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Liberalized Trade and InternationalEnvironmental Law and Policy: Australia’sNegotiations under the KyotoProtocol
Published online by Cambridge University Press: 09 March 2016
Summary
This article addresses the difficulties to be faced inreconciling the international law and policy oftrade regulation with that of environmentalprotection. It reviews the recentenvironment-related cases brought before theGATT/WTO dispute settlement panel and Appellate Bodyand provides a critical analysis of the results inthe context of the relevant GATT/WTO rules. Such areview informs the case study, which is undertakenin the article, addressing the Australiangovernment's use of trade policy in negotiating itsposition under the Kyoto Protocol to the UnitedNations Framework Convention on Climate Change. Thearticle argues that it is crucial for environmentalregulators to work cooperatively with free tradeproponents to better clarify and strengthen theposition of environmental law and policy within thefree trade regime. The article concludes that,although this debate continues to remain polarized,there does appear to be signs of movement towardssuch a cooperative approach.
Sommaire
Cet article étudie les difficultés d'une reconciliationdu droit international du commerce, de la politiquedu commerce international et du droit internationalenvironnemental. L'auteur analyse des décisionsrécentes du GATT/WTO traitant de l'environnement etdu commerce et offre quelques observations surcelles-ci et les règles pertinentes du GATT/WTO.Ceci permet ensuite à l'exposé du fondement de laposition australienne face au protocole de Kyoto.L'auteur précise qu 'il est essentiel pour toutesautorités environnementales de clarifier (et derenforcer) le role du droit et de la politiqueenvironnementale dans un régime de commerceliberalisé. L'auteur conclut qu'il y a eu de progrèsà cette égard, et ceci malgré la polarisation dudébat actuel.
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- Canadian Yearbook of International Law/Annuaire canadien de droit international , Volume 36 , 1998 , pp. 181 - 225
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- Copyright © The Canadian Yearbook of International Law/Annuaire canadien de droit international 1998
References
1 United Nations Framework Convention on Climate Change, May 9, 1992, online at the UNFCCC homepage: http://www.unfccc.de/fccc/conv/conv_toc.htm (date accessed: November 1, 1998); entered into force March 21, 1994 [hereinafter UNFCCC].
2 Kyoto Protocol to the United Nations Framework Convention on Climate Change, December 11, 1997, online at the UN UNFCCC homepage: http://www.ununfccc.de/unfccc/docs/protintr.html (date accessed: November 1, 1998); as of November 23, 1998, sixty-four countries have signed [here-inafter Kyoto Protocol].
3 Australia signed the UNFCCC in June 1992 and ratified it in December 1992. The Kyoto Protocol was signed by Australia in April 1998, but it is yet to be ratified. For more information, see online at the Department of Foreign Affairs and Trade [hereinafter DFAT] homepage: http://www.gov.au/environment/climate (date accessed: November 20, 1998) and also the Australian government, Minister for the Environment, Media Release, “Hill Signs Historic Agreement to Fight Global Warming” (April 29, 1998), online: http://www.environment.gov.au/portfolio/minister/env/98/mr29apr298.html (date accessed: November 20, 1998) [hereinafter April Media Release].
4 For the purposes of this article, reference to “environmental protection” and related terms will mean “any action by a governmental agency with the purpose of regulating the effects of industry over the environment, including health and safety standards, and the preservation of biodiversity in animal and plant species either on a national scale or as a means to protect the global environment”: borrowed from Bernabe-Riefkohl, Alberto, “‘To Dream the Impossible Dream’: Globalization and Harmonization of Environmental Laws” (1995) 20 N.C.J. Int’l Law & Com. Reg. 205 at footnote 5.Google Scholar
5 See UNFCCC, supra note 1.
6 The causes and effects of the greenhouse effect are multiple and complex. For an overview of the problem and its predicted impact, see, for example, Horsch, Richard A. and Richards, Joseph D., “Does Kyoto Protocol Fall Short of the Mark?” (April 27, 1998) New York Law Journal S4.Google Scholar
