The Problem
The globalization of the world economy was initiated by the creation of the General Agreement on Tariffs and Trade (GATT).
The GATT was a revolving contractual agreement between governments, erected in honour of economic efficiency and comparative
advantage. In 1947 these two beacons offered light to a world recently ravaged by war, stalked by poverty and riven by
suspicion between countries. Through free trade, regulated by this agreement between those same countries, it was hoped that
all the people of the world would be able to establish decent livelihoods.
Simple rules were made to guide this trade rules that, in addition to preventing arbitrary discrimination between identical
products from different GATT members, required also that there be no trade discrimination between identical products made
using different PPMs. However, the worlds economy and indeed its ecology and human society was not that simple in 1947. It
is certainly far more complex now. The understanding of this is growing, from grass roots to senior government levels, along
with the realization that new economic policies and rules are needed to reflect this complexity and to direct the world
towards sustainable development.
A part of this complexity was reflected in the GATT from the very beginning. Article XX of the founding agreement provides
for exceptions to even the golden rules; exceptions to protect human, animal and plant life and health; to protect human
morals; to conserve "exhaustible" natural resources; and perhaps most interestingly to define products produced by prison
labour as "unlike" other, physically identical products. This is the point where the importance of how a product is made, of
"process and production method" (PPM), was first recognized in the GATT. In this case it was a recognition that an unfair
price advantage could be gained on world markets by exploiting captive labour. It was considered that the immorality of the
practice, and the temptation to succumb to it due to the substantial reduction in production costs it allowed, constituted an
advantage so unfair that it could undermine the entire trading system. Hence the exception to allow differential treatment of
goods produced by prison labour.
Since that time it has become quite clear to the people and their governments that with increasing numbers of people on the
planet, the question of how they make a living has become crucial to their ultimate survival. Unless the economic activities
which generate wealth are conducted with careful regard for the environment and natural resources on which we all ultimately
depend, the livelihoods generated will undercut life itself. Furthermore, unless the wealth generated is distributed
equitably between people and generations, social, economic and environmental justice within and between nations are
threatened.
These realities were recognized in the concept of sustainable development, formulated in the report of the World Commission
on Environment and Development in 1987, and subsequently elaborated in Agenda 21, signed at the Earth Summit in 1992. In the
negotiating processes which led up to those two meetings, both governments and civil society gradually came to understand the
implications of sustainable development; in particular that one cannot separate human welfare from that of the planet, and
that national and international policies must be coordinated and integrated to safeguard both. Securing human development
(increasing human welfare) and protecting the environment were seen to be inseparable necessities, not alternatives.
The understanding that was developed during the UNCED process led in many cases to proposals for policy reforms which centred
on changing PPMs on changing how economic enterprises are conducted so as to make them sustainable in social and
environmental terms. Much of that understanding is now enshrined in Agenda 21. For example, Chapter 8 on "Integrating
Environment and Development into Decision-Making" incorporates sections on choosing how one undertakes economic activities,
and ensuring that the social and environmental costs of those activities are "internalized" that is, fully accounted for.
Chapter 14 on "Sustainable Agriculture and Rural Development" sets out policies which support farmers employing those
particular methods of agricultural production which husband natural resources and protect the environment while feeding
people. In Chapter 30, on "Strengthening the Role of Business and Industry", actions are set out for the private sector which
would lead them to adopt "cleaner production" methods, and to account fully for the social and environmental costs of their
activities.
This has not happened in the context of the GATT, which became the World Trade Organization (WTO) in 1995, where the issue of
PPMs has unfortunately tended to be polarized along North-South lines. In this context, environment and development have
become separated, and are even seen as being in conflict. Yet in reality many of the PPMs that are bad for the environment
are also bad for development. If the issue is not addressed, it will play into the hands of those who currently profit from
environmentally damaging and poverty enhancing PPMs.
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