1 Introduction
Trade as an economic activity has a long history which is connected with forming civilization, establishing towns, and creating individual states. In the modern era, nations are more closely linked than ever before through trade in goods and services, flows of money, and investment in one other’s economies. Free trade and capital flows enable countries to produce and sell more through national borders and to compete with one other in the world markets. Although international competition results in lower costs and prices, the growing production and trade can also have a negative impact on the environment and human life. On the other hand, trade reinforces international cooperation and contributes to a peaceful coexistence among nations. As international trade plays an important role in the development of many countries, on the multilateral level the process of trade liberalization is governed by some international organizations. There are in particular two international organizations, namely the World Trade Organization (WTO) and the Organisation for Economic Co-operation and Development (OECD), which currently contribute to the achievement of the Sustainable Development Goals through international trade.
The aim of this chapter is to show the main problems in the trade liberalization process with focus on three areas of trade that represent the most sensitive areas of multilateral negotiations: agricultural trade, services trade, and intellectual property protection. The main hypothesis is that trade liberalization, which is carried out under the WTO multilateral framework and supported by the OECD, contributes to sustainable development in the world. The main contribution of this chapter is that it gives the current view on the role of the WTO and the OECD in achieving sustainable development via trade liberalization processes.
The empirical verification of the fulfillment of the main tasks of the WTO and the OECD in the field of trade liberalization has the character of qualitative
The content of this chapter is structured along three sections. Section 1 points out some economic and environmental aspects of globalization. Section 2 introduces the role of the WTO and the OECD in achieving environmental sustainability. Section 3 depicts the endeavors as well as difficulties that arise from the current WTO negotiations in agricultural trade, trade in services, and intellectual property protection with focus on the environment. The chapter ends with the presentation of some conclusions.
2 Economic and Environmental Aspects of Globalization
Economic globalization speeded up processes in the world economy and contributed to the economic development of many countries. During the last several decades some developing countries1 (such as China, India, Brazil, South Korea, and some others) became the largest economies and the leading exporters and importers of goods and services in the world. Because of trade, millions of people can produce to export, and, thus, increase their consumption. Besides these positive phenomena, which are the result of interdependencies between production, consumption, and job creation, however, the expansion of production and trade resulted in growing environmental problems, such as air, water, and soil pollution, global warming, declining biodiversity, overpopulation, waste disposal, ocean acidification, deforestation, water scarcity, acid rain, ozone layer depletion, and public health issues. For example, Robalino and Herrera (2010), who analyzed the interface between trade and deforestation, found out that deforestation was affected by agricultural output prices, deducing that trade affects these prices as well as the deforestation rates. Empirical evidence confirms that increases in the agricultural and timber process lead to an increase in deforestation in Mexico, Tanzania, Thailand, Brazil, Costa Rica, Australia, and Brazil (Robalino & Herrera, 2010). Thus, growing production and pressure on raw materials consumption can have a negative impact on the environment, health of people, and the quality of life.
Another example is the world’s fastest-growing sea corridor, the Northern Sea Route. This project has economic, but also ecological consequences. Although it will bring benefits for some economies due to the reduction of
In general, the liberalization of trade and investment flows contributed to the geographical fragmentation of production, which also increased trade with components produced in different parts of the world. The predominant part of the world production, especially in the manufacturing sector, is currently internationalized through global value chains (GVC s), in which every country or region specializes on the production of a piece or component. It leads to “trade in tasks”2 that adds value along the production chain. Thus, international trade is created by countries that participate in these GVC s as a source of raw materials, manufacturing countries that make and process them, and those that export the final goods to be consumed. Complex GVC s are the opportunity for many countries on different economic levels to participate in world trade. However, it is important to ensure GVC s themselves are environmentally and socially sustainable (Okonjo-Iweala, 2022).
