Research and Reports

SESSION 2

 

GSSD Reports

Global Accords for Sustainable Development:
Enabling Technologies and Links to Finance and Legal Institutions

Session 2: Innovations of the Rio Accords


Chair: Philip S. Khoury 
Dean, School of Humanities and Social Science, MIT
Professor of History, MIT

It is a privilege for me to be invited by Professor Choucri to chair this panel, this session on Innovations of the Rio Accords.

I am an historian by training and avocation; and some of you will remember what the great publisher and press baron, Lord Beaverbrook said of historians: The story goes that one day Beaverbrook paid a visit to Sir Harold Macmillan, himself heir to a famous publishing house, and a Scot, and of course the noted conservative Prime Minister of Britain. Beaverbrook saw Macmillan reading a book on the history of Scotland in the Middle Ages and smiling. Beaverbrook said, "Sir Harold, why are you smiling?" Macmillan lifted his head and said, "Beaverbrook, what I've learned from this wonderful history book is that Scotland in the Middle Ages, is just like Scotland today, it wants its independence of England. Beaverbrook, History always repeats itself." To which Beaverbrook replied. "Sir Harold, it's not that history always repeats itself, it's that's historians always repeat each other."

The Past and the Future 
Now, even though this story does the profession of history, my profession, a disservice, I believe that Macmillan was a little too optimistic about what the past can teach us and about the present and the future. He was not completely gaga -- at least not then. We must always be searching for patterns that connect the past with the present. Consequential events like Rio require some meaningful historical framework of interpretations. Historians must be interested not only in what brings about change in a nation, a region, or in the case of this conference a world order, but also what allows for continuity and stability in periods of change and even rapid transformation.

We are now entering the seventh year (depending on how you count) of the post-Cold War era, and if this increasingly globalized society of ours has begun to learn anything it is that we are far more diverse, and potentially an unstable society, than we had ever anticipated, and those like historians themselves were all looking for patterns and frameworks of interpretations and understanding that can help us to identify where there are continuities with the past and how we might achieve greater global stability than we have so far been able to do.

Living History
What makes the topic of this session so intriguing to someone like myself, who is not an expert on the events and the forces that led up to Rio or what has happened since Rio, is because I am a witness to Rio, because Rio happened in real time. It is living history. Of course, some of our participants in this session well known to us all and in other sessions as well that will be up today and tomorrow have actually been more than witnesses, they have been direct participants in Rio and its aftermath. I very much look forward to listening to this contemporary slice of history because indeed the session today, the session I am chairing, is about contemporary history.

The question before us is simply what has been accomplished at Rio. It has been recommended, and we will try to do it in this fashion, that our keynote speaker will take about 25 minutes. He will come up here and speak to us and then we will have four shorter presentations by our panelists and with any luck (it will require a lot of luck), we will open the floor up to discussion.

Keynote Speaker
It is a privilege to introduce our keynote speaker, Razali Ismail, the Permanent Representative of Malaysia to the United Nations. He will discuss Agenda 21 and the UN Commission on Sustainable Development.

Before Ambassador Razali came to the UN in 1988, he was a senior official in the Ministry of Foreign Affairs in Malaysia and then was ambassador to Poland and India. In the United Nations he has held several important chairmanships including the chairmanships of the UN Commission on Sustainable Development. He has been a professor of international law at Michigan State University, a fellow of the Foreign Policy Association of New York and he serves on numerous boards and trusts.


Keynote Address
Agenda 21 and the UN Commission on Sustainable Development

Razali Ismail
Permanent Representative of Malaysia
Permanent Mission of Malaysia to the United Nations

Distinguished Guests,

In the letter of invitation to this symposium, I noted that the question posed for this session was "What has been accomplished at Rio?" It was further suggested that I focus on "Agenda 21 and the UN Commission on Sustainable Development." In my own way, and with license, I intend to answer the question, albeit briefly, as the past is all too obvious. But what I would like to do is an overview of Agenda 21, which can be challenging if tied to the Special Review of Rio decisions in May next year.

The Gulf
I have two quotes, which in their contrariness, embody the gulf between those that had hoped and those that were disappointed by the promise of the Earth Summit in Rio.

". . . the environment is being torn apart by two false mothers, the governments of the North and the governments of the South. It is time that a wise judge should intervene to save the child. The Earth Summit failed to act as the wise judge as so many hoped it would be."

Mohd Suliman & Ben Turok
Institute for African Alternatives

"[UNCED] has been a profoundly important human experience from which none of us can emerge unchanged . . . The world will not be the same after this Conference. Diplomacy will not be the same. The United Nations will not be the same. And prospects for our earth cannot -- must not -- be the same."

Concluding remarks by the Secretary-General of UNCED
Maurice Strong in Rio, 14 June 1992

Even though it is fashionable and easy to pour criticism on the UNCED process and its follow-up, we in the international community must force such critical analysis into political will and real action if we are to meet the immense challenge of including environmental and social sustainability into an increasingly globalized world.

My Approach
I would like to clarify that my treatment and overview rests on the challenges and obligations inherent in defining and operationalizing "sustainable development," that elusive and problematic concept that has been the subject of debate, negotiation, and summits since Stockholm in 1972, Rio in 1992, Copenhagen in 1995, and also of hundreds of books and thousands of dollars of academic research. My approach will not be, despite enormous temptation, to start pointing fingers at what the North has done or not done, what the South requires but does not have.

Agenda 21 is a global agenda. While meeting the needs of development is national, that of environmental protection is global. Agenda 21 is not supposed to place the onus of change on the South, but neither can one treat sustainable development as sequential -- that the North must clean up its house first or that economic development must precede sustainable development. And though Agenda 21 is comprehensive, it suffers from serious omissions. It does not deal in concrete terms with the inequitable economic environment, does not attend seriously to questions of trade and environment, does not carry the binding force of conventions. One can argue that if Agenda 21 is to bring about sustainable, socially acceptable, and ecologically sound development, then the North and South must break out of the North-South schism into cross-sectoral policies at the international, regional, and national levels.

