Eco-Labelling and International Trade: The Main Issues

Abstract

Eco-labelling aims to promote the consumption and production of environmentally more “friendly” products by providing information to consumers on their environmental effects, in principle based on a life-cycle approach. This paper points out that while eco-labelling is essentially aimed at environmental purposes, it may at times result in discrimination against foreign producers and act as a non-tariff barrier to trade. Developing countries are becoming more exposed to the effects of eco-labelling as some of the new product categories which are being selected for eco-labelling are of export interest to them. In addition, in the case of these product categories, upstream environmental effects may be seen as more important than those related with consumption and disposal. Thus, criteria tend to be developed regarding raw materials and production processes, which may be difficult to comply with for foreign producers. This paper examines the possible environmental and, in particular, trade effects of eco-labelling on developing countries. It reviews the main issues which are currently being deliberated in a number of forums, including the United Nations Conference on Trade and Development (UNCTAD). It draws considerably from reports prepared by the UNCTAD secretariat to aid deliberations on eco-labelling in the Ad Hoc Working Group on Trade, Environment and Development.²

1. The opinions expressed in this paper are those of the author and do not necessarily reflect the views of UNCTAD. The designations and terminology employed are those of the author.