A typical case of this phenomenon is a developing Asia. On the one hand, it is the largest recipient of foreign direct investment (FDI), accounting for more than half of the global FDI (UNCTAD, 2021b), and East Asia is the main industrial “factory” in the world, clearly illustrated in trade statistics. Between 1948 and 2020 the share of Asia in world merchandise exports increased from 14 percent to more than 36 percent (WTO, 2021b), especially due to the Chinese trade expansion. The important role of Asia in world trade has also been obvious in the time of COVID-19. In 2020, while global trade declined in volume terms by 5.3 percent, Asia’s merchandise trade was only down by 0.5 percent (WTO, 2021b). On the other hand, Asia is a region that accounts for about 60 percent of the world population, and has many environmental problems. For example, of the top 40 most polluted cities in the world, 37 are in South Asia. Overall, it contributes to around 11 percent of all deaths, and approximately 40 million disability-adjusted life years in South Asia (World Bank, 2021). However, air pollution as well as water pollution is not a localized phenomenon. It is transported across borders, and its effect spreads to places far away from the source. Thus, these global problems require global solutions through international organizations, such as the World Trade Organization and the Organisation for Economic Co-operation and Development.
Another issue arises from the fact that different ecological and work standards and claims on achieving sustainability in the individual countries also
On the whole, the world production and consumption are increasing, the living standards are improving and the populations are becoming better off, but these developments also create new demands on the environment and depleted natural resources. As the OECD projected, between 2017 and 2060 the resources used will nearly double from 89 to 167 gigatons (Yamaguchi, 2021), and with respect to the prospect of a world population of 9 billion by 2050, we need to produce and consume more sustainably and foster innovation. Elms and Low (2013) state that besides ecological aspects, social inequality within and between societies is an important element of sustainability as well. They argues that, although governments have a major role in these matters, little success is shown in fostering cooperation in which governments can advance common policies, with respect to the stalled Doha negotiations in the WTO, in climate change negotiations, and in discussion over a new international financial architecture (Elms & Low, 2013).
Although trade is the fuel of economic globalization, and usually has a direct impact on the environment by increasing pollution or degrading natural sources, it can also be the driver of environmental sustainability. For example, the support of a circular economy makes resource use more sustainable. In this vein, the results of Steinfatt’s (2020) analysis show that besides resource savings, circular economy brings environmental outcomes, trade, and economic diversification.
The effect of trade on the environment is, thus, dual. On the one hand, trade liberalization may lead to specialization in pollution-intensive activities in some countries if environmental policy stringency differs across countries. On the other hand, trade liberalization enables countries to get new technologies that make local production cleaner. In addition, as a country is more integrated within the world economy through GVC s, its exports become more exposed to environmental standards created by the leading importers. However, the
Thus, the cooperation on the creation of a suitable institutional framework, which would protect the environment but not create new barriers to trade, is desired at the local, regional, national, and international levels. In this context, Jansen and Keck (2004) argue that in theory the WTO law provides the appropriate tools to ensure rulings that are consistent with economic thinking, but economists usually have imperfect knowledge of the precise welfare effects of the different types of environmental policies. In practice, therefore, it is questionable whether economists are able to give adequate guidance to legal experts when it comes to the evaluation of national environmental policies (Jansen & Keck, 2004). Thus, the development of a set of trade and environmental indicators by the OECD in order to analyze the relationship between domestic environmental regulations and international policies is essential to better understand the interactions between trade and environmental policies (Garsous, 2019). In terms of the WTO, Low, Marceau and Reinaud (2011) state that the existing GATT and WTO rules were not drafted to address climate change problems and policies.
From the focused analysis of the link between sustainability and trade or trade policy in the abovementioned literature, this chapter considers sustainability as a complex issue, and verifies the theory of public goods in the fulfillment of tasks by the WTO and OECD in the field of the liberalization processes in order to foster a more sustainable world.
3 The Role of the WTO and the OECD in Achieving Environmental Sustainability
The WTO as well as the OECD are both international organizations that propound the idea of open markets for trade and investments around the world in order to achieve sustainable development.
The OECD was the first international organization that established the Joint Working Party on Trade and Environment in 1991, i.e., a standing body to examine trade and environmental issues and to develop discussion on different levels around evidence-based analysis concerning the environment, such as the reform of fossil fuel subsidies. The OECD, as a long-standing partner of
In order to share national experience in the implementation of the 2030 Agenda, annual meetings of the OECD Council and Partners as well as international organizations are held. The last meeting took place in 2021 in virtual format with over 65 participants. It discussed the role of tax in delivering SDG s, the importance of private investment to foster progress towards SDG s, and the budget process and public procurement to accelerate progress on SDG s.
