements will amount to disputes and discrimination and that MEAs should be concluded only under UN auspices. On the other hand, it was argued that the negotiation of regional environmental agreements could be the first step in the negotiating of MEAs. Experiences differ however. While those environment and development-related provisions negotiated by the EU have had little influence on the multilateral process, the trade and environmental debates in Nafta often shape the debate in the WTO Committee on Trade and the Environment (CTE).

Article 20 of the Gatt lists the exceptions allowed to the principle of most-favoured-nation treatment. Although it is difficult to reach consensus on its interpretation, the OECD has shown reluctance to tinker with the wording and the status quo is therefore still functioning.

David Newton

The Convention on International Trade in Endangered Species of Fauna and Flora came into being in 1973 with the signing of the Washington Convention. South Africa acceded to this convention on 13 October 1975. The aim of the convention is to ensure that trade in wild plants and animals between parties and non-parties is conducted in a sustainable manner through a system of permits, monitoring and international cooperation. It is administered by a secretariat based in Geneva. The success of Cites depends largely on the commitment of member states to actively implement all its measures.

The Cites secretariat administers the convention according to the wishes of member states. Every two years a conference of the parties (COP) is held where member states decide on actions and policies through the adoption of resolutions. According to Cites, effective regulation of trade in endangered species depends on several actions:

• Member states must incorporate Cites as a non-self enforcing treaty into their domestic legislation. This is the only way to give full effect to all the convention�s provisions and resolutions. Without effective enabling legislation it is impossible to monitor and enforce the convention effectively. The two most important categories of measures are firstly, those that penalise trade in species in violation of the convention and secondly, those that confiscate such species or return them to the state of export. South Africa, with its fragmented provincial nature conservation structures and weak national department of environment affairs and tourism (DEAT) is currently unable to enforce these measures fully.
• The convention�s main regulatory mechanism depends on a system of import and export permits. It consists of three appendices and the one in which a species is listed determines the conditions under which these permits are issued. The following table outlines these appendices.

Cites applies trade restrictions to prevent the over-utilisation and extinction of wild plant and animal populations. With these controls it is likely that trade in a species could continue indefinitely, generating constant income for a person or business. Without controls the resource could become so scarce that no further trade would be possible. In the latter case extinction can result, thus impacting on a country's bio-diversity. Loss of bio-diversity is in turn regulated by the provisions of the Convention of Biological Diversity (CBD) which South Africa has also ratified. There are also sound business reasons for ensuring that plant and animal resources are well managed and utilised in a sustainable way. Cites offers this capability.

Cites is as effective as its member countries make it. If all its provisions are properly implemented the convention would be a very powerful tool aiding the conservation of renewable plant and animal resources. The convention is very complex and requires an efficient and expensive management structure to make it effective. Proper enforcement of its provisions is essential for maximum effectiveness. Unfortunately this is often the weakest part of many countries� Cites controls. This is caused because member countries do not allocate sufficient human and financial resources to the implementation of Cites and do not pass adequate national enabling legislation.

Southern African countries are dependent to varying degrees on income generated from tourism and wildlife utilisation. The commercial utilisation of species forms a significant component of income to some national governments and in many cases to community-based conservation programmes. Governments faced with managing their resources wisely, and rehabilitating historically badly managed areas, have to contend with Cites controls. Most see the long-term benefits of the convention and are willing to implement it. However, they are faced with the lack of human and financial resources required to implement it and coordinate other management structures effectively. This creates an impression in some quarters that they are not able to control their wildlife trade adequately. As foreign aid rarely materialises to assist with capacity building, this view persists.

Furthermore, in the case of elephants, governments in southern Africa are faced by Western-based groups trying to stop them utilising their stocks for their own benefit. Cites, under pressure from these groups and some Western governments, has therefore been perceived by some southern African governments to be anti-utilisation and anti-trade. This is a serious problem in the region and has led to threats from some countries to withdraw from Cites and to �go it alone�.

South Africa has a thriving trade in fauna and flora. Many traded species are indigenous, ranging from rare sun-gazer lizards to the bitter extract from the aloe ferox plant in the southern Cape. The aloe industry alone earns approximately R3m a year for the harvesting community. Income from international sales is conservatively estimated to be about R300m a year. The total value of the wildlife trade, including hunting, pet trade and horticulture, runs into hundreds of millions of Rand a year. South Africa, based on its strong infrastructure, also acts as a clearing-house for commodities passing through from the African region and further afield which further increases income from trade in fauna and flora. Unfortunately, the management of this process is complicated due to the current transitional phase that the country is going through, resulting in uncoordinated legislation and limited law enforcement capability.

Government incentives that were put in place to encourage exports have encouraged non-sustainable trade in products such as timber. South Africa has very limited supplies of indigenous timber. Consequently, most high quality timber has to be imported from neighbouring countries and other international sources. Under existing customs tariffs raw logs can be imported at very low cost into the country. No government conservation agency monitors imports while the departments of agriculture and finance are only interested in plant health and taxes respectively. The Southern Africa Customs Union (SACU) is complicating monitoring even further by reducing the requirement for inspection. Once imported the timber can be converted into finished or semi-finished products for export at very favourable customs tariffs, thus augmenting foreign exchange earnings. This situation, although good for South Africa's economy, reflects several negative issues. Firstly, no government body in South Africa monitors the trade in Cites-listed timber species, such as imports of the large leaf mahogany from South America or other species from neighbouring countries. Such lack of monitoring between countries can allow non-sustainable trade to occur. Secondly, government bodies such as the department of trade and industry, that is calling for more and less restrictive trade, do so often without reference to conservation departments and international treaties. At current rates of timber extraction it is likely that this regional resource will fast be exhausted. South Africa, by not helping its trading partners to conserve their resources, will ultimately lose the benefits of foreign exchange earnings.

The tenth session of the Committee of Parties (COP 10) meeting in Harare during June seems to have changed the regional perception that Cites is against trade in endangered species. This follows its approval of the elephant down-listing proposals for Zimbabwe, Botswana and Namibia. The member countries of Cites have given the go-ahead for those three countries and Japan to prove, under strict conditions, that sustainable use of elephants and elephant products is possible. If they fail, however, the consequences for conservation and sustainable use programmes would be serious. In this sense the outcome of the COP 10 is a sobering victory -- the hard work is still to come.

In a strange twist the World Trade Organisation (WTO) has been used in an attempt to continue the ban on elephant trade. A Cites member requested the WTO to challenge the fact that Cites had designated Japan as the sole trading partner for elephants and elephant products. This, it claimed, was against the most-favoured-nation (MFN) principle of the General Agreement on Tariffs and Trade (Gatt). The WTO responded that since the decision was made by an international convention with global membership, this consensus arrangement had to be accepted. This can be viewed as a positive move towards the sustainable use of endangered species. However, it may also be argued that it is a passive response from the WTO which has not confirmed to date that trade measures used by Cites are a legitimate tool for protecting the global environment.

In conclusion, the South African government�s recently released white paper on the environment hold many implications for environmental governance in South Africa. Some of the most important are:

• The South African government should work with neighbouring governments to achieve sustainable use of their respective resources. This requires increased monitoring and will influence, for example, the manner in which Sacu is implemented.
• All departments whose activities impact directly on those of other departments need to consult with one another in order to eliminate opposing and counter-productive policies. This would mean that that the departments of finance, agriculture and trade and industry, as well as conservation authorities will need to consult on meeting the requirements of the white paper. Up to date some actions of these departments have worked directly against the sustainable utilisation of natural resources.
• The South African government should enforce all commitments to international treaties such as Cites. This will, however, require close consultation with the department of trade and industry before any further relaxation of trade laws can be considered.

Morkel Steyn

The Montreal Protocol, set in place to ensure the phasing out of those human-made chemicals detrimental to the ozone layer in the stratosphere, has been ratified by most of the countries of the world. South Africa acceded to the protocol in January 1990.

The following ozone depleting substances (ODSs) have been identified by the protocol: chlorofluorocarbons (CFCs), bromofluorocarbons (halons), carbon tetrachloride (CTC), 1,1,1- trichloroethane (methyl chloroform), methyl bromide (Mbr), hydra chlorofluorcarbons (HCFCs).

Before 1987, when the Montreal Protocol was first signed, the above products were widely used for many industrial and agricultural purposes:

• CFCs were used as propellants in aerosols, foam blowing agents in the manufacture of both rigid and flexible foams, solvents in the electronic industry and as refrigerants in refrigerators, deep freezers and air conditioning equipment.
• Halons were used for fire fighting.
• Methyl chloroform was used as a degreasing solvent and in manufacturing of adhesives and tipp-ex.
• CTC was used as a solvent, for example in dry cleaning.

Phase-out schedules have already been implemented for the above products.

South Africa is regarded as a �developed� country under the Montreal Protocol. This means that it has to phase out ODSs in line with countries like the United States (US), Canada, Japan, Australia, as well as European states. It also has to contribute to a multilateral fund that is used to assist developing countries to phase out ODSs. South Africa successfully phased out halons on 31 December 1993 and CFCs, methyl Chloroform and CTC on 31 December 1995 in accordance with the requirements of the protocol. The manufacture of the CFCs and HCGCs by Polifin, in Sasolburg, also ceased on the latter date and the plant has since been decommissioned.

One of the very effective steps that the parties to the protocol could take to enforce the protocol internationally, was to prevent signatories to the protocol trading in ODSs with non-signatories. The following is an extract from the Handbook for the International Treaty for the Protection of the Ozone Layer: The 1985 Vienna Convention and 1987 Montreal Protocol:

1 As of 1 January 1990, each party shall ban the import of the controlled substances in Annex A from any State not party to this Protocol.

1 bis Within one year of the date of the entry into force of this paragraph, each Party shall ban the import of the controlled substances in Annex B from any State not party to this Protocol.

1 ter Within one year of the date of entry into force of this paragraph, each Party shall ban the import of any controlled substance in Group II of Annex C from any State not party to this Protocol.

2 As of 1 January 1993, each Party shall ban the export of any controlled substances in Annex A to any State not party to this Protocol.

2 bis Commencing one year after the date of entry into force of this paragraph, each Party shall ban the export of any controlled substances in Annex B to any State not party to this Protocol.

2 ter Commencing one year after the date of entry into force of this paragraph, each Party shall ban the export of any controlled substances in Group II of Annex C to any State not party to this Protocol.

3 By 1 January 1992 the Parties shall, following the procedures in Article 10 of the Convention, elaborate in an annex a list of products containing controlled substances in Annex A. Parties that have not objected to the annex in accordance with those procedures shall ban, within one year of the annex having become effective, the import of those products from any State not party to this Protocol.

3 bis Within three years of the date of the entry into force of this paragraph, the Parties shall, following the procedures in Article 10 of the Convention, elaborate in an annex a list of products containing controlled substances in Annex B. Parties that have not objected to the annex in accordance with those procedures shall ban, within one year of the annex having become effective the import of those products from any State not party to this Protocol.

3 ter Within three years of the date of entry into force of this paragraph, the Parties shall, following the procedures in Article 10 of the Convention, elaborate in an annex a list of products containing controlled substances in Group II of Annex C. Parties that have not objected to the annex in accordance with those procedures shall ban, within one year of the annex having become effective, the import of those products from any State not party to this Protocol.

4 By 1 January 1994 the Parties shall determine the feasibility of banning or restricting, from States not party to this Protocol, the import of products produced with, but not containing, controlled substances in Annex A. If determined feasible, the Parties shall, following the procedures in Article 10 of the Convention, elaborate in an annex a list of such products. Parties that have not objected to the annex having become effective, shall ban the import of those products from any State not party to this Protocol.

4 bis Within five years of the date of the entry into force of this paragraph, the Parties shall determine the feasibility of banning or restricting, from States not party to this Protocol, the import of products produced with, but not containing, controlled substances in Annex B. If determined feasible, the Parties shall, following the procedures in Article 10 of the Convention, elaborate in an annex a list of such products. Parties that have not objected to the annex in accordance with those procedures shall ban or restrict, within one year of the annex becoming effective, the import of those products from any State not party to this Protocol.

4 ter Within five years of the date of entry into force of this paragraph, the Parties shall determine the feasibility of banning or restricting, from States not party to this Protocol, the import of products produced with, but not containing, controlled substances in Group II of Annex C. If determined feasible, the Parties shall, following the procedures in Article 10 of the Convention, elaborate in an annex a list of such products. Parties that have not objected to the annex in accordance with those procedures shall ban or restrict, within one year of the annex having become effective, the import of those products from any State not party to this Protocol.

5 Each Party undertakes to the fullest practicable extent to discourage the export to any State not party to this Protocol of technology for producing and for utilising controlled substances in Annexes A and B and Group II of Annex C.

6 Each Party shall refrain from providing new subsidies, aid, credits, guarantees or insurance programmes for the export to States not party to this Protocol of products, equipment, plant or technology that would facilitate the production of controlled substances in Annex A and B Group II of Annex C.

7 Paragraphs 5 and 6 shall not apply to products, equipment, plant or technology that improve the containment, recovery, recycling or destruction of controlled substances, promote the development of alternative substances, or otherwise contribute to the reduction of emissions of controlled substances in Annexes A and B Group II of Annex C.

8 Notwithstanding the provisions of this Article, imports and exports referred to in paragraphs 1 to 4 ter of this Article may be permitted from, or to, any State not party to this Protocol, if that State is determined, by a meeting of the Parties, to be in full compliance with Article 2, Articles 2A to 2E, Article 2G and this Article, and have submitted data to that effect as specified in Article 7.

9 For the purpose of this Article, the term �State not party to this Protocol� shall include, with respect to a particular controlled substance, a State or regional economic integration organisation that has not agreed to be bound by the control measures in effect for that substance.

10 By 1 January 1996, the Parties shall consider whether to amend this Protocol in order to extend the measures in this Article to trade in controlled substances in Group 1 of Annex C and in Annex E with States not party to the Protocol.

Notes:
(1) The terms �bis� and �ter� are used for subsequent additions and amendments to the protocol.

(2) The annexes and groups referred to above are the various lists of halons, CFCs and so on. After the original signing of the protocol new ozone depleting substances were identified. As they were identified they were added to the protocol as controlled substances by means of adjustments and amendments to the protocol.

The ban of imports from �states not party to the Protocol�, mentioned in paragraph 1, did not affect South Africa at all when it acceded to the protocol in 1990 as all its suppliers had already ratified the protocol. However, paragraph 2 posed a serious threat to South African exports of CFCs to its neighbouring states since not all of them have signed the protocol. Namibia and Lesotho, both members of the Southern African Customs Union (SACU) and non-signatories to the protocol, posed an even greater problem to South Africa. Since there are no trade barriers among the partners of a customs union, South Africa faced the threat of non-compliance to the protocol. To overcome this problem the South African government appealed to the governments of Namibia and Lesotho to sign the protocol -- which they eventually did in September 1993 and in March 1994 respectively. However, this temporary solution was no longer valid after 31 December 1995 by which date South Africa, as a developed country, had to have phased out CFCs. From 1 January 1996, it would have been in non-compliance with the protocol had it imported CFCs. An import permit is required should any South African company currently wish to import CFCs. South Africa�s SACU neighbours, however, are still allowed to import CFCs until 2005 and nothing prevents anyone from crossing the border to Gaborone or Mbabane to buy CFCs that have been legally imported to Botswana or Swaziland and to bring these into South Africa. There is currently a large market in South Africa for CFCs to service existing CFC refrigeration and air conditioning equipment. It is suspected that quite a few tons of CFC 12 in particular are being smuggled into South Africa from Botswana each year, for the servicing of automobile air conditioners. This is virtually an �unpoliceable� situation.

At the open ended working group meeting of the Montreal Protocol held in Nairobi in June 1996, some African nations requested that parties make a decision to ban developed countries from exporting any new or used products containing or designed to contain ODSs, to developing countries. This item was on the agenda of the meeting of the parties to the Montreal Protocol in September 1997. This would mean that no second-hand refrigeration or air conditioning equipment could be exported from South Africa to any African country, including, for instance, second-hand cars containing air conditioners made before 1995, whether these are functional or not. Even equipment isolated with rigid foam blown with CFCs would be banned from export. Preventing this kind of trade with other African countries will be extremely difficult and it will be almost impossible with South Africa�s customs union partners.

