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Global Environment

Harmonizing Environment and Trade Policies


In today’s world, countries are deepening their mutual interdependence in terms of socio-economic activities such as trade and finance. Against this background exists the situation where the soundness of the earth’s ecosystem, the very basis of humankind’s existence, is being threatened by various factors including massive consumption of resources accompanied by massive discharge of wastes in developed countries, and increasing pressures on natural resources in developing countries due to the growing demand for food and poverty, caused by rapid population growth. There is a growing need to reconsider values that place too much emphasis on the pursuit of material wealth, and the prevailing socio-economic activities and lifestyles marked by mass-production, mass-consumption and mass-disposal. The urgent and serious challenge for humanity is to build a society on a global scale that ensures sustainable development with fewer loads on the environment, while maintaining the environment in a healthy state.

Based on this basic recognition, Japan enacted in November 1993 the Basic Environment Law, followed by the formulation of the Basic Environment Plan in December 1994. The latter sets the following four long-term objectives: building a socio-economic system to foster a sound material cycle; harmonious coexistence between humankind and nature; participation by all sectors of society; and the promotion of international activities. In this way, Japan is making efforts to meet the challenge of creating "a society enabling sustainable development." (See Annex 1).

With regard to trade, the promotion of the non-discriminatory and liberal multilateral trading system is becoming increasingly important amid the growing interdependence among national economies. At the same time, when the limits of the global environment are more clearly felt than ever before, the expansion of trade is having a significant impact on both the environment and environmental policies. While there is a concern that the expansion of trade and the associated economic development will have an adverse effect on the environment, it is pointed out that national environmental policies are exerting distortional effects on trade. Also the appearance of transboundary environmental problems, including global-scale problems such as global warming and ozone-1ayer depletion (defined as "global environmental problems" in this report1), is making multilateral cooperation essential, necessitating the need for new adjustment at the interface between "environment and trade." Another important issue to be considered in the context of environment and trade is the expansion of the world population, which is expected to exceed 10 billion by the mid-21st century, and the limits on the earth’s supply of food and resources.

International discussion on trade and environment has been actively taking place in such fora as OECD and GATT since 1991. Also, the Rio Declaration on Environment and Development, Agenda 21, as well as the Statement of Forest Principles, which are the significant achievements of the United Nations Conference on Environment and Development (UNCED), have underscored the need to make trade and environmental policies mutually supportive2 with a view to realizing sustainable development.

The GATT Uruguay Round, which was concluded in April last year, advances further the liberalization of international trade and constitutes an important step by the international community toward realizing sustainable development. In this connection, it is noteworthy that the Committee on Trade and Environment has been established within the World Trade Organization (WTO), reflecting the growing interest, which became apparent during the course of UR negotiations, in the relationship between free trade and environmental conservation. In the preamble of the Marrakesh Agreement Establishing the World Trade Organization, there is a reference to the need for optimal use of the world’s resources in accordance with the objective of sustainable development seeking both to protect and preserve the environment, along with conventional objectives such as raising standards of living, ensuring full employment, and increasing real income. The Committee on Trade and Environment is expected to report to the first meeting of the Ministerial Conference, identifying the relationship between trade measures and environmental measures in order to promote sustainable development, as well as making recommendations on whether any modifications of the provisions of the multilateral trading system are required.

Taking into account this trend, the Basic Environment Plan stipulates the Japanese government to actively participate in discussions on matters of global importance including "trade and environment." "The Advisory Group on Global Environmental Problems," an advisory organ to the Director-General of the Environment Agency and Minister in charge of Global Environmental Issues, set up a "Special Sub-group on Environment and Trade" in May 1994 and this sub-group has been discussing how to make environmental and trade policies mutually supportive. The following is the result of its discussions.

1 In this report, the term "global environmental problems" is used as a broad concept that includes both "global scale environmental problems" which affect the whole global environment such as global warming and destruction of ozone layer and "transboundary environmental problems" which cover a considerable part of the globe such as acid rain.
2 There is no clear definition of the term "mutually supportive" in Agenda 21 and other relevant documents. In this report, the term is used as a concept that could include several partly overlapping meanings of. "mutually complementary," "mutually compatible" and "mutually reinforcing."
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