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This course has four main aims:

  • To introduce students to the World Trade Organization as an international economic, political and legal entity;
  • To examine the trade and environment debate;
  • To examine the World Trade Organization’s multilateral agreements anddispute resolution adjudications with a view to determining the extent to which the operations of World Trade Organization affect environmental sustainability; and
  • To consider the bio-political implications of the formal legal division between public international law and international economic law as they affect the trade and environment debate.

Research Essay Topics

  1. Is it correct to characterise the WTO as an international environmental rulemaker?
  2. To what extent, if any, is the use of trade sanctions to enforce environmental measures legitimate?
  3. “The WTO’s promotion of trade in environmental services is a significant contribution to international and domestic environmental protection”. DISCUSS
  4. What is the relationship between the law of the WTO law and United Nations Framework Agreement on Climate Change?
  5. “The fact that the WTO agreements promote certain forms of foreign direct investment flies in the face of its claims to be an environmentally aware organisation”.
  6. Do the WTO agreements involve a form of “eco-imperialism” for developing countries?
  7. “The failure of the SPS Agreement to recognise any substantive precautionaryprinciple suggests that it will be of little assistance in protecting life, health or the environment.”
  8. Is the ISO 14001 Standard on Environmental Management Systems a significant contribution to environmental protection?
  9. To what extent are the conflicts between the TRIPs Agreement and the Convention on Biological Diversity a serious issue of environmental concern?
  10. Should eco-labelling be regulated under WTO rules?

Discussion questions:

  1. Why is international trade regime considered to be a matter of particular interest in relation to the protection of the environment?
  2. How does the structure of international law impact on the relationship between trade and the environment?

The Relationship between International Trade and Environmental Protection

The World Trade Organization (WTO) is a global organization that governs international trade. It was established in 1995 after the Uruguay Round. One hundred and twenty four countries were involved in the creation of the Uruguay Round and in a span of seven and a half years. The biggest revolution was brought about in the world’s trading system since General Agreement on Tariffs and Trade or GATT. This essay argues the idea as whether to characterize the WTO as an international environment rule maker or not. The essay elaborates on the institutional and legal structure of the WTO centered on environmental protection, the WTO agreements that affect the environment along with how those agreements affect the environment and the interactions of WTO with environmental NGOs and the steps that might be taken to increase interaction.