7 UNFCCC, supra note 1, art. 2.
8 Perlis, Mark L., “The Kyoto Protocol’s Mandate to Reduce Greenhouse Gases, The Electric Industry Must Turn to International Emissions Trading” (April 13, 1998) Legal Times S32.Google Scholar
9 UNFCCC, supra note 1, Annexi.
10 This view is supported by the wording of the Preamble to the UNFCCC, which states that “the largest share of historical and current global emissions of greenhouse gases has originated in developed countries, that per capita emissions in developing countries are still relatively low and that the share of global emissions originating in developing countries will grow to meet their social and development needs”: UNFCCC, supra note 1, Preamble.
11 Horsch and Richards, supra note 6.
12 For a general discussion of these and other concerns, see DFAT, Australia and Climate Change Negotiations — An Issues Paper (September 1997), online at the DFAT homepage: http://www.dfat.gov.au/environment/climate/accn/contents.html (date accessed: November 20, 1998), chapter 13 [hereinafter Issues Paper].
13 See Horsch and Richards, supra note 6, for further discussion of this controversy; and see also Issues Paper, supra note 12.
14 See, for example, Horsch and Richards, supra note 6.
15 “The developed countries commit themselves to reducing their collective emissions of six key greenhouse gases by at least five per cent. This group target will be achieved through cuts of 8 per cent by Switzerland, most Central and East European states, and the European Union (EU) (the EU will meet its target by distributing different rates to its members states); 7 per cent by the United States; and 6 per cent by Canada, Hungary, Japan, and Poland. Russia, New Zealand, and the Ukraine are to stabilize their emissions, while Norway may increase emissions by up to 1 per cent, Australia by up to 8 per cent, and Iceland 10 per cent. The six gases are to be combined in a “basket,” with reductions in individual gases translated into “CO2 equivalents” that are then added up to produce a single figure.” See WTO, Report to Committee on Trade and Environment, “United Nations Framework Convention on Climate Change — Note By The Secretariat” March 3, 1998, WT/CTE/W/74, online on the WTO homepage: http://www.wto.org/wto/environ/bulletin.htm (date accessed: November 20, 1998) at para. 4 [hereinafter UNFCCC Report to WTO].
16 The Kyoto Conference and the resulting protocol were considered necessary when it was realized after the first Conference of the Parties [hereinafter COP] to the UNFCCC in Berlin in 1995 that it was not going to be possible to comply with the existing general obligations under the UNFCCC. It was thought that a more realistic and detailed plan was required in order to achieve the goals of the UNFCCC. See DFAT, Climate Change: Australia’s Approach (November 1997), online on the DFAT homepage: http://www.dfat.gov.au/environment/cli-mate/cc_aus_approach.html (date accessed: November 1, 1998) [hereinafter Australia’s Approach].
17 Kyoto Protocol, supra note 2, art. 3. For further discussion of the other elements of the system set up under the Kyoto Protocol, see Horsch and Richards, supra note 6 and, particularly in relation to the emission trading scheme, see Perlis, supra note 8.
18 Issues Paper, supra note 12, “Foreword.”
19 Ibid.
20 Ibid.
21 Ibid., “Overview,” Part 4 — Australia’s Approach to the Climate Change Negotiations:
The principle of equity, or fairness, underpins Australia’s strong advocacy of differentiated targets. The principle of equity is embedded in the Berlin Mandate and the Convention. Australia strongly supports negotiation of differentiated targets that reflect the individual circumstances of countries, particularly the widely differing costs of emission reduction, and that provide the basis for “equality of effort” by incurring similar per capita costs.
22 Ibid., “Overview,” Part 1 — Issues under Negotiation. This sense of inequity was in part based on the evidence that while the United States accounts for 47 per cent of OECD emissions and 22 per cent of global emissions and the EU accounts for 30 per cent of’OECD emissions, Australia accounts for a mere 3 per cent of OECD emissions and 1.4 per cent of global emissions: see Australia’s Approach, supra note 16.
