I. BACKGROUND
As trade liberalization and global efforts to protect the environment continue, the linkages between trade and the environment have proven to be rather complex. The recent WTO's decision on shrimp and turtle cases ruled that a U. S. ban on improted wild shrim caught without the use of turtle-excluder devices violated i nternational trade rules in that it attempts to impose U. S. environmental rules on other countries. This decision may have profound effects on the environmenta l community. The Kyoto Protocol legally binds developed countries parties to red uce GHG emissiona dn endorses in principle the use of economic instruments inclu ding emission trading and Clean Development Mechanism in combating global warmin g. These resolutions and the consequent efforts will have obvious trade implicat ions in years to come. The recent Asian economic crisis and subsequent painful r estructuring will place increasing pressures on natural resources in the region.
As China continues to integrate into the world economy, it needs to monitor the direction of the future trade, environment, and development agenda and possible approaches to trade and environmental issues. Meanwhile, it needs to address adv erse impacts of rapid economic and trade growth on the domestic environment; to avoid the possible negative effects of stringent foreign environmental standards on its export products; to explore opportunities arising from the greening of m ajor developed country markets; to make use of foreign investment to support its sustainable development efforts; as well as to fulifill its obligations to inte rnational environmental agreements.
The Workig Group on Trade and Environment was established in 1995 with a mandate to assist China in developing and implemention long-term, comprehensive and int egrated trade and environmental policies and measures that are supportive of sus tainable development. It carreies out policy related research leading to practic al recommendations for consideration by the Governent of China in addressing the aforementioned needs.
During 1995-1997, the WG met four times and completed four research projects. Tw o of them-Ecolabelling and Its Implications for China and, Green Food Developmen t and Environment Protection in China-were submitted to the Council in 1996, and the other two-Pollution Havens and Ozone-Depleting Substances Contro in China a nd, Strategies for China's Implementation of AIJ: Analysis on Advantages and Dis advantages-were submitted in 1997.
In November 1997, the Working Group in conjunction with the State Environmental Protection Administration and UNEP/LE organized an international coinference on ISO 14000 Environmental Standards and Sustainable Developent. Two papers-ISO 140 00 and China: A Trade and Sustainable Development Perspective and ISO 14000 and Business Strategies: An Annotated Bibliography-were presented at the conference on behalf of thw Working Group.
A seriesofrecommendations regarding China's overall trade and environmental poli cy, ecolabelling, green food development, the role of foreign direct investment related to ozone-depletingsubstances contro, and activities jointly impemented o fthe Council and were will received.
There publication in Chinese have been issued. They are: 1)the first book of a s eries on trade and environment, which includes three nhir WG paper-Environment a nd Trade, Ecolabelling and Its Implications for China, and Green Food Developmen t and Environmental erspective; and 3)a translation of GlobalGreen Standards: SI O 1400 and Sustainable Development.
II. MEMBERS
The Working Group consists of 12 members, 6 Chinese and 6 international members. It is chaired by Ye Ruqiu,Senior Advisor and former Deputy Administraor of the State Environmental Protection Administration of China (SEPA) and by David Runna lls, Senior Fellow and Director of the TradeProgram of the International Institu te for Sustainable Development of Canada.
The international members include: Victor Lithtinger, former Executive Director, North American Commission for Environmental Cooperation; BillLong, former Enviro nment Director of OECD; Geoffrey Oldham, Professor, University of Sussex of UK; atsuo Seiki, Executive Director of Global Industrial and Social Progress Researc h Institute of Japan; and Konrad von Morking Group this year. Rubens Ricupero, S ecretary-General of UNCTAD, was a full member during 1995 and 1997, and has now become ab honoiurary menber.
The Chinese members are: Cao Fengzhong, Director of Policy Research Centre for E nvironment and Economy, SEPA (RCEE/SEPA); Jin Yunbui, Professor of Guanghua Management School, Peking University (GMS/PU); Shi Yonghai, President of Chinese Academy of International Trade and Economic Cooperation, Ministy of Foreign Trade a nd Economic Cooperation (CAITEC/MOFTEC); Sun Weiyan, President of Foreign Trade and Economics (UIBE); and Yi Xiaozhun from the Ministry of Foreign Trade and Eco nomic Cooperation (MOFTEC). Yi Xiaozhun joined the Working Group this in place o f Li Enheng of MOFTEC.