Unmet Challenges
The challenges of incorporating environmental and social sustainability into economic relations and development needs have largely been unmet. The world in 1996 remains sharply divided between the rich and the poor, the global environment continues to deteriorate at an accelerating rate, and the numerous political developments of the last few years provide ample evidence for skeptics who doubt action "for a common future" -- for example, the start of Chinese and French nuclear testing soon after conclusion of NPT, further reductions of ODA levels, failure to tackle Third World debt despite numerous proposals, growing isolationism of US and rolling back of environmental legislation by conservatives, successful lobbying of industry to weaken the commitments of international environmental agreements, and a flawed CTBT being pushed for universal acceptance but which keeps the nuclear monopoly with the P5 without concurrent commitment to nuclear disarmament within a time frame. We have little, if any, evidence to show that the principles and practices of sustainable development are truly being implemented.

Status Quo
Most of the major players that continue to dominate global political, environmental, and socio-economic affairs had emerged at the Earth Summit itself and claimed it a success. The World Bank emerged in control of an expanded GEF. The USA got the Biodiversity Convention it sought by not signing the treaty on offer. The corporate sector was confirmed as the key actor in the "battle to save the planet." Free-market environmentalism -- the philosophy that transnational corporations brought to Rio through the Business Council on Sustainable Development -- has become the order of the day, impressing Northern and Southern leaders alike.

CSD
At the United Nations, the Commission on Sustainable Development soldiers on trying to develop and expand political consensus by working on the decisions of Rio. Results have been uninspiring. As we know, the CSD is due in 1997 for a major review of the decisions of the Rio Summit. As things are, that occasion may yield little.
The CSD has been involved in monitoring national strategies, the development of key indicators for sustainable development, and providing policy guidance on the cross-sectoral issues of mobilizing additional finance, technology, changing consumption patterns, and sustainable forest management. Progress remains negligible as governments filibuster and the powerful business sector applies pressure not to be regulated or made accountable.

UN Meetings
The UN has had other important high-level meetings, including the Social Summit in Stockholm and the Conference in Beijing. Despite impressive documents, the UN has fallen short of determining the means of implementation. Clearly we are forced to conclude that the problems of operationalizing sustainable development and international agreements are political. We therefore need to confront the structures of power, of who controls resources and decision-making, of how power is exercised, by whom and for whose benefit.

Symposium Goals
If we at this Symposium are to contribute meaningfully to the search for solutions to actualize sustainable development, we must:

1. Reform the forces and major players that entrench inequalities and prevent change;
2. Re-affirm the universal values that must inform international policy-making and negotiations; and
3. Apportion responsibility and examine innovative means to secure more equitable distribution of resources.

Three Views
On the multilateral level, the Earth Summit and subsequent accords gave three views broad recognition:

(i) The North's development model is not globally viable for ecological reasons because of the finite nature of resources, and of the planet's and the atmosphere's capacity to absorb pollution in all its forms;
(ii) The industrialized countries have recognized that they are mainly responsible for the global ecological crisis and admitted that their "rights" to exploit resources and pollute the atmosphere is historically exhausted;
(iii) The South, the poor and the poorest, have been granted the right to development, even though this right can only be enjoyed on the basis of fair distribution and a new concept of shared responsibilities and sustainability.

These universally accepted positions should remain the cornerstones for any global accords on sustainable development. Agenda 21 and the Rio Declaration should be major reference points for international negotiations. Sadly, they are not. Since Rio, the worsening economic and political conditions in nearly all industrialized countries have affected the pace and direction of international environmental policy. We therefore need a sober assessment of the prevailing framework of conditions in which global accords for sustainable development can operate.

UNCED Lesson
One important lesson the UNCED process has demonstrated is that we must not delegate the solution of global problems to international diplomacy alone. International diplomacy does not deal with the critical time factor, since the pace of environmental destruction is faster than the political potential for implementation.

Although there are a large number of major international environmental agreements (over 170), international diplomacy remains a slow business when measured against the enormous pressures caused by the problems. Months, if not years, pass before international treaties are negotiated, modified, ratified, and implemented. Negotiating centers around a search for the lowest common denominator; the resulting regulatory arrangements then embark on the slow journey of implementation by states and verification, which sometimes is impossible.

A stark example of this operational dilemma is illustrated by current efforts to conserve and sustainably use biodiversity as provided for in the Convention. While every clause and provision is meticulously examined by the Parties to the Convention, four years later financial resources to implement the Convention's objectives remain unsecured. While each government delegation negotiates a position advantageous to their own national self-interest, thousands of hectares of forests, the depositories of the world's biodiversity, are logged over and destroyed by companies in a matter of months. Most of these logging companies are privately owned, beyond government regulation, and their company directors are quite oblivious to the existence of a Convention on Biological Diversity.

Business as Usual
Another major problem with global accords, especially as they relate to sustainable use of natural resources, is that these agreements blind us to the fact that hardly a single nation-state is seriously prepared to transfer or relinquish its rights to dispose of natural resources. One of the big challenges that face us today is the need to address this suspicion towards any shedding of national sovereignty.

One critical element would be the structural redistribution of power, accompanied by real democratization of the UN system and international financial institutions. Perhaps only when the playing field is made level in terms of decision-making powers and a redistribution of resources will the insistence of developing countries on their sovereign rights to utilize their resources in accordance with national plans and use these as important political bargaining chips in global negotiations be unwarranted.

Reshaping North-South Relations
On the whole, if combating poverty and tackling the causes of environmental destruction are to be priority goals for realizing sustainable development, the real political challenge is to reshape North-South relations. In the face of the global ecological and social crisis, Agenda 21 and subsequent UN declarations have barely managed to specify in concrete terms the need to reform the world economic order. Nor have they succeeded in pointing to the direction we must move in order to defuse the ongoing and critical conflict between trade and environment.

The Review of the CSD in May of next year will provide enormous challenges. Are we going to "paper-over cracks," be accusatory, or look for the lowest common denominator for a meaningless consensus? Can the CSD enhance consensus, or can the UN, through the review, enhance its delivery capacity via a consensus?

Review Priorities
There is no running away from looking at the issue of the means of implementation, even if targets of Rio 1992 of 110 billion per year are pipe dreams. With the contraction of ODA and drying up of humanitarian assistance, and with the new definition of AID, the role of the UN in identifying and marshaling resources is significantly reduced.