In the WTO, the discussion about the optimal use of the world’s resources in accordance with the objective of sustainable development and seeking both to protect and preserve the environment started during the GATT rounds of negotiations in 1970. After the establishment of the WTO in 1995, the issue of sustainable development was introduced in the Preamble of the Marrakesh Agreement establishing the World Trade Organization. Thus, the environmental goals were to be achieved in compliance with the multilateral trade principles on which the WTO exists. This means that the fundamental principles of non-discrimination, transparency, and predictability create the framework for the WTO members to implement measures in order to achieve environmental goals.
Regardless of the non-discrimination rule, Article XX of the General Agreement on Tariffs and Trade (GATT) enables the WTO members in a specific situation to adopt measures that are inconsistent with the non-discriminatory principle but necessary to protect human, animal or plant life or health, or related to the conservation of exhaustible natural resources. The phrase “exhaustible natural resources” was interpreted broadly to include not only mineral or non-living resources, but also endangered living spaces. Like GATT, the General Agreement on Trade in Services (GATS) contains general exceptions in Article XIV, which covers environmental concerns. Besides the two pillar agreements, GATT and GATS, other multilateral agreements also include
In connection with discriminatory treatment, in the history of GATT and the WTO environmental policies were the subject of only nine panel proceedings from a total of 356 disputes (from 1995 to 2020) involving the examination of environmental measures or human health-related measures. The countries most often accused of abusing Article XX of GATT were the United States, and members of the European Communities/European Union.
Recording environmental-related notifications and measures in the WTO contributes to transparency and avoiding discriminatory treatment. In 2021, the WTO members submitted 827 environmental-related notifications, which was 16.7 percent of the total submitted notifications (WTO, 2022). Since 1997, there has been a sustained increase in the number of environmental-related notifications to the WTO. The share of environmental-related notifications as a percentage of all notifications more than doubled over the same period albeit with year-on-year fluctuations (see Figure 6.1). The predominant part of environmental-related notifications was related to the Technical Barriers to Trade (TBR) Agreement. Thus, in the period 2009–2020 more than 62 percent of the total environmental-related notifications was covered by the TBR Agreement (WTO, 2022). Figure 6.1 depicts the total number of environmental-related notifications (the left axis) in the period 1997–2020 for which data are available, and the proportion of environmental-related notifications to the total number of notifications (the right axis).
Environmental-related notifications in the WTO in 1997–2020
SOURCE: OWN ELABORATION, DATA FROM THE WTO ENVIRONMENTAL DATABASE (WTO, 2022)
Top 10 WTO members by environmental-related notifications and measures in 2009–2020
SOURCE: OWN ELABORATION, DATA FROM THE WTO ENVIRONMENTAL DATABASE (WTO, 2022)
Thus, the role of the WTO in achieving sustainable development lies in ensuring rule-based trade and discussing trade measures adopted for environmental objectives announced by the WTO. In addition, the WTO Secretariat collaborates with the UN’s environmental entities in order to ensure mutual supportiveness between trade and environmental policies.
4 Liberalization Processes in the WTO on the Way to Sustainability
The WTO as a supporter of free trade plays an especially important role in ensuring market access for environmental goods and services. In the era of the WTO, the first environment-specific discussion was opened in the Doha Round
On this base, in July 2014 a group of WTO members started negotiations in order to establish the Environmental Goods Agreement (EGA). The main idea of the EGA was to promote trade in key environmental products, such as wind turbines and solar panels to help achieve environmental and climate goals. The agreement was negotiated among 18 participants representing 46 WTO members (see Figure 6.3), benefiting all WTO members on the most favored nation (MFN) basis.
Negotiator countries of the environmental goods agreement
Note: The negotiators of the EGA were Australia, Canada, China, Costa Rica, European Union, Hong Kong (CH), Iceland, Israel, Japan, South Korea, New Zealand, Norway, Singapore, Switzerland, Liechtenstein, Chinese Taipei, Turkey, and United States.
