debt

the debate about the environmental impacts of trade is not new . Arising for the first time in relation to the impacts related to the North American Free Trade Agreement linking Canada and the United States in the late nineteen eighties and assuming major importance during the negotiation of the North American Free Trade Agreement between those two countries and Mexico. The onset of the Uruguay Round of trade negotiations, which ultimately lead in 1994 to the founding of the World Trade Organisation, also provoked great interest, at least amongst NGOs, about the possible impacts of the more than twenty agreements under the auspices of that multilateral body.

since that time the debate has widened , the impacts are better understood, and the idea that trade agreements need to be looked at for their environmental effects has gained ground, to the extent that in 1999 President Clinton of the United States, issued a presidential decree requiring future agreements to be subjected to environmental review. Despite this apparent concern, during the recent WTO ministerial meeting in Seattle the United States promoted a logging agreement which would have had recognised impacts in native forests of the Third World.

however, the debate over the impacts of trade still leaves some major gaps to be filled . For instance, while the impacts of further trade liberalisation on specific areas such as forests, water, food sovereignty, etc. have been recognised, the manner in which these issues are dealt with needs to be integrated in order to ensure that they do not become lost in a myriad of unrelated proposals for assessment or mitigation.

the individual issues described above are important enough to warrant immediate action at the international level , but there is a more serious blind spot in the move to assess and take remedial action on trade related environmental impacts. The issue of the relationship between increased trade liberalisation, increased trade, increased production, increased energy use and climate change is an area which has hardly been touched in the discussion about trade impacts.

this lack of discussion is all the more problematic given that the impacts of climate change , especially in the countries of the Third World, are, and are expected to be, extremely serious. An increasing frequency and severity in the el Niño phenomenon in various parts of the World, Hurricanes of unprecedented power and devastation in Central America, and unprecedented flooding in Venezuela and Mozambique, have all recently been registered. Thus the prevailing idea that we simply need to incorporate the environmental factor into trade agreements and that business, and trade, can then proceed as usual, needs to be challenged.

climate change is clearly not a joke and its effects will be with us for a long time , even if the industrialised countries of the world finally do get down to the serious business of reducing emissions. Unfortunately, while the need to reduce emissions is recognised, if not acted upon, there are counter currents in the world of international politics, and, of course, business. The Kyoto Protocol and the WTO for example have diametrically opposed goals, the one to reduce emissions, the other to increase trade. If there is a relationship between increased trade and increased production of physical goods, the idea that we can simply increase trade without further exacerbating the changes in climate which are already under way, needs to be thrown overboard immediately.

Another element that needs to be examined closely is that if increased trade leads indirectly to climate change, what is the position of the industrialised powers, and the WTO, in relation to the increasing Carbon/Ecological Debt which they have with the countries of the Third World.

the relationship between climate change and trade

The basic premise of neoliberal economics is that by specialising and increasing trade, all countries, including those which presently have low incomes, can benefit. Basically, that a rising tide raises all boats. This idea is fundamentally based on the assumption that a greater quantity of physical goods will be traded. This assumption is in fact borne out by the figures related to use of materials and energy on the global level. Despite the fact that the service and electronic sectors may have increased as a percentage of Global Production it seems self evident that Third World countries and people will not benefit much by having greater services or greater access to electronic information or communications, if they do not at the same time increase their access to basic goods.

The question of whether they actually need all the goods which may be considered basic by western standards is another matter altogether. It can be argued that the very process of "modernisation" and industrialisation leads to the abandoning of methods of production and styles of life which are much less dependent on industrially produced materials and products, much more energy "efficient", and sustainable.

increased trade can therefore be seen to be fundamentally based on an increase in the production and use of physical goods that the majority of people in the third world do not have, and given that increase in production, we can assume that this will lead to greater energy consumption. This assumption has however been challenged by pointing to increases in productivity per unit of energy and materials and to use of cleaner energy.

unfortunately these efficiencies, while useful in the short to medium term, do not appear to have had the kind of effect that was originally hoped for . In most cases this takes place because the drive for efficiency, if not accompanied by other measures such as restrictions on the reallocation of the saved energy, is simply swallowed up by increases in production and use. This has been made perfectly clear by the examples of car emissions in California where increased emission and fuel efficiency standards did not lead to expected improvements in air quality as it became possible to drive further for the same cost, and reduced the cost of owning a car.