Technology Issues
The Review must also discuss the transfer of environmentally sound technology -- in Rio the term used was preferential -- hardly applicable now as government-to-government transfer has barely taken off. Instead it has been left to the private sector and for those countries that can afford it. Northern-determined intellectual property rights and patents regimes have helped to retard the transfer of these technologies to the countries desperately in need of them.

While technology is vital, an unquestioning acceptance of Northern technology, especially nuclear, chemical, or the new biotechnologies, can be fatal. Some Northern technologies are re-packaged, dangerous and untested. Developing countries would do well if they were able to practice the precautionary principle in this respect. Unfortunately, most cannot afford to do so.

Value-Added
The Review in 1997 should be critical about the results achieved since 1992. But it must conclude with the UN being identified clearly as the organization which can not only enhance political commitment but can translate them in tangible terms. I am talking about a value-added role for the UN through the Review process.

We have spent enough time defining concepts and prescribing them as a result of UN conferences. The Review must allow the UN to cut a clear profile for the future and to make a claim to be involved in development in more ways than it is doing now, and with an efficient operational and delivery capacity.

UN Coordination
At the very least the UN must demonstrate that it can coordinate effectively at the macro-level by bringing decisions and deliberations to influence the decisions and deliberations elsewhere, particularly at Bretton Woods and WTO. The straitjacket of a traditional division of labor between the UN and Bretton Woods and other bodies must disappear.

Macro-coordination will take an important step if the major players that determine policies in the World Bank and the IMF are prepared to deal with the major players who attend the CSD, even if some may come from similar countries. Certain enlightened developed countries, I believe, already recognize this -- thus the small beginnings to bring the UN to the ear of G-7 meetings, but this is not enough.

The UN through the Review must leverage for itself a role as the focal point and development catalyst for sustainable development. For many reasons, perhaps more so that ECOSOC, the CSD can still stir some excitement, some spark.

When I was Chair of CSD, I regarded the CSD not only as a monitoring body operating within a narrow compass but acting fully as facilitator with the potential to harness public support to influence course adjustments of governments and institutional programmes and to influence the redirection and expansion of resources.

Commitments
Commitments given have to be honored -- if not so far, at least the validity and necessity of these commitments must be reasserted at the Review, and greater efforts made to translate the commitments into reality within certain time frames.

Co-opted Sustainability
The Review should also address how sustainable development has been dangerously co-opted by agents of free trade to the extent that sustainable development may lose its meaning. Contemporary exponents of development, both North and South, chant mantras that market forces and deregulation will bring wealth, progress, and social achievements. This is not always and necessarily true. Rising income in some developing countries can be accompanied by growth in the numbers of marginalized people.

The "wealth creating" economic activity used to "clean up" past environmental mess can in turn create additional damage. Wealth cannot bring back lost species or repair an irretrievably poisoned atmosphere or contaminated soil.

Sadly, there are many in the developing world who ignore the environmental degradation and social disintegration evidenced in the Western industrialized countries, who neglect to learn from tragic mistakes, and and who choose instead to prescribe themselves the same dose of medicine.

Marginalized Equity
Four years after Rio we see that the CSD and UNCTAD, institutions that consider equity in North-South relations as a fundamental principle, have been marginalized in favor of the WTO.

The ascendancy of the WTO as the premier institution to coordinate and adjudicate on complex issues such as the link between international trade and environmental sustainability is an alarming development.

The WTO symbolizes the unequal decision-making powers between North and South. The manner in which the environment is sought to be defined and linked to trade issues is certainly to be weighted against the weaker countries. In this skewed world, the rules of the WTO threaten to extinguish existing environmental treaties, even though the supporters of globalization profess that the resulting wealth creation will enhance environmental protection. It is a real possibility that the hard-won negotiations that culminated in the Basel Convention, CITES, and the Montreal Protocol will come to nothing. Instead the trade measures embodied in these agreements may be deemed as imposing unfair barriers to trade.

TNCs
While globalization has reduced governments' abilities to regulate the sustainable use of their resources, the free market has endowed transnational companies with greater rights to invest anywhere in the world, and with reduced responsibilities in the area of environmental protection and safeguards for human health.

It can be argued that unregulated activities of TNCs pose one of the greatest dangers to the environment and to sustainability.

False Markets
Market forces as practiced in the global marketplace today encourage unsustainable resource exploitation by the false commercial values that producers and buyers fix to natural resources. For example, one of the major causes of forest destruction in Southeast Asia and the Pacific is the hunger for timber by the Japanese construction industry. The false economy of not internalizing social and environmental costs, and which subsidizes primary commodity extraction, results in a situation where imported tropical timber from the Solomon Islands is markedly cheaper than the price of plantation timber grown domestically in Japan.

New Finance
An important challenge that faces the international community, and one that must be examined at the Review, is the urgent need to find new and innovative sources of finance. There have been many initiatives calling for international cooperation in this sphere, and proposals have ranged from the carbon tax to global taxations on international gambling, arms sales, international air travel, and exploitation of the global commons, etc.

Despite the plethora of good ideas and their potential to raise significant sums of money at a time when national states cannot, or are unwilling, to increase ODA commitments, progress has been stymied by the major countries who consider such financial instruments an infringement of their sovereign rights.

Here, then, encapsulates the vagaries of power politics and the pitiful situation we find ourselves in: when everyone has agreed that we are facing an environmental and development crisis, the major players who can make a difference refuse to do so to protect the rights of their companies to maximize profits.

Intellectual Property Rights
One other issue that I would like to mention today is the issue of intellectual property rights as they are applied to genetic resources.

This is particularly important to developing countries, as they potentially stand to gain the means to finance sustainable development. Increasing interest in the knowledge of indigenous peoples of the South has been fueled by the growth of biotechnology and the realization of huge commercial profits to be made.

These commercial values are not to be underestimated. The use of traditional knowledge has reportedly increased the efficiency of screening plants for medicinal properties by more than 400 percent; the current value of the world market for medicinal plants derived from leads given by indigenous and local communities is approximately US$43 billion. The value of crop varieties improved and developed by traditional farmers to the seed industry is estimated to be US$15 billion.

However, the TRIPS provision of GATT guarantees a monopoly of ownership to the companies and laboratories of the North who have commercialized products such as medicine or seed, based on the knowledge of indigenous peoples and local communities.

The IPRs regime denies protection to the traditions and innovations of the indigenous communities because their knowledge is deemed to be in the public domain, and therefore to be accessed freely.