The conflict between international trade and environmental protection has been discussed for years by environmental campaigners and free trade advocates. Two links between environment and trade were focussed. The first was the effect of trade globalization on the environment of a country or even the environment quality of the world. Second, the impact of the policies on environment protection on international trade. The Committee on Trade and Environment (CTE) was established under the World Trade Organization because of the decision taken during the Uruguay Round. The purpose of this committee is to promote sustainable development by identifying the relationship between environment and trade. The agenda was to act as an extension of the General Agreement on Tariffs and Trade (GATT). The main objective of WTO was to use a series of multilateral negotiations to reduce the overall level of tariffs and other trade barriers. The institutional and legal structure of WTO is based on some fundamental standards and among these norms, non-discrimination and reciprocity are the most important ones. The negotiations on reductions of tariffs shows clearly that the reciprocity system in the WTO system is adamant. Instead of lowering the barriers of trade unilaterally, the members have decided to reduce only the protection levels in exchange for mutual concessions from different trading partners during multilateral negotiations. The non-discrimination policies are expressed with the help of two principles. Among the first principle is the most-favored-nation or the MFN principle (Article I) that compels each WTO member to give all the additional members of WTO the identical privileges that it has given to its MFN. The second principle states the national treatment principle (Article III), according to which each WTO member has to treat every similar products from producers of foreign origin in the same way it treats domestic producers. The only article in the General Agreement on Tariffs and Trade specifically acknowledges environmental concerns is Article XX. The article sets conditions for stopping international trade during the event of interest of plant, animal or human health or life (Article XX(b)) and the natural resources conservation (Article XX(g)). These measures are only allowed if the members do not discriminate either arbitrarily or groundlessly between countries that have similar conditions or the situation constitutes of disguised protective measures for those favorable countries. In case of scenarios where environmental objectives are concerned, the WTO allows exceptions to its trade rules and disciplines, but they actively see that not all of the measures give rise to protectionism or discrimination among the members of WTO. A general rule of the WTO states that the member states are prohibited from restricting trade solely based on the production method of goods also known as process and production methods (PPM). Although from an environmental point of view, the production process often raises concerns and thus the environmental measures target these production processes. Such production process includes greenhouse gas emissions of manufacturing processes, dumping unprocessed hot water from plants to nearby water bodies and oil spillage from petroleum carriers. There had been many complaints from environmentalists in the past regarding the GAAT’s implementation trade measures and the ways it harmed the environment. The Uruguay Round ended with the creation of WTO. This showed a greater willingness to understand the lawfulness of environmental policies in the trading environment and this clear from the Marrakesh Agreement that established the WTO. This agreement lists environmental protection and sustainable development as clearly and well-written aims for the trading system. The preamble was not legally binding but it represented the important rejection of the GATT’s philosophy that strictly followed separation of environmental and trade policies. The World Trade Organization on the other hand strengthened the dispute settlement mechanism of the GATT. The perspectives of trade and environmental protection is changing and debatable as time goes on. Thus, making the dispute settlement legally binding helped in the evolving jurisdiction of WTO in cases involving environmental trade measures.  The debate between WTO and environmentalists arises from the question of whether these uncertainties are temporary or has long-term effect. There are various areas of environmental policymaking are effected like safety of food and other organisms that are genetically modified. Multilateral Environmental Agreements (MEA) defines trade measures in a wide and imprecise way. It primarily states various forms of trade restrictions keeping in mind the purposes of environmental conservation such as trade bans on specific substances responsible for pollution from countries that are in violation of environmental obligations. There are many treaties that are designed to regulate trade and there are other treaties that uses restrictions on trade as a form of penalty for those members or parties or nations that fail to comply with the provisions of WTO. The Montreal Protocol on ozone layer depletion is an ideal example, which imposes a schedule to phase-out certain chemicals like Chlorofluorocarbon or CFC that damages the ozone layer in the Stratosphere. The treaty additionally bans trades in the ozone layer depletion substances with countries that have not endorsed the Protocol. Legal structures of the measures of trading have become an important element of international level environmental treaties as they implicate very definite problems from a trade perspective. The use of climate regulations is seen as a potential tool to endorse restrictions on trade in carbon-intensive goods. There is high probability of a conflict between the WTO and the MEA due to the climate changes. The trade and environmental policies will overlap in the near future that will be aimed at reducing carbon emissions. The Kyoto Protocol was implemented by the UN aims at reducing carbon emissions. An extension of the Kyoto Protocol might be seen in the scenario that would aim at improving the environment while reducing the adverse effect of carbon-intensive goods on the environment.

The World Trade Organization and Environmental Protection

There have been many disputes that were settled under the General Agreement on Tariffs and Trade and World Trade Organization mechanism for dispute settlement. Among those, only some were environmental related trade disputes but these disputes attracted a lot of public attention due to severity of the disputes. Some of the important cases were the Tuna-Dolphin Case, the US-Gasoline Case, the Shrimp-Turtles Case, the EC-Biotech Case, and the Brazil-Retreaded Tyres Case.

US ban on certain tuna imports were directed at an effort to protect dolphins but this created one of the earliest and most controversial trade-environmental disputes. In 1972, the Marine Mammal Protection Act (MMPA) implemented the law on US fishermen that enforced the use methods that were dolphin-safe to counteract the undesirable trapping of dolphins in the purse seine style of nets that is primarily used tuna fishing. The US Congress later added one provision to the MMPA called the Direct Embargo Provision that granted the US Government to levy bans on tuna import from countries that failed to use fishing methods safe for dolphins. The aim of this trade measure was to prohibit foreign competition to the US fishermen from gaining an advantage by not implementing the dolphin-safe fishing methods themselves. On implementing a ban on tuna import from Mexico, it registered a complaint with the GATT on grounds that the ban was unjustified as US focused on process and production methods such as types of nets used that accidentally trap dolphins instead of the product itself that is tuna fish. Mexico further stated that the United States should never utilize GATT Article XX to coerce other countries to follow its domestic environmental laws. The General Agreement on Tariffs and Trade panel who presided the case gave verdict in favor of Mexico but the verdict was not legally binding. This decision caused a chaos among environmentalists and an extensive debate about the hostility of GATT towards environmental concerns.