SOURCE: OWN ELABORATION
Although the EGA negotiations only covered about one-third of the WTO members, the participants accounted for the majority of global trade in environmental goods, which more than doubled to US$1,260 billion between 2003 and 2016, namely due to renewable energy plants that accounted for about 35 percent of exported environmental goods. In relative terms, the share of
Commitments to reduce bound tariffs on those goods to zero was based on the APEC List of 54 Environmental Goods. In the period 2001–2016, 18 rounds of negotiations took place, especially in Geneva. Participants held a discussion on product coverage and the EGA text in various configurations. In 2015, the negotiations already included a list of roughly 650 product groups of the Harmonized System, and discussions were held in small groups that included the key proponents and opponents of each product (Global Affairs Canada, 2014). Although constructive talks were held, the participants were not in a position to close the EGA negotiations, which were suspended at the end of 2016. Regardless of the unsuccessful negotiations, the average tariffs applied to the imports of environmental goods in the OECD countries declined from 1.7 percent in 2003 to 0.8 percent in 2016. Tariffs in countries outside the OECD area were significantly higher, but also declined from 7.4 percent to 4.1 percent at the same time (OECD, 2022). However, tariffs on renewable energy goods and heat pumps remained on a high level, i.e., between 10 and 14 percent (Okonjo-Iweala, 2022).
Besides negotiations about lowering tariffs on environmental goods, three new initiatives were developed in the WTO. In November 2020, 50 WTO members of a large diversity, whose number increased to 71 in 2021, launched negotiations about environmental sustainability on the basis of structured discussions. The participants of the structured discussion include the business community, civil society, international organizations, and universities. They discuss topics such as trade-related climate measures, sustainable supply chains, environmental goods and services, a circular economy, and many others. Another initiative was recorded in June 2021 when a group of 16 WTO members4 launched an informal dialogue about the rising environmental, health, and economic costs of plastic pollution. The global efforts to reduce plastic waste and move towards a circular plastics economy should also be a topic for the WTO’s 12th Ministerial Conference, which has already been postponed twice due to the pandemic. The last initiative was developed by 45 WTO members, and is focused on a fossil fuel subsidy reform.
The liberalization of agricultural trade has belonged to the most sensitive areas of multilaterally led negotiations for decades. The restart of the negotiations began in early 2000 under a mandate set out in Article 20 of the WTO Agreement on Agriculture. Besides the liberalization of agricultural trade, the agreement mentioned that talks should consider other objectives, such as food security and the protection of the environment. These issues are also covered by the WTO Agreement on Sanitary and Phytosanitary Measures. The agreement enables members to adopt sanitary and phytosanitary measures for environmental purposes, but should not create unnecessary obstacles to trade, should not discriminate between members, and measures should be adopted in a transparent way. Thus, the role of the WTO lies in making markets more sustainable, stable, and predictable through trade rules. Trade talks could also improve the competitiveness and resilience of producers, and food security for consumers. Moreover, the WTO trade negotiations could contribute to a more effective allocation of scarce global resources, such as reducing the levels of agricultural supports that are connected with greenhouse gas emissions, and thus mitigate the negative impact of climate changes.
The current agricultural negotiations are held in the frame of the Doha Round that was launched in 2001. Agriculture is a part of a “single undertaking,” which means that all areas of negotiations will be finalized as a whole package. As a result, while the objectives of the trade talks were set in 2001, the WTO members reached progress especially in the trade talks at the 2013 Bali Ministerial Conference and the 2015 Nairobi Ministerial Conference. The farm trade package, which was agreed at the Ministerial Conference in Bali in 2013, includes facilitating imports that are allowed under tariff rate quotas, reflecting the various needs of developing countries and granting them some exemptions. The Nairobi package includes the commitments of the WTO members such as to abolish agricultural export subsidies and set new rules for other forms of farm export support, which went hand in hand with the UN’s Sustainable Development Goals, namely SDG 2.5 However, some countries consider the Nairobi Decision as “unfinished business” with respect to various measures which can have similar effects on trade comparable to those of export subsidies. Moreover, although export subsidies were abolished, the area of domestic support remains the most crucial topic in the agricultural negotiations until now.
The 2030 Agenda for Sustainable Development, namely SDG 14.6, aims to prohibit certain forms of fisheries subsidies which would contribute to overcapacity and overfishing by 2020.
