US embassy cable - 05SANJOSE2822

UNCLAS SECTION 01 OF 03 SAN JOSE 002822 
 
SIPDIS 
 
STATE PLEASE PASS TO AID 
STATE PLEASE PASS TO USTR 
AID FOR JGARRISON 
EPA FOR PAM TEEL 
WHA/OAS FOR DAN MARTINEZ 
EMBASSY SAN SALVADOR FOR GSCHADRACK AND ANNE DIX 
 
E.O. 12958: N/A 
TAGS: SENV, ETRD, EAID, CS 
SUBJECT:  MODELING THE ELEPHANT: OECD/OAS GLOBAL FORUM ON 
TRADE TAKES UP TRADE AND ENVIRONMENT CAPACITY BUILDING 
 
1.  Summary:  The OAS/OECD Global Forum on Trade session on 
Technical Assistance and Capacity Building for Trade and 
Environment was held in San Jose November 3-4.  Panels 
addressed market access, needs and priorities, and other 
issues related to trade and environment capacity building. 
Common themes included the need for policy coherence; 
problems linked to the proliferation of certification 
programs and market access standards; access to information 
and technical expertise; the usefulness of a South-South 
dialogue; and the need for small producers to become 
entrepreneurs.  Descriptions of successes - ranging from 
Indian electronics producers to Kenyan farmers and Mexican 
lobster fishermen- leavened discussions of problems with 
reminders of the opportunities trade can bring.  End 
summary. 
 
2.  The Organization for Economic Cooperation and 
Development (OECD), the Organization of American States 
(OAS), and GOCR co-hosted in San Jose a November 3-4 forum 
on Technical Assistance and Capacity Building for Trade and 
the Environment, part of the OECD Global Forum on Trade 
series.   In his opening remarks, OECD Deputy Director for 
Trade Kenneth Heydon encouraged participants to prioritize 
among the factors that determined the success or failure of 
environment-related trade capacity-building.  Panels 
addressed Environmental Requirements and Developing Country 
Market Access; Needs and Priorities for Technical Assistance 
and Capacity Building (TACB); Experiences in Environmental 
Requirements and TACB; Environmental Goods and Services; and 
Opportunities for Exporting Environmental Goods and 
Services.  Participants included government trade and 
development aid agency officials; NGOs; certifiers and 
others active in cleaner production; private sector 
representatives active in certified sustainable production; 
and academics. 
 
3.  The wide-ranging discussions in San Jose were frank but 
largely upbeat in assessments of opportunities.  Common 
themes among many of the presentations included: 
 
-- Policy coherence: Inconsistent market requirements among 
major consumers created problems for producers.  Developed 
country technical agencies encouraged diversification, but 
their trade rule-makers took decisions with little 
consideration for the impact on small producers overseas.  A 
proliferation of sustainable production certification forced 
producers to seek expensive multiple certification or to 
forgo promising markets. 
 
-- Transforming small producers into small businessmen: 
Many small producers were ill-equipped to deal with the 
demands of the international market place.  Basic financial 
management and other business skills were lacking.  Small 
businesses were discouraged by a maze of rules, changing 
market access demands, and unforeseen quality requirements. 
In other instances, small producers could not shake the 
subsistence mindset, abandoning the discipline of the 
contract for irregular production. 
 
  -- Access to information:  Developing country producers 
risk being sand-bagged dockside because notice of changing 
market access requirements failed to get to the grower.  The 
impact could be ameliorated if developed and developing 
countries assessed the impact of proposed rule-changes and 
disseminated those findings. 
 
-- South-South Dialogue:  Participants were inspired by 
sharing success stories, and saw particular value in 
networking among developing countries for fresh insights on 
managing familiar problems. 
 
Environmental Requirements and Developing Country Needs 
------------------------------------- 
 
4.  World Wildlife Fund (WWF) Director for the Center for 
Conservation Innovation Jane Earley, Costa Rican National 
Forestry Finance Fund (Fondo Nacional de Financimiento 
Forestal - FONAFIFO) Ricardo Ulate, and Chilean Trade 
Negotiator Edda Rossi discussed environment-related market 
access issues linked to certification, multilateral 
environmental agreements, and trade agreements, 
respectively.  United Nations Conference on Trade and 
Development (UNCTAD) contractor Rene Vossenaar described its 
project for strengthening developing country capacity to 
negotiate and formulate Trade and Environment Policy.  While 
the UNCTAD project boosted capacity to address trade 
negotiations, encouraged national dialogues, and (in Asia) 
stimulated interaction with the private sector, it also 
highlighted the lack of resources available to policymakers 
for institutional and policy follow-up, heavy workloads for 
small teams, and (in Central America) limited cooperation 
with regional bodies.  Project participants promoted access 
to information; encouraged trade negotiators to consider 
greater technical assistance to developing countries to meet 
new environmental standards; and recommended 
developed/developing state assessments of the impact of new 
trade measures. 
 
5.  Earley expressed concern over the conflicting 
requirements of multiple certification programs and 
expensive multiple certification for small producers.  (WWF 
is conducting studies on these two points.)  Efforts at 
harmonization or mutual recognition between programs have 
not made much progress.  Demand is being driven by big 
retailers; certification schemes are rarely directed at 
consumers.  Features of successful programs included 
stakeholder participation; transparency and good governance 
in addressing environmental issues; metrics to measure 
progress; a focus on performance; and establishment of 
minimally acceptable performance levels. 
 
