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TWN
Info Service on WTO and Trade Issues (Sept23/07) Geneva, 18 Sep (D. Ravi Kanth) — Several developing countries have raised a “red flag” against the European Union’s regulation on deforestation-free products (EUDR), which was announced on 29 June 2023, saying that it “disregards local circumstances and capabilities, national legislation and certification mechanisms of developing producer countries, their efforts to fight deforestation and multilateral commitments, including the principle of common but differentiated responsibilities.” The EU’s allegedly “unilateral” and “one-size-fits-all” approach would destroy the lives of small-holders and marginal communities across countries, complained the 17 countries in a submission to the President of the European Parliament and the European Commission on 7 September. Worse still, the EUDR, according to the complainants, “establishes a unilateral benchmarking system that is inherently discriminatory and punitive, which is potentially inconsistent with WTO obligations.” The complainants include Brazil, Argentina, Indonesia, Malaysia, Thailand, Colombia, Bolivia, Mexico, Peru, Paraguay, Ecuador, Honduras, the Dominican Republic, Guatemala, Nigeria, Ivory Coast, and Ghana. They urged the EU and its institutions to engage “in a more meaningful and open dialogue with producing countries than what has been undertaken so far”. The complaint was initially lodged with the EU’s hierarchy in Brussels on 7 September and was later submitted to the World Trade Organization’s Committee on Agriculture on 14 September. According to the submission, “the EU should work to repair this legislation, or, at a minimum, aim to mitigate its more harmful impacts through implementation guidelines that adequately value the current, as well as developing local sustainable practices in agricultural value chains, and avoid trade disruption including the excessive administrative burden related to the geo-location and traceability requirements, certifications, and customs procedures.” The complainants said, “the EU’s “one-size-fits-all” approach implemented through this model of due diligence and traceability, ignores the different local conditions and will inevitably impose immense costs on exporting and importing countries alike, as well as on producers and consumers.” “While these costs are certain, we consider that the legislation, by itself, will bear no positive impact on deforestation rates and may even produce other adverse effects, such as increased poverty, diversion of resources, and hindrance of the attainment of SDGs (the United Nations Sustainable Development Goals).” The complainants pointed out that the “smallholders are especially vulnerable to the EUDR and require special support.” They said the EU must acknowledge the efforts made by developing countries to improve their livelihood and “sustainability practices as well as the significant challenges faced by them regarding limited access to financing schemes, new technologies, and technical training and assistance.” More disturbingly, they said that the smallholders “may end up being excluded from international value chains not because they have deforested their land but due to their inability to show compliance with the stringent requirements imposed by the EUDR.” “That would unfairly deprive smallholders of an important source of income and livelihood, and even impact their ability to adopt sustainable practices,” the complainants added. They called on the “Commission to formulate clear and detailed implementing acts and guidelines that include differentiated compliance and due diligence regimes for commodities and products originating from smallholders in developing countries, considering that EU SMEs (small and medium enterprises) will be granted more flexible treatment.” Reiterating their commitment “to the SDGs and to multilateral environmental agreements and goals” and “given our shared objectives and the need to work together to tackle global challenges,” the 17 countries called on the EU “to engage in effective cooperation and meaningful dialogue, with its partners in the areas of trade and sustainable development to jointly address the impact of EU legislation and its implementing instruments, including providing support to facilitate trade.” EU’S “GREEN DEAL” As reported in SUNS #9847 dated 5 September 2023, the EU circulated a restricted room document (RD/CTE/ 230) on 21 August, seen by the SUNS, in which the EU provided an update of the so-called “Green Deal” (Green Claims Directive and Sustainable Consumption of Goods – Promoting Repair and Reuse). The document denotes the current initiatives and their status. In this context, the EU listed four initiatives and their current status. The four initiatives are: 1. Carbon border adjustment mechanism which comes into effect on 16 May 2023; 2. Proposal for regulation of deforestation-free products that comes into force on 29 June 2023; 3. Proposal on the regulation of waste shipments for which date of implementation is not indicated; 4. Proposal for an Eco-design for Sustainable Products Regulation. Under the Green Claims Directive, the EU indicated that packaging and packaging waste will be reviewed. Further, under the Green Deal legislation’s next steps,” the EU suggests that it intends to undertake several legislative acts: (1) Green Deal Industrial Plan; (2) Rules for Renewable Hydrogen; (3) Net-Zero Industry Act; (4) Crucial Raw Materials Act (apparently to cut dependence on China); (5) Rules on the Substantiation of Green Claims; and (6) Initiative on the Promotion of Repair and Reuse. In addition, forthcoming proposals include: (1) corporate sustainability due diligence directive; (2) revision of EU chemicals legislation; (3) revision of food waste and textiles aspects of the EU waste framework directive; and (4) legislative framework for sustainable food systems. As noted above, the EU’s Green Deal legislation entering into force include: (1) carbon border adjustment mechanism (CBAM); (2) regulation on deforestation-free supply chains; (3) ETS (Emissions Trading System); and (4) monitoring, reporting, and verification regulation revision. According to the EU’s room document, new rules for environment claims are needed to protect consumers and honest companies, enable consumers to make informed choices, improve legal certainty, and accelerate the green transition towards a “circular, clean and climate neutral economy.” In short, the EU’s Green Deal proposal appears to “short-circuit” multilateral institutions like the UNFCCC, the WTO, and various other United Nations bodies dealing with trade and sustainability