The Working Group has been assisted by Cheng Lulian, Guo Dongmei and Shen Xiaoyu e of PRCEE/SEPA, Li Yongjiang and Zhao Yunin of CAITEC/MOFTEC, Liu Xue of GMS/BU , Wang Yuan of METEC, and Xia Youfun of UITE.
The project coordinator from the international side is Wahnua Yang, Program Offi cer of International Institute for Development (IISD).
Arthur J. Hanson, CCICED Member and president and CED of IISD, is the shadow min ister of the Working Group and pays an important role in its establishment and o ngoing operation.
III. PHASE II WORK FOCUS
Based on the work done during the past three years as well as China's presentr s ituation and needs, the Working Group has seleted the following targets as flucu s of the Working Group during the second phase:
1. Continue to assist China in considering and implementing integrated trade and environmental policies and measures that support sustainable development;
2. Suggest actions and measures to enhance institutional building and coordinati on at national and local level relating thade and environment matters;
3. Determine China's perspective on international rules on foregign direct inves tement and consider in detail the actions required to advance the role of foreig n direct investment in promoting sustainable development;
4. Continue to determine impacts of selcted foreign environmental standards and other meaures on China's treade in certain secors;
5. Monitor the development of concerns with trade and environment in various int ernational and regional forums and assess implications for China;
6. Raise awareness on the improtance of trade andenvironment ofgovernmental offi cials in charge of trade and environmental protection, of entrepeneurs of tradin g and ofmanufacturing companies;
7. Provide support for China to explore and define workable approaches to addres sing climate change through market-based mechanisms and technology transter,espe cially through the Clean Development Mechanism of the Kyoto Protocol; and
8. Promote environmental technology transfer.
Projects Planned for the First Three Years of Phase II
In order to reach these targets, the following projects are planned for thes fir st three years of Phase II:
1. A comprehensive policy review on the interaction of China's foreign trade and environmental polices;
2. China's perspective on existing and proposed international rules on foreign d irect investment and sustainable development;
3. A study on theimpact ofselected foreign environment standards on China's trad e: case study on EU's and Japanese textile standards;
4. Monitoring and assessing trade and trade and sustainable development activiti es and issues related to China in international and regional organizations such as WTO, UNEP, UNCTAD, OECD, NAFTA and APED;
5. A study on international trade in clean coal technology: obstacles, opportuni ties, and strategies for China;
6. A follow-up study on activities implemented jointlyin the context of the Clea n Development Mechanism of the Kyoto Protocol; and
7. Workshops on trade and environment emphasizing policies and practicesof gover nmental trade and environment officials, trading companies and trade-orientedent erprises.
IV.1997-98 RESEARCH PROJECTS AND ACTIVITIES
During 1997-98, several research projects habe been undertaken. This first year of Phase II focused on the first three projects listed above. Al these htree pro jects are stillcontinuing.
As a follow-up to a previous study on pollution havens and ozone-depleting subst ances (ODS), an investigation was carried out.In concluding this project, foloow -up recommendations on ODS will be submitted to the Council.
In addition, the Working Group is involved in two joint Dutch and Chinese projec ts. One is on lief-cycle analysis of wate plastics in China with a special empha sison international trade and recycling, and the other is on the trade in Chines e t raditional medicine and the protection of endangered species, which is joint ly undertaken with the Working Group on Biodiversity.
As a presparation for a future study on clean coal technology transfer, the Work ing Group has produced a paper on the Chinese market for environmentally sound t echnology.
The firs meeting of the Working Group in 1998 took place in Huangshan, Ahnui Pro vince on April 20-23. The meeting reviewed the preliminary reports of the first three projects of Phase II and other related activities, and planned the work o n the report and recommendations to the Council and the work that should be comp leted after the next meeting.
The second meeting is scheduled immediatelyt after the Council meeting.