Public spending has contributed to a situation where nearly half of the global marine fish stocks are overfished, threatening the livelihoods of 260 million people (Okonjo-Iweala, 2022). Although the WTO plays an important role in this issue, the deadline which was set by the 2030 Agenda was not performed and negotiations have continued until now. The Ministerial Declaration from the WTO’s 11th Ministerial Conference includes the decision to conclude negotiations and adopt an agreement on fisheries subsidies reflecting the UN Sustainable Development Target 14.6, namely to prevent illegal, unreported, and unregulated fishing. The draft agreement on fisheries subsidies was submitted by the WTO negotiators in November 2021 for consideration by the WTO ministers at the 12th Ministerial Conference in Geneva in December 2021. Although the draft text covers all negotiated topics, including specific provisions for least developed countries (LDC s) members as well as technical assistance and capacity building assistance to developing countries, it does not represent the final text. The main reason is that many disagreements remain in the individual negotiation groups (see Table 6.1). In addition, the 12th Ministerial Conference was postponed due to the COVID-19 pandemic developments to June 2022. The Ministerial Decision of 17 June 2022 has only confirmed the need to continue the negotiations to make recommendations to the 13th WTO Ministerial Conference for additional provisions that would achieve a comprehensive agreement on fisheries subsidies.
WTO agricultural negotiation groups
| Groups | Description | Issues | WTO members |
|---|---|---|---|
| ACP | African, Caribbean, and Pacific countries with preferences in the EU | Agricultural preferences | 62 |
| African Group | African members and observers of the WTO | General | 44 |
| Asian Developing Members | Asian developing WTO members | General | 35 |
| Land-locked Developing Countries | Informal group of land-locked developing countries | General | 26 |
| Mercosur | Common Market of the Southern Cone, a customs union | General | 4 |
| G-90 | African Group + ACP + LDC s | General | 72 |
| LDC s | Least developed countries | General | 35 |
| SVE s | Small, vulnerable economies | General | 32 |
| Article XII Members | A group composed of members that joined the WTO after 1995 | General | 23 |
| Low-income economies in transition | A group is seeking to secure the same treatment as LDC s | Agriculture | 3 |
| Cairns group | A coalition of agricultural exporting nations lobbying for agricultural trade liberalization | Agriculture | 19 |
| Tropical products | A coalition of developing countries seeking greater market access for tropical products | Agriculture | 8 |
| G-10 | A coalition of countries lobbying for agriculture to be treated as diverse and special because of non-trade concerns | Agriculture | 9 |
| G-20 | A coalition of developing countries pressing for an ambitious reform of agriculture in developed countries with some flexibilities for developing countries | Agriculture | 23 |
| G-33 | A coalition of developing countries striving to undertake limited market opening in agriculture | Agriculture | 47 |
| Cotton-4 | A West African coalition seeking cuts in cotton subsidies and tariffs | Agriculture | 5 |
| Pacific Group | Developing country members of the Pacific Islands Forum | General | 6 |
SOURCE: WTO (2022)
With respect to the fact that the WTO currently has 164 members with different interests, finding compromise solutions in trade talks is often very difficult. Thus, countries create coalition groups that speak with one voice using a single coordinator or negotiating team in the WTO practice. Table 6.1 shows the main groups engaged in agricultural negotiations held under the WTO framework. The overview of the negotiation groups indicates some facts: besides the
The main exporter as well as importer of agricultural products is the European Union (EU). In 2020, the EU shared by more than 36 percent in the world agricultural exports and by about 32 percent in the world agricultural imports. Besides the EU, the USA, China, Brazil, Canada, Indonesia, Thailand, Mexico, India, and Argentina are also among the top ten agricultural exporters. The list of the top ten agricultural importers is a little bit different; it includes the EU, China, the USA, Japan, the United Kingdom, Canada, South Korea, Russia, Mexico, and India. However, except for India, the other countries are also among the leading exporters and importers of food. All these leading exporters and importers shared in the world agricultural and food trade by more than 70 percent in 2020 (WTO, 2021a). This probably explains why these countries are only sporadic participants in the WTO agricultural coalition groups.