So, while we acknowledge that the riches of biodiversity have been protected by indigenous peoples and farmers in the South and that benefits should be shared equitably, it is the Northern companies that are the sole beneficiaries of profits. The recent patent granted for turmeric to medical researchers of a US laboratory provides an example of such biopiracy of knowledge.

Beyond Stock-taking
In conclusion, I would like to stress that the time for stock-taking and general assessments has passed. We all know, some of us to an impressive degree of scientific knowledge, that the environment is deteriorating and the potential for sustainable development is slipping away. In retrospect, perhaps it can be argued that UNCED and its subsequent accords on sustainable development never had a chance of addressing the real problems of "environment and development."

UN delegates were provided with materials for a convention on biodiversity but not on free trade; on forests but not logging; on climate but not on automobiles. Agenda 21 features clauses on "enabling the poor to achieve sustainable livelihoods," but none on enabling the rich also to achieve sustainable patterns as well.

These omissions condemned UNCED and the succeeding discourse on sustainable development to a position secondary to the pre-eminence of globalization, an ideology spearheaded by the undemocratic and unholy trinity of Bretton Woods institutions and the WTO. We are faced with the challenge of recapturing the debate on the central issues which economic expansion poses for human societies.

Common Responsibility
It is important to remind ourselves that we (as government representatives, scientists, development workers, consumers, teachers, lawyers, and experts concerned with the business of sustainable development) have a grave responsibility in discussing development. Millions of people, the majority of them desperately poor in the South, face daily the consequences of environmental degradation. We must not allow ourselves to cast about for "solutions" that will merely keep our own power and standards of living intact when we are determining the fate and livelihoods of others.

Bottom-Up Approach
In working towards a bottom-up approach to sustainable development, we must be mindful that an awareness of the problems is not enough. Ultimately the challenge of realizing sustainable development is one of changing individual behavior and transforming societies.

It is not so much what can be given to the poor and to the South, but that the rich and the powerful should take less for themselves.


Rio Accords and Institutional Innovation
Ian Johnson
Assistant Chief Executive Officer
Global Environment Facility

Rio was and remains an import

One: It placed new issues on the international agenda -- or at least offered a high-level focus. Until the Rio process, sustainability was a fringe concern. Rio changed that.

Two: Rio was inclusive -- although ostensibly inter-governmental, the build-up and the Rio event clearly involved those outside of governments (NGOs, PS, etc.).

Three: It set in motion (in part because of items 1. and 2. above) the demand possibility for innovation.

Four: Accords and treaties were delivered and signed, e.g., Agenda 21, the Framework Convention for Climate Change, the Convention on Biological Diversity.

Five: Its timing was crucial. Great changes were taking place (North and South now; North, South and East, although East only recently).

GEF Context
This morning I will briefly talk about the Global Environment Facility (GEF) and set it in the context of the Rio process and accords. The pilot phase of the GEF started about one year before Rio -- it gained prominence during the Rio process and was reorganized as an important element at Rio, especially. The GEF started life as a troubled orphan, or at least it had only a single parent -- supported by the North and eventually Ministries of Finance.

Early meetings on GEF were exclusively Northern and Ministries of Finance: this was a function of the World Bank. The pressures coming from the Rio process changed that:

1. Pressure to broaden away from only Ministries of Finance in the North.

2. Pressure to find greater balance between North and South.

3. Pressure to be inclusive within governments -- i.e., no single ministry had a monopoly on sustainability. Governments are non-monolithic: differences within greater than between?

4. Pressure on the differences in operation of styles, including World Bank, due to some of its investment strategies.

5. Pressure to fund meaningful ways towards inclusivity, especially amongst NGOs and PS.

6. Pressure to do things differently. This meant new institutional approaches needed to deal with new issues. And this ultimately grew into a call for no new bureaucracy.

7. Pressure to identify meaningful level of funds.

This was the context in which the GEF was born and negotiated.

GEF Performance
Institutionally the GEF had to:

1. Build a bridge between constituencies, especially between the United Nations system (one country, one vote) and Bretton Woods (one $, one vote).

2. Build a bridge between North and South.

3. Build a bridge between forums for political debate and negotiations (e.g., Conventions) and forums for operational delivery.

4. Build a bridge between governments and those outside government.

5. Also, the GEF had to find money - $2 billion.

What Happened? 
What occurred was this: one and a half years of negotiations developing the pilot phase resulted in a restructured GEF and a fund of $2 billion.

Some Key GEF Features
Political stewardship was greater than operational modalities available. It was also greater than the political legitimacy accorded. And a new broad-based form of political deliberation was emerging. Here are some features:

Working Agreements

1. Separation of policy-making (Conventions) and operations of the GEF.
2. COPs provide guidance to GEF; GEF is operational.

Within GEF

1. more balanced executive body Council: 32 members (1/2 + 1/2) 

2. A new voting system

3. Joint chairmanship of executive meetings 

4. NGO observer status

6. More transparency than any other institution.

Interesting consequences

1. Wheel of misfortune: There is too much institutional overlap
2. Organization charge: There is a strong need for streamlining
3. Institutional innovation: There is now greater reliance on making science more public-policy sensitive.

What Is next
1. Money is needed.

2. We must be more creative: we must be aggressive on financing instrumentalities.

3. We must create new instruments and methods.

4. Operational modalities must be accelerated: they need to serve the intended communities better.

5. The root causes must be addressed: this is not just win-win, but win-lose, and win what? Who wins?

5. Engage others more aggressively in understanding GEF efforts; and especially engage the scientific community. The fundamental responses are science-based. When scientists speak out as public policy spokespeople, it helps enormously.

Ecological Infrastructure
I believe that the next ten years we will need to come to grips with the concept of ecological infrastructure -- life-support systems for the planet.

Paradoxically, because we have for generations under-invested in ecological infrastructure, the gains in financial and economic returns may be the highest of the three. 

The challenge is to capture those returns for the benefit of people in developing countries. Capturing the gains and shaping them in a fair way are two critical priorities for us all.