1. Policy Peview on the Interation of China's Foreign Trade and Environmetal Pol icies
This project is a two-year project, the first stage of which is a case study on
trade and environmental issues of the textile industry in China. It will be foll woed by another two case studies, one on plastics and the other on leather, and an overall review of China's tade policies and environmental policies.
The case study on textiles reviews the present status of China's trade in textil es; analyzes the product structure of China's textile industry and problems with in he sector including environmental issues; and demonsrates the linkage between domestic environmental issues in the secotr and the competitiveness in the inte rnational market.
For years, the textile export has been one of the pillars in China's foreign tra de. Although the share of textile exports remains substantial in the nation's to tal exports, if fell from almost one third in 1978-1994 to almost one quarter in 1997. Meanwhile, the textile industry faces many fundamental problems. A survey on the economic benefits of the textile sector in 1996 shows that 65% of state- owned textile enterprises suffered losses in the first three quarters of 1996, w ith the net loss as high as 7.7 billion yuan. Exept the chemical fiber sector, s even other sectors including cotton textile, dyeing, prefabrication, wool textil e, flax and hemp textile, silk and knitting all suffered losses.
In analuyzing the struture of textile production and the international market, t he study points out that low or mediu priced products rather than those of high grade have dominated China's textile products, while the international market ha s a high demand for high priced and fashionable colored and styled products.
In addition to the previous economic and operational system (which constrains st ateowned enterprises from operating on their own and taking care of profits and losses themselves), loose management and irrational high investment, major probl ems of the indursty are low-levels of technology, high consumption of resources and energy, and environmental pollution. These three environent-related problems have negative impacts on the competitiveness of China's textile products in the international market.
China has formulated a series of goals for industrial structural adjustment and relevant policies aiming at promoting sound development of the textile industry and follwoing the pathof sustainalbe development. Environmental goals have been also set up for the industry. The prevention and control of waste water and nois e pollution is the priority. The targets are to increase he waste water treatmen t rate to 90%, to expand shuttleless looms and to eliminate excessive noise.
The elimination of backward production capacity and the trandsformation from coa rse production to intensive production by improing energy efficiency, reducing c onsumption of resoures and coordinating the industry's development with environe ntal considerations, can not only increase productivity substantially, but also reduce environmental dammages caused by industrial activity.
The preliminary study concludes that at the same time when vigorously resturctur ing the sector, implementing various environemntal regulations and management ru les and reinforcing environmental management including practicing cleaner produc tion, adopting ISO 14000 environmental management standards and promoting enviro nmental lebelling and other measures can not only help reacht the economic and e nvironmental goals set by the industry, but also increase the competitiveness of China's textile industry in the iternatinal market.
The study will be followed by some field investigtions and supplemented by two o ther case studies (plastics and leather) and an overall review of China's trade and environmental policies. A full report on this project will be availabel by t he next Coucil meeting.
2. Case Study on Impacts of environmental issues in recent years, there has emer ged a "green" demand for products in some developed countries. However, there ar e no uniform laws, regulations or standards. Each individual country implements its own laws, regulations and standards, which undoubtedly creates barriers to i nternational trade. In intense competition in international markets, stringent e nvironment standards and requirments for proudcts can somertimes by used as a pr etext for trade protection in the name of environmental protection.
As a developing country, China's environmental standards are generally not as st ringent as those of developed countries', while the major importing countries of China's exprots are developed countries.
The textile industry is one of China's key industries. In recent years, some maj or importers of China's textile products such as the EU countries have adopted m ore stringent environmental standards for textile products. For example, Germany adopted a low in 1994 to ban textiles dyed with Azo dyes, which may release som me specific amines that are harmful to human health. As a result, China Xiamen S ilk Import and Export Corporation experienced some difficulties.
It is very important for China to realize that China's main exporting products a re facing new challenges posed by increasingly stringent environmental standards as requirements in international markets.
The study is designed to examine the impacts of selected environmental standards on China's textile trade, if any. The focus has been on the environmental stand ards for textiles in EU countries. The research will determine what difficulties China's textiles producers are facing due to more stringent environmental stand ards and requirements, to understand the differences between environmental stand ards and requirements of textiles in EU countries and those in China. The resear ch will then propose necessary strategies to cope with such difficulties.
