5 - International trade law and international environmental law: environmental taxes and border tax adjustment in WTO law and EC law

Summary

Professor Roessler's paper purports to “explore the systemic, legal, and institutional consequences of linking trade and non-trade issues in the framework of the WTO, taking the proposed linkages between environment and trade as an example.” The first section of this comment on Prof. Roessler's paper addresses briefly the four conclusions reached by Roessler. The second section draws attention to additional “interface problems,” notably advantages and problems of environmental taxes. The third section elaborates on the second conclusion of Roessler, i.e. that the WTO's border adjustment rules should not be changed, by analyzing in more detail the interrelationships between environmental taxes and border tax adjustment in the worldwide context of GATT and WTO law. The final section compares the worldwide GATT/WTO rules on border tax adjustment and tax discrimination with the corresponding rules and experiences in the regional context of EC law, and draws some tentative conclusions.

Professor Roessler's four main conclusions

CONSISTENCY OF WTO LAW WITH EFFICIENT ENVIRONMENTAL POLICIES

Roessler's first conclusion is that there is in principle no conflict between WTO law and the efficient pursuit of a domestic environmental policy objective so that there does not seem to be a need for exempting domestic environmental policies from WTO obligations. This view is widely shared today in environmental economics and among governments. As most environmental pollution arises at the level of production, distribution, consumption, or disposal of goods and services, efficient environmental policies should intervene directly at the source of the pollution, i.e. at the production, distribution, consumption, or waste disposal level rather than at the trade level where trade policy interventions risk causing welfarereducing “by-product distortions.”