In implementing the Montreal Protocol in South Africa, the government has had the full cooperation from the manufacturers of CFCs in South Africa, Polifin, as well as the major importers of ODSs in phasing out these substances and phasing in ozone friendly substitutes. Everything was done by self-regulation and government did not have to implement punitive legislation to enforce the phase-out. Smuggling actions only started to appear when smaller operators began to see the opportunities of �easy pickings�. In theory such operators can be prosecuted if caught, as an �environmental� levy of R5 a kilogramme is still applicable when CFCs are imported into the country. However, with no border control for goods circulating in SACU, the government has been unsuccessful in preventing the illegal importation of CFCs from Botswana. This is proving to be of great concern to the legal traders in ozone-friendly products as these will not find their natural niches as long as illegal CFCs remain available.

Tony Barnes and Willem Scott

The Basel Convention was the first global environmental treaty that strictly regulated the transboundary movement of hazardous wastes. It was also the first treaty to call for international cooperation between parties in order to manage hazardous wastes in an environmentally sound manner.

The seeds for the convention originated at the 1972 Stockholm Declaration of the United Nations Conference on the Human Environment that resulted in the formation of the United Nations Environment Programme (UNEP) that has ever since been involved in the management of hazardous wastes.

The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal was adopted by a conference of plenipotentiaries from 106 countries on 22 March 1989. The convention came into force in May 1992 after having been ratified by 20 countries.

South Africa acceded to the Basel Convention on 5 May 1994 and the entry into force was 90 days later on 3 August 1994. As of June 1997 112 countries and the European Union were party to the convention and several more countries are in the process of finalising their preparations for ratification and accession.

The convention calls for �the reduction of generation to a minimum of hazardous wastes in terms of both quality and quantity�. To fulfil this aim the Basel Convention stipulates three mutually supportive goals that need to be attained:

• transboundary movements of hazardous wastes should be reduced to a minimum,
• hazardous wastes should be treated and disposed of as close as possible to their source of generation,
• hazardous wastes generation should be reduced at source.

The Basel Convention came into being after international concern has been expressed for many years regarding the problem of illegal transboundary traffic in hazardous wastes and the need was recognised for strict international control to reduce such movements to a minimum, especially from developed to developing countries.

The Basel Convention controls the transboundary movements of hazardous wastes through what is known as the prior informed consent (PIC) procedure which allows especially developing countries to prevent unwanted wastes from entering or leaving their borders by making informed decisions on import or export applications. It places many obligations on the parties:

• hazardous wastes and other wastes shall not be exported unless the state of import provides consent in writing for the specific import. Furthermore, if the country of import gives consent for an import it must be able to show that it has adequate and proper facilities and technology to deal with the wastes and the exporting country has to be satisfied in this respect;
• transboundary movements of hazardous wastes will not be permitted to parties which have prohibited the import of such wastes;
• a party shall not permit hazardous wastes to be exported to a non-party or to be imported from a non-party and so on unless they have some sort of bilateral or multilateral agreement.

In an international convention such as this the major hurdle to progress was always going to be the decisions taken as to what wastes would be subject to the convention. However, through consensus decisions a reasonably comprehensive list of wastes can be found in Annex 1 of the convention. The wastes are listed either as wastes streams originating from specific sources or processes or as wastes having specific constituents. Forty-seven categories of wastes are recognised.

In addition the convention also recognises 14 different hazard characteristics such as explosiveness, flammability, corrosiveness and so on. Therefore, for wastes to be considered hazardous they have to exhibit one or more hazardous characteristics and they have to belong to one of the 47 wastes categories.

At the second conference of the parties to the convention held in Geneva, Switzerland during March 1994 it was decided that all movements of hazardous wastes destined for final disposal from OECD to non-OECD countries would immediately be prohibited. Furthermore it was decided that as of 31 December 1997 all movements of hazardous wastes from OECD to non-OECD countries, destined for recycling of recovery operations, would be prohibited.

Since the categories of wastes which are listed in annex 1 are very broad, the Technical Working Group of Experts of the Basel Convention was given the task, at the third conference of the parties, of providing a list of wastes which would be subject to the ban decision. In their workings the Group of Experts not only came up with a list of wastes subject to the ban decision but also a list of wastes not subject to the ban decision and a third list which contained wastes on which consensus could not be reached. These lists, with the inclusion of a third list which contains wastes still to be considered, were presented at the fourth conference of parties which took place in October 1997 in Kuala Lumpur.

These lists have the greatest implications for international trade. From a South African perspective not much trade takes place in the hazardous wastes currently on list A that are subject to the ban decision. World wide, the industry most likely to be affected by the ban decision is iron and steel manufacturing. Considerable trade in copper, zinc and other metal containing �slags� and �drosses� -- all of which have the potential to be on list A -- takes place between various Organisation for Economic Cooperation and Development (OECD) countries.

Unfortunately the department of environmental affairs and tourism (DEAT) does not have the means at present to calculate exactly what the monetary implications of the ban decisions would be for South Africa. Suffice it to say that it would be more practicable to ascertain the monetary value once the various lists have been adopted by the convention at the fourth conference of the party and these have become legally binding. However, the trade coupled to the import and export of iron and steel manufacturing slags and drosses was valued at R340 m in 1993, according to South African customs figures.

It is important to note that at present South Africa has a moratorium on the import of all hazardous wastes. Therefore the only way the ban decisions are currently affecting its industrial sector is through the export of hazardous wastes to OECD countries. It should also be mentioned that these exports are exclusively for recycling and recovery and not for final disposal.

Hazardous wastes management in South Africa is in a state of crisis. South Africa does not have a clearly defined hazardous wastes policy even though a moratorium currently exists on the import of all hazardous wastes. Since there is no policy on hazardous wastes management, there is also no regulation of trade in hazardous wastes.

However, being a party to the Basel Convention has pointed the government in the right direction. The DEAT, acting in its capacity as the competent authority for the Basel Convention, has convened a so-called Basel Committee with representation from national government departments and the nine provinces. This committee is currently discussing the feasibility of opening the committee to industry, labour and non-governmental organisations. The functions of this committee include, among others, advising the DEAT whether approval of applications for transboundary movement of hazardous wastes and other wastes should be granted or not.

Surprisingly, the reaction to the Basel Convention and the level of understanding of the convention has been very positive and the industrial sector, for example, has organised a so-called Basel Committee. The DEAT is currently embarking on what is known as the Integrated Pollution Control and Wastes Management Policy Process. One of the envisioned outcomes of this project is the development of a consultative policy on hazardous wastes management from which regulations pertaining to the management of such wastes will stem.

The Bamako Convention, banning the import into Africa of hazardous wastes and controlling the transboundary movement and management of hazardous wastes within Africa, was adopted on 30 January 1991 in Bamako, Mali. The convention can be seen as a regional agreement and it is open to members of the Organisation of African Unity.

The Bamako Convention, recently ratified by 10 countries, has not been signed by the required number of countries to make it legally enforceable. Whereas 19 African countries are party to the Basel Convention, 28 countries, including South Africa, have not yet signed the Bamako Convention.

The DEAT, which is the designated national authority for the Basel Convention and whose responsibility it is to evaluate the Bamako Convention, has identified some issues in the Bamako Convention that could become problematic. These include the definition of wastes; contradictions in the convention; duplication with other conventions and possible serious financial implications. While South Africa�s participation in the Bamako Convention therefore needs to be carefully evaluated, it should nevertheless play a leading role in the African region to ensure that the hazardous wastes management problems faced by the continent are handled in the correct manner.

Negotiations for South Africa�s accession to the Lomé Convention were previously tempered due to the fact that certain interest groups argued that Article 39 of the convention, which deals with environmental management, would prevent South Africa from capitalising on the market opportunities with respect to trade in wastes.

The DEAT has never found Article 39 to be problematic. Its interpretation, which it views as the correct interpretation, is that the Lomé Convention promotes environmentally sound management of hazardous wastes by encouraging its parties to implement the Basel Convention. Since South Africa is a party to the Basel Convention it is therefore comfortable with Article 39. Article 39 also promotes the norms and standards of the International Atomic Energy Association (IAEA) with respect to nuclear wastes management. Since South Africa adheres to IAEA norms and standards, it fully supports Article 39.

The department�s current position is that Article 39 of the Lomé Convention is consistent with both its current and future hazardous wastes management policy planning. Finally, industry and non-governmental organisations (NGOs) have indicated that they would prefer the DEAT to lead future Lomé negotiations regarding environmental issues.

Hesphina Rukato

The International Organisation for Standardisation (ISO) is a world wide federation of national standards bodies of about 100 countries. It is a non-governmental organisation established in 1947 to promote the development of industrial standardisation and related activities in the world so as to facilitate the international exchange of goods and services, as well as to develop cooperation in the intellectual, scientific, technological and economic fields. Technical committees (TCs) carry out the important standards development work. Each TC becomes the responsibility of one of the national standards bodies that make up the ISO membership. This organisation�s activities result in international agreements that are published as international standards. Its national members provide their country�s share of financial support for the central operations through the payment of membership fees.

The British Standards Institute (BSI) virtually invented quality standards in the late 1970s through the production of the world�s first quality management standard BS 5750, which has since become ISO 9000. The latter is �an integrated, global system for optimising the quality effectiveness of a company or organisation, by creating a framework for continuous improvement�. The then European Community started the world wide dissemination of ISO 9000 when it instructed the European Committee on Standardisation (CEN), the European Community standards body, to adopt ISO 9000 as the harmonised quality management standard for the coming European Union single market.

Initially, only European companies, United States (US) companies in Europe and their sister and parent companies in the US adopted ISO 9000. It was subsequently adopted throughout the world. In 1992 the BSI produced a second pioneering management standard, BS 7750, the world�s first environmental management standard. Just as BS 5750 was the unofficial model for ISO 9000, so BS 7750 became the model for ISO 14001. Other national standards, including the South African SABS 0251 were also used extensively for the development of ISO 14001.

In support of the June 1992 United Nations Conference on Environment and Development (UNCED) held in Brazil, the ISO committed itself to supporting the concept of �sustainable business development�. As a result the Strategic Advisory Group on the Environment (Sage) was formed. Sage became aware of the international need to improve environmental performance in the sphere of business, as well as of the real possibility that diverse national and regional standards may result in unintended technical barriers to trade. It was therefore critical that voluntary international standards became environmental management tools. In 1993 Sage recommended the formation of ISO Technical Committee 207 to develop such standards, the ISO 14000 series to cover the areas of environmental management systems (EMS), environmental auditing, eco-labels, environmental performance evaluation, life cycle assessment and environmental terms and definitions.

The ISO 14000 series of environmental standards has become one of several industry responses to the strong general interest in sustainable industrial development precipitated by UNCED in 1992. This growing environmental awareness is also due to environmental accidents and disasters. The ISO 14001 International Draft Standard was formally adopted as an international environmental standard at a plenary session in Brazil in July 1996.

In the past, the business sector has tended to make environmental investments where there was a short-term bottom line reward and it has only recently realised the economic benefits, such as in marketing or public relations, of such investments. Companies must now address the question of what economic benefits they can gain from sound environmental management given the existing market conditions.

The ISO 14000 series of standards (and ISO 14001 in particular) has become important for two reasons. Firstly it provides a common understanding of what a national and international standard means and secondly it carries authority under the new international trade rules based on the 1994 General Agreement on Tariffs and Trade (Gatt). These standards have the potential to influence trade, environmental and other regulations, both at the international and national level. Developing countries have been advised to look to self-regulatory or legislative environmental management as a means of increasing their competitiveness and as a basis for increasing their terms of trade with the North. ISO 14000 is a demonstration of the potential that industry now has to create international trade standards without operative public or government participation.

All ISO 14000 standards are intended for voluntary use. ISO 14001, the cornerstone of this series of standards, is s a specification, as opposed to a guidance, which means that it is written in informative language - for example, �shall� rather than �should�. Therefore, if an organisation decides to comply with ISO 14001, then all of the clauses become mandatory, rather than optional. ISO 14001 is a standard that describes the core elements of an effective environmental management system (EMS). ISO 14004, however, is a guidance document that provides advice on techniques for implementing an environmental management system. All of the other documents in the ISO 14000 series are being written as guidelines and are not intended for certification purposes.

ISO 14001 contains only those requirements that may be objectively audited for certification purposes and/or for self-declaration purposes. This means that an organisation may choose to implement an EMS and state that it complies with the requirements of ISO 14001 based either on a self-audit, or on a third-party audit. A third-party audit conducted by a recognised certification body carries more credibility than an internal audit. ISO 14001 is meant to be applicable to �all types and sizes of organisations and to accommodate diverse geographical, cultural and social conditions�, although there are initiatives to make the standard more usable for small and medium enterprises (SMEs) and special requirements for forestry. It specifies requirements for an EMS to enable an organisation to formulate a policy and objectives taking into account legislative requirements and information about its environmental impacts. It is applicable to those environmental aspects that the organisation can control and over which it is expected to have an influence. It does not, however, state specific environmental performance criteria. According to the South African Bureau of Standards (SABS), ISO 14001does not establish absolute requirements for environmental performance beyond commitment, in the policy, to compliance with applicable legislation and regulations and to continual improvement. Thus, two organisations carrying out similar activities but having different environmental performance may both comply with its requirements.

ISO 14001 is applicable to any organisation that wishes to:

• implement, maintain and improve an environmental management system;
• assure itself of its conformance with its stated environmental policy;
• demonstrate such conformance to others;
• seek certification or registration of its EMS by an external organisation;
• make a self-declaration of conformance with the international standard.

The extent of the application of these requirements depends to a large extent on factors such as the environmental policy of the organisation, the nature of its activities and the conditions under which it operates.

Accreditation is a process of ensuring that an organisation or a person is competent to do what they say they do. The success of ISO 14001 will depend heavily on the consistent implementation of the accreditation criteria applied to certification bodies. Individual accreditation bodies have established, and some are currently establishing, their own criteria for ISO 14001 certification. There is a view within industry that central coordination of these criteria is required to provide a level playing field for certification. Without mutual recognition of accreditation criteria, multinationals wishing to use the same certifier internationally might face additional expenses and delays in ensuring that their certifier meets the different accreditation criteria. Another problem is that different accreditation bodies may interpret the standard as they please. The ISO Committee on Conformity Assessment (Casco) has provided guidelines for accreditation bodies to encourage consistency in their criteria.

ISO/IEC Guide 62 sets out criteria for bodies operating assessments and certification of suppliers� environmental management systems. It is intended for use by bodies concerned with recognising the competence of certification bodies. Bodies that are to be accredited as complying with the standard have to meet these guidelines. It specifies requirements, the observance of which is intended to ensure that certification bodies operate third party certification systems in a consistent and reliable manner, thereby facilitating their acceptance on a national and international basis. Another aim is to enable accreditation bodies to harmonise their application of the standards against which they are bound to assess certification bodies. The use of this guide is an important step towards the mutual recognition of relevant national accreditation systems in the interest of international trade.

Certification is a means whereby to monitor whether an organisation or person complies with the requirements of a specification or standard. It therefore addresses issues of compliance. Certification involves a great deal of auditing and verification before compliance with and conformity to stated requirements can be assumed. If an organisation is committed to responsible environmental management it can demonstrate this commitment by being certified to ISO 14001 by an independent third party.

South African consumers and clients are not very environmentally discerning. However, the importers of South African products in Europe, the US and other more sophisticated markets are forced by their customers to scrutinise their suppliers� environmental credentials. South African companies that have just regained legitimate access to international markets would be unwilling to be denied access once again, especially for environmental reasons. Shareholders, investors, insurance companies and international and commercial banks are also becoming increasingly mindful of the risks and liabilities they may inherit from financing a client company that does not exhibit appropriate environmental risk management. In addition, there is growing emphasis within southern African markets themselves on the importance of good environmental management practices. Some sectors in South Africa, however, feel that there is no need to do more than simply comply with legal requirements.

There is no doubt that any company wishing to operate in the 1990s and beyond must take its commitment to environmental performance as seriously as it does its commitment to technical and financial competence. It is in the interest of every business to monitor and track the progress being made in formulating and adopting these standards. Some business organisations in South Africa have been involved in the development of a national accreditation System for environmental management and auditor certification. Businesses in southern Africa have been informed of developments within ISO through the activities of the SABS, the Industrial Environmental Forum of Southern Africa and other initiatives. The department of trade and industry has also become involved in environmental performance activities through the funding of the South African National Accreditation System (Sanas) activities.