The study is still at a preliminary stage. Efforts have been made to review majo r environmental problems in the tectile industry. Relevant environmental stadard s and requirements for textile products in several EU countries have been also e xamined, including a 1994 German Law banning 118 kinds of Azo dyes, legislation on Azo dyes in other EU countries, and environmental standards regarding other h armful materials of textile products in major EU countries.
The next steps of the study include in - depth investigations to consider how th ese issues fit into the presen formal trading system (WTO); to examine how China 's policies have responded to this situation; and possibly to work in conjunctio n with the cleaner production working group to consider policy recommendations t o tackle these problems.
3. International Investment Rules and Sutainable Development: China's Perspectiv e
Over the past ten years, international investment flows have attracted much atte ntion, because they have become very large and because traditional development a ssistance has stagnated in some cases and been sharply reduced in others. For ma ny countries, foreign direct investment has become a vital part of their develop ment strategy.
The study reviews China's foreign direct investment (FDI) development and its im pacts on China;s economy and sustainable development; China's experience in coor dinating the utilization of FDI and environmental protection in support of susta inable development. It aims to provide some insights and recommendations on how to improve the coordination between investment and sustainable development in Ch ina and on the position China should take in the possible future development of international rules on investment.
China's FDI Utilization and Its Impacts on Sustainable Development
Since its opening in 1978, China has made remarkable progress in attracting and utilizing foreign direct investment (FDI). To the end of 1997, a total of 304,82 1 foreign investment projects had been approved. The contracted foreign capital reached US $ 520,4 billion, and the actual investments amounted to US $ 221.9 bi llionl. Since 1993, China has become the second largest recipient of FDI in the world after the United States.
The existing strategies for introducing FDI emphasize quantity and speed, while neglecting efficiency, quality, and management of FDI projects. This has provide d opportunities for foreign companies to transfer pollution - intensive operatio ns to China. According to the statistics provided by the third national industri al census conducted in 1995, there are 16,998 foreign funded enterprises (includ ing equity joint ventures, contractual joint ventures and wholly owned foreign e mterprises) that involved in pollution - intensive operations, approximately 30% of total foreign funded enterprises in China. Among them, about 40% engaged hig h pollution - intensive operations.
There are some cases indication that undesirable materials or technology sometim es were shifted to China through EDI.
Foreign capital inflows, on the other hand, have some positive effects on China' s environmental protection and sustainable development. Foreign companies, multi nationals in particular, bring in advanced technology including environmental te chnologies as well as good environmental management skills. They are also leadin g in adopting some voluntary measures such as ISO14000 and ecolabellin. Of 36 IS O 14000 certified enterprises in China, 25 of them are foreign funded enterprise s with most of them being multinationals. Among 86 enterprises presently having their products ecolabelled, 40 of them are foreign funded enterprises.
China's Policies, Laws and Regulations Regarding FDI and Environmental Protectio n
The study indicted that at present, there are more than ten Chinese policies, la ws and regulations regarding foreign investment have environmental provisions an d about two dozen environmental policies, laws, regulations that are relevant to FDI.
On the whole, environmental considerations have been integrated into China's pol icies, laws, and regulations governing the utilization of FDI. The focus is gene rally placed on the pre-establishment and during the application process by usin g an Industrial Guiding Indes to Foreign Investment to screen projects. The Guid ing Index divides projects into four categories, that is, projects in which fore ign investment is encouraged, permitted, restricted or prohibited.
Chnese environmental policies, laws and regulations have also considered environ mental problems that may be caused by foreign funded projects, and imposed vario us various rules rules and measures to comtrol environmental pollution that may arise from these activities. Policies and regulations governing these activities include strengthening environmental planning of coastal and other open economic zones, requiring environmental impact assessment and the "three simultaneity", and having foreign funded projects adhere to other applicable environmental laws and regulations.
However, the implementation and enforcement of these policies, laws and regulati ons lacks coordnation. This makes the transfer of pollution-intensive industries from other countries hard to control. Many environmental issues arise after the establishment of projects.
