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The GATT/WTO Committee on Trade and the Environment—Toward Environmental Reform

Published online by Cambridge University Press:  27 February 2017

Jennifer Schultz
Jennifer Schultz*
Affiliation:
Monash University, Victoria, Australia
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Extract

The Uruguay Round of trade negotiations took until December 1993 to be completed. Its conclusion has been heralded as a significant step on the part of countries belonging to the General Agreement on Tariffs and Trade (GATT). However, further cooperation by these countries is still required, as is the need to go further. The globalization of the world’s economies is paralleled by the increasingly global nature of environmental problems. This is true in terms of the effects of these problems (e.g., climate change and ozone depletion), and also because dealing with these problems will require international cooperation. In view of the significant role it will play in the world economy, this global response will, in part, include reforming the rules of the international trading system.

Type
Current Developments
Information
American Journal of International Law , Volume 89 , Issue 2 , April 1995 , pp. 423 - 439
Copyright
Copyright © American Society of International Law 1995

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References

1 General Agreement on Tariffs and Trade, Oct. 30, 1947, TIAS No. 1700, 55 UNTS 187 [hereinafter text referred to as General Agreement or the GATT]. The GATT also refers to the institutional framework that implements the General Agreement. GATT/WTO will refer to the Final Act Embodying the Results of the Uruguay Round of Multilateral Negotiations, infra note 9.

2 Trade and Environment, Ministerial Decision of 14 April 1994, 33 ILM 1267 (1994).

3 The theory of sustainable development synthesizes resource conservation and economic growth. Proponents of sustainable development aim at “[m]eet[ing] the needs of the current generation without compromising the ability of future generations to meet their needs.” World Commission on Environment and Development, Our Common Future 8 (1987). See also Policies and Mechanisms for Achieving Sustainable Development: Report by the UNCTAD Secretariat, UN TDBOR, 38th Sess., pt. 1, UN Doc. TD/B/1304 (1991); Sustainable Development and UNCTAD Activities, Report by the UNCTAD Secretariat, UN TDBOR, 37th Sess., pt. 1, UN Doc. TD/B/1267 (1990).

4 GATT Dispute Settlement Panel, United States—Restrictions on Imports of Tuna (Aug. 16, 1991), 30 ILM 1594 (1991) (not adopted by the GATT Council) [hereinafter Tuna/Dolphin Panel Report]. The panel determined that U.S. import restrictions on tuna to protect dolphins from incidental kill during purse-seine fishing operations violated the GATT. See Jack I. Garvey, Trade Law and Quality of Life—Dispute Resolution under the NAFTA Side Accords on Labor and the Environment, infra p. 439.

5 North American Free Trade Agreement, Dec. 8, 11, 14, 17, 1992, Can.-Mex.-U.S., 32 ILM 296 and 605, Art. 915.1 (1993) [hereinafter NAFTA].

6 See, e.g., for a good explanation of environmental concerns, Sandra Postel, Carrying Capacity: Earth's Bottom Line, in State of the World 3, 16–19 (Lester Browned., 1994).

7 The concept of the WTO goes back to 1919, when President Woodrow Wilson proposed a “World Trade Board” as part of the Covenant of the League of Nations. The board was dropped from a later draft, but the idea did not die. An International Trade Organization was approved by a United Nations conference in 1948. But the organization never eventuated because of opposition in the U.S. Congress. This year, it looks as if the Wilsonian vision will finally be achieved.

8 John H. Jackson, Testimony on the Uruguay Round legislation, prepared for the U.S. Senate Finance Committee Hearing 3 (Mar. 23, 1994) [hereinafter Jackson testimony] (on file with author).

9 Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Agreement Establishing the World Trade Organization, GATT Doc. MTN/FA, Preamble (Apr. 15, 1994), reprinted in 33 ILM 1125, 1144 (1994) [hereinafter WTO Agreement].

10 Id., Art. IV, para. 7, permits the addition of “committees with such functions as [the members] deem appropriate.” See Trade and Environment, supra note 2, for the contents of the decision to establish the Committee on Trade and Environment.