6.  Ulate addressed the challenge of applying to local 
conditions the tools and goals derived from multilateral 
agreements like climate change and biodiversity.   He warned 
that the estimated 50 international agreements, and the 
processes, reports, and obligations that they create, 
challenged the limited capacity of many States.  Rossi noted 
that cooperation under free trade agreements (FTAs) helped 
balance developed countries' concerns about competition 
based on lower environmental standards, developing country 
concerns about potential environmental barriers to trade, 
and market interest in price, quality and high environmental 
standards.  She encouraged FTAs to define the principles 
needed to encourage sustainable development and to establish 
consultative mechanisms.  In her view, FTA-related 
environment cooperation priorities should take into account 
prior cooperation; characteristics of principal forms of 
economic activity; weaknesses in environmental management; 
national priorities; and chief international priorities or 
commitments. 
 
Learning from Experience: Identifying Needs and Priorities 
------------------------------- 
 
7.  Representatives of donors, recipients and international 
agencies identified needs and priorities.  Claudia de Windt 
of OAS and Cecilia Pineda with the United National 
Environmental Program (UNEP) demonstrated the potential for 
international commitments to spur action at the national and 
local levels of government.  They pointed out that capacity 
building works best if the beneficiaries lead, "owning" the 
process, and that policy is more likely to last with an 
intersectoral approach to mitigate changes in personnel and 
policy shifts.  Public participation and South-South 
dialogue are also important elements in ensuring that 
beneficiaries make the most of their aid.  A range of 
examples and programs were discussed: 
 
--  Presentations by African organics/sustainable producers 
and Indian electronic manufacturers highlighted common 
themes, including the lack of credit with which to upgrade 
standards;  conflicting rules for market access; the lack of 
a premium for sustainably produced goods;  and the challenge 
in providing a reliable supply to large retailers, 
particular when the supplier's subsistence expectations 
collides with contractual demands. 
 
--  Yemi Oloruntyi of the Marine Stewardship Council joined 
Mario Ramade Villanueva to discuss certification of the 
sustainable managed Baja California lobster fishery, which 
accounts for 65 percent of Mexico's lobster exports.  Key 
constraints included a limited range of certifiers and weak 
capacity for collecting and analyzing fisheries science 
data. 
 
--  Colombian Ministry of Environment Green Markets official 
Laura Rodriguez promoted in-country demand for local eco- 
products.  Sectors included ecotourism; recycling (50,000 
families rely on recycling 470,000 tons of paper, metals, 
bottles, and plastic), and power (36 wind and solar power 
firms complement the efforts of 300 small hydro producers.) 
 
--  Chantal Carpentier of the U.S.-Mexico-Canada Commission 
for Environmental Cooperation addressed the identification 
and development of green markets.  The CEC applied a 
geographic information systems (GIS) tool to plot 
biodiversity, development patterns, and other factors to 
identify promising areas for greenmarket production and 
demand promotion strategies. 
 
--  Highlighted Central America experiences included a 
presentation by EPA official Pam Teel on EPA's El Salvador 
projects; a joint United Nations Industrial Development 
Organization (UNIDO) -Honduras presentation on methyl 
bromide and its alternatives; and AID and Swiss support for 
Costa Rica's National Center for Cleaner Production.  This 
last showcased a regional market for industrial by-products; 
best hotels practices; and revolving credit programs.  Also 
of particular interest were UNIDO's findings on the non- 
tariff reasons that Central America exports were refused 
entry into developed country markets - product 
characteristics failed to meet applicable standards; 
inappropriate methods of production; inappropriate packing 
material; and labeling problems. 
 
 Environmental Goods and Services 
--------------------------------- 
 
8.  OECD Trade Directorate official Ronald Steenblik 
provided a basic introduction to environmental goods and 
services.  In its small sample of environmental projects, 
OECD found that waste management projects typically imported 
about 25-30 percent of environmental goods, primarily 
specialty items.  (Most items were non-specialty and 
procured locally.)  Tariffs and customs clearance delays 
were identified as the chief obstacles for imported 
environmental goods; tariff exemption requests proved a 
cumbersome tool.   Steenblik explained that the market for 
environmental goods and services is driven by ever-tighter 
regulations; corporate social responsibility; and the 
competitive advantage of farming out specialized services to 
firms who spread certain costs among clients. 
 
9.  Grant Ferrer, President of Environmental Business 
International, criticized trade negotiators for sacrificing 
"hard" environmental services talks in favor of "easy" 
progress in environmental goods negotiations.  In his view, 
the distinction is artificial.  The lack of progress in 
defining trade in environmental services clipped the 
potential benefits of liberalized trade in environmental 
goods.  Discussion also highlighted the problem of "dual 
use" and defining the end use for goods that could serve 
both environmental and productive ends. 
 
10.  COMMENT.  The Forum featured little discussion on how 
to influence developed country trade policy or the conduct 
of global trade negotiations.  Instead, it was particularly 
useful in opening doors to new contacts and ideas.  The 
range of featured topics and experiences brought to mind the 
old tale about sightless wise men who, when presented with 
an elephant, deduced the whole from a particular part - 
handling the trunk, one called it a snake; touching the leg, 
a second argued it was a tree; feeling the ear, a third 
concluded it was a giant bat; and so on.  Like the sightless 
wise men, conference participants were aware of the impact 
of trade and environment on their particular specialty or 
activity.  The Forum succeeded in linking the specialists' 
experiences to the broadest trends and issues under 
negotiation in international fora, and, in so doing, modeled 
the whole of the elephant.  END COMMENT. 
 
LANGDALE