Existing and Emerging International Rules on Investment
OECD began the negotiation of a Multilateral Agreement on Investment three years ago. The MAI has been viewed by developing countries as largely an agreement to protect investors of developed countries. In additon, the MAI has been criticiz ed because of its limited attention to environmental aspects.
In the WTO system, international rules have been formulated for commodity trade (GATT) and service trade (GATS), but no rules on investment. The Singapore meeti ng was the first occasion for more systematic discussion of the issues relating to FDI with a view to formulating an agenda for future WTO action. As result, a Working Group on Investment has been formed and it just had its first meeting re cently.
The study is still continuing. Based on the preliminary analysis, the study conc ludes that the principle of sustainable development should be integrated in FDI policies and laws.
In order to systematically regulate the environmental behavior of foreign funded enterpriese, the legislation of the environmental management of FDI projects sh ould be strengthened.
Although China has generally integrated environmental consideration in nvestment policies, and adopted environmental measures governing foreign investment proje cts, the State Environmental Protection Administration needs to work more closel y with the Ministry of Foreign Trade and Economic Cooperation in implementing in vestment and environmental policies and laws.
During the last two decades, China has gained much experience in operating vario us forms of special economic zones and open cities. There should be lessons that can be learned from theses areas related to investment and the environment, and it is worth exploring how to promote FDI in support of sustanable development i n these regions.
China's expeience in attracting and utilizing direct foreign investment and in c oordnating FDI and environmental protection has provided many insights to the fu ture possible negotiation of international investment rules. Future internationa l rules must be based on the sustanable development prnciple.
4. Initial Research on Chinese Market for Environmentally Sound Technology
This study is carried out in preparation of future work on the international tra de in clean coal technology. It divides environemtally sound technology (EST) in to two categories 'end-of-pipe' technology (EOPT) and clean production technoloj gy-(CPT).
In general, the Chinese environmental industry and EST markets are still in thei r infancy although they have developed to some extent in recent years. The share of the transaction of EOPT technology in the Chinese domestic technology market was relatively low before 1995, but increased greatly in 1996. In the process o f opening up and the recent rapid growth, China has undoubtedly adopted some CPY , but the scale is hard to determine.
The driving forces for the EST market are quite different from those for the gen eral technology market. The general technology market is largely driven by the p rofitability of an enterprise. Based on its own competitive strategies, the ente rprise decides whether or how to take part in the technology market. Non-market factors can hardly influence enterprises' technology choice. In contrast, the ES T market is not only driven by the profitability, but also by other factors such as environmental regulations and their enforcement, public environmental awaren ess and other non-market forces. The EOpT market is particularly driven by these factors.
There are several indication showing great potential for further expansion of th e Chinese EST market. First, with the present rapid economic growth, environment al problems now facing China tend to become more serious.
Second, over the years, high input, high emission and low output have accompanie d China's rapid growth. For example, the energy utilization efficiency is very l ow. In 1992, energy consumption per unit of GDP in China was 2.86 times higher t han the of India, 5. 45 tmes of U. S., 19.86 of Germany and 14.33 of Japan. It i s estimated that the energy conservation potential in China is 300 million tons of standard coal each year.
Third, the shortage of resources has greatly constrained China's economic growth . In recent years, China has faced a shortage of 20-30 million tons of coal, 10 million tons of petroleun, and 70 billion KWH of electricity. It has estimated t hat the losses caused by the shortage of energy are 20-60 times the value of the energy. The shortage of 100 million tons of coal results in a loss of 100 billi on yuan.
Furthermore, with the increase of income and the improvement of the standard of living, the Chinese people have become more aware of environmental problems, and this trend is likely to continue. They are willing to pay environmental protect ion expenses.
Another imprtant factor that affects the EST market is the investment in environ mental protection. China's investment in this area has steadily increased over t he past decade. The average growth rate is about 24% whic is higher even than th e growth rate of GNP. More recently, China has decided that the proportion of en vironmental investment should be not less than 1.5% of GNP.
