Weblogic

The Founex Report - Real Dangers


The real danger is if the environmental standards enforced by the developed countries are unrealistic and unilateral and are arbitrarily invoked by them to keep some of the exports of the developing countries out of their own markets. Finally, the major danger that both developing and developed countries have to guard against is that the argument for better environment may be turned into an argument for greater protection by vested interests. When the concern spreads from the quality of a product to the environment in which such a product was produced, the alarm bells should ring all over the world, for it would be the beginning of the worst form of protectionism.

4.6. As a first step, it appears necessary to draw advance attention to the implications of environmental concerns for the continued growth of international trade. Appropriate procedures for prior notification, consultation and co-ordination will be needed to avoid adverse effects for world trade arising from national measures designed to promote pollution control. Conflicts of trade interests arising in this area should be resolved through existing and evolving arrangements and procedures. In this connexion, the existing GATT framework - under which most of the industrialized countries have assumed specific rights and obligations - should be further used to mitigate such problems, so as to reduce the fears of the developing countries that a desire for a better environment may lead to an increase in protectionism.

4.7. It is important that the dimensions of this problem should be carefully defined and more concrete information accumulated so as to serve as the basis of international action. We therefore recommend that a number of specific studies be undertaken to analyse the implications of the current environmental concern for trade disruption. First, a comprehensive study should be made, possibly by UNCTAD, of the major threats that may arise to the exports of the developing countries, the character and severity of such threats, and the corrective action that may be possible. Second, FAO should continue its present useful work on food standards considerations, including contamination, and should seek to establish agreed environmental standards and guidelines for the export of foodstuffs. Third, GATT should undertake to monitor the rise of non-tariff barriers on grounds of environmental concern and bring out pointedly any such trends in its Annual Reports.

4.8. There is also a fear in the developing countries that excessive preoccupation with environmental problems will lead to a diminution of aid resources from the developed countries. Since there is an increasing concern in the developed countries about the deteriorating quality of life, and more attention is likely to be given to their own problems of slums, pockets of poverty and poor public services, it is argued that this may divert resources from foreign assistance to domestic needs. In a more exaggerated form, the fear is that the concern for environment may become a priority unto itself in the developed countries, like space exploration in the 1960s, and take away resources badly needed for other purposes. Since there has been a progressive weakening of the will in a part of the developed world for giving foreign assistance to the developing countries, anxiety on this score is not entirely unfounded.

4.9. Aid priorities and project appraisal may also, it is feared, be distorted by an excessive tendency by the developed countries to apply their own environmental standards unthinkingly to the developing countries. To the extent that aid priorities are influenced by, and are an extension of, the current concerns in the developed countries, it is inevitable that they will respond to the growing environmental concern. Aid donors may well believe that projects meant for environmental improvement should claim a fairly high priority in the developing countries while the latter may give these projects a lower priority in the context of their own competing needs. Again, development projects may be held up for their presumed impact on environment if extensive guidelines for project appraisal are developed by the donors, as seems to have happened in the case of some recent hydro-electric projects. These projects may also become more expensive if much higher environmental standards are insisted upon than are appropriate to the developing countries at their present stage of development. By their very nature, environmental diseconomies are very difficult to measure or quantify and there can be greatly different judgements on the time period over which they may occur and the priority that should be attached to their elimination or reduction in the current design of a project. There is a fear as such that there may be serious distortions in the allocation of aid funds to various projects and even greater delays in the processing of projects in view of the growing environmental concern in the developed countries and its unthinking extension to the context of the developing countries. It is imperative, therefore, that multilateral and bilateral donors do not rush into the preparation of detailed guidelines for project appraisal from an environmental viewpoint without adequate consultation with the developing countries and without providing adequate safeguards against arbitrary guidelines and undue project delays. We realize that the question of a shift of aid from a project basis to a programme basis is already under debate and raises many issues beyond the purview of our discussion, but the danger which we point out above should add one further consideration in favour of such a shift. It seems to us desirable that environmental considerations be discussed between donor and recipients on their own merits and the danger must be avoided that discussion of environmental aspects of projects may delay and reduce the flow of aid.