Neither is there much sign that the flow of materials through the economy has slowed ; that the global economy has been "dematerialised". In fact the evidence is all to the contrary. Levels of material extraction and use are rising, while increases energy consumption shows no sign of slowing and are expected to be

what we do know is that in 1990, the relationship between global production and carbon emissions was around the 3,000 :1 mark , That is, that on average, for every $3,000 of the World GDP, 1 tonne of Carbon is emitted. And according to CESPAL, no significant change has been noted in the relationship between GDP and Carbon emissions in seven of nine Latin American countries during then period 1980-92. It therefore seems fair to assume that increasing trade, and therefore production, will inevitably lead to further carbon emissions. Unfortunately, the world is already emitting around 7,000,million tonnes per year, far above the capacity of the atmosphere and natural systems to absorb or re-process. The result of these unsustainably high Carbon emissions is Climate Change, a process which appears to be implicated in the recent rash of devastating storms and floods in various parts of the world. In late 1999 Venezuela was inundated by dramatic flooding whose cost is estimated at around $10,000 million, a figure that corresponds to a significant part of its external debt.

the conclusion has to be drawn that there is a connection between climate change and its impacts, the use of energy, and therefore, increases in trade

This link between Trade and Climate change requires us to ask whether we can afford to promote increased trade (and production)? Given the evidence, the answer would appear to be no. On the contrary the evidence points to the need for major reductions in energy use and production. Perhaps if present fossil fuel sources were to be substituted by clean, renewable and low impact energy sources, this might allow for some modification. However, this still leaves us with the problem the time necessary for this substitution and even then this does not solve the issue of material and land use and the impacts that these have on cultural and natural diversity. For example, how much does the social welfare equation change if shrimp or flower production is facilitated by the use of solar power instead of diesel?

We are also left with the problem of what happens to the thousands of millions of people in the world that lack basic services and goods. Most of these people live in countries which are indebted to the nations and banks of the industrialised world, and therefore have little money with which to finance health care, education programs or basic infrastructure etc. The capacity of these countries to design and follow their own versions of development, or to protect the sustainable models they already have is virtually nil due to the use made of the external debt by multilateral agencies such as the IMF and World bank to promote "export lead growth", that is, the increase in trade, of mainly primary resources, between these countries and the industrialised creditor nations.

If trade and production can not be increased without risking even more serious climatic problems, then some other way has to be found for the living standards of many of the world’s people. In order to achieve this it is evident that the same model of "production at all costs" cannot be used. The industrialised countries will need to reduce their use of energy and materials by about 90% in order to allow Third World countries to bring their own production/consumption up to a reasonable level without altering the environmental balance of the planet. This is highly unlikely. There is no evidence that this type of change, is even remotely visible or perhaps even feasible.

The only other possibility is that the countries which are still presently sustainable, that is those of the Third World, must take the initiative in protecting, designing and implementing sustainable models which are not based on the present production consumption patterns operating in the industrialised nations, on the concentration of wealth, and on inequality. The moral and financial basis for this leadership and change can be found in the Ecological Debt.

carbon emissions and ecological debts

On the other hand, as a counterbalance to this external (eternal) debt the industrialised countries of the world have, on both a historical and per capita basis, greatly overused their Carbon emission quota. In fact, on a purely per capita basis even the most "efficient" of these countries would probably run out of quota by March or April of every year. The industrialised countries therefore are drawing on Carbon credits every year, have been doing so for decades, and in the process have been accumulating a major ecological debt with the Third World. The fact that this debt is not acknowledged by the debtor countries hardly need surprise us, the basic issue is power or force. The strong do not recognised their debts with the weak, but enforce the debts of the weak with the strong. (a situation quite analogous to the "bargaining" or dispute "settlement" processes at the WTO). The U.S and E.U lead drive to increase world trade simply increases this tendency, deepening their Ecological Debt and plunging the world, including themselves, into a miasma of unpredictable and wildly dangerous climate swings and arrows.

The ecological debt is not however limited to the overuse of per capita carbon emission quotas, includes amongst other things the historical looting of various parts of the world, most obviously Africa and Latin America, and the ongoing unequal terms of trade, in which the average price of the raw materials which form the basis of most Third World country exports have continued to fall in comparison with the technological produce of the industrial world. Ironically, this debt has even been made worse by projects designed to buy Carbon Secuestration Rights in the Third World. Projects which have planted fast growing trees have actually had a negative effect on the environment and populations of a number of countries, for example, by planting trees on moorland, something problematic not only from a biodiversity and water supply point of view, but which has actually increased the net release of Carbon into the atmosphere.conclusions

1. 
   