Energy and Sustainable Human Development
Thomas B. Johansson
Director, Energy and Atmosphere Programme, SEED/BPPS
United Nations Development Programme

Energy & Poverty
An estimated 2 billion people, out of a current world population of 5.8 billion, have no access to electricity. Two billion people cook using traditional fuels such as dung, fuelwood, and biomass, and the collection, carting, and indoor air pollution effects associated with the use of these fuels has direct and negative impacts on the quality of life of women and children in particular.

In total, 2.5 billion people in developing countries have little access to commercial energy services. Energy services constitute a sizable share of total household expenditure in developing countries, and the poor usually pay a higher cost per unit of energy service when compared to the rich.

Energy Production
Energy production and use is directly related to local, regional and global pollution and environmental quality. Indoor air pollution in developing countries caused by cooking using traditional fuels, urban air pollution with associated health implications, acidification, and global climate change are all directly related to current patterns of energy production and consumption.

Energy and electricity are direct inputs to industrial processes, food processing, agriculture, and most activities and impact development and economic growth in most countries.

Energy is not only a sectoral issue but is integrally and critically related to many dimensions of sustainable human development.

Current Approaches
Current approaches to energy production, distribution and utilization are generally unsustainable in economic, social, and environmental terms and will increasingly make energy a barrier to socio-economic progress in developing countries. With growing demand for energy services and insufficient investment financing, conventional energy will, more and more, create bottlenecks to sustainable human development.

If today's developing countries are to achieve people-centered economic growth, guided by the paradigm of sustainable socio-economic development, they must undertake a new energy path that uses new technologies and approaches.

This is not a change at the margin, but a fundamental change in how energy is viewed within overall socio-economic development. This transformation must involve moving away from energy consumption as the measure of development -- an approach that implies that the task of energy planning is to make projections of energy consumption into the future and design supply mixes to meet these projected energy requirements.

New Approach
What is needed instead is a new approach to energy in which the level of energy services is the indicator of development. In this approach, the level of energy services, rather than simply the amount of energy consumed, determines the satisfaction of basic human needs, the quality of life, and the standard of living. The manner in which energy is utilized must be reevaluated. Development planning and poverty alleviation strategies must be linked and address the role of energy in development to be sustainable.

Energy Sustainability
Sustainable approaches to energy would focus on dramatically enhanced end use efficiency, the widespread dissemination of renewable energy, especially to provide energy services in rural and remote areas, and the global adoption of modern, cleaner fossil fuel based energy technologies.

Technology Choices
Technology choice and technology path are critically important with regard to all three issues. Developing countries need not repeat the path of technology choice followed by industrialized countries. Developing countries can take advantage of modern, highly efficient technologies which exist and are commercial or need increased dissemination to become fully commercial. Because of short-term time horizons by which investment decisions are currently evaluated, some excellent technology options are currently not widely disseminated. The cheapest technologies in the short term are often not the most efficient, nor cost-effective when evaluated in the medium term, compounded further when environmental and social externalities are included.

Renewables
Furthermore, many new and renewable energy technologies are on the threshold of commercialization and need access to markets of adequate size to reach the economies of scale that will ensure economic sustainability.

Opportunity Costs
This is especially important as the major new investments to increase installed capacity are today taking place in the developing world. The opportunity exists to avoid the costly mistakes of the industrialized countries while at the same time diversifying the technology path pursued in the energy sector.

Sustainable energy options shift the course of energy development to meeting the objective of providing the same energy service with less energy inputs or to achieve a higher level of services with the same inputs.

Options
These options include the more efficient use of energy in new installations and equipment through the establishment of performance criteria which recognize the lower costs of energy savings as compared to the expansion for new capacity in the generation sector.

Savings
Industrial energy savings focusing on technological innovation in the most energy-intensive industries of iron and steel, chemicals, petroleum refining, pulp and paper and cement, industries which are growing most rapidly in developing countries, offer opportunities for major energy savings. Improving transportation options including fuel economy as well as modal shifts to alternative transportation systems are also important in developing countries where global trends in urbanization are the greatest.

Efficiency
Energy efficiency in the use of traditional fuels through improved stove development and dissemination is essential not only to improve the management of the natural resources base in many countries but to mitigate associated indoor air pollution effects. This type of technology change can also provide the basis for fuel switching to cleaner options such as kerosene and LPG once the technological base is improved.

Material Use
Improving material use efficiency for energy-intensive materials through using higher quality material, and reuse and recycling of materials is important for overall energy efficiency of the economy.

UNISE
In response to these challenges and opportunities, UNDP has developed the UNDP Initiative on Sustainable Energy (UNISE) which is a strategic document describing the key linkages between energy and socio-economic development within the sustainable human development paradigm (SHD). Energy is seen not as an end in itself, but rather as a means to achieve people-centered development.

End-Use
Through improved end-use efficiency and increased utilization of renewable sources of energy, energy can become a critical tool to achieve UNDP's primary goals: eradicating poverty, improving the situation of women, providing people with income-earning opportunities, and protecting and regenerating the environment. UNISE advocates an integrated, cross-sectoral, and energy service orientated approach to sustainable development.

Focused Attention
UNISE focuses on promotion of activities in four areas: mobilizing support for indigenous capacity-building; creation of supportive legal, institutional, and regulatory climates for sustainable energy development; contributing to technology leapfrogging through innovation demonstration projects, and supporting the formulation and implementation of national energy action programmes.

The necessary reorientation will not happen by itself, under present rules, regulations, and economic frameworks. There is a vital need to create focused attention to how public and private interests can be mobilized to formulate and implement the legal, institutional, and fiscal frameworks required to promote sustainable energy.

This requires a public sector led undertaking, with important contributions from the private sector, and civil society at large. It requires a renewed and action-oriented response from the international community.


The World Trade Organization and the Environment
Rudolf Dolzer
Professor of Law, University of Bonn

It falls to me to review the developments in the area of trade and environment since Rio. This segment is distinct from issues such as climate change, protection of the ozone shield or conservation of biodiversity, as it does not address one specific environmental objective but relates, in principle, to all areas of the environment. Moreover, and more importantly, the focus here is not as discrete.

At its core it consists in the blending of environmental concerns with economic processes of wealth creation. In this sense, issues of trade and environment are at the very heart of the concept of sustainable development.

Trade Issues
It was by no means accidental that trade issues and their implications for environment came to the forefront in Rio de Janeiro. In Rio, the concept of sustainable development was directly linked to the necessity of the integrating of environmental values into other economic and social policies.