The South African National Accreditation System (Sanas) has been launched by the minister of trade and industry in August 1996. It is registered as a Section 21 company, and as such has to comply with certain government requirements with respect to its business and financial reporting. Most of its funding will come from the fees charged for accreditation. It is a company not for gain.

As the only national accreditation body, Sanas will facilitate the flow of international and national trade by overcoming technical barriers to trade. Its objectives are therefore:

• to ensure that South Africa has a national system for accreditation that encourages and promotes international development and cooperation and promote mutual recognition agreements (MRAs);
• to reduce the cost of international trade by minimising the possibility of multiple assessments;
• to ensure consistency and standardisation of certification bodies in their activities. An organisation will be faced with the same requirements for certification irrespective of the certifying body;
• to ensure that the national measuring system in South Africa is maintained to a standard that allows for the continued acceptance of South African test and calibration results;
• to allow a pool of expertise to be developed and;
• to give accreditation a higher profile.

Sanas has to comply with international criteria in order to ensure that the organisations it accredits will be internationally accepted. The criteria are specified in various ISO documents. Sanas will provide a mechanism for South African companies trading internationally to overcome any technical barriers that may potentially be raised against them. It is expected that in future Sanas accreditation will be recognised throughout Europe and the Far East as well as Australia and New Zealand.

Internationally the ISO 14000 series of standards have already generated interest that surpasses those of any previous ISO standards, including ISO 9000. Even though South Africa has been well represented in the development of the standards, the basis and benefits of such representation and involvement is not clear. Due to the novelty of the ISO 14000 series of standards on the environmental scene not much research has been done on the implications of these standards on industry, particularly in South Africa. It was for this reason that the research on which this contribution is based was conducted.

This research examined the potential benefits and costs (both monetary and environmental) of South African involvement in the implementation of ISO 14001. These results will help policy makers, industry and those involved in environmental and trade issues to decide whether or not to view ISO 14001 as credible and useful standards to be used as an environmental management tool in South Africa.

The aim of this research was to assess the likely positive and negative impacts of the implementation of the ISO 14001 as a formal international environmental standard on selected South African industries.

Interviews were conducted with: managers of industrial associations, South African representatives on ISO TCs, government officials, representatives of environmental non-governmental organisations, representatives of all certification bodies and standards associations in South Africa and representatives and environmental managers of industries implementing ISO 14001 located within the Gauteng area. Names of industries that have been certified were obtained from the various certification bodies. Other industries that have not yet been certified but are in the process of setting up their EMS were interviewed telephonically. Some names of these companies were obtained from the Industrial Environmental Forum and the Chemical Industries Association membership. Three sets of questionnaires were also administered to environmental non-governmental organisations, certification bodies and environmental managers of industries implementing ISO 14001. The questionnaire for environmental non-governmental organisations (NGOs) sought to assess:

• the level of NGO knowledge about ISO 14001,
• the level of ISO 14001 credibility amongst NGOs,
• to which extent ISO 14001 certification is likely to be used as a trade barrier.

Certification bodies were asked questions about:

• their countries of origin and areas of expertise
• benefits of ISO 14001 certification
• costs associated with certification
• whether ISO 14001 certification has the potential to be used as a trade barrier

Industries that have already been certified or whose EMS was at an advanced stage were asked questions about:

• their areas of activity
• the destination of their products
• whether or not their customers demanded certification to any standards
• whether or not they are ISO 9000 certified
• why they are or would like to be ISO 14001 certified
• the benefits of ISO 14001 implementation and certification
• the average costs of certification
• their choice of certification bodies
• whether ISO 14001 certification has the potential to be used as a trade barrier.

What emerged from this research was that the business sector was addressing environmental issues in a consistent and systematic way and not as an ad hoc activity. Industry has shown considerable interest in the implementation of ISO 14001. In the initial stages the most visible application of ISO 14001 has been by those companies that trade internationally, mainly in the energy, manufacturing, pulp and paper and automotive sectors. Table 1 shows the number of industries that were already certified or were preparing for certification as of July 1997.

Respondents revealed that most industries share a common need to implement and become certified to ISO 14001. The highest ranked reason given for the need for certification was the need to access and maintain international markets after the lifting of sanctions.

For the packaging industry there are no environmental requirements within the domestic or the export market. The company interviewed was competing with 10 other South African companies. It viewed its certification to ISO 14001 as giving it a competitive edge on the market both at home and outside of the country and has already carried out an aspects and impact analysis.

The two pulp and paper companies that were part of the research project had a significantly wide export market. Other environmental requirements in their sector only pertain to afforestation permits, water quality requirements, bio-diversity, landscape aesthetics and the use of herbicides. The companies identified the Forestry Act, the Environmental Conservation Act and the Agricultural Resources Act as being very important in this sector. The two companies face more than 100 competitors world wide, therefore they would want to use all the latest marketing tools, one of these being ISO 14001 certification.

There are no environmental requirements from customers of the automotive industry, although the issue of gas emissions has become of concern. One of the two companies indicated that the issue of emissions has partially been addressed by the introduction of unleaded petrol in South Africa. Other customer requirements in this sector are product specific. International competition in this sector is fierce and both companies have used ISO 9000 and ISO 14001 as import marketing strategies to satisfy suppliers.

The energy sector is one of the most controversial in South Africa because of its negative environmental impact, hence the interest in demonstrating its commitment to good environmental management. However, there are no environmental requirements from South African and southern African customers. There is also very little competition in this sector.

The petroleum sector faces no market requirements for ISO 14001 certification, but the need to improve its profit opportunities has been the main reason for certification. One citrus company indicated that although there are no environmental certification requirements in its export markets, it had to pay more attention to its environmental impact due to increasing competition in the citrus market.

The South African wastes management sector has had a poor history of environmental management. Currently, there are very few companies in this sector. Due to the mismanagement of wastes countrywide, one company has turned to ISO 14001 to show its commitment to better environmental management as well as to improve its image.

The need to save resources is not the only reason why industries implement ISO 14001 as this could still be done without certification. One company director revealed that the bottom line for any company should be �sustainable competitive advantage�, derived certification to and implementation of ISO 14001. From a business point of view the most important issues are technology, raw materials and the market. If any company lacks a clear stance on all three then it does not have a sustainable competitive advantage to help it to do business in the long term. He therefore noted that:

it is very important for all those interested in ISO 14001 to understand that the EMS should help a company manage its business risks in the environmental field. If used for anything else it is doomed to fail. It is therefore important to understand what makes business tick and how business makes money. Top management is generally not interested in soft issues but only with the bottom line figures. They want to know how ISO 14001 is going to help them get profit. These systems are not just nice to have but are essential elements of overall business management. ISO 14001 has all the important elements and has an internationally recognised system that can be tested.

One of the reasons for ISO 14001 certification cited by the motor industry was that of international pressure. However, there are more pressures based on product specific requirements than on environmental pressures in this sector. One of the two companies interviewed saw the need to save resources like water and energy and they aimed at using an EMS to realise this.

Ten companies said that they had south or would seek ISO 14001 certification because of the expanding markets in their respective sectors and also to be recognised internationally as leaders in safety, health and environmental responsibility, as well as to boost the image of the company. Even though the ISO states that ISO 14001 should not be used as a trade barrier, companies expressed the concern it will inevitably be used as those who are not certified. Getting certified at this stage is therefore a precautionary measure.

Most industries see the ISO 14001 EMS as embodying important elements of good environmental practice. The implementation of an EMS is seen as a business decision to derive financial benefits from business credibility. The implementation and certification of an EMS is seen by business as a way of managing potentially high-risk environmental impacts, and therefore as being practical and useful.

Business world wide has sensed the need to be more open, to communicate better and to report more regularly to stakeholders. Implementing an EMS and getting ISO 14001 certification is a way of keeping abreast with international developments and what the rest of the world is doing. In this way, companies see themselves gaining financially from being pro-active.

In some cases ISO 14001 certification has been a requirement from customers or suppliers. One company that has subsidiaries in the petroleum, chemical and mining sectors indicated that the company had experiences where suppliers or customers demanded proof of implementation of ISO 9000 and responsible care. Therefore, this company does not want to wait until proof of ISO 14001 certification is demanded. It would rather phase in the EMS at its own pace so as to avoid financial shock to the company should it wait until it is being pressurised to implement the EMS.

This company also revealed that it has not yet started demanding ISO 14001 certification from its suppliers, as it would want them to have ample time to put their systems in place and also to make future projections taking ISO 14001 into account. However, in the near future the company would start demanding ISO 14001 as a prerequisite for doing business because it is the only way of levelling the playing field. It thought that all other environmentally conscious companies should seriously start thinking of �spreading the misery� -- ISO 14001. If this happens, it will have a direct bearing on the ability (in monetary terms) of small companies to implement and get certification for ISO 14001.

There is an understanding within industry that companies that do not go the ISO 14001 route may find their lack of an EMS being used as a trade barrier, especially if they export an intermediate product, the importer of which may require that the supplier be certified. One automotive industry that was interviewed revealed that ISO 14001 is being used for strategic reasons, linked to the ability of the company to access and maintain export markets in industrialised countries such as Japan and Europe, as well as the industry�s need to import from these markets.

Of the eighteen companies that responded to the questionnaire, eight favoured the use of international certification bodies, six favoured the local certification body and four were unsure of their choice. The main factors that influence a company to choose one certification body over were listed as:

• cost,
• hearsay,
• international reputation,
• service excellence and experience,
• ability to meet customer requirements,
• customer familiarity with the certification body,
• the certification body�s knowledge of local legislation and culture,
• the company�s previous ISO 9000 relationship,
• the credibility of the registration scheme and its auditors,
• the track record, ethical responsibility and references of the certification body;
• the accreditation held by the certification body and,
• in the case of multinational companies, the acceptance world wide of the certification.

All the companies that are ISO 9000 certified have used or are going to use the same certification body for ISO 14001 certification. Some expressed concern that local certification may not be accepted by customers in Europe or elsewhere. Companies that favoured external certification bodies cited the problem with local bodies to be a lack of continuity in the kind of service provided to companies due to staff turnover. Such companies said that they prefer certification bodies that have had international recognition for a long time. Before certifying with the SABS, many companies first wanted to examine the bureau�s auditing practices. There is a perception within industry that the SABS was slow to catch up with ISO 14001 certification and that initially there was confusion about the role of Sanas. Some companies have recommended that the SABS open offices abroad as a way of advertising themselves and getting international recognition. However, because of the weak South African currency, it might be more cost-effective for the SABS to remain in South Africa.

Most of the certified companies consider it cheaper to be certified by an national certification body that has international links or origins than to be certified by an international body. The cost of using locally based certifiers with international links is about 25 per cent of the total cost of importing certifiers. The trend has been for companies that are interested in international trade to seek certification by internationally known bodies. However, there are some companies that favour certification by the SABS because of its understanding of the local culture and environment. The fact that the SABS is a local organisation also means that its service is easily available and that it can guarantee continuity.

Companies that have been or are going to be certified by international certification bodies said that the cost of certification by an international body are worth the extra cost because a company immediately assumes international status. They added that from a short-term point of view one would prefer using local certification bodies such as the SABS as this would cut the costs associated with using external certification bodies. Table 2 describes the certification bodies that are currently operating in South Africa.

ISO 14001 is an expensive system and very time consuming. As long as stringent international regulations are developed to improve environmental management there is a cost involved to the companies and the cost affects the competitiveness of a company. When environmental legislation is less strict and/or when companies ignore such legislation, there is a high possibility that their goods may be rejected on the international market. Both industries and certification bodies agreed that initial internal costs of implementing an EMS which complies with the requirements of ISO 14001 include time to put the system in place and capital equipment to improve pollution control measures. The cost of implementing and maintaining an EMS is much higher than that of once-off certification. Certification bodies and companies said that they expected, as more companies seek ISO 14001 certification, that competition will lead to a drop in prices, although initially certification will be very expensive. The various companies who were asked to indicate the costs of actual certification gave the figures shown in Table 4.

C = Certification costs
Y = Yearly EMS implementation costs from time of certification (meeting the ISO 14001 requirements)
X = Not sure of cost

Many companies and all certification bodies declined to reveal the costs of certification as they considered this information to be confidential, and five companies were not sure of the costs of certification and EMS maintenance. Companies that have full-time environmental managers to prepare their systems for certification said they pay less in the long run than those that bring in consultants to develop their systems for them. Companies that have had to develop their EMS from nothing said that they have had to pay more within a short period than companies that developed their EMS over a long period and have only had to pay slightly more to meet the ISO 14001 requirements. Most companies stressed that it is important for the manager of the EMS to have a good knowledge about the company if the system is to be implemented effectively and a comprehensive review is to be carried out. The same companies added that it was better to get in-house people to work on the system first and then to use experienced consultants for an objective review before seeking a certification audit. In the experience of most companies the system will not work unless there is a full time expert to implement it. All the companies that were interviewed agreed that the managing director has to make human and financial resources available for this purpose. They thought that this process should also give companies a chance to take a closer look at their operations.

Certification bodies cited the following factors that affect the total amount that a company has to pay for certification:

• The size of an organisation as well as the location of the company in relation to the certification body.
• The complexity of a company�s manufacturing processes and products will influence cost. The more varied and complex a company�s activities are, the more time is needed for auditing and the costly it becomes. Five certification bodies indicated that it is more costly if a group of companies seeks to certify all its subsidiaries at the same time or to combine ISO 14001 with other standards or/and requirements.
• The market requirements of a company will also affect the amount of time required by an EMS audit and this will directly affect the cost of the certification process.

Personnel training can be expensive, but it is crucial to get all employees involved if the EMS is to succeed. At the beginning, most companies might be in a position to afford the once-off payment for certification. However, maintenance of the system over a long time might be too expensive as the fortunes of a company fluctuate in response to market forces. In this case, environmental management might be the last system that a financially struggling company will be willing to sustain.

One organisation commissioned a research and development programme to provide information on the environmental impact of its activities as well as other EMS-related issues on a constant basis. Additional documentation, procedures, training and knowledge of the legal requirements were commonly cited by the 18 organisations that were interviewed as escalating the costs of certification. One company mentioned that it had to initiate a computer based data management system to facilitate the management of its EMS information.

On the international market ISO 14001 is a negotiating tool and can help companies to access global markets. Certification is also seen as a way of satisfying customer and investor demands. Some companies hope to decrease their potential liabilities and gain insurance benefits. In the long term ISO 14001 could help to protect the assets of a company. One company in the chemical sector indicated that its premiums had been reduced because of its certification to ISO 14001. Certification can also lead to more acceptability as a business partner both nationally and internationally.

The companies and individuals that participated in this research cited the following benefits to be derived from the implementation of and certification to ISO 14001:

• It would lead to optimal resource use and bottom-line environmental responsibility.
• It would be a demonstration of due diligence and responsible citizenship.
• It would reduce resource and service utilisation.
• It would give impetus to a company�s training programme and would assist it in identifying its training needs.
• It would be good business management because it gives value to a company�s assets.
• It would be a good sales tool which, if well implemented, can help reduce environmental risk, improve environmental performance and pollution prevention and improve a company�s image.
• It would lead to cost reduction through re-engineering of the company�s activities to develop environmentally friendly products.
• It would assist companies in building better relations with their local communities and enhance their relationships with regulatory bodies.
• It would show credibility and help a company to reduce the cost of non-conformance to environmental standards.
• It would assist companies in their compliance to legislation and reduce the possibilities of breaching legislation in future.

ISO 14001 is seen as having no benefit in the short term, but rather as a long-term investment. Some interviewees identified as a problem that South African companies are not so far sighted enough. They generally have five-year business plans and an EMS will not yield any benefits within this timeframe. They advised that companies start planning business for the next 20 to 50 years if they are to realise the benefits of ISO 14001.

One company with three subsidiaries sees its ISO 14001 certification as a motivational tool for staff. The company has not yet realised any market benefits but is content to have had some publicity. It estimates that cuts in losses resulting from ISO 14001 and implementation and certification has resulted in a 10 per cent increase in profits and as a result, all its plants will have to be certified by 1999. The company says it is getting more cooperation from contractors both nationally and internationally and feels that it is in a better position in terms of competitiveness. Research carried out by the company throughout its subsidiaries indicated that there is a better culture of environmental awareness and these subsidiaries have become easier to manage.

All six NGOs that participated in the research held the view that the development of the ISO 14001 standard has not been participatory enough. An industrial association representative, however, pointed out that in the history of ISO, with the development of standards such as ISO 9000, the approach has always been that because it is a voluntary standard it involves mainly the affected stakeholders, which in this case was business. She added that although few NGOs would have had the means to become involved in this process, they should still be able to participate in principle.

