Eco-labelling and the Trade-Environment Debate

60 DANIEL MELSER AND PETER E. ROBERTSON
c. An Appropriate Policy Regime for GM Products
Though the moratorium on GM foods in the EU has been lifted, decisions on
individual GM crops are now made on a case-by-case basis by the European
Commission; The Economist (2004a). Thus the EU still remains a long way from
‘free trade’ in GM products. The analysis above suggests that labelling requirements
on GM products are an appropriate response for the health and safety
concerns of consumers, but not for the environmental concerns expressed by
lobby groups. In principle, therefore, an informed discussion on these issues
should consider the environmental and personal health concerns separately, and
form policies based on the perceived attributes of each product. If the concerns
over a GM product extend only as far as personal health issues associated with its
consumption or disposal, then labelling policies may be all that is required. If
concerns extend to local or global environmental costs, then alternative regulations
need to be considered.
6. CONCLUSION
Understanding the potential benefits of eco-labelling policies is particularly
important for internationally traded goods, where the potential exists for the
misuse of labelling as a technical trade barrier. Moreover, in several high-profile
cases, eco-labelling was adopted as a substitute for more trade-restrictive measures.
Thus we have argued that eco-labelling policies may, in some cases, be
simply a politically expedient way of avoiding the difficulties that have arisen
between trade and environmental policy objectives. This is a concern, however,
since we have also argued that there are grounds to be pessimistic about the
ability of eco-labels to solve environmental problems.
Specifically we showed that, while eco-labels can benefit consumers, the market
for the labelled good will be characterised by damage levels that exceed the
social optimum, because eco-labels only provide information about costs and
benefits that are external to each consumer. In some cases, such as the GM food
debate, labelling information about environmental costs may be only part of the
objective of a labelling programme. Nevertheless, if there are external costs
associated with the decision to consume the product, even a perfectly monitored
labelling scheme will not force consumers to internalise these costs. Hence ecolabelling
should only be seen as a part of a range of policies for environmental
management.
© Blackwell Publishing Ltd 2005