4.2 Liberalization of Trade in Services with Focus on the Environment
As Sauvage and Timiliotis (2017) state, there are strong complementarities between environmental goods and the provision of services, because numerous services are essential to the proper delivery and functioning of environmental equipment. As trade in environmental goods has lowered the price of cleaner technologies, it appears that trade in environmental services could lower the cost of environmental protection (OECD, 2022). Thus, negotiations about removing barriers to trade in goods should be accompanied by liberalization in trade in services.
Environmental services represent one of the broad 12 service sectors which are qualified in the Services Sectoral Classification List (the W/120 Classification List). The Classification List is based on the UN’s Central Product Classification, which also distinguishes four environmental subsectors:
- –Sewage services (A)
- –Refuse disposal services (B)
- –Sanitation and similar services (C)
- –Other environmental services (D)6
However, the scope of what has the character of environmental related services is the subject of long-term discussions, and also many other services not
In principle, the so-called core environmental services, such as wastewater treatment and solid-waste management, are public goods. They have several specific characteristics, i.e., they benefit all members of society, they are non-excludable and non-rivalrous from consumption. They require large-scale investment, and, thus, they are managed and financed by public utilities or a few large multinational companies from developed countries. Besides infrastructure environmental services, specialized small firms can also provide non-infrastructure environmental services, such as consulting, legal services, accounting services, etc. This is also an opportunity for small suppliers from developed as well as developing countries. Thus, besides trade liberalization, the privatization of the suppliers of environmental services is important as well.
Trade in environmental services has gained significance in recent years, particularly in connection with global challenges, such as climate change, resource depletion, and waste generation. Moreover, the development of new technologies has also contributed to the growth of this sector, with new areas of trade negotiations dealing, for example, with the circular economy transition.
In the WTO, the General Agreement on Trade in Services (GATS) modifies trade in environmental services. The GATS sets rules for trade in services based on non-discriminatory treatment. Like Article XX of GATT, paragraph (b) of the GATS allows the WTO members to adopt policy measures that would normally be inconsistent with the GATS if it is necessary to protect human, animal or plant life or health. However, these measures should not result in arbitrary or unjustifiable discrimination and should not constitute hidden protectionism.7
The liberalization of services is generally carried out through members’ commitments. Every WTO member has a national schedule, which includes two types of commitments, i.e., horizontal and specific commitments accepted through services sectors and subsectors corresponding to the W/120 Classification List. While horizontal limitation8 is applied across all sectors and often refers to a particular mode of supply (see Table 6.2), specific
Examples of services provided by WTO modes of supply
| Mode | Description | Example |
|---|---|---|
| 1 – Cross-border trade | From the territory of one member into the territory of any member | A company monitors and diagnoses its wind turbines from one foreign-based remote operations center. |
| 2 – Consumption abroad | In the territory of one member to the service consumer of any other member | An engineer travels abroad to further his or her knowledge of energy efficiency through a course organized by foreign experts. |
| 3 – Commercial presence abroad | By a service supplier of one member, through commercial presence in the territory of any other member | A firm establishes several subsidiaries abroad to provide environmental consulting and engineering services locally. |
| 4 – Temporary presence of natural persons abroad | By a service supplier of one Member, through the temporary presence of natural persons of member in the territory of any other member | Experts in a particular environmental domain travel abroad to train local staff or conduct repairs. |
SOURCE: SAUVAGE AND TIMILIOTIS (2017)
The WTO negotiations about trade liberalization in the environmental sector began in January 2000 under the Council for Trade in Services. Between 2000 and 2002, seven WTO members (Australia, Canada, Cuba, Colombia, EU, Switzerland, and the US) submitted negotiation proposals. Besides proposals to ensure market access for environmental services, these countries proposed to broaden the sectoral classification of environmental services to bring the
In parallel to these negotiations, the environment has been a part of the Doha negotiations which focused on the reduction or elimination of tariff and non-tariff barriers to environmental goods and services. It has been included in the Doha Declaration (WTO, 2001). After the 2005 Hong Kong Ministerial Conference, a group of 23 WTO members submitted a plurilateral request on environmental services to a group of 20 other members. This collective request included commitments for high levels of market access across all environmental service subsectors, in the four modes of supply.9
However, compared with other sectors, such as tourism, financial services, or telecommunications, the level of commitments has remained modest (WTO, 2022). As of January 1, 2022, 59 WTO members (counting the EU with 25 members as one10) had made commitments in at least one environmental service subsector. Specifically, 52 members have accepted commitments for sewage services, 50 members for refuse disposal services, 51 members for sanitation and similar services, and 51 members for other environmental services. Although many empirical studies have confirmed a detrimental effect of protectionism on trade (for example, Sauvage & Timiliotis, 2017), the reason for only small progress that was recorded in these negotiations can be related to the fact that developed countries have a higher interest in the liberalization of environmental services than developing countries.11
Intellectual property rights (IPR s) can be defined as the rights given to people over the creations of their minds (Cosbey, 2000). They are legally enforceable and are granted by the state to owners of IPR s. They specify a time period during which other producers may not copy the innovators’ inventions, giving them the possibility to cover the costs coupled with the innovations and invest in new research. The argument for IPR s protection is that without the protection of new inventions, there would be less innovation. It is cheaper to manufacture drugs, computer software, etc. than to develop them. Intellectual property protection, thus, has legal, economic, and social aspects.