Rio stands for the recognition that in the long run, the compartmentalization and fragmentation of economics, of social justice, and of environmental politics must gradually be abandoned and replaced by integrated policies which reach out and address all concerns. At least on the governmental level, few participants in Rio had illusions about the far-reaching nature of this challenge, but all agreed that for the sake of our children and of the creation, we have no alternative.

Realistic Expectations
Against this background of the novel call for integrated policies on the governmental level, a review of the issues of trade and environment may be especially telling in an assessment of the developments since Rio.

However, expectations about specific results must not be too high in an area such as trade and environment, which is characterized by the presence of powerful interest groups, of institutional rivalry, and of inertia informed by long-standing habits of thought and action. It is almost commonplace today that the issue of trade and environment makes two cultures meet, some would say clash.

The focus of trade specialists has been to create wealth by way of opening national borders through deregulation, through the pushing back of governmental intervention. In contrast, the major theme of environmentalists has been to call on governments in order to act and to protect nature against human infringement.

In reality, it appears that the issues and the approaches required are more complex and that we are still at the stage of identifying and defining them.

Environmental Protection
From the point of view of environmental protection, there is no single category and type of free trade. Free trade with endangered species or with CFCs must be prevented, but, for instance, free trade in agricultural products may lead to the abandonment of subsidies and of production methods which will benefit the environment.

Along the same lines, there is no "trade with tropical timber," but there is trade with timber from forests sustainably managed and from forests that are being destroyed.

These examples show that generalization about trade and environment must be avoided, as the rubric covers a range of distinct matters with separate features, and it is impossible to find any general scheme or guideline which would properly encompass and address the specifics of all the many facets. The yardstick by which we must measure progress therefore lies in an informed review of distinct, individual issues.

Official Stance
A few months ago, the leaders of the G7 or G8 again called for new policies to implement the Rio concept. In their final communiqué they highlighted that trade and environment must not contradict but reinforce or strengthen each other.

One may judge that the leaders have simply restated the same old problem which was already put on the international agenda in Rio.

The more appropriate assessment seems to be that the issue has retained its high profile in spite of the complexities involved, and that substantial pressure continues to be exercised on the WTO when the Ministerial Conference will meet in Singapore this December to consider this segment.

Now, whereas the wide attention for the nexus between trade and environment is relatively new, the GATT had established a Working Group on Environmental Matters and International Trade as early as 1971. It would be inappropriate to say that major initiatives came out of this group.

GATT Views
The GATT community traditionally considered the issue to be a marginal one for its purposes, and environmental regulations were chiefly seen as a potential impediment to free trade. In most corners of the GATT community, still today environmental measures are viewed through the lens identifying obstacles to trade and green protectionism.

It will not be overlooked that among the eight decisions reached on specific environmental matters within the GATT and the WTO since the early 80's, not a single case was resolved in favor of the environment; the typical decision was that the measures were discriminatory or unnecessarily restrictive. While all cases and issues deserved to be judged on their own merits, this record has not strengthened the confidence of the environmental community vis-ˆ-vis the responsiveness of the GATT system as a whole toward environmental concerns.

WTO
As to the WTO, established in 1994, the traditional GATT rules as they relate to environment have not been changed. In fact, the word "environment" appears neither in the old nor in the new operative GATT text.

However, the objective to protect and preserve the environment and sustainable development has been explicitly recognized in the preamble of the new GATT. In the area of technical barriers, new rules were adopted in the 1994 GATT, which, in my view, may eventually turn out to raise more problems for the environment then did the earlier version due to the emphasis on international rather than national standards.

The matter is ambivalent, however, inasmuch as the new rules are based on the concept that the GATT will accept whatever international standard is accepted; this opens up the possibility to establish high international environmental standards compatible with GATT rules.

The environmental crux is, however, that no provision has been made in order to produce any international standard. In principle, the new GATT continues to rely on the traditional GATT rule agreed upon in 1947, according to which rules affecting trade are allowable in case they are "necessary to protect human, animal, or plant life or health" (Article XX b), or if they relate to the conservation of exhaustible natural resources (Article XX g).

While this scheme may appear appropriate and acceptable in principle, its interpretation and application to national, regional and global issues of the environment remains vague and needs to be clarified. Thus, the WTO Committee on Trade and Environment has been charged "to make appropriate recommendations on whether any modifications of the provisions of the multilateral trading systems are required."

Key Issues in Technology-Environment Agenda
Among the key issues to be considered, the following are highest on the agenda:

First: The relationship between the GATT and multilateral environmental conventions needs to be clarified.

Currently, the international system does not clearly protect the international environmental conventions against the disciplines of GATT, and they may therefore be considered to violate GATT.

As international conventions on the environment must be considered to establish minimum standards for sustainable development, it must be ensured that the implementation of their objectives will be judged to be consistent with the rules of the international trading system. Again, the details of such an arrangement will have to be negotiated carefully. Various categories of actions may be distinguished. Generally speaking, action mandated by a multilateral convention must clearly be protected.

More difficult questions will arise if actions are consistent with the objectives of a convention, but not mandated by a multilateral convention. Yet other questions must be asked in view of unilateral environmental questions affecting trade which are not covered by a multilateral treaty but which are supported by scientific evidence.

And for all these issues, differentiations may have to be introduced with regard to territorial jurisdiction. Thus, different rules may have to apply for unilateral environmental measures aimed at conduct in the State's territory, on foreign territory, and on territory belonging to the global commons.

These distinctions illustrate the technical legal complexity of the substantive issues which may govern law and trade in the future.

Second: Economic incentives for environmentally sound conduct must be established.

The range of governmental instruments best suited to effectively promote environmental objectives has, of course, been the subject of a long-standing debate involving classical policy of command and control, taxes, fees, trading schemes, and subsidies. While it seems clear that no general abstract rules have been found which would favor one or the other instrument, a willingness has emerged to rely more on incentives, taxes, charges, fees, subsidies and less on command and control than so far.

The maxims of free trade, of the optimal use of resources and of the internalization of environmental costs, may be linked through identical or parallel underlying rationales, and their interdependence will have to be examined and highlighted for the sake of sustainable development.

Also, voluntary guidelines or agreements undertaken by the private sector and the government may play a more prominent role in the future. So far, the discussion in GATT has largely centered on command and control; issues involving taxes, charges, and fees remain vague.

