States recognize that environmental policies should deal with the root causes of environmental degradation and development problems in a manner which avoids adoption of measures resulting in unnecessary or unjustified trade restrictions. Environment-related regulations or standards, including those related to health and safety standards, should not constitute a means of arbitrary or unjustifiable discrimination nor a disguised restriction on international trade. Nor should trade restrictions or distortions be used as a means to offset differences in cost arising from differences in environmental standards and regulations, since their application could lead to trade distortions and increase protectionist tendencies. Unilateral action to deal with environmental challenges outside the jurisdiction of the importing country should be avoided. Environmental measures addressing international environmental problems should, as far as possible, be based on an international consensus. Domestic measures targeted to achieve certain environmental objectives may need trade measures to render them effective. Should such trade policy measures be found necessary for the enforcement of environmental policies, certain principles and rules should apply. These could include, inter alia, the principle of non-discrimination; the principle that the trade measure chosen should be the least trade-restrictive necessary to achieve the objectives; an obligation to ensure transparency in the use of trade measures related to the environment and to provide adequate notification of national regulations; and the need to give consideration to the special conditions and development requirements of developing countries as they move towards internationally agreed environmental objectives.
Environmental damage can occur as much from production as from product use and disposal. Environmental accords demonstrate that when governments focus on defining acceptable levels of environmental performance, they can adopt effective agreements, using labeling, market mechanisms, and other policy tools. Trade specialists fear that process-based distinctions would simply impede trade. But the failure to elaborate such frameworks – and the ad hoc distinctions that nations, under pressure of public demand for environmental protection, may make – pose a greater trade risk.
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.
Principle 12 of the Rio Declaration states: "Trade policy measures for environmental purposes should not constitute a means of arbitrary or justifiable discrimination or a disguised restriction on international trade... Environmental measures addressing transboundary or global environmental problems should, as far as possible, be based on an international consensus."
Standards and conformity assessment have replaced tariffs as the critical issues in international trade. About 70% of European Union directives involve standards and conformity assessment criteria.
No nation should be required to open its markets to goods when the producing nation's persistent failure to enforce environmental laws or flagrant violation of multilaterally agreed environmental performance standards effectively distorts the playing field.
The extent to which the 200 or so international environmental agreements impact on trade is largely undocumented. Whether environmental agreements create, obstruct or divert international trade is still unknown.