Eco-labelling: Legal and Institutional Eco-labelling: Legal and Institutional IssuesIssues

Beatrice ChaytorBeatrice Chaytor

FIELDFIELD

FIELD/UNCTAD Project on Building Capacity for Improved Policy Making and Negotiation on Key Trade and Environment Issues funded by DFID

African Regional Consultative Meeting, Nairobi

18-20 November 2002

DefinitionDefinition

• “ “ the use of labels to inform consumers the use of labels to inform consumers that a product is more environmentally that a product is more environmentally friendly relative to other products in friendly relative to other products in the same category the same category ” (UNEP) ” (UNEP)

• Example: non use of pesticides in Example: non use of pesticides in agricultural product (coffee, tea, agricultural product (coffee, tea, cotton) or whole life cycle description cotton) or whole life cycle description of productof product

ScopeScope

• Environmental labels: focus on Environmental labels: focus on consumption not production of product consumption not production of product (recyclable material)(recyclable material)

• Eco-label: reduce environmental impacts Eco-label: reduce environmental impacts over entire life cycle of product without over entire life cycle of product without specifying the production practicesspecifying the production practices

• Organic labels: specify production Organic labels: specify production method without requiring proof of method without requiring proof of environmental improvementenvironmental improvement

International Organisation for International Organisation for Standardisation (ISO)Standardisation (ISO)

• Type I: voluntary, multiple criteria based Type I: voluntary, multiple criteria based third-party practitioner programmes that third-party practitioner programmes that award labels based on life cycle award labels based on life cycle considerations (Germany’s Blue Angel, considerations (Germany’s Blue Angel, Nordic White Swan)Nordic White Swan)

• Type II: informative environmental self Type II: informative environmental self declaration claims (‘organically-grown’, declaration claims (‘organically-grown’, ‘energy-efficient’, ‘ozone-friendly’)‘energy-efficient’, ‘ozone-friendly’)

• Type III: quantified product information labels Type III: quantified product information labels based on independent verification using based on independent verification using preset indices (‘eco-toxic’, ‘biodegradable’)preset indices (‘eco-toxic’, ‘biodegradable’)

Features of Eco-labellingFeatures of Eco-labelling

• Sequence of procedures on standard/criteria Sequence of procedures on standard/criteria setting, testing, monitoring and certifyingsetting, testing, monitoring and certifying

• Focus on one stage of product’s life cycle, (use Focus on one stage of product’s life cycle, (use or disposal); one particular environmental or disposal); one particular environmental aspectaspect

• Increasing trend: reflect more holistic multi-Increasing trend: reflect more holistic multi-criteria and life cycle approach/assessmentcriteria and life cycle approach/assessment

• Usually voluntary but may be administered by Usually voluntary but may be administered by government agencygovernment agency

• Criteria differs in terms of scope and stringencyCriteria differs in terms of scope and stringency

Life Cycle Assessment (LCA)Life Cycle Assessment (LCA)

• Separate product stages (raw Separate product stages (raw material extraction, production of material extraction, production of intermediaries, product intermediaries, product manufacturing, use and disposal)manufacturing, use and disposal)

• Categories of environmental aspects Categories of environmental aspects (resource use, energy, emissions, (resource use, energy, emissions, nuisance, waste, reusability, nuisance, waste, reusability, reparability, life span)reparability, life span)

Challenges in Design of Eco-Challenges in Design of Eco-labelslabels

• Processes and procedures not open to Processes and procedures not open to foreign producersforeign producers

• Criteria set without consultation with Criteria set without consultation with foreign producersforeign producers

• Criteria for labels not important in foreign Criteria for labels not important in foreign producers’ countryproducers’ country

• Foreign producers have little or no access Foreign producers have little or no access to technology critical for complianceto technology critical for compliance

• Costs prohibitive for foreign producersCosts prohibitive for foreign producers

Challenges in Implementation Challenges in Implementation of Eco-labels of Eco-labels

• Voluntary eco-labels may turn into Voluntary eco-labels may turn into mandatory standardsmandatory standards

• UNCTAD: “UNCTAD: “when eco-labelling is an when eco-labelling is an important factor in the market place important factor in the market place its effects may be similar to those of its effects may be similar to those of regulatory measuresregulatory measures””

• Example: forestry – impact of Example: forestry – impact of European furniture industry – European furniture industry – ‘sustainably managed forests’‘sustainably managed forests’

Further ChallengesFurther Challenges

• Multiplication of labels, programmes: Multiplication of labels, programmes: e.g. bananas (Fair trade, Eco-OK, ISO e.g. bananas (Fair trade, Eco-OK, ISO 14001, organic)14001, organic)

• Differences in approach/criteria Differences in approach/criteria (social, environmental)(social, environmental)