A consultant pointed out that the ISO 14001 standard requires that industry �takes the views of interested parties into account� but it does not require the active involvement of these parties. Industry only has to provide its environmental policy to the public. This is where the credibility of ISO 14001 will become questionable which is why most NGOs held the view that other stakeholders should also question its credibility and that industry should demonstrate that it ISO 14000 is not just a certificate. NGOs can therefore help to monitor industry�s performance, especially given that there are no performance standards. If one company has a high and another company a low performance standard, both can get certified. ISO 14000 does not guarantee their environmental responsibility, but only that they have the systems and controls in place to achieve whatever levels of performance they set for themselves since it does not give the public the right to monitor the process. Some NGO respondents thought that the interest and involvement of NGOs would further improve the implementation of ISO 14001.

Industry also feels that ISO 14001 can actually bridge relations between government, NGOs and the private sector. Since business as a sector has decided to be more open, to communicate better, and to report more regularly, this can lead to more trust because previously industrial secrecy has been one of the primary factors leading to mistrust in environmental management. If information is presented in a formal, systematic and consistent manner, this can allow the public to make comparisons in a verifiable manner. Therefore, the further ISO 14001 develops together with auditing and reporting the more the public will understand the information and thereby improve the relations between social groupings.

There is very superficial knowledge of the development of ISO 14001 within the NGO sector. Most of those interviewed were not sure if the implementation or certification to ISO 14001 by South African industries would strengthen environmental management or have an impact on environmental policy and legislation. There was also a clear message from five out of six NGOs interviewed that �under no circumstances should industry be trusted with self-regulation�. Some NGOs said they did not know enough about ISO 14001 to say whether or not government should support it.

Only one NGO representative knew how ISO 14001 was developed and thought that the standard can help in the development and implementation of a national environmental policy. Another representative felt that industry could be trusted with self-regulation only if the following were in place:

• a national duty of care legislation,
• a national register of wastes producers,
• a national �wastes manifest system� and
• an integrated pollution control wastes management policy.

This NGO held the view that government should support ISO 14001 because it will promote effective self-regulation if there is legislation in place. Certification implies continuous improvement of environmental management and it would assist in international trade. It is also positive that ISO 14001 should have an impact on international trade because non-certified companies may be excluded which will force them to implement an EMS, thereby promoting local environmental management. However, it could also be considered as a barrier to international trade imposed by the developed countries on developing countries and global trade may in the near future be limited to those large companies and multinational companies who can afford to implement an EMS.

Consultants can help industry to unpack the ISO 14001 �black box�. They also play an important role in changing the mind-set of companies that have until now not taken environmental management seriously, to see their operations in environmental terms. Some companies will need help with preliminary studies and the identification of their environmental impact and aspects. Other companies already have procedures in place and therefore consultants will have to focus on early implementation procedures.

Some sectors of industry fear that consultants may raise the standards to levels that are artificially high because of potential self-interest. In some sectors there are rumblings that some consultants are still not fully aware of the practical aspects that need to be addressed when developing an EMS. In this regard, consultants have the potential to make ISO simply a bureaucratic exercise with people focusing on documents and manuals and therefore becoming both expensive and useless. Much will also depend on the auditors of the EMSs.

If a company is ISO 9000 certified it can be very strenuous to change ISO 9000 to incorporate ISO 14001, especially in the identification of impacts and aspects and setting up structured responsibilities and awareness.

Fifteen out of 18 companies implementing or certified to ISO 14001 are ISO 9000 certified. All these have and that they are going to be integrating ISO 14001 and ISO 9000 because it is too expensive to maintain the two separately. Companies that subscribe to responsible care also indicated that they would integrate ISO 14001, ISO 9000 and responsible care and safety and health measures. The main reason for the need to integrate the system is based on the fact that all these systems have some common factors, which could assist companies to save resources if they implemented and maintained the systems as one entity. For example, it is estimated that ISO 14001 covers 20 per cent of responsible care, but does not address issues of safety and health, community involvement, product stewardship and transportation. Some industries view responsible care as covering only 25 per cent of the ISO 14001 elements and therefore see ISO 14000 as providing added value to responsible care. One of the companies in this study has integrated health and safety regulations, the National Occupational Safety Act, ISO 9000 and ISO 14001.

There is a general consensus that ISO 14001 will be easier to put in place for companies that already implement ISO 9000 because they already have the management procedures and documentation in place. The latter is considered to be a very laborious task. However, ISO 14001 should not be driven by the same people who implement ISO 9000 as the former requires a totally different mind-set. The two need to be initially separated so as to put relevant emphasis on environmental issues. Most interviewees view it as important to convince the management of a company that having a system in place is necessary before implementing the system. Organisationally, the main aim of most companies is to protect their assets and to look after their balance sheets. Currently, remedial costs are not disclosed as a liability in the financial statements. However, with ISO 14001 there is a need to protect the assets of the company, including its finances.

Some leading industrial forum representatives cited the fact that they want to be pace setters in environmental management. They added that the position of government has always been that if it does not lead industry, industry will lead it, and this is what has happened with ISO 14001. They added that this is why industry tries at all times to consult with all the relevant ministries and departments such that of environmental affairs and tourism and water affairs and forestry. In this way, policy-makers and ministers will also understand what is happening in industry and what is affordable thus preventing policies from hindering economic development.

Most interviewees from industry thought that the role of government should be to set up political avenues to deal with these issues as they undoubtedly affect trade and the competitiveness of South African goods on the international market. They added that the government should view ISO 14001 as an important system of regulating the effects of trade on the environment. Industrial representatives singled out the department of trade and industry, saying the department should start looking at building environmental issues into its trade policies and the focus should be trade facilitation because trade partners are interested in environmental issues and so are industry associations.

Another view from industry is that ISO 14001 sets out some structured thinking for government and national industrial activity the same way that the Integrated Environmental Management (IEM) process did. Government should therefore begin to analyse the situation and develop policy accordingly and at the same time help companies to change their mind-set. This will enable them to view their operation in environmental terms.

Some NGO respondents said that it was difficult for companies to object to trade barriers based on environmental performance. They thought that companies should incur environmental costs or should even be forced to take due cognisance of the environmental impact of their activities, otherwise they should be pushed out of the market. They added that trading partners should assist their poorer partners to implement ISO 14001. Most interviewees agreed that it would make sense for authorities to give incentives to companies that adopt ISO 14001. It would give the authorities the assurance that issues are being addressed, enabling them to focus on companies that are not certified. Companies would also need to be checked less frequently, for example random checks every three years instead of annually. It is considered to be in the interest of authorities that a body of companies consistently and systematically addresses environmental issues. In principle, having the system in place will not take away the problems, but will increase the probability of having good management to address a crisis when it occurs.

A few government officials indicated that there is a need for South Africa as a nation to have IMR if the country�s goods and services are to be accepted internationally. Some interviewees from industry thought that government policy needs to start referring to ISO 14001 and that pressure should be put on government to start adopting the principles of ISO 14001.

Even though there was a general response that small companies need not implement an advanced EMS, all interviewees and questionnaire respondents were concerned about the cumulative negative impact of these on small companies. All respondents said that the small industries should at least have the basic environmental management infrastructure in place to meet the minimum legal requirements. Industrial representatives felt that in theory ISO 14001 is applicable to both big and small companies but in practice it is going to appeal more to complex companies where there is a more obvious need to implement such a system. They added that successful implementation of an EMS in those companies may cascade down to smaller companies. They also felt that much would depend on the approach of other stakeholders and the support they give to this process.

It is clear from the results of this study that interest in the implementation of and certification to ISO 14001 is not confined to any sector of industry. However, those companies that are interested in the international market are at the forefront of certification. The underlying reason for interest in ISO 14001 has been the need to access and maintain international markets. Some companies have also indicated that they want to prove their commitment to effective environmental management. They study also showed that currently there are very few market demands for ISO 14001 certification. It appears though as if industry would want to pre-empt these demands in the event that they become a reality. Whatever the reasons for the interest displayed in ISO 14001, they can be directly linked to industry�s basic need to remain in business.

Even though the International Organisation for Standardisation states that ISO 14001 should not be used as a technical barrier to trade, about 98 per cent of all the participants in this research said that they thought that ISO 14001 has the potential to be used as a trade barrier. It is for this reason that companies seek certification by international certification bodies that are already well known. It is therefore important that in the interest of promoting South African trade, Sanas should start promoting mutual recognition agreements. This would reduce the cost of international trade by minimising the possibility of multiple assessments where a local certification body has been used.

The cost of preparation for certification can be very high for those companies that are starting to develop an EMS. Most companies considered the actual certification costs to be reasonable, but indicated that the implementation costs can be prohibitive for SMEs and therefore the question of subsidising these enterprises should be considered by government and trading partners.

There is very superficial understanding of ISO 14001 within the NGO community and government. Some interviewees suggested that for this system to be understood and get the support that it deserves, an educational initiative is needed although respondents were unclear whether industry or government should initiate such an initiative. Some respondents proposed a similar initiative for small and medium enterprises that lack both the necessary funds and sufficient environmental awareness to implement ISO 14001.

ISO 14001 has many implications for South African industry. The most significant ones are linked to the competitiveness of companies on the international market, the need to do business in an environmentally friendly manner, the ability to meet government regulations and above all, the need for companies to remain in business.

Aaron Cosbey
Although ISO 14000 could act as an indirect trade barrier in the case of small and medium enterprises (SMEs) due to the high cost of certification and implementation, it is essentially a voluntary measure undertaken by companies and is mainly consumer driven. However, one can safely predict that it will in due course become a sine qua non for all companies. While the ISO can be considered a form of self-regulation by industry, government still has a responsibility to monitor and regulate the environmental impact of industry. Governments should therefore subsidise ISO 14000 certification and implementation costs in the case of SMEs. In terms of intergovernmental regulation of industry, the WTO does not formally recognise the ISO 14000 and can therefore not serve as a dispute resolution mechanism where differences over implementation arise.

Catherine Fedorsky
The ISO family comprises Environmental Management Systems (EMS), an auditing component, eco-labeling, environmental performance evaluation, life-cycle assessment and definitions. The challenges posed by the ISO are to tie together the different MEAs, the ISO and various national and regional environmental initiatives; to change national policies and standards; to examine sector-specific implementation and to increase an awareness of environmental standards and conventions. Benefits that can accrue from ISO certification include technology promotion and transfer, improvement in quality of life for all people, the creation of opportunities for joint ventures and partnerships, diversification of business and greater responsibility and accountability of the various industrial sectors.

Many pitfalls could stem from ISO certification. SMEs may find it difficult to meet the requirements of international standards due to limited resources and lack of capacity and certification could initially lower export capability and revenues from exports for industries. ISO certification could also make South African industry less attractive for international investors. Finally, national legislation might be inadequate to enforce environmental standards.

The impression is often created that the South African government is not pro-active in the negotiation of MEAs and that it places too much emphasis on legal and technical aspects to the detriment of developmental issues. The reason for this is that it lacks sufficient capacity to negotiate these agreements.

The DTI does not have a mandate or the capacity to monitor, control and inspect environmental standards, but it does have a mandate to reconcile trade and environmental interests. Workshop participants suggested that some form of national debate on the content and implications for South Africa of MEAs should be institutionalised, following the example of the Consultative National Environmental Policy Process (Connep).

Regarding the implementation of trade restrictions for environmental protection, appendix one of Cites does not allow the use of unilateral actions to protect its listed species, but the Convention specifies that a certain process be followed to ensure such protection. First, proposals for inclusion of species in appendix one, conforming to specific criteria, are received from all signatories to the convention. All parties then discuss the merits of these proposals before voting. A two-thirds majority vote is needed for a species to be classified under appendix one. There are several management procedures in place to deal with trade in such species -- a selected management regime can often become a separate resolution. With regard to wildlife protection in southern Africa, it is imperative that SADC member countries follow a cooperative approach to trade in species in the region and coordinate the use of natural resources. A case in point is the SADC Wildlife Protocol that is presently under negotiation.

The current policy situation in South Africa regarding the trade in species can at best be described as fragmented. For example, there is no departmental coordination on trade in timber or medicinal plants and since 1990 no South African government department has been tracking trade in timber.

It was suggested that trade restrictions should not be viewed as the ultimate solution to phase out the use and consumption of CFCs as stipulated by the Montreal Protocol, but that alternative measures should also be explored such as joint implementation of the protocol where developed countries transfer �clean� technology. This would lead to a win-win situation. This debate on environmental regulation measures should also attempt to measure short-term adjustment costs of a ban on carbon dioxide-emitting exports, against the long-term costs of climate change as a result of inaction.

South Africa applied to be reclassified as a developing country under the Montreal Protocol because it currently has no political home in the protocol; it is part neither of the Organisation for Economic Cooperation and Development (OECD) group of industrialised countries, nor of the Group of 77 (including China). Should South Africa succeed in its bid for reclassification, it will not retreat from its commitment to phase out HCFCs by 2030, but will henceforth be held to a different schedule. Thus, South African companies that have already ceased CFC-emitting production will not be negatively affected by such a development.

In the survey examining South African industry and environmental regulation, it was found that many firms understood changing market structures and followed pro-active environmental policies. For example, Eskom started implementing an environmental management system (EMS) long before ISO 14000 has been finalised.

Participants agreed that ISO environmental standards could also be problematic for various reasons. Firstly, one has to critically examine the agendas and motives of those who are setting environmental standards, namely developed country representatives, environmentalists and lawyers, as well as western consumers. Secondly, companies often do not understand or are unable to quantify their production waste. Lastly, while environmental management systems aim to establish a commitment to continuous improvement of environmental standards, they are mainly concerned with management and not environmental standards. ISO 14000 does thus not purport to set environmental standards, but will hopefully enable a company to deal systematically with environmental waste, thereby assisting companies to internalise environmental externalities.

The following research topics were suggested:

• An inventory of SME exports as well as an examination of their vulnerability to environmental regulation
• The relationship between the implementation of ISO 14000 and competitiveness
• The relationship between the implementation of ISO 14000 and eco-efficiency.

Lael Bethlehem

Environmental concerns have become an established feature of international trade. Consumers around the world (but especially in Europe and North America) are increasingly making choices on the basis of the environmental impact of products. Governments are imposing restrictions on what can be brought into their countries, and multilateral bodies, ranging from the World Trade Organisation (WTO) to the United Nations (UN) and the International Standards Organisation (ISO), are becoming deeply involved in the trade and environment debate.

At the centre of this debate is a problem about how to regulate environmental impact. Each country imposes different environmental laws on its own producers, and environmental standards differ radically between countries. When countries trade with each other they import not only a product or service, but the embodiment of a production process. The production process in the exporting country may have very different impacts on the environment -- either on the local environment in which it is made, or on the environment of the country into which it is imported and eventually disposed. Given that the actual harmonisation of environmental standards between counties is very difficult, countries have found other ways to influence the environmental performance of companies from which they import. This is done through multilateral environmental agreements and domestic regulations aimed at entering products and international management standards.

For a country like South Africa, environmental trade measures under international agreements are fraught with dangers. There are certain specific features of the South African economy that could make the country vulnerable to environmental measures. Firstly, it has a high concentration of energy intensive industries and many of these are active in export markets. These industries draw their energy from coal-fired power stations and enjoy the lowest electricity prices in the world. Any action against coal-fired energy (for example, as a result of greenhouse emissions,) could have a significant effect on exports. Secondly, due to the low levels of investment in the South African economy (and particularly in manufacturing) from the mid-1980s to the early 1990s, capital stock in industry tends to be old. As a result, environmental protection technologies that have been built in to newer capital equipment are often missing. The investment required to install these in some sectors is considerable and may place a large burden on companies in certain industries. Thirdly, the environmental regulatory system is weak and environmental standards in many sectors are lower than they might be with better enforcement of environmental regulation.

But international environmental pressures may also benefit South Africa by raising the environmental performance of South African exporters. In the face of regulatory weaknesses, environmental trade measures could be helpful because they will exert pressures on export companies ensuring that they raise their environmental standards more quickly and decisively than they would otherwise. In theory then, environmental trade measures may be seen as a double-edged sword that is as capable of damaging South Africa�s process of development as it is of improving exporters� environmental performance.