11 WTO Agreement, supra note 9, Art. IX, para. 2.

12 For the terms of reference of the committee, see Trade and Environment, supra note 2.

13 Peter Lallas was extremely positive about the formation of the committee. He stated that he believes the terms of reference set out a large and ambitious, yet balanced agenda for the committee. Conference with Peter Lallas, Attorney-Adviser, Office of General Counsel, International Activities Division, U.S. Environmental Protection Agency, Washington D.C. (Mar. 25, 1994).

14 In 1991, the Director-General of the GATT Secretariat, Arthur Dunkel, in his capacity as Chairman of the Trade Negotiations Committee, had compiled a Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, GATT Doc. MTN. TMC/W/FA (Dec. 20, 1991) [hereinafter Dunkel draft]. This document contains the various agreements that had been negotiated up to that time, and where agreement had not been reached, a compromise position drafted by Dunkel. For an analysis of the environmental provisions in the Dunkel text, see, e.g., Steve Charnovitz, Trade Negotiations and the Environment, Int'l Envtl. Rep. (BNA) 144 (Mar. 11, 1992).

15 Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, supra note 9, Agreement on Technical Barriers to Trade, Art. 2.4 [hereinafter TBT Agreement].

16 Id., Art. 2.2. The NAFTA text, supra note 5, broke new ground in the treatment of technical standards by denning legitimate objectives as including “safety, protection of human, animal or plant life or health, the environment or consumers,” and “sustainable development.”

17 TBT Agreement, supra note 15, Art. 2.2.

18 Id., Art. 2.3.

19 Previous drafts of the Agreement on Sanitary and Phytosanitary Measures lacked language stating the intent of the GATT “harmonization” language, which led environmental groups to believe that this provision would result in downward pressure on many tough food safety standards. As a result, GATT members included language in the Final Act to remedy this concern. See Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, supra note 9, Agreement on Sanitary and Phytosanitary Measures, preamble and Art. 3, para. 3 [hereinafter SPS Agreement].

20 Because “scientific justification” was previously undefined, environmental groups believed the term could lead a GATT panel to second-guess a country's scientific procedures in setting a standard. “Scientific justification” was thus defined as follows:

[T]here is a scientific justification if, on the basis of an examination and evaluation of available scientific information in conformity with the relevant provisions of this Agreement, a Member determines that the relevant international standards, guidelines or recommendations are not sufficient to achieve its appropriate level of sanitary or phytosanitary protection.

Id. n.2.

21 Environmental groups raised concerns about risk assessment techniques and whether human health risk assessment would be subject to the same strict economic criteria that are used for assessing risks to animal and plant life and health. The Final Act specifically exempts human health risk assessment from the economic tests such as “the potential damage in terms of loss of production or sales in the event of the entry [of the product].” See, e.g., SPS Agreement, supra note 19, Art. 5, para. 3. Human health-based risk assessment is only subject to scientific justification.

22 Id., Art. 3, para. 3.

23 Id., Art. 5, para. 7.

24 See text at and notes 17–18 supra.

25 SPS Agreement, supra note 19, n.3.

26 NAFTA, supra note 5, Art. 714.2(b).

27 SPS Agreement, supra note 19, Art. 4, para. 1.

28 See, e.g., SPS Agreement, supra note 19, Art. 5, para. 5.

29 TBT Agreement, supra note 15, Art. 12.4.

30 Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, supra note 9, Agreement on Subsidies and Countervailing Measures, Art. 9.1 [hereinafter Subsidies Agreement].

31 Id., Art. 1.1(a)(1).

32 Principle 16 of the Rio Declaration states: “National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.” United Nations Conference on the Environment and Development, Rio Declaration on Environment and Development, UN Doc. A/CONF.151/5/Rev.1 (1992), reprinted in 31 ILM 874 (1992).

33 The polluter pays principle was pioneered by the Organisation for Economic Co-operation and Development. The principle holds that the price of a good or service should fully reflect its cost of production and the cost of the resources used, including environmental resources. See, e.g., OECD, Guiding Principles Concerning International Economic Aspects of Environmental Policies (May 26, 1972), reprinted in 11 ILM 1172 (1972); OECD, Council Recommendation on the Implementation of the Polluter Pays Principle (Nov. 14, 1974), reprinted in 14 ILM 234 (1975).

