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GATT Report Draws Fire From Environmentalists In Runup to Key Summits

Study counters argument that free trade hurts the environment

ARTHUR DUNKEL, director-general of the General Agreement on Tariffs and Trade (GATT), has thrown down the gauntlet on conservationists who claim that free trade damages the global environment.

His 35-page report released on Feb. 11 is the first of its kind to come from the world trade watchdog established in 1947.

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In it Mr. Dunkel argues that "green" policies and freer trade in industrial products can live together in harmony. But his arguments have drawn rebukes from environmentalists determined to prove him wrong.

Some environmental groups concede, however, that the report merits a reasoned response and have decided to study it with care before commenting.

Disputes between conservationists and champions of industry are nothing new. This time, however, the debate has been initiated by the GATT chief.

Dunkel's report was characterized by one of his officials as an attempt to "encourage international discussion of the links between trade and industry and environmental pollution."

Its central - and controversial - thesis is that increased international commerce should make it easier, not harder, to protect the global environment.

"Increasing trade improves our ability to invest in and protect the environment," the report says. "A country with a stagnant economy will be under greater pressure to snit on improving the environment."

The Dunkel report has been published amid continuing attempts to break the deadlock in the stalled Uruguay Round of world trade talks and in the run-up to the United Nations "earth summit" in Brazil in June.

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Dunkel said the report was to be discussed at the summit, and that the document was designed to counter two arguments likely to be used extensively by environmental spokesmen at Rio de Janeiro: that increases in international trade have an adverse impact on the environment; and that the application of trade sanctions against countries with low environmental standards is justifiable.

The Dunkel report's contention that increased trade gives countries more money to spend on cleaner production and consumption challenges the passionately-held convictions of environmentalists.

Its publication came only a week after the leaking of a memorandum by Lawrence Summers, vice president of the World Bank, arguing the economic case for locating pollution-producing industries in developing countries. The memo, which Mr. Summers defended as an attempt to provoke thought, appeared to conflict with World Bank policies on environmental protection and prompted demands for his resignation.

The bank administers the $1.5 billion Global Environmental Facility through which funds for environmental protection in many countries are administered.

Colin Hines, a London-based Greenpeace International campaigner, called the Summers thesis "outrageous." He dismissed Dunkel's argument as "totally false."

"The idea that more trade equals more cash equals more money available for environmental protection is a travesty," Mr. Hines said. "The dictates of the market encourage producers to look for places where production is cheap. This can well lead to a vicious circle."

Other environmental groups, however, were cautious in responding to the Dunkel report. A spokesman for Friends of the Earth said it raised "many issues that require careful consideration."

Friends of the Earth was not prepared to "respond in a knee-jerk way," the spokesman said, adding that his organization planned to study the Dunkel report "in detail."

The circumspection displayed by Friends of the Earth reflects a belief among some environmentalists that Dunkel is likely to gain the sympathy of developing countries at Rio with the part of his report which argues that using trade sanctions to punish countries with low environmental standards is wrong.

Maria Elana Hurtado, director in London of the World Development Movement, said developing countries viewed with alarm an attempt last year by the Bush administration to block Mexican exports of yellowfin tuna to the United States.

The US sought to justify the ban on the grounds that in harvesting the tuna, Mexican fishing fleets were also killing dolphins. Ignoring US protests, GATT ruled against the ban.

"Third-world countries such as Mexico fear that they will be made targets of embargoes dressed up as environmental protection but in fact motivated by other aims," Chilean-born Ms. Hurtado said.

The Dunkel report cites the Mexican tuna case as an argument in favor of free trade: "A country may not restrict imports of a product simply because it originates in a country whose environmental policies are different."

But Hines says trade embargoes to enforce environmental standards can be of benefit in some cases - for example in discouraging industries based on the destruction of rainforests.

"In two or three years' time the Netherlands is likely to introduce a law banning imports of unsustainable logged timber materials. That would be against GATT rules but could well benefit the environment," Hines said.

He added that multilateral accords to curb environmentally damaging industries were the best solution, but in the absence of such agreements "other measures are sometimes necessary."

Dunkel, however, argues a different strategy. In the case of rain forests, his report notes that countries with extensive forested areas are providing the rest of the world with "carbon absorption services."

Instead of such log-exporting countries being punished by imposing trade sanctions on them, they should be compensated for their carbon-absorption services by countries which produce carbon dioxide pollutants.

Dunkel said he hoped this proposal would be fully considered at Rio de Janeiro.

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