Given the international debate and the potential impacts that we have identified in theory, what are the experiences and expectations of companies active in the export market? This study set out to explore these experiences by interviewing 20 South African export companies in 12 sectors. The companies were interviewed not only about strictly defined trade measures but also about the effects of all forms of international environmental pressure.

The twelve sectors represent a sample of South Africa�s largest exporters and include energy intensive sectors, commodities, agriculture and manufactured goods. The main issues in each sector, as revealed in the interviews conducted, are summarised below.

Electricity provision in South Africa is unusual for two reasons. Firstly, a very high proportion of the country�s energy is provided by coal-fired electricity as opposed to a greater mix of supply. Secondly South Africa�s electricity is very cheap. At present Eskom supplies the world�s cheapest electricity to high-load users and has committed itself to lowering the real cost by a further 15 per cent by the year 2000. In addition, Eskom currently has an over supply of generating capacity. These factors make South Africa an attractive place in which to establish energy-intensive industries. South Africa�s large and fairly easily accessible coal reserves will ensure that cheap, coal-fired electricity is available for many years to come. But coal-fired generation has an important impact on the environment, especially in terms of air quality, water quality and consumption and waste. All of these clearly impact on the environment and on human health in South and southern Africa. But for the purposes of this paper, we will concentrate on those that are of global concern, since they are most likely to affect trade issues. This means focusing largely on air emissions. The concerns that are currently most strongly on the international agenda are the emission of greenhouse gases (especially carbon dioxide), substances contributing to ozone depletion (chloro-fluorcarbons - CFCs) and substances contributing to acid rain (SOx, NOx). Greenhouse gases, in particular, have come under the international spotlight because of concerns about the potential effects of global warming. In 1990 South Africa emitted 1.4 per cent of global carbon dioxide emissions and Eskom was the single largest contributor to this.

Within the context of continued use of coal-fired stations, Eskom has limited options for abatement of carbon dioxide. It is impossible to prevent its emission from a coal fired station altogether although it is possible to become more efficient so that less carbon dioxide is emitted per unit of electricity generated. However, even with improvements in efficiency, carbon dioxide and other gaseous emissions will continue to rise in absolute terms as the demand for electricity rises.

The introduction of environmental abatement technologies is related to the price of electricity. Cheap electricity is an important comparative advantage for South African industry and, indeed, Eskom is actively promoting the establishment of energy intensive sectors (such as aluminium) in South Africa. Eskom�s environmental impact and the concentration of electricity intensive industries in South Africa make the country�s electricity intensive sectors potentially vulnerable to international trade pressures.

In our interview, however, Eskom said that it had not been under any pressure from its electricity intensive export customers with regard to its environmental performance but that international environmental pressures were reaching the company in other ways. Eskom is acutely aware that greenhouse emissions are firmly on the international agenda and have the potential to impact on South Africa�s trade relationships. But so far, Eskom seems to be adopting a �wait-and-see� attitude.

The United Nations Framework Convention on Climate Change (UNFCCC) has set out a programme to limit greenhouse gas emissions internationally. At present, a small number of mostly developed countries contribute the lion�s share of carbon dioxide emissions. In 1990, for example, the USA alone contributed 23 per cent of global carbon dioxide emissions. There is, however, no clear relationship between a country�s level of development and its emissions. South Africa�s emissions were about one-third higher than those of Brazil which is a much bigger country at a similar level of development.

The UNFCCC assigns different responsibilities to OECD countries, countries with economies in transition and developing countries. Operating as a developing country under the UNFCCC, South Africa�s immediate responsibilities do not involve setting targets for reductions in emissions, but include commitments such as the sharing of information on emissions; tracking carbon sources and sinks and developing a strategy to reduce emissions.

There is therefore no immediate pressure to substantially reduce our greenhouse emissions. Instead, we need to establish information systems and develop a strategy for the future. In the medium term, however, South Africa is likely to come under some pressure to limit greenhouse emissions since targets and other commitments may be set for middle income developing countries.

While there is no immediate pressure to substantially reduce the country�s greenhouse gas emissions, South Africa is likely to come under some pressure to limit greenhouse gas emission since targets and other commitments may be set for middle-income developing countries.

Two companies were interviewed in this sector. The first manufactures primary aluminium and exports about 50 per cent of its product, mainly to Japan, Korea, Malaysia, the Middle East and Africa. The second produces rolled aluminium products and extrusions and exports about one-third of its production, mainly to North America and East Asia.

Both companies were aware of a range of general environmental pressures including local regulation of emissions and effluent. However, neither company had experienced significant pressures in the export market. Both companies were aware of the discussions on the development of an environmental standard under the International Standards Organisation (ISO) and both expected to apply for accreditation once the standard is in place. They were aware of a general increase in environmental pressures and perceived the international industry to be increasingly concerned about environmental issues. One of the companies was, for example, in the process of developing a comprehensive environmental policy, partly to prepare for a major new investment. The aluminium sector is vulnerable to international environmental pressures because it is extremely energy intensive. This is especially important for one of the companies, since the price it pays for electricity is pegged to the international aluminium price. In this way, its electricity costs remain stable relative to the prices of its product and this is a major advantage. Any attempt to restrict trade access on the basis of �dirty� energy would have a major impact on the aluminium sector. However, neither company seemed to be aware of this possibility.

Two companies were interviewed in this sector. One is a producer of a wide range of chemicals and chemical products. Its exports are concentrated in particular product markets -- some of which are exported in large quantities (up to 40 per cent of production) -- mainly to the EU, North America, Latin America and Australia. The other is a producer of petrochemicals and general chemicals. It is currently attempting to raise export levels and is especially active in the EU, North America, Latin America and East Asia.

Neither company has experienced strong pressures or restrictions to market access. However both companies have received queries about potential hazards involved in the use and degradation of their products. Both have been asked to fulfill special protection and labeling requirements for the transport of their products, and this has required specialised packaging. Both are aware of or involved in the discussions on the ISO 14000 series and both expect to apply for accreditation. Both companies see environmental issues as increasingly important to their ability to capture and maintain export markets in the long term. One area where the sector has made a major adjustment is in the process removing CFCs from their production. Action was taken in the wake of the Montreal Protocol to phase out CFC production.

Both companies believe that there will be increasing environmental pressures in the sector and that, internationally, companies will assume more and more responsibility for the products, from cradle to grave. The companies pointed to various environmental initiatives in the sector internationally. Keeping pace with international trends can involve large investments. One of the companies has decided that all new plants in the group will be built to international environmental standards, partly to ensure that products will be able to meet the requirements of the export markets. But older plants present more of a problem because of the cost of retrofitting.

The chemical sector, more than most, faces environmental problems both in South Africa and internationally and is affected by international agreements and environmental campaigns. Both companies pointed to agreements such as the Basel and Bamako Conventions (which regulate the transport of hazardous waste), and the Biodiversity Convention. The sector as a whole is a major contributor to greenhouse gas emissions and would have to be integrally involved in any plan to reduce greenhouse gas emissions under the UNFCCC.

The industry is also affected by the international environmental campaign to ban the use of persistent chemicals such as DDT, PCBs and chlorine. According to the companies, the dangers of DDT and PCBs have been widely recognised and their business would not be severely affected by an international ban or restriction on their use. Other persistent chemicals like chlorine and polyvinyl chloride, however, are much more integral to the business of the chemical industry as it is currently structured and severe restriction would have �a major impact on our business�.

One company was interviewed in this sector. It is a major coal producer and exports 30 per cent of its production to a variety of markets in the EU, East Asia, North America, Latin America, the Middle East and Africa. The company is aware of growing environmental concerns in the industry.

Internationally, coal fired power has come under some pressure with regard to its environmental impact and, especially, its contribution to greenhouse gas emissions and acid rain. This pressure may, in the long term, affect international coal consumption. At present, however, international coal consumption is not being negatively affected. The world market for coal is expected to grow by about 30 per cent by the end of the century and South Africa�s coal exports are likely to follow the trend. The world coal market is, however, increasingly demanding low-sulphur coal because of concerns about sulphur emissions and environmental regulations. South African coal deposits are low in sulphur that places the country at an advantage relative to many competitors.

The coal sector is potentially vulnerable to environmental trade measures, especially in the form of a carbon tax. The company does not, however expect carbon taxes to be widely introduced in the foreseeable future. If international coal consumption does decline, South Africa could be badly effected since coal is a major export and, indeed, a major employer. However, it would be in a slightly better position than many other coal exporters due to the relatively lower sulphur levels in South African coal.

Two companies were interviewed in this sector. Once produces manganese and exports 85 per cent of its product. The other produces platinum and related products and exports over 90 per cent of its product. Both export to a wide range of markets including the EU, North America and East Asia.

Both companies have received some queries about the environmental performance of their products and processes and both believe that the issue is becoming increasingly important in international markets. While neither company has faced environmentally related market barriers thus far, one of the companies has experienced a problem in exporting one of its concentrates that contains recycled materials. There has been difficulty in passing through European borders because of intricate regulations relating to this product and its environmental implications.

Perhaps the biggest danger for the industry relates to the energy issue. Like aluminium, energy costs are a large proportion of the cost of minerals processing -- around 30 per cent. South Africa�s cheap electricity is currently a major advantage but may also become a disadvantage if there is international action against greenhouse gas emissions. Only one of the companies was aware of the issue. It felt that there is no immediate danger.

One company was interviewed in this sector. It is an export agent that markets South African citrus fruit on behalf of farmers and selling to a wide rage of countries including the EU and North America. According to the company, environmental issues are coming up strongly in the international fruit trade and the company has identified environment as a major issue over the next five years. Fruit is subject to specific sensitivities and to special provisions applicable to food. The major issue in the industry is the use and control of chemicals that are used in growing and transporting the fruit. The regulation of chemicals has become a major issue in the industry internationally and this has had an immediate impact on South Africa since exports constitute some 60 per cent of the crop. South African exports, particularly to Europe, must meet with strict specifications on chemical residues in fruit entering the market. This has meant that South African farmers have had to alter their methods of protecting the fruit both during growing and distribution.

The company assists farmers with introducing ecologically friendly techniques and managing pesticides and other chemicals. This is especially important since farmers who abide by South African law may still be unable to export their product. Part of the difficulty has been that local standards for chemical use do not necessarily take account of maximum residue levels applicable in export markets.

Two companies were interviewed in this sector. Both are large packaging groups that provide packaging services to a wide range of exporters in various international markets. Both companies also export some empty packaging, mostly to Latin America and the EU. Both companies have been highly involved in meeting the packaging requirements of their customers in export markets. International (and especially European) packaging legislation has driven significant changes in the local packaging market and has encouraged a trend towards lighter and more easily recycled materials. According to the companies, this trend is now not only evident in packages for export products but also for locally used packaging.

The packaging experience also illustrates the importance of services to exporters and illustrates the way in which environmental trade measures can drive company behaviour.

Two companies were interviewed in this sector. They are large producers of pulp and paper and export some 35 per cent of their production. Exports are concentrated in particular product markets and are sent to a wide range of markets including those in the EU, North America, Africa and East Asia. Environmental pressures have been particularly strong in this industry and it serves as an interesting case study of the capacity of international market trends to change the environmental behaviour of South African companies.

There have been two main concerns about the environmental impact of the pulp and paper industry in recent years. The first is the impact of wood demand on world forest resources. Here the concerns have mostly been about logging of old-growth forests and the contribution of the paper-related wood industries to deforestation. The source of pulp producers� timber supplies and the management of forests have therefore come under the international spotlight. The second main concern has been about the use of chlorine -- particularly elemental chlorine -- for the bleaching of pulp and the subsequent release of organochlorine effluent into inland and marine waterways. As a result, there has been an international campaign to remove chlorine from the paper making process.

The forestry and chlorine campaigns have both affected South African companies. Both companies have had inquiries about their timber sources, with some customers asking for written certification that the wood used in their paper production is not logged from old-growth forests. This has, in fact, been an advantage for South Africa since all pulpwood is drawn from human-planted, managed forests rather than indigenous areas. There are a number of environmental problems associated with plantation forests of this kind -- particularly their impact on water supply and biodiversity -- but these have not yet come under international scrutiny. The chlorine issue has been more difficult for South African producers. Elemental chlorine is still being used in some South African plants. The international market is, however, increasingly demanding elemental chlorine-free (ECF) pulp and as a result, both companies are moving in this direction.

The chlorine issue is an interesting example of market based pressure. According to the companies there is no agreement among scientists internationally that chlorine is, in fact, harmful in the quantities in which it is released. However, the market has made a judgment that it is harmful and this has been impossible for pulp producers to ignore. It is also an interesting example of the way in which companies can use environmental performance as a source of competitive advantage and perhaps as a source of protection.

The chlorine case also demonstrates the limited impact of international market-based pressures. There are two reasons for this. Firstly, environmental pressures rise and fall to some extent with supply and demand in the market, especially in relation to commodities. At times of international oversupply, customers are able to exert more pressure on suppliers and can be more insistent about environmental issues. When the market is tighter, customers tend to ask fewer questions about environmental performance as they are under more pressure to assure their supply. Secondly, the international market is concerned only about certain issues, usually those involving global commons. While other, more local, environmental issues may be more urgent, they are unlikely to receive international attention. International pressures must therefore be combined with effective local regulation.

The steel industry exports some 30 per cent of its production to a range of markets including Latin America, the EU, East Asia and the USA. Exports include mild steel, flat products, profile products and stainless steel. According to the steel company interviewed, the industry is experiencing increasing environmental pressures from local sources and from the international market. The pressures from the international market in particular are expected to grow in coming years.

Recently, representatives of one of the major companies in the industry visited European customers and competitors and gained a clear impression that environmental pressures are growing in the international market. They also concluded that South African companies are largely behind other international producers on the environmental front although some local mills perform better than others do on this score.

It is difficult to generalise about the environmental profile of the industry. Much depends on the age of the mills and the degree to which they have invested in capital equipment which limits their environmental impact. The investments required to upgrade old plants are very costly. However, if this and similar investments are not made then it seems that some of South Africa�s mills may face real threats in the export market. In the industry as a whole, environmental investment levels are low, at about 5 per cent of operating budget, compared with an international average of about 15 per cent.

The steel industry is also under some pressure from local sources. This includes pressures from surrounding communities to do something about air emissions. There is also government pressure as a result of the presence of chemicals and heavy metals in plant effluent as well as concern about particulate and sulphur emissions. The international pressure may however be more difficult to resist.

The steel industry therefore faces major environmental challenges and without substantial action and investment may well face constraints in the export market in the coming years. The may be some value in developing an industry-level approach to this problem and some assistance from government may be required.

Two companies were interviewed in this sector. Both are subsidiaries of major international companies. Each company exports less than 10 per cent of its production, mostly to other African countries and to the Indian Ocean islands. What is interesting about this sector is the effect of the policies of the head offices of these multinational companies on the manufacture of products in South Africa. Both companies must abide by the policies set by their mother companies and the environmental performance of their products must match the same standards as a product manufactured in a company plant in another country. One example of this is in packaging. At one of the companies, the international head office set packaging policy guidelines which exceeded local regulation or practice in the South African market. The local subsidiary then had to ensure that its packaging suppliers were able to meet these standards and that its packaging for local and international markets was in line with the company�s international policy.

Two companies were interviewed in this sector. One is a large producer of a range of textiles and exports 10 per cent of its product mostly to the EU and Australia. It has only been in the export market for two years and hopes to grow its exports to 20 per cent over the next five years. The second company produces technical and engineering fabrics and exports 70 per cent of its product to the EU, the USA and Australia.

Neither company reported significant environmental pressures on its exports. According to one of the companies, the major effect that environmental issues have had on its exports, has been the increased demand for niche �environmental fabrics� such as �natural look� unbleached textiles, and all natural fibres. Environmental issues do not, however, seem to have affected demand for the traditional textiles which it supplies.

This is in stark contrast to the pulp industry where chlorine has become a major issue. None of the companies interviewed has experienced pressure to achieve environmental accreditation or was aware of the possible introduction of eco-labels on any textiles that would affect its product range. However, one of the companies pointed out that its production process involves very little use of chemicals and this makes it much less vulnerable to international concerns. One of the companies argued that the international textile industry is much more involved in a debate about human rights or social clauses in trade agreements than environmental ones. There is a danger, however, that local producers may have insufficient access to information about environmental requirements in export markets especially in light of the current discussions on establishing a European eco-label for textiles.