23 Ibid. Australia, along with other countries, considered the EU proposal particularly unfair because it set an emissions target to be applied collectively to the EU, thereby allowing the actual targets for individual EU countries to range from a 40 per cent increase to a reduction of 30 per cent without allowing similar flexibility for other countries.
24 In this regard, the Issues Paper describes Australia’s position as follows:
No other country in the OECD has a trade profile that so significant! combines a concentration of emission-intensive goods in the composition of its exports and a trade reliance on the fast growing regions of Asia. Reflecting its strong resource base, Australia specialises in energy- and greenhouse-intensive goods which account for over 80 per cent of Australia’s merchandise exports. In comparison these same resource-based goods account for under 40 per cent of world trade. Trade with developing countries — particularly in the Asia-Pacific region — accounts for nearly half of Australia’s trade flows. This is important both because of their rapid growth and because a significant number of Australia’s trade competitors are non-Annex I Parties. Australian imports, which consist mostly of manufactures, are generally less energy intensive.
Ibid., “Overview,” Part 3 —Australia’s National Circumstances.
25 For example, Australia argued that “[u]niform targets, as advocated by the EU and the US, could limit the benefits of specialisation. This specialisation has underpinned much of the rapid growth in global and regional trade and investment witnessed in recent decades resulting in growth that has benefited all economies, businesses and communities. Efficient specialisation should be encouraged”: ibid., Overview,” Part 4 — Australia’s Approach to the Climate Change Negotiations.
26 Ibid., “Overview,” Part 1 — Issues under Negotiation. Australia noted that it would also be significantly affected by the implementation of the UNFCCC obligations by other parties because their consumption of fossil fuels would fall, leading to a corresponding fall in export opportunities for Australia. Ibid., “Overview,” Part 5 Australia’s Position on Key Issues under Negotiation.
27 Although, compare Christoff, Peter, “Greenhouse Win Creates a Fossil Fool’s Paradise,” [Melbourne] Age (December 22, 1997) A9Google Scholar, where the author observes that “[b]y continuing to protect and enhance Australia’s structural bias towards greenhouse emission production, the Government is merely increasing our future burden of social and economic adjustment costs when the country is belatedly forced to comply with more stringent targets.”
28 Australia noted that “[t]he climate change negotiations have important implications for global growth. Approaches like uniform targets would impose higher costs on the global economy, in terms of depressed output and trade, than is necessary to achieve any given environmental outcome”: ibid., “Over-view,” Part 4 —Australia’s Approach to the Climate Change Negotiations; see also Part 14.2 —Australia’s Position at Kyoto.
29 Compare Christoff, supra note 27, where it is claimed that Australia’s success in the Kyoto negotiations was due to its “irrelevance to the conference’s main game, concerning the US, the European Union and Japan.”
30 April Media Release, supra note 3.
31 Briefly, the outcome of the fourth Conference of the Parties (COP-4) was that the parties agreed to a deadline of 2000 for working out the final details of the Kyoto implementation mechanisms and that the Annex I countries will provide the developing countries with financial assistance to help them introduce environmentally sound practices: “Aid Pledge Clinches Warming Deal, Developed Countries Vow to Set Up Fund to Help Poorer Nations Get Technology,” [Montreal] Gazette (November 15, 1998) A7. During COP-4, the United States finally signed the Kyoto Protocol, being the last of the major industrial countries to do so, and Argentina became the first developing county to commit itself to voluntary action to reduce its greenhouse gas emissions: “U.S. Signs Global-Warming Agreement, But Critics Say World’s Largest Polluter’s Intentions Still Seem Short on Concrete Action,” [Montreal] Gazette (November 13, 1998) A17.
32 See Australian government, Minister for the Environment and Heritage, Hill, Robert, Media Release, “Hill Welcomes Greenhouse Praise” (November 10 1998), online: http://www.environment.gov.au/portfolio/minister/env/98/mrionovg8.htmlGoogle Scholar (date accessed: November 20, 1998):
Australia’s efforts to reduce greenhouse gas emissions have won international praise at the Climate Change Conference in Buenos Aires. The International Council for Local Environmental Initiatives (ICLEI) says the Howard government has been a world leader in encouraging local governments to take up the challenge of cutting emissions & ICLEI has told a Conference meeting that the Howard government’s commitment to the program has seen local governments in Australia signing up at a faster rate than any other nation.
