Developing-Country Stakeholders Influence EU Environmental Standards Which May Affect Trade and Competitiveness

Developing-country stakeholders should proactively engage in the definition of environmental standards in industrialized countries, which may affect their competitiveness, rather than just adapt to them once they are on the market[1].

Awareness of the impact of trade on climate change is here to stay. The concern of the effects of carbon embedded in the production, trade and consumption of goods and services has been increasing, and its visibility has influenced public and private policy initiatives, mostly outside the multilateral UNFCCC framework. The difficulties in advancing a multilateral architecture for international climate policy, the so-called top-down approach, have encouraged the development of alternative (or complementary) bottom-up approaches of different kinds[2].

One pragmatic bottom-up approach is the development of sectoral standards or product standards, developed by industry or national governments, which may be controversial regarding compatibility with trade rules and are thus under the scrutiny of the multilateral trade system. Nevertheless, governments and firms in an increasing number of countries are establishing new requirements to quantify greenhouse gas (GHG) emissions, as well as other sustainability indicators related to the supply chain of goods and services, in order to ensure product traceability throughout the life-cycle and inform consumers.

These environmental standards are usually defined by governments and industries in developed countries, without participation of developing-country stakeholders which are at the production phase of the supply chain.  However, standards will impact the competitiveness of Latin American exports on international markets, and producer participation in this process is relevant, in order to include the specific focus of the production part of the supply chain and help define the new standards[3].

A new initiative to identify and quantify the product environmental footprint (PEF) is the three-year pilot program initiated in 2013 by the European Commission^[4], in the context of the Single Market for Green Products project. Its purpose is to develop environmental performance standards which could lead to a common, voluntary eco-labeling standard and is intended to help companies develop more resource efficient processes and promote more sustainable consumption patterns, as well as lessen consumer confusion caused by too many eco-labels. The Program is open to both EU and non-EU stakeholders and the new standards should reach markets in 2018.

One section of the European Commission Environmental Footprint Pilot Program focuses on 11 food products and agro-industries, which are of interest to Latin American producers, who are bound to be affected by the new standards. The public-private Latin American Coffee Environmental Footprint Network, organized by representatives of 11 coffee producing and exporting countries in the region has successfully participated and influenced the PEF process. Public agencies, such as trade promotion agencies, as well as non-state actors from developing countries, can have a relevant and proactive role in defining technical and environmental standards in industrialized countries.

[1] See Alicia Frohmann “Environmental Standards and International Trade. Latin American Stakeholders and the EU Environmental Footprint Program”, SECO/WTI Academic Cooperation Project Working Paper Series 2015/07, World Trade Institute, Bern, December 2015.

[2] See Rafael Leal-Arcas, “Climate Change and International Trade”, Edward Elgar, 2013.

[3] A new consumption rather than production-based GHG emissions-accounting model, which is being developed  within the Carbon Cap (Carbon emission mitigation by Consumption-based Accounting and Policy) Project, offers a new perspective on traditional emissions accounting, focusing on the embedded carbon in trade and the consumption end of the supply chain.  See Sonja Hawkings, Doug Crawford-Brown, “Exploring the trade impacts of consumer-facing climate policies”, BIORES, Vol.9/5, June 2015.

[4] http://ec.europa.eu/environment/eussd/smgp/pef_pilots.htm