Third: Matters of standards, technical regulations, packaging, labeling, and recycling for eco-purposes must be clarified. 

Trade experts have raised concerns vis-a-vis such measures in view of the requirement for transparency, the participation of all domestic and foreign stakeholders, and the effect on developing States.

At first sight, the issues seem to belong to the more simple ones, but is has turned out that even here progress is slow.

Fourth: Developing countries demand that whatever rules are agreed upon, they must take into account their special needs and capabilities.

Especially the least developed countries will ask for privileged treatment. In relation to developed states, a special debate centers on the North/South exports of goods which are domestically prohibited in the North. In the area of waste and of chemicals, rules have already been introduced which require the prior informed consent of the importing country.

One key issue here relates to the alternative between international rules which may govern or between national rules which determine the scope of import restrictions. Developing states argue, understandably, that they lack the knowledge and resources to protect themselves unilaterally.

Fifth: From the legal perspective, the issue of dispute settlement is an important one.

A number of environmental conventions contain their own systems of dispute settlement, and thus it becomes necessary to assure consistency with the new WTO system.

In the case of the WTO system, NGOs have expressed concern, correctly, that environmental objectives may in fact not receive the same attention as trade issues when it comes to weighing environmental and trade concerns. Policy decisions and the resolution of individual disputes in this field often turn on the balancing of values, and the outcome may largely depend upon the special background, experience, and bias of the decision-maker.

In the past, it appears that the key question was whether environmental objectives were consistent with trade, and not whether trade rules affected the environment in an unacceptable manner. If the message of Rio is taken seriously, the primary yardstick is neither trade nor environment, but sustainability.

Products and Process
Let me turn to the GATT policy toward a product and the method of its production. The GATT distinguishes between a damage arising out of a product and damage arising out of the method of production.

The distinction is important because GATT is only concerned with the product, not with a method of production. For environmental purposes this means that a State may not have recourse against another State if environmentally harmful methods of production are at stake. This seems to be one area where classical rules are not amenable to environmental concerns and where reform will be necessary.

Also, the GATT/WTO rules so far do not allow to properly focus on the consequences of externalized or internalized costs of a traded product, even though the concept of free trade and the environmental concern for the optimal use of resources share an underlying rationale.

Environment-Trade-Cooperation
Moving beyond trade and environment, the same maxim applies, in principle, to the linkage between the environment and other fields of international economic cooperation. The WTO is undertaking studies not only on the trade-environment nexus, but also on the role of the environment in policies governing the new international regimes on intellectual property rights and on trade in services.

In these areas, the process of examination and of discussion has hardly started, but it has already become clear that important and complex issues of sustainability are emerging in these sectors as well.

Finally, the prominence of the debate on trade and environment must be allowed to overshadow the linkage between the environment and foreign investment.

From a broader perspective of sustainable development, it is my view that issues of foreign investment are at least as important as those of foreign trade. It so happened that one case, the first Tuna Dolphin case, highlighted trade rather than investment issues in 1991 when the trade negotiations entered their final stage.

Globalization Realities
While the Uruguay Round thus turned out to provide a timely forum for trade issues, the practicabilities of economic globalization and its bearing upon global sustainable development will eventually require equal attention to issues of foreign investment, especially in view of the crucial role of private capital for development in the Third World.

Currently, the time does not appear to be ripe for a comprehensive worldwide effort to address these issues, even though the NAFTA has done so. The OECD has engaged in a major effort to prepare a multilateral treaty governing the protection of foreign investment which would replace or complement the current patchwork of more than 600 bilateral treaties; it would appear that this initiative may open an avenue to effectively address the linkage between trade and investment at a subsequent stage.

The complexities in this field are, however, not less than in the trade area. The call for sovereignty of the host states, especially in the Third World, will bear upon these discussions as much as in the trade area. As these deliberations and negotiations on legally binding rules will take time, it is most appropriate that on the non-binding level, a major initiative under the leadership of the World Bank has been launched in this field; it aims at establishing sectoral guidelines for sustainable foreign investment which would be of a voluntary nature.

Linkage Issues
Among all the tasks on the road to sustainable development, the linkage issues, such as the integration of environmental concerns into foreign trade or investment policies, may require the most ingenuity and willingness to abandon the cherished habits of compartmentalized segmented thinking which separates economic, social, and environmental concerns.

The difficulties to move environmental concerns into mainstream economic activities are well known to national ministers and to agencies for the environment. Progress will depend upon the political will to cooperate on the part of all actors concerned, and the political horse-trading requires that the environmental actors have equal political standing and influence.

In the area of international trade, the trading community rather than the environmental groups has taken the lead. Environmental groups should, in any view, not lament but welcome the willingness of the WTO to put the environment on the agenda.

The next phase of the WTO negotiations will answer the question whether, as feared by some, the trade community has in fact acted chiefly to preempt the issue so as to be able to defend its specific concerns, or whether a genuine shift in paradigm has occurred which will integrate trading and environmental issues.

Institutional Issues
Institutional issues will be discussed later on in this Symposium. It is well known that at this stage international environmental organizations suffer from a structural weakness.

In the context of trade, as in other areas, this makes it difficult, or impossible, for them to speak out as the effective voice of the environment in the same way as economic organizations protect the economic interests which they guard according to their mandate.

For the time being, we must hope that the WTO indeed will succeed in promoting the optimal use of the world's resources for the sake of sustainable development. The topic will require continuous public attention.


Industrial Countries' Views of Sustainable Development
Jeremy Eppel
Counsellor to the Director for Environment, Organisation for Economic Co-operation and Development (OECD)\

By the time of Rio and certainly since then, I do think that the tone and focus of the debate has shifted in agreeing to Chapter 4 of Agenda 21 on the subject of sustainable consumption.

The industrialized countries did signal that they were prepared to accept a major part of the responsibility for changing their patterns of consumption and production. That is not the same as saying stopping economic growth.

The two issues do have to be distinguished. There are points at which those two concepts intercept and there are points where they diverge. Why did the OECD countries do this, you may well ask? There are two particular reasons for this that are worth examining:

Self-Interest
First of all is legitimate self interest. One of the key issues is that as traditional problems of pollution and waste from large point sources have been substantially under control, it becomes the millions of diffuse individual sources of pollution and resource use, the actions of all of us and our lives as consumers, that become the biggest challenges for governments and others to manage.

