Trashing Free Trade: The Basel Convention’s Impact

Executive Summary

With the establishment of the World Trade Organization (WTO) in 1995, free trade should be on the rise. The WTO has been heralded as the mechanism for a new era in global trade liberalization. However, new non-tariff trade barriers are gaining increased acceptance around the world in the form of multilateral environmental treaties with trade enforcement measures. The most significant, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, seeks to impose environmental regulations and outright trade bans. This treaty is a direct challenge to the notion of a free and open global market.

Signed in 1989, the Basel Convention creates a global regulatory regime to control trade in hazardous wastes. It also obligates governments to manage waste transportation and disposal. It has three primary objectives:

1. Reduce transboundary movements of hazardous wastes to a minimum;
2. Ensure that hazardous wastes should be treated and disposed of as close as possible to their source of generation;
3. Minimize hazardous waste generation at source.

International negotiators first designed a “soft” law framework of general commitments, with “hard” law instruments to be negotiated and approved later through Conferences of the Parties (COP). The first COP decided to prohibit exports of hazardous wastes from industrialized nations for final disposal in developing countries. The second COP decided to ban, by 1998, all exports of hazardous materials for recycling purposes from members of the Organization for Economic Cooperation and Development (OECD) to non-OECD countries. The third COP moved to amend the Convention to make the ban on waste exports formally binding.

The power to declare a material hazardous can have enormous implications for the world economy. The criteria are so broad that trade in the by-products of nearly all agricultural and industrial processes is potentially affected. A ban on exports of many recycling materials from rich to poor nations would needlessly terminate a $50 billion trading relationship which is a vital industrial source of secondary raw materials and energy for developing countries such as South Korea, Indonesia, China, Malaysia, Thailand, and India.

International trade itself is not a cause of environmental degradation. Illegal dumping of waste is most often a problem in countries where there is little private property, and unresponsive or corrupt government bureaucracies. Global hazardous waste regulation does nothing to change such root causes of environmental degradation. International trade controls cut off developing countries from international markets for important materials supplies, reducing economic opportunities. Yet economic growth is essential for the creation of wealth, which provides the resources necessary for environmental protection.

The relationship between the Basel Convention and international trade rules is controversial and has not yet been settled. While the North American Free Trade Agreement incorporates Basel trade restrictions, the WTO does not. Environmental groups and some industrialized nations want to allow multilateral environmental agreements to override basic WTO obligations. The Committee on Trade and the Environment (CTE), convened by the WTO to consider the relationship between multilateral fair trade rules and environmental restrictions, will present its findings to the December 1996 Ministerial Conference in Singapore.

Many developing countries sense that the intent of proposals at the CTE is to erode their comparative advantages in international trade. Members of the Association of Southeast Asian Nations (ASEAN), in particular, have lashed out at industrialized nations for stacking the WTO summit agenda with non-tariff issues. Developing countries are coming to the realization that the environmental demands of the industrialized nations are new forms of protectionism designed to close markets. As a result, there may be little progress on this issue at the Singapore summit.

The U.S. should refrain from further active participation in the Basel Convention. Though efforts to “green” the WTO are not going far, neither does the WTO appear anxious to strike down a Convention whose core principles are antithetical to the philosophy of free trade and nondiscrimination. The U.S. should reject even the possibility of global trade regulation and an export ban. What Greenpeace and like-minded NGOs envision is a regime of global environmental standards for trade. This entails a blending of two incompatible concepts, free trade and government controls. Countries which desire competitive international trade, particularly developing countries, must stand firm against the green trade restrictions embodied in the Basel Convention.