The US-Gasoline case occurred in the 1990 where the Clean Air Act (CAA) as amended by the United States as an effort to improve the quality of air by reducing harmful emissions from use of gasoline. The law enforced that cleaner gasoline be sold that was reformulated for less emission, in urban areas that is generally heavily populated. Conventional gasoline was permitted to be sold in the rural areas due to the low population density. There would have been a shift of low cost yet exceptionally high polluting gasoline from urban areas to rural areas due to this law. Thus, to prevent this from happening the law also stated that the gasoline that will be sold in the rural areas must the same purity index as it was before the law was formed. A baseline was established and any gasoline company going below the baseline would be penalized. The domestic refiners were given the liberty of setting their own individual baseline that they used in 1990 while producers of foreign origin were given an average baseline to follow which the Environmental Protection Agency had set. Venezuela and Brazil had filed a complaint under Article III of the GATT and argued that the law disfavored the imported gasoline. The Appellate Body of the WTO had concluded that that the method to establish the baseline was inconsistent with Article III and even Article XX could not justify it. The Appellate Body however also found that the aim of the US measures was to conserve natural resources. The members of the WTO were allowed to set their own environmental standards as long as they followed the rules set by the WTO and one rule in particular about the domestic and foreign products. The World Trade Organization’s dispute settlement body had started working under the WTO agreement’s strengthened rules. This enabled them to have a broader perspective of the situation and gave sided with the environmental concern of the US that reflected in the trade measure and blindsided the discriminating part of the measure.

Trade Agreements and the Environment

In 1997, the Shrimp-Turtles Case emerged that was similar to the tuna-dolphin case. The US Government decided to enforce a law, which would force use the ‘turtle excluder device’ or TED on the foreign shrimp trawlers while fishing for shrimps in areas with seas turtle population. This measure was in accordance with the US Endangered Species Act of 1973.  Four countries, India, Malaysia, Pakistan and Thailand, filed official complaints at the World Trade Organization. They argued that this measure broke the rules of the WTO and the foreign producers were threatened based on the process and production methods (PPM). The case was judged based on a greater emphasis on balancing environment with free trade and WTO used its improved dispute settlement powers. The body responsible for dispute settlement gave its verdict in favor of US that the import ban was legitimated base on Article XX that was related to natural resources that are exhaustible. Verdict was passed that stated that the ban was discriminatory in nature, as the United States implemented the treaty of turtle protection on some countries and many similarly affected countries were exempted. The ‘arbitrary and unjustifiable discrimination’ among the members of the World Trade Organization is the reason the US lost the case. The US lost the case because the designed method discriminated between foreign competitions. The United Stated then changed its rules and started to target individual shipments of shrimps instead of the exporting countries. This measure was in accordance with the Article XX of the WTO. The environmental policies of the WTO critically states that restrictions on trade based on the process and production methods in a foreign country can be implemented if the restrictions are unbiased and non-discriminated in nature between different countries.

The EC-Biotech Case occurred in May 2003 when the United States, Canada and Argentina filed complaints with the WTO against the European Community and its member States who were affecting the agricultural and food exports. Consumer hostility and NGO campaigns against the Genetically Modified Organisms (GMO) had forced the EU to impose an embargo on the import of GMO’s. The dispute was based on the precautionary measures took by the EC even when there were many scientific uncertainties involved. The EC thus had to revise its regulations but it did so partially. The Approval process of GMO remains complex due to resistance from domestic sources to agricultural biotechnology.