Two companies were interviewed in this sector. Between them they export some 1.3 million tonnes of logs and wood chips, mostly to the Japanese market. One of the companies also exports sawn timber products. Both companies have received environmental enquiries from customers, including being asked to submit verification that the wood is all sourced from plantation rather than old-growth forests. Like in the pulp industry, this has been a source of advantage for South Africa since all forests are managed plantations. Companies that are unable to provide assurances about the source of their timber are apparently being forced out of certain markets, particularly in Europe.

One of the companies is exploring an accreditation system for its timber and timber products which involves applying for the right to use a privately issued eco-label which assures the customer that the product has been produced in an environmentally responsible manner. These labels are issued by environmental groups such as the World Wide Fund for Nature and Friends of the Earth. In order to win approval from these groupings -- and attach their label to the product -- certain environmental requirements must be met. These labels are particular to the wood industry and are mostly aimed at tropical hardwoods since these are most important with regard to deforestation. Nevertheless, these labels would be available to South African exporters and their use is being explored.

At the beginning of this paper it was noted that international environmental pressures may be a double-edged sword. On the one hand, they may constrain companies� ability to export, and may act as a form of protection for more developed economies. On the other hand they may serve as a source of pressure for companies to raise their levels of environmental performance. Having presented the evidence from the study, what conclusions can we draw about these two possibilities?

The discussion of the sectors has revealed a number of trends regarding the environmental pressures on South African exporters. The experience of most sectors is that environmental pressures are building up in export markets but that there are no experiences of actual trade restrictions or barriers to foreign markets, although a number of sectors have had to adapt to meet the environmental requirements of the market. This is the case especially in the pulp and paper, packaging, fruit and, to a lesser extent, chemical sectors. A number of sectors expect to make major adjustments in the near future, especially the steel and chemical sectors. In some sectors, companies have found that they have a competitive advantage as a result of international environmental concerns. This is the case in the coal, timber and pulp industries. In all of these industries the advantage is based more on natural endowments than on a conscious environmental policy.

This evidence creates a clear impression that international environmental pressures are having an impact on the environmental performance of South African exporters. Although this pressure is difficult to quantify, all the companies interviewed listed international pressures as an important influence on their environmental performance. In many cases it was a seen as the key influence.

It is important to note however that international pressures are almost always combined with local pressures whether these are in the form of regulations or community and other initiatives. At present local environmental pressures in South Africa are relatively weak although environmental lobby groups are certainly growing in strength. Environmental regulatory authorities are generally weak and under-resourced which makes it difficult for the government to monitor individual plants� compliance with environmental regulations. International pressures may therefore play an important complementary role in encouraging companies to raise their environmental performance.

However, it has been observed that international pressures largely relate to global issues such as ozone depletion, global warming, deforestation, chemical build-up in marine waterways and acid rain. Local environmental issues such as waste management, particulate emissions and local water quality are generally not addressed by international measures. It should also be remembered that international measures are often subject to the ups and downs of the market and to changes in international sentiment. They should therefore not be seen in any way as a substitute for proper national environmental policies.

The experience of exporters reflected in this study raises a number of important issues for environmental management and policy in South Africa. Some relate to the actions of specific firms or industrial sectors whereas others require action from government. Specific policy issues are discussed below.

Many of the exports discussed above are energy intensive. This is particularly true of the aluminium, and minerals processing sectors as well as certain types of steel and paper. Other sectors related to the energy debates are electricity generation, chemicals and coal. As noted above, low electricity prices are a major source of comparative advantage for South African exporters, but also makes them vulnerable to international trade measures. If significant action would be taken against energy intensive exports because of the environmental impact of South Africa�s electricity generation, then exports from a number of sectors would be affected. Similarly, if energy prices were to rise considerably as a result of investments in environmental abatement technologies, the comparative advantage of a number of exports could be affected. Of course the energy generation sector is not the only contributor to greenhouse gas emissions.

The chemical sector should also be considered in the debate. But the management of the energy sector�s environmental impact is key to the trade and environment debate. It is possible that trade pressures could be applied to South Africa if it does not comply with environmental targets. South Africa is particularly vulnerable in this regard because of its very high proportion of coal-fired generation and the low cost of electricity. The market may apply direct pressures to its energy intensive exports by fostering an image of South Africa as a dirty energy producer. It is also possible that trade measured may be applied in the longer term if South Africa is unable to fulfill its obligations under the UNFCCC. Thus, more attention needs to be given to this issue. There is a clear need for coordination between Eskom, energy intensive exporters and government on this issue. There is also a need to ensure that South Africa�s position is well represented at international negotiations on trade and the environment in general and at the UNFCCC in particular.

A second major issue arising from the interviews is the importance of investments in environmental abatement technologies. In a number of sectors -- notably pulp and paper -- very large environmental investments have already been made and managers interviewed in the electricity, chemicals, minerals processing, steel and paper industries pointed to the need for further environmental investments. In some cases these investments have economic benefits as well as environmental ones, but in others, the investments would be purely environmental. In some industries -- notably electricity, steel and chemicals -- the required investments would be very large and the companies have not yet committed themselves to these spending the necessary resources.

A failure to make the appropriate investments in clean technology may constrain the ability of companies to export in the long term -- to say nothing of the environmental consequences. The steel industry is a case where large investments have to be made in a number of plants if environmental performance is to be raised to international levels. There is no guarantee that the companies concerned will make the investments in good time. In the context of relatively old capital stock in much of the industry, companies may also have real difficulty in committing the required funds over the next few years. There may therefore be a role for government in helping to finance such investments where necessary.

A third area arising from the interviews is the importance of information on environmental trends. A number of companies interviewed seemed unaware of initiatives that could affect their ability to export in the long term. These included textile companies that were unaware of the possible development of an eco-label on textiles and energy intensive companies that seemed unaware of the potential affects of global action against carbon dioxide emissions. There is a clear role for government as well as private sector organisations such as the Industrial Environmental Forum to provide companies with information. The United Nations Conference on Trade and Development (Unctad) could also play a useful role in this regard. In addition to the three priorities outlined above, a number of other policy issues also arise from this study:

• International management standards

One of the strongest trends to emerge in the interviews was the intention of a wide range of companies to apply for accreditation under the ISO 14000 environmental standard when it is launched. The ISO 9000 series of standards already have a strong following in South Africa and ISO 14000 is likely to become well established among South African producers. A standard like ISO 14000 could play an important role in complementing regulatory work and in supporting national environmental and economic objectives.

Although ISO 14000 measures conformity to an environmental management system rather than the actual performance of an organisation or its products, it could be very useful in ensuring that companies have environmental policies and action plans in place. The standard may also ensure that companies are more aware of and responsive to their legal obligations, thereby helping to solve the problem of enforcing environmental regulations since it would provide more of an incentive to abide by environmental laws than the current system which relies on under-resourced government departments.

• Institutions

Certain institutional arrangements within the private sector, and between the private sector, government and other organisations could foster more successful approaches to international environmental pressures. The first of these is a set of institutions within sectors that provide environmental information, services and research for companies in the sector as a whole. The citrus fruit sector is a good example of how a central organisation can assist individual producers by gathering information on environmental requirements in export markets and conducting research to assist producers in meeting these requirements. Joint committees between government and business may also be useful in looking at issues like investment in environmental abatement technologies or in establishing a set of environmental targets for a sector as a whole. Such structures may also facilitate improvements in the services offered by government departments by providing clear information to government on the kind of assistance required by exporters.

• Small, medium and micro exporters

This sample for this study did not include any small, medium or micro companies and it is therefore impossible to comment in detail on the issues that may face such companies. However, it is clear from the experience of the large companies and from other literature that successful management of international environmental pressures requires skills, information, systems and resources. It is reasonable to assume that all of these are in shorter supply in small firms than they are in large ones. There may be a special role therefore, for government or for sectoral organisations, to assist small and medium sized exporters to manage their environmental performance.

• Government level negotiations

Given the potential that exists for environment-related trade disputes, South Africa may very well become involved in such disputes in future. The international rules on trade and the environment are currently being debated in World Trade Organisation committees, Unctad seminars and the United Nations Environmental Programme (Unep). It is imperative that South Africa is active in this debate and that government participates in negotiations on trade measures. This will require an in-depth understanding of the debates as well as a strong link with business and other interested parties such as trade unions,

This study was based on a small but significant sample of export companies. Their experiences show that while exporters are not facing environment-related trade restrictions, they are increasingly affected by largely market-based international environmental pressure. Some companies are also affected by environmental regulations in other countries and by international environmental agreements. In most sectors, companies have been able to meet the new environmental requirements and expect to continue to do so. In other sectors however compliance will be more difficult and will require very substantial investments. Many companies are raising their environmental performance in response to international pressures and that this is helping to raise environmental standards in South Africa. However, the road ahead is long and will require significant adjustments from companies. Government will also have to play a strong role in negotiating the conditions under which environment-based trade measures may be applied. Much will be required in the way of investment, information and skills to realise the potential benefits of environmental pressures and avoid the dangers of protectionism.

Karin Ireton

South African businesses focusing on export markets have been complying with internationally accepted product characteristics for many years. These have come from international agreements, the national legislation of importers or domestic legislation and have dealt with quality aspects and occupational health and safety issues. Recently the �environmental� field has to a limited extent become an accepted part of business practice and has in some instances actually facilitated interactions between companies and countries by providing norms and standards against which products and systems can be measured and judged. So, at times they have had a significantly positive result.

Yet one should also understand the potentially significant threat to South African industry, and therefore the country as a whole, of the wholesale adoption of such standards. Many product criteria are implicitly associated with production processes and technologies. The World Trade Organisation (WTO) has ruled against process specifications precisely because they do become barriers to trade. Many other forms of product specification schemes that extend producer responsibility and liability, such as the take-back schemes that are proliferating in the European Union, could successfully remove the products of developing countries from those markets.

Thus, by not meeting the environmental priorities of the developed world, where a further percentage point reduction in wastes volume is critical, South Africa could exacerbate its own environmental and especially socio-environmental problems.

The following institutions have developed in support of these standards: national accreditation bodies which certify laboratories, certification bodies which audit quality, environmental and other management systems and products and international systems for accrediting the appropriate auditors. The whole international standards system is based on providing an internationally recognised and supported means of dealing with common criteria. In South Africa, the South African National Accreditation System (Sansa) is currently being developed. It will become the umbrella body, negotiating mutual recognition agreements with other national accreditation systems, to ensure that International Standards Organisation (ISO) and other standards certificates and laboratory results issued in the country are recognised and given equal status to those issued in other countries.

An excellent example of the need to comply with these criteria was reported in The Sunday Independent in August 1997. Noting that BMW South Africa is now exporting cars to Australia, the Middle East, the Far East and South America, the report said:

BMW South Africa had to pass stringent quality tests before the parent company in Germany approved the export programme. In July 1994 BMW South Africa achieved the ISO 9002 accreditation, an international quality standard proving that the company was capable of producing cars and components that met the highest international standards. By obtaining ISO 9002 accreditation, BMW South Africa convinced the previously sceptical overseas car market that the local company was capable of becoming a player in the highly competitive market.

The newspaper did not report on any environmental criteria required of the company. But it is well known that European motor manufacturers have already incorporated significant environmental issues into their manufacturing processes and one can assume that environmental criteria are implicit. However, these will be criteria determined in Germany or the European Union where the focus is on issues such as changing input materials to make the recycling of the product easier. These are important advances in the European context, where vehicles have a much shorter life than they do locally, but might not be recognised as key environmental issues in the South African situation.

Despite some minor confusions in the article about accreditation and certification against international standards it makes the point that product certification can be an essential part of international trade and in some instances extremely useful to South African companies entering and retaining markets. The BMW initiative is one of the approaches being taken in the bid to bring down vehicle manufacturing costs. South Africa is one of the very few countries in which BMWs are produced outside of Germany. The only other manufacturing plant is in the United States. By limiting the centres of production BMW is able to increase volumes thereby reducing unit costs. South African manufacturing, by earning export credits in this way, is able to extend the range it can make available in South Africa and can source high-tech parts from the mother company in Germany more cost effectively.

In a paper delivered at the Second Southern African International Conference on Environmental Management in 1994, the environmental manager of Nissan South Africa argued that while future environmental requirements could pose significant challenges to South African exporters, the options for avoiding or challenging such policies are limited. To successfully challenge and comply with international environmental requirements, the South African government needs to create a national database that would identify the region�s capacity for compliance, to develop an international lobby and to facilitate innovation in low-cost environmental compliance technology. Due to the distance from the market place, policies that extend producer obligations, such as take-back schemes, are far more costly to developing countries because of transport and other logistical issues. The shorter production runs usually associated with developing countries mean limited economies of scale.

Other approaches are also being taken. Some vehicle manufacturers, for example, are outsourcing parts internationally. In this case, South Africa is the subcontracted to manufacture all seats or leather for seats. Companies involved in these processes report that environmental criteria have become important in the choice of a preferred supplier. In other companies, there is a move toward the production of recyclable steering wheels. Again, these earn export credits for the manufacturer, thereby allowing it to source other critical parts from elsewhere or to keep down the overall cost of local manufacture which has short runs and high production costs. South African exports might benefit overall from the recycling of steering wheels. However, to establish the mutual impacts of trade and the environment, one has to weigh up the costs and benefits. The environmental benefits of recyclable steering wheels -- a questionable local priority -- might be outweighed by the costs to small suppliers that are not able to meet international manufacturing production criteria, of being put out of business. Perhaps South Africa�s local manufacturers and national negotiators need a means to assess the impact of such deals on the broader environment and negotiate for compensatory training or skills upgrading for individuals that are put out of jobs in this manner.

It is much more difficult to find hard evidence that international specifications for product characteristics and processes could act as a potential trade barrier. Theoretically, trade figures are fairly easy to collate as one can monitor flows of goods and currencies. The collation of facts about missed opportunities is an altogether different issue. One does not find these kinds of figures carefully collated and presented. Not only is it difficult to establish what they might mean in financial terms, but to determine whether they are the result of not meeting some environmental product or process standard would be nearly impossible. There have been a few international landmark cases where companies or countries were faced with the loss of an existing market due to non-compliance to criteria. The Mexican and United States (US) case regarding the fishing of tuna and dolphin protection is a case in point.

The environmental movement tends to use glibly holistic definitions of the environment. However, supporters of the movement sometimes forget that by making �first world� choices they could be assisting a European nation to marginally solve an almost-solved environmental problem while causing social stress in less developed countries such as South Africa. The environmental movement should make social justice part of its negotiations, obliging industrialised countries that set requirements causing social stress to compensate the affected party through, for example, retraining.

Research needs to be conducted under the aegis of the United Conference on Trade and Development (Unctad) or the World Trade Organisation (WTO) to monitor environmental restrictions to enable these organisations to determine whether or not it is an issue of major concern. Many of the product criteria have been entrenched in trade policies and there is little a lone voice could do to reverse this trend. Developing countries therefore need to negotiate as a single bloc for better indicators that allow for their priorities and needs to be addressed.

A United Kingdom (UK) company recently had to face the issue of first world priorities set against third world realities. It is a retail chain that sources its products from around the globe and has prided itself in being an environmental leader. For example, it was one of the pioneers of the concept of preferred suppliers, judged on environmental criteria. But, on inspecting one of its suppliers, it discovered that the company on the Asian sub-continent was making use of child labour. The dilemma they faced was that withdrawing the supply contract would dramatically and instantly increase the misery of the children involved as well as their families. Instead, they negotiated a deal with the company which saw immediately improved working conditions for the children and a medium term phase-out of child labour, based on guaranteed orders. Through this more flexible approach, both the company�s environmental conscience and improvements to the social circumstances of the affected children have been achieved. This is in stark contrast to the impact of a heavy-handedly applied ban or a product or a process criteria approach, which would absolve the consciences of the purchasers and increase the misery of the former suppliers.

It is fairly true to say that anything is possible -- at a price. South Africans should ask themselves what price they are prepared and able to pay in terms of more costly goods, potential loss of jobs and increased poverty or potential damage to humans and the environment. For large businesses seeking international markets these criteria are a daily reality. In order to sell their products companies react to the changing demands of the market place and adapt. The South African government should ensure that it does not negotiate the country into situations that place a bigger onus on small companies than they can meet in order to meet certain environmental criteria.

A Cape-based fruit distributing company, Unifruco, faced some years ago with stringent European packaging directives, instantly set about complying with these because it feared environmental sanctions against its products. The end result was that environmental criteria were complied with and the company had an economic benefit as well as an improvement in occupational safety incidents resulting from the repetitive lifting of heavy boxes. In a similar vein, the packaging industry switched to environmentally friendly inks and recyclable input.