34 The Subsidies Agreement, supra note 30, Art. 8.2(c), states that only facilities that have been in existence for two years qualify for support to adapt “to new environmental requirements imposed by law and/or regulations which result in greater constraints and financial burden on firms.” Thus, new investments would bear the cost of new technology for environmental protection as part of the financial portfolio, and would not qualify for government support. Moreover, for older facilities to qualify for nonactionable status, the subsidy must be a one-time investment; must be no greater than 20% of the cost of compliance; may not be used for installation or operation of the new technology; must be linked to reducing pollution and not to increasing a firm's savings or profit margin; and must be available to all industries that can use the new technology or process methods, in order to avoid using subsidies to favor one domestic industry over another when both sectors are in equal need of compliance measures.

35 Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, supra note 9, Understanding on Rules and Procedures Governing the Settlement of Disputes, Art. 16, para. 4, reprinted in 33 ILM at 1226 [hereinafter Dispute Settlement Understanding].

36 See, e.g., Jackson testimony, supra note 8, at 6.

37 Dispute Settlement Understanding, supra note 35, Art. 13.1.

38 Id., Art. 13.2.

39 SPS Agreement, supra note 19, Art. 11, para. 2; and TBT Agreement, supra note 15, Art. 14.

40 NAFTA, supra note 5, Art. 2015, states: “On the request of a disputing Party the panel may request a written report of a scientific review board on any factual issue concerning environmental, health, safety or other scientific matters raised by a disputing Party in a proceeding … .” See also Jackson testimony, supra note 8, at 7 (suggesting that “something more is needed to ensure the appropriate expertise on the panels, perhaps following analogous provisions that are contained in the NAFTA dispute settlement procedures”).

41 Dispute Settlement Understanding, supra note 35, Art. 3.8.

42 NAFTA, supra note 5, Art. 2017.

43 The new appellate procedure will substitute for the GATT Council approval process of a panel report and thereby overcome blocking. Under the new procedures,

a panel report will automatically be deemed adopted by the Council, unless it is appealed by one of the parties to the dispute. If appealed, the dispute will go to an appellate panel. After the appellate body has ruled, its report will go to the Council, but in this case it will be deemed adopted unless there is a consensus against adoption, and presumably that negative consensus can be defeated by any major objector.

Thus the presumption is reversed, compared to the previous procedures, with the ultimate result of the procedure that the appellate report will in virtually every case come into force as a matter of international law.

Jackson testimony, supra note 8, at 6.

44 Dispute Settlement Understanding, supra note 35, Art. 18.2.

45 Id., Art. 8.1 and 8.4 would allow environmentalists to serve on panels as long as they were drawn from a roster of potential panelists kept by the GATT Secretariat. Environmentalists may also act as members of the seven-person appellate body established by the Dispute Settlement Understanding, in accordance with Art. 17.3.

46 Id., Art. 8.6. The practice of including at least one environmental expert on a panel deliberating a trade and environment dispute could be implemented along the lines of Article 8.10 of the Dispute Settlement Understanding, which states: “When a dispute is between a developing country Member and a developed country Member the panel shall, if the developing country Member so requests, include at least one panelist from a developing country Member.”

47 Jackson testimony, supra note 8, at 6.

48 Id. at 9.

49 “Free rider” refers to the situation where a group of countries agree to some discipline such as restraint on using certain trade barriers. Under the most-favored-nation (MFN) clause, they may be required to give the advantages of that discipline to other countries, including countries that have not entered the specific agreement. Those countries that have not joined the agreement but enjoy its benefit without submitting themselves to the discipline are “free riders.”

50 Montreal Protocol on Substances That Deplete the Ozone Layer, Sept. 16, 1987, S. Treaty Doc. No. 10, 100th Cong., 1st Sess., 26 ILM 1541 (1987) [hereinafter Montreal Protocol].

51 Trade and the Environment: News and Views from the GATT, GATT Doc. TE/004, at 3 (Nov. 26, 1993).

52 Basel Convention on Transboundary Movements of Hazardous Wastes and Their Disposal, Mar. 22, 1989, UN Doc. UNEP/IG.80/3, 28 ILM 649 (1989) [hereinafter Basel Convention].