In 2004, Brazil imposed an import ban on retreaded tyres from countries that were non-MERCOSUR, stating that the tyre disposal had adverse effect on human health and the environment. Brazil argued that their ban was in accordance with the Article XX of the WTO and that it had obligations towards the MERCOSUR countries and thus had to exclude them due to rules of the custom union. EU asked the WTO panel to reconsider this trade restriction and that it was biased and unfair. The Appellate Body gave its verdict that the import ban by Brazil had environmental grounds however there was discrimination between countries. Brazil thus had to revise its laws on request from the dispute settlement board to make them in accordance with the WTO rules.

Dispute Settlement Mechanism

The Uruguay Round marked the beginning of WTO and agreements that the members of the WTO consented on. There are some major achievements of the Uruguay Round that have huge impacts on the trade-environment link including the Agreements on Technical Barriers to Trade (TBT) and the Application of sanitary and Phytosanitary Measures (SPS), Third Party Risk Management (TPRM) and General Agreement on Trade in Services (GATS). The TBT agreement had set rules for the use of technical standards and regulations that would help in minimizing the trade-distorting effect. The agreement identifies the right of countries that enables them to impose measures, which protects the environment and the human health. It also states that these measures should be trade-restrictive but not more than that is necessary. An environmental label, for example, that states the potential health risks of using the particular product to a customer could be considered acceptable under the WTO norms but so long as those norms are applied in an unbiased manner. However, the TBT agreement is broken if a label is used that solely aims at the production process of a product such as the carbon-intensity during the manufacturing process of cars. The agreement applies to mandatory standards imposed by governments of different nations, whereas individual eco-friendly labels that are created and imposed by private sectors are not included in the WTO jurisdiction. The SPS agreement deals with different measures that protect the life or health of human, animal or plant. It allows nations to take measures that does not lead to disguised restrictions or discriminations on international trade. The SPS and TBT agreements together encourage standardization and even the creation of international standards. In one of the articles of the Agreement, Article 2.2 specifies that the SPS measures have to be based on principles backed up by scientific procedures of risk assessment and sufficient scientific evidence is also needed. Article 5.7 states that the requirement in Article 2.2 can be temporarily suspended in the case of lack of scientific evidence is encountered. A full risk assessment within a stipulated amount of time is to be performed by obtaining additional scientific information. The SPS agreement considers scientific uncertainties while creating justification for precautionary measures in trade measures. The creation of GATS or the General Agreement on Trade in Services was one of the prized achievements of the Uruguay Rounds. All WTO members, which amounts to almost 140 countries, are the members of the GATS at the same time. They have taken up commitments in individual service sectors. Third Party Risk Management (TPRM) manages and addresses risk related to third party vendors.

As of today, there are thousands of NGOs including the environmental NGOs, who are directly involved in various international trades and issues both on local level as well as on international level. These international trades and issues are inclusive of agriculture and economic development of the least developed and developing countries. Trade Unions as well as business groups have been in existence since a long time, and now with the increased involvement in the field of trade with significant rise in globalization and liberalization of trades, environmental NGOs are now considered as the modern players in the domain of international trades.

Conclusion

With the establishment of the World Trade Organization, in accordance with the Article V.2 of the Marrakesh Agreement, the General Council has been making appropriate and necessary arrangements to consult with the non-government organizations (NGOs) and get their cooperation on matters and issues related to the WTO including environmental issues. The very next year, in 1996, the members of the Security Council recognizing that the NGOs can play a vital role in increasing the public awareness on the activities of WTO, agreed to develop and improve their communications with the NGOs. This agreement came into effect, by firstly giving the authoritative power to the Secretariat of the WTO to initiate contact with the NGOs directly and then by identifying various other communication channels including the public forums and briefings by the team of the Information and External Relations Division of the WTO.