Many of these companies are operating to environmental criteria that could be far more stringent than domestic product legislation. What is not known is the extent to which such product criteria have excluded small businesses from international markets? One would also not be able to attach any real value to market loss since companies do not broadcast such information easily. They would not necessarily know that their failure to secure a contract was based on a failure to comply with one of many criteria. Process and production method criteria are usually only one aspect of the deal -- the others being financial factors, reliability of the product and its delivery, prevailing exchange rates and so on.

Where lead times are significant, a company has the opportunity to adapt to changing and increased demands. The more flexible and well managed a company is and the more in tune it is with the demands of its market the easier such adaptations are -- if the inherent ability and the appropriate resources and products are available. For example, when the packaging industry was faced with a need to address environmental issues they found that access to environmentally more benign inks was extremely limited and quite costly because no local demand for such inks existed.

One must also place these environmental requirements in a South African context and ask hard questions about the financial and environmental trade-offs. It is this particular concern that will need to be the subject of far greater debate and research, perhaps even at regional level given that South Africa is now moving into a new regional trade dispensation.

One of the problems encountered by those negotiating these standards and agreements is the lack of national environmental priorities and goals in South Africa. This prevents the negotiators from building South Africa�s environmental priorities into such multilateral agreements. This means we are always reacting to the environmental priorities set by other more developed nations. These priorities are sometimes inappropriate to the South African context. For example, when German packaging regulations changed some years ago, the use of multi-use and recyclable packaging was introduced. An automobile manufacturer in South Africa that imported engine blocks and other significant sized parts from its mother company in Germany had for years placed the packing crates outside the factory gates for use by the local community as building material. When the packaging laws changed the crates had to be redesigned. After use they were collapsed and shipped back empty to Germany for re-use.

A life cycle study should have been done prior to the implementation of this law. The environmental costs of the long distance transport of the empty packaging crates could well have negated any benefit of re-using them, not to speak of removing a resource from an impoverished community. Relatively speaking packaging wastes might be a significant environmental problem in Germany but it is not nearly a problem of similar dimensions in South Africa.

South Africa�s current national environmental white paper states the intention to establish a national environmental strategy and action plan. Stakeholders in the process have supported this intention wholeheartedly on the premise that it will be based on scientifically established risk, and scientifically measured perceptions, in order to obtain a truer picture of what South Africa�s environmental priorities are. This does not mean that one should ignore the international trend towards higher environmental standards, but that one should guard against adopting them when they work against first meeting South Africa�s basic needs.

The WTO in its deliberations has determined that process stipulations should not form the criteria on which these norms should be based -- for good reason. These stipulations would effectively exclude the products of many developing nations using dated production technology that cannot afford the enormous capital and social cost of importing modern technology. However, in many cases the product specifications have implied process implications that are in many instances labour unfriendly.

Based on my observations, I believe that most �best available environmental technologies� would reduce industrial or manufacturing jobs and therefore have significant negative social and, by definition, environmental consequences in less developed countries (LDCs). In these countries the state is often incapable of providing a significant unemployment benefit, the need for jobs is growing at a tremendous rate and the literacy and educational background of many workers frequently precludes them from working in such environments. As a result, the first world suppliers of such technologies would benefit most by developing and selling these and providing on a contractual basis the highly skilled staff required to maintain and to operate them.

One German government-funded study that tried to evaluate the impact of environmental criteria in the German job market, pointed to jobs being created in service sectors, like environmental education, as offsetting those losses that had occurred in industry. In a developed economy with a highly educated population where there is a natural movement away from primary and processing industry to the service sector, these occurrences might well be tolerable or even welcomed. Would the same be true in the South African economy that already experiences more than a 30 per cent formal sector unemployment rate?

There is no question that demands for higher standards of design and better tested input materials and products add to the cost of production and that those costs are not only passed on to international markets but to local customers as well. While cost internalising is always passed on, there is more pressure in an extremely competitive market to ensure that the impact is minimal. Where environmental criteria have led to a lower risk profile or a more secure market the benefit could lead to lower prices and an even bigger market share. Where the cost of adapting technology, process or changing staff is high that too gets passed on to the consumer.

The setting of environmental criteria for manufacturers and exporters has already gained momentum throughout the world and the South African government would appear foolish and reactionary to try to stop this movement. It should rather negotiate to incorporate its own environmental needs and priorities into such standards in a way that would cause a first world country to commit �political suicide� when enforcing its standards and in so doing inflict further poverty on LDCs.

Part of the problem in this debate is that in South African much of the evidence being dealt with is anecdotal. Many companies are moving towards internalising externalities but the trade-offs are not always clearly examined. More data is needed on decision frameworks and progress should be made towards identifying and quantifying the issues.

Throughout the world, companies have been going through procedures, audits and lengthy questionnaires to justify their environmental management systems and environmental impact to foreign markets long before ISO 14001 has been developed. Today, ISO 14001 provides an internationally acceptable mechanism that is less arbitrary than previous procedures. It also does not set performance standards for environmental management systems, thereby giving companies the flexibility to react firstly to national environmental needs and priorities, secondly to regional and thirdly to global imperatives.

Peter Ngobese and Jacques van Zuydam

Discussions on topics like those covered in the deliberations at this workshop are usually -- and appropriately so -- framed by the concept �sustainable development�. This concept introduces long-term resource considerations as a variable in determining the viability and desirability of a development venture, including economic development and thus international trade. Sustainable development is often referred to as �development that meets the needs of the present without compromising the ability of future generations to meet their own needs�. This means that �living standards that go beyond the basic minimum are sustainable only if consumption standards everywhere have regard for long-term sustainability�.

The challenge is therefore to seek a compromise between a host of interests, but according primacy to human development. Sustainable development can be achieved through:

• eliminating absolute poverty;
• meeting the legitimate aspirations of the majority of South Africa�s population;
• cutting the environmental cost of development;
• distributing more fairly the benefits of development and
• lowering population growth and ensuring more balanced population distribution within and between countries.

Agenda 21, adopted at the 1992 Earth Summit in Rio, substantially addresses the social and economic dimensions of sustainable development, firmly locating challenges on this terrain within the context of globalisation. For example, the international economy is regarded as a key to achieving environmental and developmental goals through trade liberalisation, encouraging macroeconomics policies conducive to sustainable development and �making trade and environment mutually supportive�. At the national level, Agenda 21 argues in favour of employment creation programmes and the provision of essential social services to combat poverty, aimed at specific vulnerable groups as long-term strategy. At local level, it places emphasis on infrastructure development that will promote sustainable livelihood. National and local policies and programmes are to integrate environmental and developmental concerns, taking into account demographic trends.

In effecting these policies and programmes governments were called upon to strengthen partnerships with the following groups: women, children, local authorities, business and industry, farmers, workers and trade unions, non-governmental organisations, indigenous people and their communities and scientific and technological communities. According to Agenda 21, local authorities have a role to play in public education and mobilisation, local stakeholder consultation and information gathering in order to build consensus on sustainable development strategies. The role of trade unions is derived from their interest in the protection of the workplace and related environment and includes active and informed participation in shaping environment and development strategies towards enhancing employment. Both business and industry and scientific and technological communities should attend to the environmental impact of production, related ethics and research. Furthermore, government should support such actions through incentives, laws, standards, promotion and support related to environmental responsibility and sustainability.

In international environmental law practice general rules and principles that have had sufficient precedent to be applicable almost universally are now emerging. These principles have emerged out of the need to have international agreements on environmental issues that could not be adequately dealt with simply on a national basis. Some of these include Principle 2 of the Rio Declaration, which introduced the notion that states have sovereignty over their natural resources and the responsibility not to cause environmental damage. Furthermore, Principle 27 points to the need for good neighbourliness and international cooperation in the pursuance of sustainable development. These two principles have found expression in a number of international agreements and are at the core of the sustainable development debate. Although there is no well-established or agreed legal definition of sustainable development per se, elements of it have found expression in international conventions and treaties. Although not explicitly defined, the concept of �sustainable development� is used as a legal term in, for example, the global conventions flowing from the Rio conference, the Framework Convention on Climate Change and the Framework Convention on Biological Diversity. These principles seek to arrive at the lowest common denominator on environmental issues at the global level. Such a perspective is compounded when other issues such as the linkage between trade and the environment are introduced into the equation.

The relationship between trade and the environment can be conceived of as the convergence of debates on the environment and trade policy that have been raging for the past two decades. In each of these areas new perspectives are emerging. There is no doubt that international trade, for instance, has had considerable influence on natural resource utilisation and that the environmental costs of such utilisation have not been internalised in the prices of associated traded goods. The view is often advanced that increased trade liberalisation will lead to the over-harvesting of the natural resource base of the South.

The relationship between trade and the environment appears to be characterised by two closely linked but distinct processes namely economic globalisation and liberalisation. These processes offer a great opportunity for growth and development, but also entail risks of instability and marginalisation both among and within nations. In other words, globalisation can be seen as undermining the sustainable development agenda. Thus, the challenge for national and international cooperation in this field is to move in a direction that maximises the developmental impact of globalisation and liberalisation while minimising the risks of marginalisation and instability.

In disaggregating the linkage between trade and the environment one needs to trace the various trends in the debate, both historically and within the South-North divide. The political undercurrents of the present debate also need to be considered, particularly if trade measures are used to meet certain environmental objectives. Trade restrictions such as bans and boycotts have been used to discourage the harvesting, manufacturing, distribution and consumption of products with negative environmental and/or social effects. Such a use of trade restrictions can also be seen as advancing interests other than environmental ones. The ban on ivory trading within the Convention on International Trade in Endangered Species (Cites), for instance, can be seen as advancing both the political and environmental objectives of the North or the South (particularly southern Africa).

Many concerns have been raised over the use of trade measures such as boycotts to achieve environmental objectives, apart from the fact that they are generally thought not to be as effective. There is therefore a need to distinguish between trade provisions in multilateral environmental agreements (MEAs), environmental provisions in trade agreements and the use of other economic instruments to achieve environmental objectives. These distinctions are less obvious when the net effect amounts to a trade restriction.

Environment-related trade disputes are likely to increase as countries attempt to protect their own trading positions. Trade liberalisation, as most African countries undergoing structural adjustment programmes have found, has net gainers and losers. This has forced countries to re-examine their own engagements in the international trade arena and whether they would be able to withstand pressures on their economies through regional economic groupings. In southern Africa, the Southern African Customs Union (Sacu) and the Southern African Development Community (SADC) seem to offer this possibility.

The SADC Trade Protocol envisages the creation of a free trade area (FTA) within eight years through the negotiation of the removal of tariffs and the non-tariff barriers on a product-by-product basis. At the same time South Africa is negotiating an FTA agreement with the European Union which explicitly excludes 40 per cent of its agricultural export products. In the emerging globalising and liberalising international trade regime such issues need to be understood in the context of the General Agreement on Tariffs and Trade (Gatt). The impact of these agreements on regional trade flows is as yet unclear.

The South African government�s vision of sustainable development is recorded in the Reconstruction and Development Programme (RDP). Any assessment of specific policies, programmes and projects should consider the principles of the RDP. One of the programme�s key principles is nation-building -- the basis on which to build a country that can support the development of southern Africa as well as ensuring South Africa�s effective role in the world. The RDP aims to integrate growth, development, reconstruction and redistribution into a unified programme that advocates an approach to growth emphasising its location, sustainability, distribution, contribution to long-term production capacity and human resource development and its impact on the environment. The key integrating link in the RDP is an infrastructural programme mainly targeted at basic needs and human resource development. Ultimately this chain of causality will build the economy and create growth.

The RDP aims to address serious weaknesses and inequalities in the South African economy. While past industrial policies assisted in creating employment and in developing industry, they were also accompanied by repressive labour practices, neglect of training, isolation from the world economy and an excessive concentration of economic power. The RDP focuses on the following programme areas: reconstruction and development, industry, trade and commerce, resource-based industries, upgrading infrastructure, labour and worker rights and southern Africa. According to the RDP, �reconstruction and development will be achieved through the leading and enabling role of the state, a thriving private sector and active involvement by all sectors of civil society, which in combination will lead to sustainable growth�.

Specific programmes aimed at achieving the above are outlined in the Growth, Employment and Redistribution (Gear) strategy of the government, which aims to attain a growth rate of 6 per cent and the creation of 400 000 jobs a year by the year 2000. This objective is to be attained by �concentrating capacity building on meeting the demands of international competitiveness�. Developments in this respect include the acceleration of non-gold exports, expansion of private sector capital formation and public sector investment and improved employment intensity/job creation resulting from these investments.

In its new trade and industrial strategy, the government has shifted its focus from export substitution, backed by demand-side interventions like tariffs and subsidies, to employment creation through international competitiveness, underpinned by a suite of supply side measures. These include tax holidays, financial and non-financial capacity building incentives and support to small medium and micro enterprise (SMME) development.

South Africa�s new industrial strategy is therefore located within the context of economic globalisation and is driven by several strategic interventions to adjust the economy to become globally competitive. The primary focus of the new economic strategy is at a sectoral and spatial level. The sectoral focus targets specific industrial sectors or clusters for growth through government incentive schemes and thorough analysis of such clusters. The spatial focus is aimed at �generating long-term, internationally competitive growth and development and at restructuring the apartheid space economy�. These initiatives have come to be known as Spatial Development Initiatives (SDIs), of which the first and best known is the Maputo Development Corridor aimed at unlocking the inherent and under-utilised economic development potential of certain specific spatial locations in South Africa. A key component of these initiatives is the move away from the protected and isolated approach to economic development, towards one in which international competitiveness, regional cooperation, and a more diversified ownership base is paramount.

The key objectives of SDIs are:

• to generate sustainable economic growth and development in relatively underdeveloped areas, based on the inherent economic potential of localities;
• to generate long-term and sustainable employment for the local inhabitants of the SDI area and for South Africans in general;
• to maximise the extent to which private sector investment and lending can be mobilised for the SDI area.
• to exploit the spin-off opportunities that arise from the relative crowding of private and public sector investment for the development of small, medium and micro enterprises (SMMEs) and the empowerment of local communities.
• to exploit the under-utilised location of SDI areas and their economic advantages for export-oriented growth.

The key sectors that have been identified to facilitate these objectives include manufacturing, mining, tourism and agro-industry.

According to the RDP, �in the long run, sustainable reconstruction and development in South Africa requires sustainable reconstruction and development in southern Africa as a whole�. The RDP determines that South Africa and its neighbours should �forge an equitable and mutually beneficial programme of increasing cooperation, coordination and integration appropriate to the conditions of the region�. Aspects of envisaged cooperation include workers� rights; technical and scientific cooperation; industrial strategies and more balanced trade.

South Africa�s regional trade strategy is informed, on the one hand, by the earlier-mentioned spatial and cluster considerations, and on the other by its overall global strategy. This is well illustrated by some elementary demographics. South Africa�s global trade �targets� are the North American Free Trade Area (Nafta) with a population of roughly 300 million, the European Union with a population of more than 500 million and India and China with a population of about one billion each. The Southern African Development Community (SADC) countries combined have a population of less than 150 million that is also amongst the poorest in the world. Of this population, almost 50 per cent fall in the non-productive age groups of which about 45 per cent are under 15 years of age. Looking at these figures as an indicator of market size, the South African government should recognise that the country can only become a real global player by enhancing the economic muscle of the southern African region. Analysed individually, SADC member states offer different trade and investment opportunities. When grouped together these opportunities could be compounded, most notably through clusters like metals and minerals that offer competitive industrial and technological opportunities.

Regional cooperation is best illustrated by initiatives like the Maputo Development Corridor and the Lubombo SDI. In addition, eight other regional corridors are at various stages of design. These cross-border corridors offer opportunities in trade geographically targeted development of clusters like tourism and investment in infrastructure, mining, mineral processing, agri-business and manufacturing as well as investment targeted at employment generation.

The principle of good neighbourliness and environmental cooperation has become an accepted feature of regional cooperation and has found resonance through a series of programmes and agreements. One of the earliest forms of such cooperation is contained in the 1987 Zambezi Action Plan Agreement that has more recently been extended in the form of a SADC Protocol on Shared Watercourses.

South Africa�s emergence as a major player in the SADC region and beyond is occurring in the face of increasing liberalisation and globalisation. The Marrakesh Agreement of the Gatt and the subsequent establishment of the World Trade Organisation have provided the institutional framework for trade regulation, trade liberalisation and trade dispute facilitation.