33 See Gaines, Sanford E., “Rethinking Environmental Protection, Competitiveness, and International Trade” (1997) U. Chi. Legal F. 231 at 235 (and also 247)Google Scholar where he notes that the negative effect of environmental protection regulation on free trade and competition is now accepted or presumed without question and “has become so instilled in both the academic and political consciousness that it has assumed a mythical character.” Gaines argues, in the context of an analysis of the economic theory supporting liberalized trade that, contrary to political arguments, recent empirical economic evidence does not in fact support the assumption that environment regulation has a significant impact on competitiveness. Other factors, such as costs associated with labour and access to, and cost, of raw materials, have a much greater effect. Gaines concludes, at 248, that “[e]nvironmental conditionality may force changes in the processes or production methods used to produce goods, but if the trade conditions are properly developed to safeguard against market-protecting abuses, the record suggests that those changes are more likely to enhance rather than obstruct economic development and thus will augment the economic benefits of international trade.”
34 GATT, Note on the United Nations Conference on Environment and Development Held in Rio de Janeiro, Brazil, from 3 to 14 June 1992, GATT Doc. L/6892/Add.3, annex paras. 2.19-2.20, 39th Supp. B.I.S.D. (1993) 303 at 321–22.
35 Gaines, supra note 33 at 234–35 [footnotes omitted].
36 For a discussion of the history of tension between policies of environmental protection and trade liberalization dating as far back as 1870s, see Fletcher, Charles R., “Greening World Trade: Reconciling GATT and Multilateral Environmental Agreements within the Existing World Trade Regime” (1996) 5 J. Transnat’l L. & Pol’y 341 at 346–47.Google Scholar
37 For an overview of the rise in significance of the environment and its relationship to development and trade as an international concern, see Gaines, supra note 33 at 231–35.
38 This conference resulted in the Rio Declaration on Environment and Development, June 13-14, 1992, U.N. Doc. A/CONF.151/26 (Vol.1), August 12, 1992, 31 I.L.M. 874 [hereinafter Rio Declaration]. It should be noted that the Rio Declaration has been widely criticized by environmentalists as being imprecise and ineffectual in its terms. See, for example, Bernabe-Riefkohl, supra note 4 at 221, for a discussion of this criticism.
39 See the Rio Declaration, supra note 38, in particular principles 3 and 4. Specifically in relation to the role of trade in the concept of sustainable development, Principle 8 of the Rio Declaration states that “to achieve sustainable development and a higher quality of life for all people, States should reduce and eliminate unsustainable patterns of production and consumption,” while Principle 12 states that countries:
should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation … Unilateral actions to deal with environmental challenges outside the jurisdiction of the importing country should be avoided. Environmental measures addressing transboundary or global environmental problems should … be based on an international consensus.
40 General Agreement on Tariffs and Trade, Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, April 15, 1994, reprinted in 33 I.L.M. 1125 (1994), preamble [hereinafter GATT].
41 Ibid.
42 For more information on the Committee on Trade and Environment (hereinafter CTE), see online at the WTO homepage: http://www.wto.org/wto/environ/marrakes.htm (date accessed: November 20, 1998).
43 See, for example, WTO, Trade and Environment Bulletin No. 25, WTO Committee on Trade and the Environment Invites MEA Secretariats to Information Session and Discussion Items Related to the Linkages between the Multilateral Environment and Trade Agendas, August 10, 1998, WTO Doc. PRESS/TE 025, online at the WTO homepage: http://www.wto.org/wto/bulletin.htm (date accessed: December 1, 1998) [hereinafter CTE Bulletin]. The CTE Bulletin reports that the WTO members focused on three items of the CTE work programme relating to links between multilateral environment and trade agendas, namely: (1) the relationship between MEAs and the WTO, including regard to dispute settlement; (2) the export of domestically prohibited goods; and (3) aspects of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, including its relationship to the Convention on Biological Diversity.