All these factors show that potential for the development of the EST market in C hina is substantial. However, there are also various barriers constianing the de velopment of such a market.
There exist obstacles both from the demand and supply sides that will affect the development of China's EST market.
A further study will be carried out focusng on clean coal technologies. It will analyze problems facing the development of China's EST market, opportunities for its further expansion, and obstacles from both demand and supply sides. On the basis of the indepth investigation, policy recommendations on the trade in clean coal technologies will be put forward.
5. The First Meeting of 1998 in Huangshan
The Working Group had its first meeting of 1998 in Huangshan, Anhui Provnce from April 20 to 24, 1998. About 30 participants attended the meetng, including 5 Ch inese members and all 6 international members.
The Working Group reviewed the progress of three ongoing projects.The first is a preliminary report on trade and environmental issues in China's textile industr y, which is one of the three case studies under a broader prject on policy revie w of the interaction of China's trade and environmental policies. The second is a study on China's perspective on international investment rules and sustainable development, and the third is a case study on imacts of environmental standards of EU on China's trade in textiles.
Members also reviewed and delberated two joint Dutch and Chinese projects in wh ich some members of the Working Group had been involved. One is the plastic cycl in China with a specialemphasis on international trade and recycling, and the ot her is traditional medicine in China and the protection of endangered species, w hichis jointly undertaken with the Working Group onBiodiversity. In addition,the Chinese market for einvironmentally sound technology and China's WTO accession negotiation and its participation in APEC were also discussed at the meeting.
Several presentation were made by international members including major internat ional events related to trade and the environment, climate change problems and t he Kyoto Protocol, OECD Multilateral Agreement on Investment, NAFTA and the Free Trade Agreement of Americas.
The meeting endorsed a research proposal on international trade inclean coal tec hnologies, and decided to continue to seek funds for trainigng workshops on trad eandeviroment: olicies andpractices.Emission trading andClean Development Mechan ism related to climate change were also briefly discussed. Several researc proje cts proposed for future programs include APEC trade liberalization and environme nt, a demonstration project in Beijing economic and technology zone, tade in env ironmental services and emission trading.
The Working Group developed its work planafter its second meeting of the year. D ecisions on its report to the Council and details of the next meeting were also made.
6. The Second Meeting of 1998 in Beijing
The second meeting of the year is scheduled immediately following the Council me eting.
V. RECOMMENDATIONS
Environmental considerations have generally been integrated into China's policie laws, and regulations governing foreigen direct investment. Chinese environmenta l policies, laws and regulations have also considered environmental problems tha t may be caused by foreign funded projects by imposing various rules and measure s to control environmental pollution that may arise from these activities. Studi es done by the working Group, however, reveal some remaining problems and indica te room for improvement in coordinating the relationship between China's foreige n investment utilization and sustainable development.Therefore, the Working Grou p proposes the following recommendationsto the Council:
1. Adopt new sustainable develoment criteria for solichting and approving direct foreign investments
2. Make efforts to prevent activities or materials from entering China that may affect China's bligations under international environmetal agreements
1. NEW CRITERIA FOR DIRECT FOREIGN INVESTMENTS
1) define areas and projects where foreign investment should be limited, strictl y limited or prohibited according of the severity to a project's environmental i mpacts;
2) reform foreign projects'review procedures. In ordar to strengthen the environ mental management of foreign direct investment, environmental protection authori ties should be involved in approving foreign invested projects;
3) adopt measures to provide concentrated supervision and management: for projec ts that involve intensive pollution, but are judged to be indispensable for the nation's economic development, measures can be takten to provide concentrated su pervison and management. As a tentative measure, several industrial development zones for certain pollutionintensive sectors could be established with the appro val of the State Environmental Protection Administration and the Ministry of For eign Trade and Economic Co-operation. In such zones, pollution control facilitie s of air, water and solid wastes should be built as the essential infrastructure s of the regions;
4) provide necessary incentives to encourage foreign investors to practice clean er produchtion and environmental management throughout the life cycle of a produ ct,and to adopt ISO 14000 and eco-design; encourage investors to establish envir onmental reporting systems; and
5) define the responsbilities of transnational corporations in promoting sustain able development in China:
·introduce state-of-the art environmental technologies and equipment and advanc ed environmental management skills,
·apply home country standards where they are more stringent than those of China . Standards that are less stringent than their home countries, but stricter than the Chinese standards, could be allowed at first, and then they should graduall y move towards more advanced standards;
·train their employees in environmental safety and health issues;
·pulish annual environmental performance reports;
·assist their partners, suppliers, contractors and licensees to improve their e nviromental caacity through vairous ways such as technology transfer, technical training, product specifications, so as to promote sustainable development throu ghout the whole product chain.