• Multiple inspections/certifications lead Multiple inspections/certifications lead to additional costs in complianceto additional costs in compliance

• Confused consumersConfused consumers

Interaction of Eco-labels with Interaction of Eco-labels with WTO RulesWTO Rules

• Eco-labels administered and enforced Eco-labels administered and enforced through processes that have through processes that have governmental authority (e.g. EU eco-governmental authority (e.g. EU eco-labelling scheme)labelling scheme)

• Eco-labels that are entirely non-Eco-labels that are entirely non-governmental (e.g. Forest Stewardship governmental (e.g. Forest Stewardship Council) Council)

• Challenge traditional distinctions between Challenge traditional distinctions between ‘private’ and ‘public’ spheres‘private’ and ‘public’ spheres

Agreement on Technical Agreement on Technical Barriers to Trade (TBT)Barriers to Trade (TBT)

• Disciplines Disciplines – Technical regulations: compliance is Technical regulations: compliance is

mandatorymandatory– Standards: compliance is voluntary Standards: compliance is voluntary

• Eco-labels: provisions on standardsEco-labels: provisions on standards

Definition of StandardDefinition of Standard

• Annex I: “Annex I: “Document approved by a Document approved by a recognised body, that provides, for common recognised body, that provides, for common and repeated use, rules, guidelines or and repeated use, rules, guidelines or characteristics for products or related characteristics for products or related processes and production methods, with processes and production methods, with which compliance is not mandatory. It may which compliance is not mandatory. It may also include or deal exclusively with also include or deal exclusively with terminology, symbols, packaging, marking or terminology, symbols, packaging, marking or labelling requirements as they apply to a labelling requirements as they apply to a product, process or production methodproduct, process or production method.”.”

‘‘Recognised Body’Recognised Body’

• TBT Agreement does not defineTBT Agreement does not define

• Standardising body: “Standardising body: “a body that has a body that has recognised activities in standardisationrecognised activities in standardisation” ” (incorporation of ISO language in TBT) (incorporation of ISO language in TBT)

• NGOs administering fair trade label NGOs administering fair trade label might not qualify as ‘recognised body’ – might not qualify as ‘recognised body’ – within scope of TBT Agreement? within scope of TBT Agreement?

Coverage of Process and Coverage of Process and Production MethodsProduction Methods

• ““Rules, guidelines or characteristics on Rules, guidelines or characteristics on products or related process and products or related process and production methodsproduction methods””

• Prima facie would exclude pure process Prima facie would exclude pure process based criteria for eco-labelsbased criteria for eco-labels

• However: standard may “also” deal with However: standard may “also” deal with ““labelling requirements as they apply to labelling requirements as they apply to a process or production methoda process or production method”. ”.

Non Product Related PPMsNon Product Related PPMs

• How is “How is “alsoalso” to be interpreted?” to be interpreted?– Does it extend the definition in first sentence Does it extend the definition in first sentence

(process and production methods) only in so far as (process and production methods) only in so far as “related to” products?“related to” products?

– Should it be read subject to first sentence – simply Should it be read subject to first sentence – simply points out that labelling requirements are included points out that labelling requirements are included within scope of first sentence?within scope of first sentence?

• Possible interpretation: second sentence Possible interpretation: second sentence clarifies the application of the TBT agreement clarifies the application of the TBT agreement to labelling standards in their entirety to labelling standards in their entirety (whether or not based on pure process (whether or not based on pure process criteria)criteria)

Substantive Obligations on Substantive Obligations on Voluntary Eco-labelsVoluntary Eco-labels

• Art. 4 TBT AgreementArt. 4 TBT Agreement– Provisions on Preparation, Adoption and Provisions on Preparation, Adoption and

Application of StandardsApplication of Standards– Establishes graduated requirements to Establishes graduated requirements to

comply with a Code of Good Practice for comply with a Code of Good Practice for the Preparation, Adoption and the Preparation, Adoption and Application of StandardsApplication of Standards

TBT Code of Good PracticeTBT Code of Good Practice

• Central government standardising bodies: Central government standardising bodies: mandatory compliancemandatory compliance

• NGO and local government standardising NGO and local government standardising bodies: “bodies: “take such reasonable measures take such reasonable measures as may be available to themas may be available to them” to ensure ” to ensure compliance compliance

• Non compliance of Code by voluntary NGO Non compliance of Code by voluntary NGO administered labelling schemes – limited administered labelling schemes – limited scope for WTO censurescope for WTO censure

Code of Good Practice 2Code of Good Practice 2

• Section D: “Section D: “In respect of standards, the In respect of standards, the standardising body shall accord treatment to standardising body shall accord treatment to products originating in the territory of any products originating in the territory of any other Member of the WTO no less favourable other Member of the WTO no less favourable than that accorded to like products of than that accorded to like products of national origin and to like products national origin and to like products originating in any other countryoriginating in any other country.”.”