While the World Intellectual Property Organization (WIPO) promotes and protects intellectual property across the world through the administration of international treaties that deal with a wide variety of intellectual property issues, the WTO, on the one hand, promotes effective and adequate protection of IPR s, and, on the other hand, ensures that measures and procedures to enforce IPR s do not become barriers to trade. With respect to the fact that IPR s also have an impact on trade and sustainability,12 cooperation among the WTO, the WIPO, and the World Health Organization (WHO) is needed. While the topic of IPR s from the point of view of different international organizations is described in more detail in Chapter 14, in this part of the monograph we focus solely on the WTO trade liberalization in light of the Sustainable Development Goals.
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (hereafter the TRIPS Agreement) states, in particular, that “the protection and enforcement of IPR s should contribute to the promotion of technological innovation and to the transfer and dissemination of technology.” In relation to the environment, the TRIPS Agreement (2017) sets certain inventions ineligible for patenting in order to protect human, animal or plant life or health, and to avoid serious harm to the environment. While plants, animals, etc., can be excluded from patenting, plant varieties as well as microorganisms, etc., have to be eligible for protection either through patents or another specific system, or a combination of the two. The discussion about this topic and
The topic of IPR s also gained significance at the WTO Ministerial Conference in Doha in 2001, especially with a focus on public health. As a result of the negotiations, a separate declaration to the TRIPS Agreement set the possibility to adopt appropriate measures necessary to protect public health. In this vein, the Declaration confirmed the governments’ right to use the agreement flexibilities, in particular, compulsory licensing and parallel importing. This means that generic versions of the patented product can be locally manufactured or imported without the authorization of the patent holder (WTO et al., 2020). The decision to remove the final patent obstacles to cheap drug imports was accepted by the WTO members in 2003, and was replaced by a Protocol amending the TRIPS Agreement, which took effect in 2017. In practice, it waives the countries’ obligation under the provision of the TRIPS Agreement, which says that production under compulsory licensing must be predominantly for the domestic market. Removing obstacles in production and drug export expresses the fact that public health problems resulting from HIV/AIDS, malaria, and other epidemics are global problems with impacts on human society, and take development issues fully into account. As a result, thanks to the transition period under the TRIPS Agreement, which currently exempts LDC s from implementing patent protection for pharmaceutical products, generic manufactures in Bangladesh have begun producing a generic version of remdesivir against the threat of COVID-19, which is patented in a number of other countries (WTO, 2020).
Besides public health, the flexibilities in the TRIPS Agreement could also be applied in other areas in order to contribute to sustainable development in the world. For example, some developing countries negotiating climate change issues have argued that flexibilities are significant for getting access to green technology. At the 14th Global Forum for Food and Agriculture in January 2022, Pauman (2022) emphasized the important role of trade in ensuring efficient agricultural production and in providing access to technologies needed to improve soil management.
Thus, international trade can contribute to sustainable development through the WTO negotiations, which have two directions, i.e., negotiations about lowering tariffs on environmental goods and using the TRIPS flexibilities for getting better access to technologies.