programs. “SLASH-AND-BURN” STRATEGY Brussels is apparently determined to embark on what analysts referred to as a proverbial “slash and burn” strategy wherein the EU seems confident on riding roughshod over multilateral institutions and developing countries. After seemingly creating the climate change problem over the past two centuries, the EU along with the US are apparently willing to walk away without paying for the historical damage they created to developing countries. It is common knowledge that the UN has estimated that the developed countries will need to pay around $1 trillion in climate finance to address the loss and damage due to climate change that they have been largely responsible for during the last two hundred years. Pakistan, which led a group of 134 developing and least-developed countries, called for substantial amounts of funds for loss and damage, an issue that has largely remained unaddressed during the last several years. G20 REMAINS SILENT The G20 trade ministers, in their “Outcome Document and Chair’s Summary” that was issued at the end of the G20 Trade and Investment Ministers’ Meeting (TIMM) in Jaipur, India on 25 August, merely recalled, in paragraph nine, that “trade and environment policies should be mutually supportive, consistent with WTO and multilateral environmental agreements.” The ministers went on to state: “We further acknowledge the essential role of multilateral cooperation to effectively address common environmental and sustainable development challenges. We will engage in further discussions on trade and sustainability.” Instead of targeting the controversial carbon border adjustment mechanism, the G20 Outcome Document merely stated the issue in some rather weak language. BRICS OFFERS ROADMAP AGAINST CBAM In sharp contrast, the Johannesburg II Declaration of the expanded BRICS (Brazil, Russia, India, China, and South Africa along with six new members – Ethiopia, Egypt, Saudi Arabia, United Arab Emirates, Iran, and Argentina), issued on 23 August during the XV BRICS Summit in South Africa, unambiguously reaffirmed “the call for the implementation of the 2030 Agenda for Sustainable Development in its three dimensions: economic, social and environmental, in a balanced and integrated manner by mobilizing the means required to implement the 2030 Agenda.” It urged “donor countries to honor their Official Development Assistance (ODA) commitments and to facilitate capacity building and the transfer of technology along with additional development resources to developing countries, in line with the national policy objectives of recipients.” The BRICS members highlighted “in this regard that the SDGs (Sustainable Development Goals) Summit to be held in New York in September 2023 and the Summit of the Future to be held in September 2024, constitute significant opportunities for renewing international commitment on the implementation of the 2030 Agenda.” More importantly, the BRICS declaration re-emphasized “the importance of implementing the United Nations Framework Convention on Climate Change (UNFCCC) and its Paris Agreement and the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) enhancing low-cost climate technology transfer, capacity building as well as mobilizing affordable, adequate and timely delivered new additional financial resources for environmentally sustainable projects.” It underscored the need “to defend, promote and strengthen the multilateral response to Climate Change and to work together for a successful outcome of the 28th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC COP28).” Further, “the Means of Implementation should be enhanced by developed countries, including through adequate and timely flow of affordable Climate Finance, Technical Cooperation, Capacity Building and Transfer of Technology for climate actions,” the BRICS declaration noted. The expanded BRICS declaration said that it has agreed “to address the challenges posed by climate change while also ensuring a just, affordable and sustainable transition to a low carbon and low-emission economy in line with the principles of CBDR-RC, in light of different national circumstances.” More fundamentally, it advocated “for just, equitable and sustainable transitions, based on nationally defined development priorities”, and called on developed countries “to lead by example and support developing countries towards such transitions.” The expanded BRICS members emphasized “the need for support of developed countries to developing countries for access to existing and emerging low-emission technologies and solutions that avoid, abate and remove GHG (greenhouse gas) emissions and enhance adaptation action to address climate change.” “We further emphasize the need for enhancing low-cost technology transfer and for mobilizing affordable, adequate new, and timely delivered additional financial resources for environmentally sustainable projects.” The BRICS members expressed “strong determination to contribute to a successful COP28 in Dubai, later this year, with the focus on implementation and cooperation.” They stated that: “As the main mechanism for assessing collective progress towards achieving the purpose of the Paris Agreement and its long-term goals and promoting climate action on all aspects of the Paris Agreement under the UNFCCC, the Global Stocktake must be effective and identifying implementation gaps on the global response to climate change, whilst prospectively laying the foundations for enhanced ambition by all, in particular by developed countries.” The expanded BRICS members called upon the developed countries “to fill outstanding gaps in means of implementation for mitigation and adaptation actions in developing countries.” Lastly, the expanded BRICS said categorically that they “oppose trade barriers including those under the pretext of tackling climate change imposed by certain developed countries and reiterate our commitment to enhancing coordination on these issues.” The BRICS members said unambiguously that “measures taken to tackle climate change and biodiversity loss must be WTO-consistent and must not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade and should not create unnecessary obstacles to international trade.” “Any such measure must be guided by the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC), in the light of different national circumstances,” they concluded. In short, it appears that the battle-lines are being drawn between the developing countries on the one side, and the European Union on the other at the WTO and other multilateral fora over the EU’s “unilateral” and “one-size- fits-all” trade-related environmental measures. +
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