• Definition of ‘Definition of ‘like productslike products’ : LCA based ’ : LCA based criteria incorporating non product related criteria incorporating non product related PPMs?PPMs?

Code of Good Practice 3Code of Good Practice 3

• Section E: “Section E: “The standardising body shall The standardising body shall ensure that standards are not prepared, ensure that standards are not prepared, adopted or applied with a view to, or adopted or applied with a view to, or with the effect of creating unnecessary with the effect of creating unnecessary obstacles to international tradeobstacles to international trade.”.”

• GATT/WTO practice on interpretation of GATT/WTO practice on interpretation of term “term “necessarynecessary” (Art. XX (b)) relevant. ” (Art. XX (b)) relevant.

CGP Provisions on CGP Provisions on HarmonisationHarmonisation

• Section F: “Section F: “Where international standards Where international standards exist or their completion is imminent, the exist or their completion is imminent, the standardising body shall use them, or the standardising body shall use them, or the relevant parts of them, as a basis for the relevant parts of them, as a basis for the standards it develops, except where such standards it develops, except where such international standards or relevant parts international standards or relevant parts would be ineffective or inappropriate, for would be ineffective or inappropriate, for instance, because of an insufficient level of instance, because of an insufficient level of protection or fundamental climatic or protection or fundamental climatic or geographical factors or fundamental geographical factors or fundamental technological problemstechnological problems.”.”

Provisions on Harmonisation Provisions on Harmonisation 22• Section G: “Section G: “With a view to harmonising With a view to harmonising

standards on as wide a basis as possible, standards on as wide a basis as possible, the standardising body shall, in an the standardising body shall, in an appropriate way, play a full part, within the appropriate way, play a full part, within the limits of its resources, in the preparation of limits of its resources, in the preparation of relevant international standardising bodies relevant international standardising bodies of international standards regarding subject of international standards regarding subject matter for which it either has adopted, or matter for which it either has adopted, or expects to adopt, standardsexpects to adopt, standards…”…”

International HarmonisationInternational Harmonisation

• Organic foods:Organic foods:– Codex Alimentarius Commission: Codex Alimentarius Commission:

Guidelines for the Production, Processing, Guidelines for the Production, Processing, Labelling and Marketing of Organically Labelling and Marketing of Organically Produced Foods Produced Foods

– Common basis for rules at international Common basis for rules at international level of organic production level of organic production

– Some countries working on national Some countries working on national legislation based on Guidelines: e.g. PRC, legislation based on Guidelines: e.g. PRC, India, Philippines, Thailand and MalaysiaIndia, Philippines, Thailand and Malaysia

International Harmonisation International Harmonisation 22

• 1992 IFOAM developed Accreditation 1992 IFOAM developed Accreditation Programme to recognise equivalence Programme to recognise equivalence of organic products from different of organic products from different countriescountries

• EU: regulations EEC 2092/91, EEC EU: regulations EEC 2092/91, EEC 1804/99 – guidelines on organic 1804/99 – guidelines on organic production of agricultural products production of agricultural products

Mutual Recognition and Mutual Recognition and EquivalencyEquivalency

• TBT Agreement on technical regulations: TBT Agreement on technical regulations: ““Members shall give positive consideration to Members shall give positive consideration to accepting as equivalent technical regulations accepting as equivalent technical regulations of other Members, even if those regulations of other Members, even if those regulations differ from their own, provided they are differ from their own, provided they are satisfied that these regulations adequately satisfied that these regulations adequately fulfil the obligations of their own regulationsfulfil the obligations of their own regulations.”.”

• No equivalent provision on standardsNo equivalent provision on standards

Progress within the WTOProgress within the WTO

• CTE: within its current terms of CTE: within its current terms of reference to give attention to reference to give attention to labelling requirements for labelling requirements for environmental purposes.environmental purposes.

• To Report to 5To Report to 5thth WTO Ministerial in WTO Ministerial in Cancun (September 2003)Cancun (September 2003)

• Doha Declaration: work on issue Doha Declaration: work on issue should include identification of any should include identification of any need to clarify relevant WTO rules.need to clarify relevant WTO rules.

Progress in the ProjectProgress in the Project

• Identification of specific products impacted Identification of specific products impacted by eco-labellingby eco-labelling

• Elements for national legislation on Elements for national legislation on organic products of specific export interest organic products of specific export interest (Codex guidelines)(Codex guidelines)

• Principles on mutual recognition and Principles on mutual recognition and equivalencyequivalency

• Effective participation in Codex, ISO, CTE, Effective participation in Codex, ISO, CTE, TBT CommitteeTBT Committee