2. increasing international trade is dangerously increasing climate problems . In light of the serious impacts climate change is already having on the whole world, especially the countries of the Third World, and given the links between Climate Change, production and trade, policies promoting further increases in international trade which are espoused by the major industrial powers and the multilateral organisations such as the World Trade Organisation, are untenable.
3. the idea that trade and environment, or sustainability, can be self reinforcing is little more than a discourse which in the short term will allow the expansion of trade to go on unexamined and therefore unchecked, and which will increase the impacts of climate change.
4. that the present ideology of increasing production at the global level in order to increase income for all, including the poor, is a hollow promise . Not only does increase in trade have little to do with increased income (the relationship is at best 7:1) but in fact the environmental and social impacts of increased trade, which are made visible through Climate Change, are actually reducing possibilities for an increase in social welfare for the thousands of millions of people in Third World countries exposed to these impacts.
5. the world’s industrialised nations are ethically and financially bankrupt . According to Carbon accounting, and its relation with the Ecological Debt, the present style of production and consumption as practised in the industrialised nations has gone far beyond the limits of sustainability and climatic stability. Further increases in the levels of consumption and production will only lead to more severe impacts on the Third World countries, which are less equipped to deal with them. The model has therefore to be changed rather than expanded to countries which still presently are outside this dangerous pattern.
6. other more autonomous and less dangerous methods are necessary for increasing welfare of the majority of the world’s people . The countries of the Third World must be able to design their own models based on first satisfying their own internal needs and only then on exports. Protecting the environment, respecting basic human rights, and promotion of natural and cultural diversity are not side agreements to a model of export lead growth, but the foundations of any workable and just economic system which takes the needs of all into account.
7. the industrialised countries are incapable of changing the dangerous path they are following . While industrial efficiency has been increased, the promotion of more trade and consumption has raised consumption of raw materials and manufactured goods. For reasons of profit, short term electoral strategies, and sheer blindness, the roughly 20% of the world’s population which profits from the present model and enjoy its benefits, are hardly likely to voluntarily renounce their privileges. And as increasing levels of material consumption indicate, they have shown absolutely no sign of doing so, despite the evident links between this consumption and major environmental and social impacts in the Third World

recommendations

1. 
   
2. all processes which promote trade expansion must be brought to an immediate halt . Regional trade agreements such as the Mexico – E.U. agreement, the Free Trade Area of the Americas, the Mediterranean Free Trade Zone, the Trans-Atlantic Free Trade Area, and Global processes under the auspices of the World Trade Organisation are promoting climate change must all be stopped immediately .
3. the southern countries must take the lead in ensuring sustainablity and climate stability . While due to considerations of military and financial power it is virtually impossible for the countries of the Third World to oblige the industrialised nations to pay their debts, the former can, and for ethical and Climatic security reasons must, embark on a policy of non-cooperation with the present economic model. This would include the following measures:

• Non payment of external debts (counterbalanced by the Carbon/Ecological Debt), so that environmental and social concerns can be dealt with..

• Concentration on the development internal and South – South markets (because focusing on asymmetric external markets, especially those of the major industrial powers, is proven to be prejudicial to most of the Third world Countries),

• Reducing the South to North flow of material resources to a level which is sustainable from, local environmental, climatic, and social points of view.

3. southern countries must prepare other strategies to improve the welfare of their people . As has been indicated increased trade has little to do with increased income per capita or welfare. So despite the rhetoric to the contrary, by withdrawing from a trade/export based economic system, these countries will lose little, if anything, and will gain both socially and environmentally from implementing more sustainable policies. This implies the development other more effective and locally controlled strategies for providing basic services such as health, education, improving the lives of the majority of people in the Third World. With the balancing of the external debt by the Ecological Debt, this will in fact be easier to achieve.

references :

World Resources 1998-9 , World Resources Institute,

Vital Signs  : WorldWatch Institute, Washington.

Beyond Growth  ; Herman Daly, Beacon Press, Boston, U.S.A. 1996.

Who Owes Who : Climate Change, Debt Equity and Survival , Christian Aid, London, U.K. 1999.

Greenhouse Gangsters Vs Climate Justice  : Transnational Resource and Action Centre, San Francisco U.S.A. 1999.

Ecological Debt   vs External Debt : A latin American Perspective, Juan Martínez-Alier, Universidad Autónoma de Barcelona, 1998.

Climate, Debt, Equity and Survival , Global Commons Institute, London. U.K.

Annual Report 1999  : World Trade Organisation, Geneva, 1999.

Handbook of International Trade and Statistics 1996-7 : UNCTAD New York, Geneva 1999

Our Ecological Footprint: Wakernagel & Rees, New Society, Vancouver Canada 1996

Ecología Política No.18 . Impactos de la applicación de políticas sobre cambio climático en la forestación del paramo en el Ecuador, Veronica Vidal, Barcelona, July 1999.

International Trade and Globalisation Monitoring Campaign,

Acción Ecológica,
Alejandro de Valdez 24-33 y La Gasca,
Quito Ecuador
Tel/Fax : 593-2-547-516 E-mail : cflores@hoy.net