TRADE AND ENVIRONMENT 

Dr. Kim Myung Ja

Advisor and Planning Consultant

Uri Party, Korea

Distinguished Members of the Parliament, ladies and gentlemen! 

First of all, I would like to extend my sincere appreciation to the European Parliament for hosting this meeting of the Council of Asian Liberals and Democrats (CALD) and the Alliance of Liberals and Democrats for Europe (ALDE).  My gratitude also goes to the Friedrich Naumann Foundation for its generous sponsorship.

It is my great pleasure to join reform-minded lawmakers from two of the most dynamic regions in the world.  As some of you may know, Mr. Kim Daejung, former President of Korea and the 2000 Nobel Peace Laureate, cofounded the CALD in 1993.  During his administration, I served as the Minister of Environment for four years, and had the honor to see firsthand his liberal political philosophy at work.  Mr. Kim’s torch of democracy has been successfully handed over to the current administration headed by President Roh Moo-hyun.  And last June, for the first time in Korea’s constitutional history, democratic party captured the majority in the National Assembly.  So it is particularly meaningful for me to be here as a participant and witness to Korea’s visible democratic progress.   

Honorable colleagues.  I would like to take this opportunity to discuss an increasingly important item on the global negotiations agenda, and one that would determine the shape of human future: the trade and environment.

With the onset of the WTO regime in 1995, potential impacts of trade liberalization on the environment have been extensively debated.  Trade proponents argue that the rise in trade volume will lead to greater income, greater environmental investment, and thus less pollution.  Environmentalists, on the other hand, express concerns that free trade will degrade the environment by leading to mass production, consumption, and waste disposal.  

However, it is important to understand that trade itself is not the root cause of environmental problems.  Environmental problems arise as byproducts of market failure and absence of appropriate policy regulations.  Market failure occurs when no pricing system is in place to ensure efficient use and allocation of environmental resources.

With this understanding, the WTO maintains that trade liberalization must be accompanied by appropriate environmental measures at national and international levels.  However, national environmental standards are sometimes used as disguised trade barriers.  In other instances, environmental standards are intentionally lowered to attract foreign investment or to enhance export competitiveness.

Despite such abuse and misuse of the cause of environmental protection, the concept of “sustainable development” has become an overarching paradigm for the 21^st century.  Defined as development that “meets the needs of the present without compromising the ability of future generations to meet their own needs,” sustainability was officially added to the environmental lexicon by the World Commission for Environment and Development in 1987. 

Through various meetings, including the 1992 UN Conference on Environment and Development and the 2002 World Summit on Sustainable Development, sustainability has become a realizable vision.  Among many frameworks, Agenda 21 and the Johannesburg Plan of Implementation present the most detailed and widely accepted action plans toward harmony among the three pillars of sustainable development: namely, economic growth, social integration, and environmental soundness. 

Much to our relief, global commitment to sustainable development has placed the trade and environment linkage on top of negotiations for the Doha Development Agenda (DDA) and free trade agreements (FTAs).  DDA is a multilateral trade agreement adopted at the 4^th WTO Ministerial Conference in Qatar in 2001.  It differs from former multilateral trade rounds under the General Agreement on Tariffs and Trade (GATT) in that it addresses environmental issues under separate cover:

first) how to define the relationship between WTO trade regime and multilateral environmental agreements;

second) procedures for regular information exchange between the secretariats of WTO and multilateral environmental agreements; and

third) facilitating the trade of environmental goods and services.

Obviously, these issues present challenge to many countries as they may have the effect of limiting access to foreign markets.  For example, if mandatory reduction of CO₂, which is stipulated by the UN Framework Convention on Climate Change and Kyoto Protocol, enters into force, environmentally advanced countries like the European Union can legally ban the circulation of carbon-intensive products like refrigerators and automobile in their markets.

Given the situation, developing countries argue that incorporating multilateral environmental agreements into the WTO mandate will frustrate their efforts to achieve trade balance with developed countries by raising production cost, limiting market access, and lowering export volume. 

To a certain extent, their concerns are understandable.  However, there is a saying that goes, “Risk always comes with an opportunity.”  If we take a forward-looking approach, challenges of the trade and environment linkage can be utilized to our benefit.  For one thing, we can expand markets for environmental goods and services, and develop cutting-edge environmental technologies and industries.  We can also get the direct benefits of greater public awareness and environmental improvement. 

In Korea, we are encouraging sustainable business management strategies and providing incentives for the design, production, and purchase of environmentally friendly goods.  As a result, Korea has become one of the most popular environmental study destinations, especially for countries that are experiencing rapid economic growth in Asia. 

Ladies and gentlemen.  As you are aware, negotiations at the 5^th WTO Ministerial Conference in Cancun last year was not as successful as many had hoped for.  In the face of deadlocked multilateral trade liberalization, FTAs are expected to grow into an independent driving force for free trade in the next few years.

I am pleased to note that in line with this international trend, Korea has concluded our first FTA with Chile last April.  We are now negotiating the FTA with Singapore and Japan this year, and our partners will expand to Mexico and the countries of the European Free Trade Association next year (Swiss, Iceland, Norway, and Liechtenstein).  Korea’s FTAs include separate negotiations for opening the environmental service market.  This is expected to provide an additional source of foreign capital and advanced environmental technologies.  We also promote environmental cooperation in the context of FTA through joint environmental labeling and environmental review of FTA.

Finally, I would like to emphasize that in liberalizing trade, it is very important to develop systematic strategies for environmental protection.  It is equally important to engage as many stakeholders as possible in the development of these strategies.  On their part, governments must publicize the contents of ongoing trade-environment negotiations, including the business sector and NGOs.

One of the strategies that Korea has developed to effectively deal with the trade-environment linkage is the establishment of the “Environmental Regulations Information Network.”  The objective of this Network is to provide accurate information to exporting businesses and to benchmark successful foreign environmental regulations.  Along with the Network, we also operate “Environmental Regulations Analysis and Evaluation System” to help provide sound adaptation strategies and to facilitate information exchange among businesses.  These proactive measures will help companies keep abreast of ever changing environmental regulations by providing information quickly and reliably.

Dear colleagues!  Deepening trade liberalization will further enlarge the interface between trade and the environment.  As lawmakers and representatives of the public, we must take the initiative of maximizing their synergy effects.  There is no one better positioned to take that initiative.  Let us make continuous and concerted efforts to harmonize trade and environment, and pass on a green and prosperous Mother Earth for all!  Thank you.