In 1996, SADC member states signed a trade protocol, rooted in the principle that an integrated regional market will create new opportunities for private sector growth. The elements covered by the protocol include:

• simplification of trade procedures to facilitate and promote trade,
• elimination of tariffs and non-tariffs barriers,
• promotion of industrial development and diversification,
• provision of safeguards and exceptions for special cases.

Work is now under way to develop a tariff phase-down schedule that will form the basis of the implementation of this framework. At the same time particular attention is being given to an appropriate rules-of-origin regime as well as to those sectors that may require specific protocols.

South Africa�s involvement in SADC has to be linked to the sustainable development principles set out above, thus bringing its own reconstruction and development objectives into play. The political vehicle for realising those objectives, with regard to its international trade relations, is nation building, translated into the constitution�s instructions around cooperative governance. The South African government�s outward policies therefore have to be in synchronisation with its inward policies, including the provincial and local spheres of governance. To this effect, investment oriented government departments are currently concluding a survey on aligning national and provincial growth and development strategies. Thus far, the key findings of this survey are that South Africa needs to strengthen its infrastructure, including roads, telecommunications, water supply and electricity, to serve as the backbone for growth creation. An accepted strategy towards developing infrastructure is through public-private partnerships. However, certain policy spheres related to reconstruction, like land reform, are scheduled according to time frames that are not necessarily conducive to fast moving investment programmes. At the same time trade-offs need to be made between trade and investment challenges and those other development challenges facing the government. In the end people -- including workers, peasants, women and youth -- also need to benefit from these strategies through, for example, SMMEs.

South Africa�s role in the search for common ground on trade and the environment within SADC will therefore be defined by one�s understanding of sustainable development. The operationalisation of this concept to link trade and development has several implications. These include according primacy to poverty elimination, meeting people�s aspirations and a more fair distribution of the benefits of growth. Stakeholder communities who should benefit from the country�s trade and environment strategies include women, workers and other marginalised groups as well as the industrial sector.

Drawing on recent initiatives by large companies, the forestry/wood/pulp/paper cluster -- paper and paper products being the largest export item from SACU to SADC -- offers an illustrative example of how trade and the environment can be linked. This cluster�s production process has been questioned on environmental and social grounds. In seeking a sustainable development strategy around this cluster, companies have put forward production processes that benefit local communities, especially rural women and youth, considering an acceptable but profitable labour regime to be more important than soil or water degradation caused by plantations. In terms of RDP morality such an argument is sound. The challenge for government and civil society is therefore to seek ways to factor environmental concerns into economic activity, without compromising human development.

The environment may, however, also become a powerful tool in advancing human development in South Africa�s trade strategies. This has recently been illustrated in the environmental debate around the proposed Coega industrial port in Port Elizabeth. Few residents of the area had any concern about the threat that the development posed to the St Croix Island penguins. But serious concerns arose when environmental health issues and potential job losses in certain other sectors were raised. These debates forced environmental concerns onto the trade agenda, in the context of human development. Hopefully this will ensure more thought-through and sustainable strategies.

SADC protocols in various areas of cooperation are at different stages of development. Among the most important are those on energy, water resource management and transport systems. Priority is accorded to these sectors in recognition that the sustainable exploitation of regional resources for water and hydro-power provision in particular are central to attaining significant levels of growth and development in southern Africa.

One of the principal requirements for enhancing the country�s prospects for growth and development would be for South Africa to strengthen relations with its neighbours. The promotion of greater economic cooperation and integration would be a key ingredient in a strategy for more effective restructuring and participation in the global economy, both at the national and the regional level.

Both global economic considerations and an understanding of the benefits of globalisation and liberalisation are informing the South African government�s engagement with SADC. It is also informed by the country�s nation-building objectives, especially the engagement between national, provincial and local government and the focus on specific cluster and spatially defined initiatives. In turn, the South African government�s national priorities will fundamentally shape its search for common ground on trade and the environment in the SADC region. Any future policy direction will therefore have to be framed by the government�s political understanding of sustainable development. Strategies such as clusters and SDIs already contain those elements that will inform a South African trade and environment strategy in SADC. The alignment of these elements, however, will be determined by the government�s definition of environment. A common understanding on trade and the environment will have to contribute to human development, even in the short-term, especially benefiting previously marginalised groups and involving all stakeholders. Such understanding will need to be broadened to include the infrastructure requirements of trade. Trade-offs are more likely to be made between growth and development than between either of these and environmental concerns. Therefore, in pursuing a common ground on trade and the environment, one might have to move beyond the understanding of the environment as one element of the tripolar sustainability equation towards operationalising it as a tool to advance growth and human development.

The discussion paper presented by the department of trade and industry spurred heavy debate on the relationship between human development and environmental standards in the promotion of sustainable development. Participants were concerned that the discussion paper presented human development and environmental standards as a trade-off and over-emphasised the human development axis. According to them, the environment should be viewed as the centre-pole of economic growth and human development. The department of trade and industry (DTI) responded that it will need to incorporate a policy linking trade and the environment into its existing policy framework. Such a policy will aim to satisfy various and diverse needs and interests. Departmental representatives recognised that those SDI investments producing export-oriented and energy intensive products will have to acquire environmentally sustainable technology and implement environmentally sustainable production processes. The department views the promotion of eco-tourism in the Wild Coast initiative, an SDI project currently being developed in conjunction with the Development Bank of South Africa, as a useful environmental awareness strategy.

It is, however, difficult to �police� the implementation of environmental standards. A database on the toxic release levels of companies could assist in this task. To compile such a database, DTI can start by rewarding ISO 14000-certified companies for making available this information. However, such inventories have a checkered history elsewhere in the world. As a further measure to regulate environmental standards, the government can insist on environmental responsibility when providing loans to small and medium enterprises (SMEs). It can even access the so-called �green box� fund in the WTO for environmental management subsidies. SME managers in South Africa have little to no environmental management skills and would therefore benefit greatly from such subsidies and other environmental management services. To meet environmental standards, they need sophisticated sector-specific management and information systems to analyse production processes and inputs.

Research has shown that the majority of companies (both SMEs and larger corporations) in South Africa still lack environmental awareness. The workshop suggested that the DTI should, in conjunction with other departments and environmental organisations, play a role in creating such awareness and set the parameters for a trade and environmental policy. The department also needs to manage the perceived employment/environment trade-off in the Southern African Development Community (SADC) since South Africa has the most advanced environmental regulation framework in the region, both in the private and public sectors. No legislation on toxic release levels currently exists in South Africa to assist companies in waste management. Once entrenched, such legislation should be balanced and sensitive to the general situation of industry in South Africa. To achieve this, it should be developed through a participatory process, a good example being the multi-stakeholder committee on the Climate Change Convention that was convened by the department of trade and industry.

Participants suggested that South Africa should first define its national priorities before negotiating or signing MEAs. An example of an MEAs that can negatively affect the South African economy is the OECD�s proposal to phase out metalbromyde, under the Basel Convention, that will have a negative effect on farmers of perennial crops in South Africa should it come into effect.

The workshop concluded with a panel discussion on the development of a policy linking trade and the environment in South Africa. The aim of the discussion was to identify key priorities and areas for further research; to suggest ways in which to deal with the lack of capacity in government and civil society on the issue of trade and the environment and to suggest an appropriate policy formulation process.

Leslie Dikeni
According to the department of trade and industry, trade and environmental concerns should not be perceived as mutually exclusive. The department needs guidance on how to continue with the process of formulating a policy linking trade and the environment, assisted by the appropriate research institution(s), since the government does not have the human and financial resources to coordinate such a process. For example, a mechanism needs to be created which will allow for consultation and interaction between government and civil society before MEAs are ratified.

Aaron Cosbey
The International Institute for Sustainable Development is currently developing a project that aims to build capacity in developing countries on trade and sustainable development-related issues. The project will target policy-makers and work closely with relevant research institutes by hosting workshops with parties interested in the trade and sustainable development debate and commissioning research. South Africa has been identified as one of the countries to benefit from this project. This could assist the DTI in setting a pro-active agenda and encourage policy dialogue at a national level.

Magda Shahin
National government representatives, particularly from the developing world, often find it difficult to defend their interests and positions in the WTO. The latter obliges governments to ensure that their trade agendas are consistent and compatible with WTO rules.

The main issues that the debate on trade and the environment needs to address in the context of the WTO are competitiveness, environmental measures as trade barriers and access to �clean� technology. The WTO can only address the practical problems national governments experience with these issues if labour, business, NGOs and governments interact. Developing countries need to engage critically the WTO agenda as well as the setting of international standards. The trend thus far has been for developed countries to set the agenda for trade and environment regulations and for developing countries to respond by focusing on the sectoral implications of environmental restrictions. These restrictions often have the greatest impact on those sectors in which developing countries have a competitive advantage such as their textile, leather and agricultural export-oriented industries. Developing countries can take recourse to the United National Conference on Trade and Development (Unctad) to assist them with technical capacity building thereby assisting them to negotiate less restrictive market entry measures.

She recommended that developing countries also set standards and that negotiations in the WTO be based on fairness and mutual recognition of respective needs and interests between industrialised and developing countries. However, it will always be difficult to achieve complete harmonisation. NGOs, businesses and other groups in civil society should be involved in the WTO process since they often expose industrial countries� unilateral imposition of restrictive environmental measures. Such involvement, however, necessitates that lawyers, economists, diplomats and business managers be trained in the functioning and mechanisms of the WTO.

In principle, environmental standards should never erode the existing market access that products enjoy; they should not become an added restriction to or conditionality for market access and government representatives should aim to achieve synergy or win-win solutions in negotiations on trade and the environment in the WTO.

Cornelis van der Lugt
He noted that the debate on trade and the environment should not be defined too broadly. Since it concerns mainly MEAs, it is largely an international issue. The department of foreign affairs should therefore play an important role in the development of a South African position on this matter. Still, all concerned government departments (DTI, DFA and DEAT) should coordinate their activities more effectively to avoid replicating the biases of those multilateral organisations they respectively deal with, such as the WTO and the United Nations Environment Programme (Unep) as well as to avoid duplicating efforts. He also suggested that a national committee be formed for each of the MEAs under negotiation to manage the policy cycle. Similar committees could also be set up to deal with WTO and Unctad structures.

More research needs to be done on industry and the environment in South Africa to complement existing studies. The issue of trade and the environment also needs to be examined more rigorously within a SADC context. In the final instance, South Africa needs to develop a legal position on the tension between the legal frameworks of the international trade and the international environmental regimes.

Lael Bethlehem, Nedlac
The debate on trade and the environment is not one of environment versus development, but of �both or neither�. The real question is how to manage the impact of development on the natural environment.

She recommended that:

• the experiences of exporters with regard to environmental restrictions on trade be monitored more closely and continuously for the government to base policy decisions on this information,
• greater coordination and consultation take place amongst government departments and between them and civil society with regard to MEAs and
• the DBSA expand its national database on resources used by South African industry and the pollution they generate.

In order to develop a broader policy process on trade and the environment:

• DTI and DTE should interact more effectively on environmental impact assessments of South African industry
• a regional approach to issues of trade and environment should be advocated within SADC
• information systems on toxic waste release should be developed and
• research is needed on the environmental impact of spatial development initiatives (SDIs) and cluster development.

DTI representatives emphasised that the department lacks capacity and resources to develop the recommended policy process. Its primary mandate is to create employment and not to protect the environment. The environmental lobby should therefore incorporate the human resource and financial costs attached to any policy process when they submit such proposals to the department. The latter considers issues such as job creation, investment potential, cost, competitiveness and legal procedure when evaluating these.

The workshop was informed of a project managed by the DBSA, but funded and initiated by the World Wildlife Fund. It will examine the linkage between the macro-economy and the environment in four southern African countries, namely Botswana, Tanzania, Zimbabwe and South Africa. The South African branch of the project was initiated at a consultative workshop hosted by the DBSA policy unit, also the project secretariat, and started in September 1997. It aims to build cooperation between the environmental community and government through the formation of a national advisory committee that would propose and commission research on various issues related to the macro-economy and the environment.

Some participants were of the opinion that department of trade and industry lacks the political will to initiate and sustain such a process and also lacks an understanding of environmental issues. They suggested that the department identify or create forums where the issue of trade and the environment can be discussed and should also support such efforts financially. She further raised the issue of the lack of capacity in southern Africa to deal with issues of trade and the environment.

Participants agreed that a national information strategy is needed to involve and coordinate all stakeholders in the debate on trade and the environment. The DTI also needs to commit itself politically to such a strategy. A national information strategy should coordinate environmental research and projects such as the United Nations Development Programme�s (UNDP) ISO 14000 project, the SADC environmental infrastructure project and the already-mentioned DBSA project. In this way, it will maximise limited resources. As a way forward, a small focused research team should take this process further in a future workshop.

Although the South African government and South African businesses have accomplished significant environmental achievements in the past few years, there is still only a small pool of people that work on issues related to trade and the environment. This highlights the urgent need to build capacity and expertise in this field.

The DTI suggested that, due to its existing lack of capacity, it would rely on a non-governmental institution to facilitate a consultation process involving business, government, NGOs and labour. The Foundation for Global Dialogue (FGD) offered to provide a forum for dialogue and dissemination of research on trade and the environment that could feed into the policy process. The Trade and Industrial Policy Secretariat (TIPS) emphasised that a research or non-governmental organisation cannot necessarily sustain such a policy formulation process. Government departments need to address the current fragmentation of policy on trade and the environment and coordinate their activities in this regard. Meanwhile, the research community can assist in identifying and analysing the issues that need to be addressed in a policy formulation process.

1. A database of all trade and environment research and projects in South and southern Africa needs to be established
2. DTI, in cooperation with other relevant departments, assisted by TIPS (as research broker) is to set up a process that should lead to the formulation of a policy framework on trade and the environment. The department should also liaise with the organisations and individuals present at the workshop to support the process. It is essential that a government department initiate and lead the policy process, despite bureaucratic and resource constraints, due to the long-term nature of such a process. It can access international funding and support for skills-building with the assistance of the environmental community.
3. The research and environmental community needs to undertake more focused research that respond to the needs of DTI, DEAT and DFA. This should happen in a coordinated fashion as part of the policy process
4. While the DTI is setting up the policy formulation process on trade and the environment, the research community should sustain its communication with all departments whose functions concern trade and environment-related issues.

Chair - Rashad Cassim
Director, Trade and Industrial Policy Secretariat

The role of the WTO in regulating trade and the environment -- aims, contributions and shortcomings
Magda Shahin
Deputy chief of mission at the Egyptian mission to the United Nations in Geneva

Trade and sustainable development
Aaron Cosbey
Programme manager, International Institute for Sustainable Development, Winnipeg, Canada

Assessing the global debates and issues from a South African perspective
David Fig
Consultant, Group for Environmental Monitoring

Session two : Multilateral environmental agreements and their impact on South Africa
Chair - Cornelis van der Lugt,
Directorate environment, Department of foreign affairs

Trade in species and the Convention on International Trade in Endangered Species (Cites)
David Newton, Traffic Southern Africa

Ozone depleting substances and the Montreal Protocol
Morkel Steyn, Directorate: air pollution control
Department of environmental affairs and tourism

Trade in wastes and the Basel Convention
Willem Scott and Tony Barnes, Directorate: air pollution control
Department of environmental affairs and tourism

The implications of ISO 14001 for South African industry
Hesphina Rukato, Coordinator, Community Wastes and Action
Programme, Group for Environmental Monitoring

Discussants: Aaron Cosbey, Institute for Sustainable Development
Catherine Fedorsky, Chief environmental advisor, Eskom

Session three: Developing a South African response
Chair - Xavier Carim
Directorate: multilateral trade relations
Department of trade and industry

The environmental experience of South African exporters: constraints and opportunities
Lael Bethlehem, Research coordinator
National Economic, Development and Labour Council (Nedlac)

Can South African business and industry accept environmental trade barriers based on product characteristics and processes?
Karin Ireton, Industrial Environmental Forum of Southern Africa

Panel discussion
Identifying key priorities on trade and environment in government and developing the institutional capacity to coordinate and harmonise policies
Leslie Dikene, Department of trade and industry
Cornelis van der Lugt, department of foreign affairs
Magda Shahin, Egyptian mission to the UN
Aaron Cosbey, Institute for Sustainable Development
Lael Bethlehem, Nedlac