Applicable departments
The Ministry of Intermational Trade and Economic Cooperation
The State Environmental Protection Administration
The State Planing and Development Commission
2. MAKE EFFORTS TO PREVENT ACTIVITLES OR MATERIALS FROM ENTERING CHINA THAT MAY AFFECT CINA'S OBLIGATIONS UNDER INTERNATIONAL ENVIRONMENTAL AGREEMENTS
ImplementaionMeasures
1) Strengthen legislation
Provisions on ODS control should be included in the implementationrules of the e xisting Air Pollution Prevention and Control Law; and special management rules r egarding FDI should be formulated in implementing China's Country Program for ph asing out ODS. These should include a detailed list of technologies and material s in which investment should be limited or banned and rules for limiting or proh ibiting the import and export of ODS.
2) Reinforce management
The investment authorities at various levels (usually MOFTEC and local economic and trade commissions) who have the power to approve direct foreign inestments s hould reject and projects that will involve ODS production and consumption; envi ronmental departments at all levels should include ODS control in existing envir onmental management systems such as environmental impact assessent, the 'three s imultaneity' system, pollution charges and other instruments. Policies encouragi ng the development, use and application of ODS substitutes and technology should be formulated, especially preferential loans and taxation should be provided.
3) Establisch a sound IEA implementation system
The ODS study shows that the imlementation of aninternational environmental agre ement (IEA) needs a sound institutional system, including cooperation betwenn fr ade and environmental departments, between central and local agencies and among various local institutions including planning, trade, finance, commerce, pricing ,industry, customs,and environmental protection.
4) Strengthen customs management
Customs plays a vital role in the implementation of IEAs. Rules of customs to co ntrol ODS imports and exports should be established. Imports of ODS should be li mited by quota according to the domestic consumption.
5) Strengthen dissemination and education and provide necessary training
Tha awareness of ODS is crucial in the implementaion of the Montreal Protocol. F or ODS control, efforts should be made to have the public aware of the ODS issue s through various forms of media and proper training should be provided to local management personnel.
6) Expedite standards formulation and assist enter prises to acquire new technol ogy
According to the Montreal Protocol, there is a long list of ODS substitutes. Chi na has no emission standards for most of them. Problems exist especially with la rge discharges. Efforts should be made to expedite scientific research on these substances and formulate emission standards accordingly.
China's Leading Group on Ozone Layer Protection should organize experts and tech nical personnel to assess and approve substituting technology from abroad. Based ontheir assessment and approval, only those technologies that are considered as mature should be imported. Technical information on substitutes and new technol ogy should be made available to enteerpriese to assist them in search for substi tuting technologies.
Applicable Departments:
·The State Economic and Trade Commission
·The State Development Planning Commission
·The State Envirionmental Protection Administration
·The Ministry of International Trade and Economic Cooperation
VI. 1998-1999 WORKPLAN
During 1998-1999, the Working Group will continue three ongoing research project s. One project has just been started; and another one is about to start. The Wor king Group is also planning to organize one or two training workshops on trade a nd environment for trade and environmental officials, trading companies and expo rt-oriented enterprises. The details of these projects are as follows:
Projects to be continued
·Policy research on the interaction between China's foreign trade and environme ntal protection
·Case study on impacts of selective EU environmental standards on China's texti le trade
·International investment rules and sustainable development: China's pespective
Projects to be initiated
·APEC trade liberalization and China: coordination betwwen trade policies and e nvironmental policies.
·Training workshops on trade and environment: policies and practices