44 WTO homepage, supra note 42.
45 Hudnall, Shannon, “Towards a Greener International Trade System: Multilateral Environmental Agreements and the World Trade Organization” (1996) 29 Colum.J.L. & Soc. Probs. 175 at 177–79.Google Scholar
46 See Gaines, supra note 33 at 245 for an analysis of this argument.
47 Gaines, ibid, at 246. See also Dillon, Sara, “Trade and the Environment: A Challenge to the GATT/WTO Principle of ‘Ever-Freer Trade’,” (1996) 11 St. John’s J.L. Comm. 351 at 379–80 for a detailed discussion of this latter argument.Google Scholar
48 Fletcher, supra note 36 at 349 [footnotes omitted]. See also Hudnall, supra note 45 at 176 and Schultz, Jennifer, “The Demise of ‘Green’ Protectionism: The WTO Decision on the US Gasoline Rule” (1996) 25 Denv. J. Int’l L. & Pol’y 1 at 3,Google Scholar where the author notes that “[a]t the heart of the trade and environment debate is a fear that flexible loopholes, created under the banner of the environment, will deprive the GATT non-discrimination principles of all meaning.”
49 Convention on the International Trade in Endangered Species of Wild Flora and Fauna,July 1, 1975, 27 U.S.T. 1087, 993 U.N.T.S. 243 [hereinafter CITES].
50 Fletcher, supra note 36 at 347. Of particular relevance to this discussion is Article X of CITES, which states, in respect of trade restrictions imposed against non-parties, that “[w]here export or re-export is to, or import is from, a State not a party to the present Convention, comparable documentation issued by the competent authorities in that State which substantially conforms with the requirements of the present Convention for permits and certificates may be accepted in lieu thereof by any Party.”
51 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, March 22, ig8g, reprinted in 28 I.L.M. 657 (entered into force May 5, 1992) [hereinafter Basel Convention].
52 Montreal Protocol on Substances That Deplete the Ozone Layer, September ι6, 1987, reprinted in 26 I.L.M. 1550 (1987) (entered into forcejanuary i, 1989) [hereinafter Montreal Protocol].
53 Fletcher, supranote 36 at 345.
54 Article XX is discussed later in the article. It has been argued that in respect of the requirements of the preamble of Article XX,
because some countries are parties to the convention and some are not, the “same conditions” do not prevail within the various countries. That justification also would apply to the Montreal Protocol and CITES, but might not be necessary in light of the explicit provisions in those agreements for nondiscriminatory treatment of nonparties which meet the treaty’s respective requirements. The GATT Article XX preamble thus does not pose an insurmountable obstacle for any of the three agreements.
Hudnall, supra note 45 at 206 [footnotes omitted]. Whether or not the trade restriction measures of the MEAs would satisfy the various requirements of the relevant exceptions (found in paragraphs (b) and (g)), is, however, difficult to say. In particular, in respect of paragraph (b), the requirement that the measures be “necessary” (that is, the least discriminatory measure available, all other GATT consistent measures being exhausted), and in respect of paragraph (g), the requirement that the measure “relate to” (that is, primarily aimed at) conservation in conjunction with domestic conservation objectives, would be the most problematic. See Hudnall, supranote 45 at 207–9.
55 See, for example, Fletcher, supra note 36 at 348.
56 Ibid. See also, Hudnall, supra note 45 at 187 and 203. Article 4.5 of the Basel Convention requires that “a Party & not permit hazardous wastes or other wastes to be exported to a non-Party or to be imported from a non-Party.”
57 Fletcher, supra note 36 at 349. In particular, Article 4.8 states that imports and exports of substances controlled by the protocol, normally prohibited under Article 4, “may be permitted from any State not party to [the Montreal] Protocol if that State is determined, by a meeting of the Parties, to be in full compliance with [Article 2] and [Article 4], and has submitted data to that effect as specified in Article 7.”
