[ Nippon Keidanren ] [ Policy ]

Basic Positions on Trade and Eco-Labelling

March 14, 2003

Committee on Trade & Investment
Nippon Keidanren
(Japan Business Federation)

1. Background

Since its establishment, the WTO has endeavored to promote balanced free trade linked to sustainable development i, and the Japanese business community holds this undertaking in the highest esteem. The Doha Ministerial Declaration (November 2001) provided for negotiations on three environmental agendas: (1) the relationship between WTO rules and multilateral environmental agreements (MEAs); (2) the exchange of information with the Secretariats of MEAs; and (3) the reduction and elimination of tariff and non-tariff barriers to environmental goods and services. With regard to the New Round, we are hopeful for copious progress on this agenda. As for the discussions concerning MEAs, as stated in Japan's proposal ii, we support the categorization of ideas on "specific trade obligations" pertaining to MEAs and, in turn, the building of a common mutual understanding between the WTO and MEAs on specific trade obligations.
Moreover, the Ministerial Declaration articulates: (1) the effect of environmental measures on the market access of developing countries; (2) the provisions of TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) related to environmental issues; and (3) that eco-labelling iii and trade shall be discussed prior to the Fifth Session of the WTO Ministerial Conference (hereafter referred to as "The Cancun Ministerial Conference") to be held this September in Cancun, and where appropriate, that future action, including the desirability of negotiations, shall be recommended to the Conference.
With regard to eco-labelling, there is an immediate need for Japan to clarify its stance; thus, it was decided that the position of the business community would be stated herein. However, as the practice of eco-labelling does not have a long history in any country, further development in terms of technology, management systems and the like can be anticipated. In addition, the direction of upcoming discussions at the WTO is uncertain. These facts inform our preliminary basic position based on current circumstances. Hereafter, we intend to maintain a high level of interest with respect to WTO discussions pertaining not only to eco-labelling, but also to all trade and environment issues, and to convey our stance in response to any progress achieved.

2. The current state of eco-labelling and business activities in Japan

Various approaches to eco-labelling in each country were initiated, primarily by developed countries, starting in the late 1970's. Afterwards, in 1989, the ISO issued a basic standard known as "Environmental labels and declarations - General principles" (ISO 14020), which is applicable to all eco-labelling. In 1999, the ISO successively issued an international standard called "Type I" (ISO 14024) pertaining to eco-labelling through third person certification; "Type II" (ISO 14021), which applied to self-declared eco-labelling; and in 2000, a technical report on eco-labelling known as "Type III" (TR 14025) laying out the quantitative data measuring environmental impact.
Japanese business boasts world-class environmental technology and is committed to supplying environmentally friendly products in the interest of sustainable development. As part of this endeavor, Japanese companies have taken it upon themselves to comply proactively with ISO's general principles pertaining to eco-labelling (ISO 14020). In recent years, the level of consumer environmental consciousness and the expectations of business held by consumers have reached new highs in Japan. Given these circumstances, Japanese business now feels that it is extremely important to relate environmental information about products and services to consumers through means such as eco-labelling.
The eco-labelling approach has spread worldwide, and in many countries, both developed and developing, eco-labelling is being adopted. Consistent with this trend, countries that have already adopted eco-labelling are engaging in international cooperation such as information exchange, mutual technical assistance activities and mutual certification activities. We believe that this kind of international engagement is extremely vital to the worldwide dissemination of eco-labelling and at the same time, the elimination of unnecessary trade barriers. As a business community of an environmentally conscious nation, we further promote those initiatives, such as mutual certification and other related activities.

3. Concerns held by the Japanese business community on eco-labelling with respect to trade

As mentioned above, Japanese business has acknowledged that eco-labelling is an effective means of promoting environmental conservation, and has pledged its efforts for the disclosure of information to consumers and to the labelling scheme that gains the trust of consumers. On the other hand, with respect to labelling, the Japanese business community perceives overseas trade concerns such as: (1) operations that are based on criteria that favor domestic industry, and that are discriminatory and lack transparency iv; (2) forced compliance with government-imposed regulations calling for eco-labelling as a requirement of green purchasing conducted by government v; and (3) government engagement in discriminatory practices of mutual certification of standard eco-labelling.
The securing of transparency in eco-labelling operations is one of the most important aspects pertaining to trade. Furthermore, during the phase in which requirements are being established, conformity with existing standards must be the aim, while in the examination phase, securing of authenticity is sought. Moreover, national governments should not make eco-labelling based on a voluntary principle mandatory as part of a means to promote environmental policy. While eco-labelling itself does not aim to impose any direct restrictions on imports, there is concern that it could serve as a trade barrier depending on the management of the operation.

4. Prospects for the WTO New Round

From this perspective, the Japanese business community holds in high regard the Doha Ministerial Declaration, which confirmed that measures aimed at environmental conservation should not be applied in a manner which would constitute a disguised restriction on international trade, while taking note of the efforts by Members to conduct national environmental assessments of trade policies on a voluntary basis. We request that the WTO decides how to handle the following two points in relation to eco-labelling at the coming Cancun Ministerial Conference.