53 Article 30 of the Vienna Convention on the Law of Treaties provides general rules governing the relationship of successive treaties. When the provisions of two treaties are in conflict, the later in time prevails, as between parties to both, unless one treaty expressly specifies otherwise. If a state is party to only one of the treaties, under Article 30(4)(b) only that treaty governs. Vienna Convention on the Law of Treaties, opened for signature May 23, 1969, 1155 UNTS 331, 8 ILM 679 (1969) (entered into force Jan. 27, 1980).

54 See, e.g., NAFTA, supra note 5, Art. 104.

55 In 1982 the contracting parties agreed that it was appropriate to examine measures to control the export of products that are prohibited from sale in domestic markets. See Ministerial Declaration, GATT Doc. L/ 5424 (Nov. 29, 1982). This agreement evolved into the creation by the GATT Council in 1989 of the Working Group on the Export of Domestically Prohibited Goods and Other Hazardous Substances, GATT, Basic Instruments and Selected Documents, 36th Supp. 402, 403 (1990). The working group examines the trade-related aspects of ongoing international work to regulate the flow of such goods and substances among the contracting parties. See, e.g., John Sankey, Domestically Prohibited Goods and Hazardous Substances—A Nexv GATT Working Group Is Established, 23 J. World Trade 99 (1989).

56 The London Guidelines for the Exchange of Information on Chemicals in International Trade, as amended in 1989, establish a “prior informed consent” procedure for “States having taken control action to ban or severely restrict a chemical.” This system is intended to provide importing governments with information on the chemical being imported, the reasons for its restrictions or ban in the country of origin, and any alternative measures to the use of the chemical. The London Guidelines are designed only to offer information on traded chemicals, and specifically exclude from that definition pharmaceutical products, radioactive materials and food additives. As proposed, GATT measures for domestically prohibited goods would cover trade not only in chemicals and toxins, but in a wider range of products currently excluded from the prior informed consent program. See United Nations Environment Programme, London Guidelines for the Exchange of Information on Chemicals in International Trade (amended 1989), adopted by UNEP Governing Council Decision 15/30 (May 25, 1989).

57 Working Group on Domestically Prohibited Goods, Export of Domestically Prohibited Goods, Submission by the Delegation of Nigeria, GATT Doc. DPG/W/5 (Nov. 8, 1989).

58 The working group is considering a Draft Decision on Products Banned or Severely Restricted in the Domestic Markets. This draft, as currently written, covers all products (including hazardous wastes) determined by a contracting party to present a serious and direct danger to human, animal or plant life or health, or the environment within the contracting party's territory, and that are banned or severely restricted within the contracting party's domestic markets. The draft also includes notice provisions requiring the contracting parties to notify the GATT Secretariat of all such banned or restricted products for which no actions to control exports have been taken.

59 Charles Pearson & Robert Repetto, Reconciling Trade and Environment: The Next Steps, in The Greening of World Trade 83, 90 (Environmental Protection Agency ed., 1993).

60 For example, the infamous battle over the U.S. ban on Mexican tuna because of dolphin kills really took place after the GATT dispute panel decision. Almost no Mexican tuna caught using the dolphin-killing purse-seine nets was being sold in the United States at the time the ban was put in place because tuna canners had begun a “dolphin safe” labeling program that had made it nearly impossible to sell “dolphin unsafe” tuna in the United States.

61 Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, supra note 9, Agreement on Trade-Related Aspects of Intellectual Property Rights, reprinted in 33 ILM at 1197.

62 Durwood Zaelke, Robert Housman & Gary Stanley, Frictions Between International Trade Agreements and Environmental Protections, in The Greening of World Trade, supra note 59, at 44, 54.

63 NAFTA, supra note 5, Art. 1114.

64 Id., Art. 1113.

65 Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, supra note 9, Agreement on Trade-Related Investment Measures.

66 See, e.g., J. Michael McCloskey, Trade and the Environment: Press Clips, in The Greening of World Trade, supra note 59, at 182, 200.

67 See Daniel C. Esty, Greening the GATT: Trade, Environment, and the Future 78–98 (1994). Esty discusses the desirability and feasibility of establishing a global environmental organization.