58 This view is supported by the types of disputes that have arisen under the WTO/GATT dispute settlement processes involving environmental issues and is echoed by the following extracts from the CTE Bulletin, supra note 43, items 1 and 5:
Many Members, including Norway, Turkey, and others, said that the development of MEAs as an effective way of solving global environmental problems would likely reduce the resort to unilateral and extrajurisdictional measures. A number of WTO panels attached importance to whether international cooperation had been sought, for example through an MEA, before a trade restrictive measure was used.
One point which was noted by Members & was that WTO rules already provide considerable scope for accommodating the use of trade measures necessary for environmental purposes. This has been confirmed by the interpretation given to Article XX in WTO dispute settlement. WTO rules have not prevented the formulation and implementation of appropriate multilateral measures to promote environmental protection, including where they encompass trade measures, as has been demonstrated by the absence of any challenge to trade measures in MEAs.
59 Fletcher, supra note 36 at 356 [footnotes omitted]. See also, Hudnall, supra note 45 at 204–8 for further discussion of the potential violation of GATT provisions of the three MEAs discussed earlier.
60 See Fletcher, supra note 36 at 350-57 and Hudnall, supra note 45 at 182–85 for further discussion of these provisions; see also Jackson, John H., The World Trading System 2nd ed. (Cambridge: MIT Press, 1997) at 234–36.Google Scholar It has also been suggested that Article XXI(c), which states that nothing in GATT shall be construed “to prevent any contracting party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security,” may potentially have a use in the context of the environment. Such use would arise if the UN Security Council were to declare that the existence of a serious environmental crisis within one or more countries constituted a threat to international peace and security and subsequently called for the imposition of trade sanctions. See Hudnall, supra note 45 at 191.
61 GATT, supra note 40, art. I (1).
62 Ibid. art. III(4) and III(1) respectively. Taxes or charges on imported products must also not exceed taxes or fees levied on domestic products. See art. III(2).
63 Fletcher, supra note 36 at 351; see also Jackson, supra note 60 at 236.
64 GATT, supra note 40, Annex 1C, Agreement on Trade-Related Aspects of Intellectual Property, art. 28 [hereinafter TRIPS].
65 Fletcher, supra note 36 at 351.
66 GATT, supra note 40, art. XI(2) (c).
67 Fletcher, supra note 36 at 352.
68 GATT, supra note 40, art. XX. See United States — Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, April 29, 1996, 35 I.L.M. 603 (1996) [hereinafter Reformulated Gasoline case] at page 22, where the proper approach for applying Article XX (which has been reaffirmed in United States — Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, October 12, 1998, online at the WTO homepage: http://www.wto.org/wto/dispute/dis-tab.htm (date accessed: November 20, 1998) [hereinafter Shrimp-Turtle case] at paras. 118-20) is described as follows:
In order that the justifying protection of Article XX may be extended to it, the measure at issue must not only come under one or another of the particular exceptions — paragraphs (a) to (j) — listed under Article XX; it must also satisfy the requirements imposed by the opening clauses of Article XX. The analysis is, in other words, two-tiered: first, provisional justification by reason of characterization of the measure under [the particular exception]; second, further appraisal of the same measure under the introductory clauses of Article XX.
69 United States — Restrictions on Imports of Tuna, Report of the Panel, GATT Doc. DS29/R, 16 June 1994, reprinted in 33 I.L.M. 839 [hereinafter second Tuna-Dolphin case]. This case arose pursuant to a challenge filed by the European Community and other countries subject to an embargo imposed by the United States pursuant to the Marine Mammal Protection Act of 1972, 16 U.S.C. 1361 (1994), on imports of tuna caught using dolphin “unfriendly” harvesting methods. For a detailed analysis of this case and also United States — Restrictions on Imports of Tuna, Report of the Panel, GATT Doc. DS21/R, 3 September 1991, reprinted in 30 I.L.M. 1594 [hereinafter first Tuna-Dolphin case], see Fletcher, supra note 36 at 353–57 and Hudnall, supra note 45 at 193–202.