The WTO interacts with the NGOs including the environmental NGOs in various ways. The World Trade Organization (WTO) official website contains all the latest information about the several activities of organization including trade based negotiations, WTO agreements being implemented, latest publications of WTO, statistics of the latest trades and several other pages dedicated to others including NGOs. Thus, by going on the WTO websites, the NGOs can keep themselves updated. Then the WTO has its own Really Simple Syndication (RSS) news feeds, enabling the NGOs including the environmental NGOs to get the WTO related news directly to their device and be informed of their area of interest without visiting the official website. The World Trade Organization is also active on various social media websites including Facebook as well as Twitter. This allows the NGOs to follow the activities of the WTO posted on the social media and comments on them. The WTO, after all its major meetings that is held at its headquarter in Geneva, goes ahead to give informal briefing that the registered NGOs should either be Geneva based or from the nearby regions may attend.

Being registered beforehand, for being a part of the public events is the general rule that all the NGOs are supposed to follow. According to the records available at WTO website, there are forty-five representatives of the local NGOs registered to the World Trade Organization (WTO). Apart from this, WTO also gives out a WTO-NGO badge with a validity of a year to all the local NGOs who request for it. With these things, WTO allows the NGOs access to the building of WTO and facilitates their participations in public events as well as in events that are purely dedicated to the NGOs including briefings by WTO Secretariat. The NGOs are allowed by the WTO to even attend and participate in the ministerial conferences, which is its supreme decision making body, held after every two years. During these conferences, the NGOs do gets briefings regularly by the External Relation team on the progresses made in the discussions between the members of WTO. Similarly, NGOs can also attend the public hearings of certain proceedings related to dispute settlement.

The other means through which the WTO and the environmental NGOs can interact with each other are by active participation of these NGOs in the public forum of the WTO and by submitting various position papers on different WTO topics. The public forum of the WTO is its largest outreach event annually. With the help of this forum, WTO provides a stage or a platform to the NGOs to conduct public debates on various WTO issues related to environment and trade as well as exchange different ideas and views with it. Apart from the participating in the discussions, the representatives of the NGOs can also organize different sessions on their own. As the position papers are nothing but the written statements that declares the location of an NGO on either an individual WTO topic or several topics, by submitting these papers at proper time including the ministerial conferences, the NGOs can give their positive contribution to any of the debate or issues related to the WTO.

There have been various research done that discusses on giving the NGOs a larger decision making role on several issues related to WTO. By conducting more open discussions and dialogues with the NGOs including the ones who opposed certain polices of theirs, the WTO would be able to increase its legitimacy and transform itself with much better and transparent democratic functions. The WTO by means of promoting fair and environment friendly and sound practices can further help the environmental NGOs in achieving their objectives. The focus on the participation of the NGOs needs to be more broadened with inclusion of more actors who wants their WTO’s direct participation to be increased as well as the participation of the non-state actors who opposes certain mechanism of the organizations from being institutionalized.

 Apart from these, the Organization must come up with the development and maintenance of a better system than the existing one that accredits the NGOs along with different civil groups. This should be done to make sure that the northern group, the corporate businesses does not become dominant and a balanced representation is ensured from different regions as well as interests by being an observer of the meetings of the WTO Council and Committee. By making the mechanisms of the organization more judicial, WTO has become more responsive to various demands of the NGOs. Even though this shows the ability of the organization to be permeable to the changes that occurs in the environment around the globe, WTO needs to overcome the limitations that undermines or even discords the processes of the effective system within the WTO. By overcoming these limitations and conducting detailed briefings, it will help the organization to gain the trust of the environmental NGOs and work with them. With the NGOs participating either formally or informally, irrespective of the resistance faced by many of the powerful members of the WTO, it will help the WTO to address and solve various environmental issues.

Thus, it can be concluded from the essay that the World Trade Organization enforces rules keeping in mind the trade-environment balance as opposed to its predecessor GATT. In the various cases that was a conflict between the trade and environment agendas, the dispute settlement model of the WTO is very adept to handle such cases. The WTO presides on international trade among the countries of the world. The WTO started consulting the environmental NGOs due to the changing environmental policies with time and it updates their dispute settlement understanding.

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