One Hundred Fifth Congress
Congress of the United States

House of Representatives
Committee on Government Reform and Oversight
2157 Rayburn House Office Building
Washington, DC 20515

June 19, 1998

The Honorable William J. Clinton
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear Mr. President:

The World Trade Organization (WTO) and other international institutions play a pivotal role in balancing trade objectives with global environmental goals. As you remarked at the WTO meeting in Geneva, environmental protection and international trade objectives should be achieved in tandem. You called on trade and environment ministers to give new energy to the WTO's efforts to make trade and environment policies mutually reinforcing, and ensure that sovereign nations can uphold more stringent environmental, health, and safety standards.

Unfortunately, we don't believe that enough has been done at the WTO and other international institutions to accommodate trade measures that provide incentives for countries to improve the environment as they liberalize their markets. The recent WTO ruling regarding shrimp harvests is evidence of this problem. Global climate change is another important area where more effective trade policies could help countries reduce dependence on polluting fossil fuels, and leverage our environmental goals.

We are interested in your views on how the United States has been using its economic leadership at the WTO, the World Bank, and other agencies to address the challenge of global warming and provide incentives for developing nations to increase their participation in this critical global effort. In particular, we request your views on the following issues:

1. Since 1992, the World Bank has helped finance 87 fossil-fuel based projects. These projects are expected to produce one and a half times more C0₂ emissions than today's annual global total. Has there been a comprehensive review of these projects undertaken to determine whether renewable or clean energy technologies could be substituted as energy sources.

2. What is the status of the World Bank review of the impact of its lending policies on the environment?

3. The WTO requires a review of subsidies that distort international markets. The Intergovernmental Panel on Climate Change also encourages phasing out existing distortionary fossil fuel subsidies as a prudent, cost-effective measure to address climate change. Has the USTR encouraged the WTO to review fossil fuel subsidies that directly work against the goal of curbing emissions? What timeline is in place for phasing out such subsidies in both OECD and developing nations?

4. What is the U.S. position on the use of trade measures in furtherance of the goals of multilateral environmental agreements? Does the U.S. support the use of trade sanctions for countries who are in violation of multilateral environmental agreements (MEAs) such as the Montreal Protocol and the Kyoto Protocol?

5. What is the USTR doing at the WTO to ensure that WTO's panel and appellate reports as well as consultations comply with the terms of MEAs?

6. What steps have been taken at OPIC to ensure that its policies are consistent with the objectives set forth under the United Nations Framework Convention on Climate Change (UNFCCC) and other MEAs?

7. The Multilateral Agreement on Investment's performance requirements section explicitly forbids technology transfer as a condition of participation. This is inconsistent with the goals of the UNFCCC and the Montreal Protocol. Why is the U.S. supporting language in the MAI that would undermine the goals of our international agreement?

8. What is the process by which IMF lending conditions are reviewed to ensure they are consistent with the global environmental objectives? What has the U.S. executive director to the IMF done to further this process?

9. Given the importance of improving the impact of trade policies on the environment, it seems that USTR and the Council on Environmental Quality should share the responsibility for all issues where trade and environment intersect. What steps have been taken to establish joint jurisdiction?

In addition to your views on the questions posed above, we also request periodic briefings by U.S. representatives to the Committee on Trade and Environment for members and staff. We hope such briefings will provide a forum for continued dialogue on these matters.

Global warming is a serious issue requiring global action, and international trade and financial policies should reflect the importance of this challenge and offer avenues for cooperative solutions. We look forward to working with you on this important issue.

Sincerely,

cc: Charlene Barshevsky, U.S. Trade Representative

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