(1) Clarification of the object of discussion

What is referred to in the Ministerial Declaration as "labelling requirements for environmental purposes" does not clearly define the object of discussion. There is a need for the members of the WTO to provide clarification.

(2) Clarification of aspects pertaining to eco-labelling under the TBT Agreement (Agreement on Technical Barriers to Trade) vi

We request clarification on the aspects of the TBT Agreement related to eco-labelling. For instance, through the clarification of (1) the relationship between ISO Type I, II, III Labelling and the TBT Agreement and (2) general concepts under the Agreement (for example, standardizing bodies), the WTO has to clearly define the relationship between the TBT Agreement and eco-labelling and to enhance the transparency of eco-labelling.

5. Conclusion

At present, many countries including developing countries are engaged in eco-labelling as a means of environmental conservation. We are hopeful for the expansion of this movement, and in the interest of preventing eco-labelling from becoming an unnecessary trade barrier, we also strongly advocate that each country do its utmost in the following areas: (1) conformity to international standards; (2) securing of transparency; (3) enforcement of non-discriminatory operations; and (4) promotion of mutual certification.
In order to organize international systems and regulations pertaining to trade, it is important that we consider methods that do not disrupt the voluntary approach to environmental maintenance employed by corporations. In particular, the WTO should clarify the aspects of eco-labelling under the TBT Agreement, and concurrently, environmental authorities and international certification institutions involved in eco-labelling should maintain close mutual contact and undertake the promotion of mutual understanding.
Additionally, it is also necessary to build an international supporting system that will enable developing countries to produce environment-conscious products without bearing an undue burden. For example, we feel that intellectual support for the development of environment-conscious products in developing countries is also essential in reducing the burden on the earth's environment. The Japanese business community, with the support of the public sector, intends to use the experience gained up to this point as a foundation for active cooperation for increasing the capabilities of developing countries to formulate and operate environmental policies, standards and criteria, through the course of capacity building.

  1. In the preamble to the Marrakech Agreement, it is provided that, "while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development".

  2. The Government of Japan submitted in October 2002 "The Relationship Between Existing WTO Rules and Specific Trade Obligations Set Out In Multilateral Environmental Agreements (MEAs)" (TN/TE/W/10), which pertains to the relationship between the WTO and MEAs.

  3. The Doha Ministerial Declaration makes reference to "labelling requirements for environmental purposes."

  4. Operations that are discriminatory and non-transparent:
    among some nations adhering to ISO Type I, it is evident that, in some cases, at the time of criteria establishment, criteria that are self-serving are arbitrarily selected. It is stated in the ISO Eco-labelling General Principal 8 (ISO 14020) that, when developing the process of eco-labelling, consultations open to the participation of interested parties should be conducted, and that achieving a consensus is highly desirable throughout the development of the process; thus the selection of non-transparent criteria is at odds with ISO principle. Moreover, we are concerned that operations that are discriminatory and non-transparent with respect to foreign enterprises producing like products are in conflict with the WTO's basic principle of national treatment.

  5. Voluntary labelling on a mandatory basis:
    With regard to eco-labelling provisions in ISO Type I, II, and III, it is stated in the principles that the voluntary nature of operations is requisite. However, in some countries, eco-labelling is being performed on a mandatory basis, though it should be voluntary. The inclusion of ISO Type I eco-labelling as a requirement of governmental green procurement is an example of this. Such operations are not only in opposition to ISO eco-labelling principles, but they serve as unnecessary international trade barriers.

  6. The TBT Agreement categorized standards into either (A) "Technical regulations" referring to mandatory standards or (B) "Standards" referring to voluntary standards, the principles of respective standards being regulated to prevent them from becoming unnecessary trade barriers.
    The following applies to "Standards" adopted by non-governmental bodies
    (1) Standardizing bodies of the governments of member nations (regardless of whether they are central government bodies, local government or non-governmental bodies) shall maintain strict adherence to the TBT Annex III "Code of Good Practice for the Preparation, Adoption and Application of Standards."
    (2) Conformity assessment procedures [TBT Agreement Articles 5, 6 (excluding the provision pertaining to the obligation to render conformity assessment procedure notification)] by non-governmental bodies.
    [Primary Principles]
    1. Securing of national treatment with respect to like products.
    2. Securing of conformity assessment procedures, which are not unnecessarily restrictive of trade.
    3. Strict observation of the guidelines and counsel of international standardizing bodies with respect to conformity assessment procedures.
    4. Securing of transparency in notification and disclosure with respect to conformity assessment procedures.
    5. Promotion of mutual certification of conformity assessment results.
    PPMs, which have an influence on final products, have been approved by the TBT Agreement, but it is not clear whether those PPMs not having influence over final products (in other words, non-product PPMs) have been approved. In making a distinction between products with eco-labelling and those without, there arise issues of violations concerning most-favored-nation treatment and national treatment, which apply to those items regarded as "like products" by the WTO.

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