70 Second Tuna-Dolphin case, supra note 69 at para. 5.29.
71 First Tuna-Dolphin case, supra note 69.
72 Second Tuna-Dolphin case, supra note 69 at para. 5.35.
73 Fletcher, supra note 36 at 354. See the second Tuna-Dolphin case, supra note 69 at para. 5.38.
74 Thailand-Restrictions on Importation of and Internal Taxes on Cigarettes, GATT, November 7, 1990, 37th Supp. B.I.S.D. (1991) para. 75 [hereinafter Thai Cigarette case].
75 Schultz, supra note 48 at 7. Linked to this criticism is the view that “[c]onceivably, any measure might have hypothetical alternatives more consistent with the GATT”: ibid, at 17.
76 Second Tuna-Dolphin case, supra note 69 at para. 5.24.
77 Fletcher, supra note 36 at 354. It is not clear what amount of time dedicated to international negotiation would be required to satisfy this requirement. In this regard, Fletcher notes further that “[t]he panel did not specify to what extent the United States would be required to pursue multilateral negotiations prior to taking more trade restrictive measures. Apparently the United States’ efforts to resolve this issue through the Inter-American Tropical Tuna Commission were not sufficient.” See also Hudnall, supra note 45 at 202 for a similar observation.
78 GATT, supra note 40, art. XX (g).
79 See the Shrimp-Turtle case, supra note 68 at paras. 125–45.
80 Ibid., at 128.
81 Ibid, at para. 129. After considering a variety of such conventions and declarations, the Appellate Body concluded that the content of the term “exhaustible natural resource” should be considered “evolutionary” in nature and that this perspective is confirmed by the wording in the preamble to the GATT (see supra note 40 and accompanying text), where the WTO members have explicitly acknowledged the relevance of the “objective of sustainable development” such that this now gives “colour, texture and shading to the rights and obligations of the Members” under the GATT system: ibid, at para. 155.
82 See the Reformulated Gasoline case, supra note 68 at pages 20–21 and the Shrimp-Turtfe case, supra note 68 at paras. 143–45.
83 See the second Tuna-Dolphin case, supra note 69 at para. 5.12 and also the Shrimp-Turtle case, supra note 68 at paras. 146–59.
84 See the Reformulated Gasoline case, supra note 68 and Schultz, supra note 48 at 20.
85 Shrimp-Turtle case, supranote 68.
86 Ibid, at para. 120.
87 Ibid, at para. 149.
88 Ibid, at para. 156.
89 Ibid, at para. 157.
90 Ibid, at paras. 160–64. Interestingly, this seems to suggest that had the United States merely required “comparable” regulatory programs to be adopted by other countries, this may have been acceptable under Article XX. If this is the case, the Appellate Body would be opening the door to the possibility of GATT-consistent measures that impact on the domestic production processes of other states, something traditionally shunned by the GATT system. However, given that the Appellate Body specifically declined to make any finding on the issue of jurisdiction (see infra text accompanying note 96, it is not entirely clear if this kind of extrapolation can be drawn at this stage.
91 Ibid, at paras. 166–69. The Appellate Body also found that the application of the measure in this case amounted to unjustified and arbitrary discrimination between countries due to the lack of due process, transparency, and procedural fairness in the certification process prescribed by the United States: ibid, at paras. 175–84. As the measure was found to violate the first element of the chapeau requirements, the second element — de facto protectionism — was not discussed.
92 First Tuna-Dolphin case, supra note 69.
93 Second Tuna-Dolphin case, supra note 69 at para. 5.15.
94 See Hudnall, supra note 45 at 189–91 for a full discussion of the meaning of the phrase “relating to” in Article XX(g) as interpreted by various GATT dispute resolution panels.
95 Second Tuna-Dolphin case, supra note 69 at para. 5.27.
96 Shrimp-Turtle case, supra note 68 at para. 133.
97 It is now arguable, at least on an anecdotal basis, that the environmental or “green” movement is becoming increasingly powerful both in domestic politics and at an international level and is able to act more effectively as a counterpoint to the traditionally dominant industry-related lobby groups.