So, it's the ever-growing environmental impact of these that really is at the heart of it. The transport sector provides us the most striking example, but it is by no means the only one. This sector shows how the OECD has been approaching this issue, based on the view that business-led strategies for more eco-efficient production and technology can make a major impact on the problem. That certainly is the philosophy we have been promoting.

There is also a real possibility that however successful are efforts towards eco-efficiency, they will be overwhelmed by growth and demand for transport or whatever the service or product happens to be, particularly if the fast industrializing non-OECD countries are brought into the equation.

The fact is that in 1993, OECD Ministers (not just the Ministers of the environment, but the Council of Ministers that covers finance, trade, and economic affairs) asked the OECD Secretariat to help analyze and advise on these problems. We have been working with a number of partners actively to do so, to clarify the conceptual framework underlying this debate (which is clearly important because it is open to much misunderstanding), to analyze trends, and to explore new policy options to changing consumption and production patterns which might be more successful than heretofore.

Our emphasis has been strongly in putting the whole issue on a sound analytical footing. We have seen some real leadership by a number of OECD countries, notably Norway, the Netherlands, Australia, Japan, and also, not yet an OECD country but in the process of accession, South Korea.

Geopolitical Change
The second reason why changing consumption and production patterns is now an accepted -- and to a larger extent an acceptable -- part of the international policy agenda of industrialized countries is really the sort of geopolitical changes which have been occurring since the time of Rio.

Our experience in the OECD is a microcosm of the larger world scene. Today we find ourselves talking to and working with countries and institutions that we seldom engaged in the past, including China, India, and Brazil.

The geography of the OECD itself has also changed, with Mexico, Hungary, Poland and the Czech Republic all becoming members since 1994. Regional groupings such as NAFTA, the EU, and APAC have also greatly emerged as important factors in international relations. All these changes have led to a much more constructive climate for dialogue amongst nations and for national and international partnerships involving a spectrum of stake holders.

Much of this was really unimaginable just a few years ago. But what we have yet to see on this issue clearly is any significant progress at implementing real changes in policy. It is to be hoped that next year's Special Session of the General Assembly nevertheless strongly reinforces that spirit of partnership and constructive dialogue and gives more momentum to positive efforts in this field.

Key Question
Let me return to my original question: Would these changes in thinking which we have seen not only in changing consumption patterns but also in policy integration -- and many other areas in fact -- and the beginnings of changes in action on the ground have occurred, at least on the national level, without the Rio accords? The answer is, quite possibly.

Have those accords and the examination of these issues in the CSD and at national levels and the local level especially played a significant role in keeping the international debate moving forward and constructive? To my mind, the answer is undoubtedly yes. 

Perhaps, however, my question was the wrong one. Instead of asking what would the world look like if Rio had not happened, we should ask how much worse would the world look in the future if Rio had not happened?

OECD Consensus
Let me turn to some important observations which OECD environment ministers made when they met in Paris last February. These are relevant to our discussion here at this Symposium.

First, globalization of the world economy is intensifying interdependence amongst nations and breaking down many of the traditional boundaries between developed and developing countries.

Second, the OECD governments must continue to show leadership internationally on key environmental challenges, whether climate, biodiversity, changing consumption patterns, or whatever whilst -- now this is the important bit -- seeking strong partnerships globally from other countries beyond the OECD.

And, third, Ministers of the OECD need to meet again in early 1998 to review the implications for OECD countries of the General Assembly Special Session. Previously they only met every five years, and so the pace was hotting up and they needed to meet after only two years.

Interdisciplinary Issues
This was really in recognition of a feeling that the easy politics of the environment, the traditional views, were now over; and the hard ones, the complex, interdisciplinary issues, were really just beginning. My remarks earlier about the need for much more effective policy integration underscore that.

The institutions and policies to tackle these multifaceted challenges (as Ian Johnson and others have said), which is really the intersection of environmental, economic, and social policy, are still in their infancy and they require us to take a much longer term perspective. After all, we know that Rio set an Agenda not for the next five years or the last five years, but for the 21st Century, and I think we should keep that strongly in mind.

Now, an added note: I have tried to underline the contrariness when we talk about global concerns on one hand and on the other hand we are still very strong about the rights to exploiting natural resources.

There are two schools, as it were, on this matter, which places what we agree on in the context of universal values as being incompatible with what you want to do with our natural resources. In the context of the environmental debate, clearly, developing countries still insist on their right to extract the natural resources, including many exploiting timber, for example.

There has not been a single country but perhaps one who has actually given up the right to such exploitation. I remember the representative from India at a recent international meeting insisting that the right of the poor people to natural resources must be recognized in any definition of sustainable development.

The poor must have access to natural resources. I suggest that we try to recognize this and try to find answers at the Review itself. It will be the job of the UN to try to see how we can do this, but I can assure you that this is not a romanticized version.


Comment from the Floor:
I just wanted to make two points:

First, regarding Professor Dolzer's very elegant presentation and his comment that GATT should have to recognize the importance of managing product and production methods.

There is no doubt that products and production methods have to be brought under some discipline, but that to us is tied intimately with insisting this be done on a multilateral basis, not on a unilateral basis. This is because those cases that went in favor of the trade regime, as opposed to the environmental regime, were attempts to deal unilaterally with environmental issues and to impose unilateral views on others. And, here, the business community has a certain commonality with the developing countries in insisting on rules of the game that discipline everyone.

Second, just a small point on Jeremy Eppel's remark on taxation. I understand that the Europeans in particular are thinking how they can shift the tax profile from taxation on payroll to a taxation on energy and other resources; that is fine, if you can do it without neutral tax adjustments, which apparently European businessmen simply do not accept. They say, we have to be protected against competitive loss.

The OECD fiscal committee recognizes that and pointed out that such a tax approach would have the very, very strange effect that: (a) you could have an environmental tax on energy, used in production process; and with that tax adjustment, it would (b) negate the environmental impact that the tax is meant to achieve.

I think that this was a finding we always knew all along. If you tax, and keep the effects all to yourselves, than that is fine; but if as a whole you try and spread it to the system, then we get into trouble.