Although international organizations, such as the WTO and the OECD, have a long tradition in supporting free trade and sustainability, the real achievements of trade negotiations led on the multilateral level within the Doha Development Round are not visible enough. The analysis of trade negotiations in the WTO in the area of agricultural trade shows “a grey area” more than real progress in trade negotiations. This means that the main topics, such as domestic support, market access, export competition, and restrictions, have been negotiated for more than 20 years. In the area of services trade the technical issue that is connected with the classification of services has been negotiated since 2000, and also the level of members’ commitments remains low in comparison with other sectors. The only limited success was achieved in technological transfer in the area of public health, but other areas for flexibilities in the TRIPS Agreement remain open for discussion. The main reason for the stagnation in the negotiations is the single-undertaking approach that the WTO members approved within the Doha Round in 2001. As the interests of the WTO members are different and making compromise solutions is difficult, a single undertaking among 164 WTO members is impossible. Moreover, the trade policy of the individual members usually varies under the influence of their domestic policy priorities.
The plurilateral initiatives under the WTO framework show the fact that only a limited number of members is interested in trade liberalization. Thus, although trade can contribute to sustainable development in many ways, the multilateral negotiations are not effective. Therefore, the hypothesis that trade liberalization, which is carried out under the WTO multilateral framework and supported by the OECD, contributes to sustainable development in the world, has not been confirmed. The growing number of environmental-related notifications in the WTO can, on the one hand, show a transparency in trade, but, on the other hand, the environmental-related measures can be the source of “green protectionism” in the form of non-tariff barriers. In addition, the data about tariffs on the imports of environmental goods declined although the EGA was not signed by the WTO members.
Although the OECD grants analytical support in the form of data for negotiations on trade and environment and the WTO ensures transparency in trade, progress in multilateral trade negotiations is very small. Thus, progress in environmental negotiations in the WTO can be achieved by a complex reform of the WTO, which would bring changes in the multilateral system. Besides the modernization of the WTO functioning, it would also be desirable to solve new aspects of trade that are the result of economic globalization. In this vein, some
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The classification of UNCTADStat distinguishes two main groups of regions, i.e., developing and developed regions, based on the development status in accordance with the United Nations’ Standard country or area codes for statistical use (the M49 standard).
This new paradigm was first used by Princeton University economists Gene Grossman and Esteban Rossi-Hansberg (Grossman & Rossi-Hansberg, 2006).
Many of the 17 SDG s and the associated 169 targets involve long-standing trade-related issues, such as the reform of government support for fisheries or fossil fuels.
The group of 16 WTO countries includes Australia, Barbados, Cabo Verde, Canada, the Central African Republic, China, Ecuador, Fiji, the Gambia, Jamaica, Morocco, New Zealand, Switzerland, Thailand, and the United Kingdom (WTO, 2021a).
SDG 2 deals with the end of starvation, achieving food security and improved nutrition, and promoting sustainable agriculture.
Other environmental services include the cleaning of exhaust gases, noise abatement services, nature and landscape protection services, and other environmental protection services which correspond to the four other environmental service subsectors identified in the UN’s Provisional Central Product Classification (WTO, 2022).
The GATS also determines six types of quantitative restrictions, including limitations on types of legal entity and on foreign equity participation.
Horizontal limitations include limitations on real estate ownership or lease, foreign equity limitations, economic needs tests, residency or nationality requirements for directors, discriminatory minimum capital requirements, technology transfer requirements, and the obligation to train nationals.
Although environmental negotiations have taken place on a plurilateral base, the outcomes of these negotiations are applied on the MFN basis, i.e., to all WTO members in compliance with the WTO rules.
Although the EU has had 27 members since 2021, the WTO database introduced commitments for the EU with 25 members in January 2022.
The developed countries which managed the top 50 environmental companies are the main consumers and suppliers of environmental services, and developing countries are net importers of environmental services (WTO, 2010).
Cosbey (2000), in an examination of the effects of the TRIPS Agreement on the sustainable development in developing countries, states that the strengthening of IPR s embodied in the TRIPS Agreement will have varied effects on innovation in different countries. Developing countries that have a healthy domestic capacity for research and development and strong management and marketing skills may benefit from stronger IPR laws in terms of increased domestic innovation. Those that do not may be hampered by TRIPS in their ability to develop such capacity through the necessary imitation stage of development.