How environmental provisions affect Asian Developing Countries

Abstract

Asian developing countries have increasingly become dependent on trade and have increased their participation in the multilateral trading system under the World Trade Organisation (WTO ). Side by side, trading rules have changed fundamentally. The Agreements on Application of Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) under the Uruguay Round in 1995, have accommodated differential environmental standards, certifications, and consumer risk preferences across nations, while promoting free trade. These agreements run the risk of providing for trade restrictions disguised as environmental grounds. The system of international environmental standards does not adequately reflect developing countries’ preferences and resource endowment, since participation from developing countries has been typically poor.

Aparna Sawhney analyses how the implementation of the SPS and TBT provisions has adversely affected the traditional agricultural and manufactured exports of an Asian developing country like India. Since more than half the value of total Indian exports comes from the OECD countries, the market access and standards/regulations in these countries are crucial. Deviations from the international benchmark, and unresolved issues, such as the stand on genetically modified (GM)-products, fragment export markets for developing countries and prove to be costly. Technical regulations, including labelling and packaging requirements and conformity tests have affected the exports of manufactured goods like textiles, garments, and leather products. The costs of complying with stipulations like use of new chemicals, processes, testing, certification and packaging are significant for producers in developing countries.

While environmental provisions have increased through new agreements under the WTO, there has been a simultaneous widening of the legal interpretation of older provisions. While consumer sovereignty and environmental risk preferences of different nations have to be respected, the developing countries need to build in their own environmental priorities in international standards. Increasing their participation in standards-making bodies is a good way to begin. Further, to ease the domestic challenge, small and medium enterprises in the traditional export sectors can be helped through targetted environmental programmes, since the environmental challenge is toughest for them.