98 Fletcher, supra note 36 at 349.
99 Perlis, supra note 8. This article illustrates the type of domestic industry-related pressures and criticisms that governments face when seeking to promote change in the form of economically costly environmental measures. Perlis discusses the adverse impact that the implementation of the Kyoto Protocol could potentially have on the domestic electricity industry in the United States and stresses the importance of emission trading schemes in assisting with a smoother, more affordable transition to Kyoto Protocol compliance. Perlis also notes that in order to comply with the Kyoto Protocol, it will be necessary for electricity suppliers to convert from coal to cleaner fuels, such as natural gas. Such a transition is considered unlikely without government intervention because market forces, in an increasingly deregulated system, will encourage the use of the cheapest, lowest production-cost resource, which is currently coal.
100 It is interesting to note that in its report to the WTO Committee on Trade and Environment, the UNFCCC Secretariat notes the fact that the “real” reduc-tions in emissions will actually be greater than appears on the face of the Kyoto Protocol as a positive aspect of the agreement:
Since emissions levels would increase without a Protocol, actual emissions reductions will be much larger than 5 per cent. If compared to the year 2000, the total cuts will equal about 10 per cent. This is because many industrialized countries have not succeeded in meeting their earlier non-binding aim of returning emissions to 1990 levels by the year 2000, so that their emissions have in fact risen since 1990. Compared to the emissions levels that would be expected by 2010 without emissions-control measures, the Protocol target represents a 30 per cent cut.
UNFCCC Report to WTO, supra note 15 at para. 6.
101 Fletcher, supra note 36 at 361.
102 Ibid, [footnotes omitted].
103 For a discussion of these approaches, which “range from harmonization of national environmental laws, to the use of unilateral trade measures for protection of the global environment,” see Fletcher, supra note 36 at 357–71. It should be noted that one of the underlying assumptions of many of these proposed modifications to the current trade regime, to the extent that they involve issues of differing national environmental standards, is that environmental regulation is necessarily an unproductive cost to free trade, that it inherently conflicts with the policy of trade liberalization, and that trade policy must therefore be somehow compromised for the sake of environmental objectives. For an alternative position, see Gaines, supra note 33, particularly at 245.
104 Fletcher, supra note 36 at 357–58.
105 See, for example, Schultz, supranote 48 at 23 for a discussion of this point.
106 Shrimp-Turtle case, supra note 68 at paras. 79–91.
107 Ibid, at para. 89.
108 Ibid, at para. 91.
109 See Hudnall, supra note 45 at 181, where the author notes that “[d]espite the recognition by GATT parties that international trade policies should be both consistent with and complementary to international environmental policies, in practice environmental policies have taken a second seat to trade goals;” see also Dillon, supra note 47 at footnote 83, where it is observed in relation to Article XX that “the diction of [that provision] is too heavily weighted in favour of free trade doctrine to provide a convincing counter balance from an environmental point of view.”
110 Fletcher, supra note 36 at 359 and 369–71.
111 These justifications would apply even in respect of GATT members that have not signed the particular environmental agreement in question provided that this would not be contrary to principles of international law. For example, where it could be argued that the MEA in question had become part of customary international law. See ibid, at 370.
112 Ibid.
113 Ibid, at 372.
114 Ibid. Another option, similar to the proposed Article XX interpretation guide, but focusing on the negotiation and preparation of MEAs, has been suggested by Canada and has been reported in the CTE Bulletin, supra note 43, items 1 and 5, as follows:
Canada advocat[es] that the WTO develop a “principles and criteria” approach to MEAs to guide international negotiators contemplating the use of trade measures in an MEA. Canada had proposed the following qualifying principles for MEAs: (i) the MEA is open to all countries; (ii) the MEA reflects broad-based international support; (iii) the provisions specifically authorizing trade measures should be drafted as precisely as possible; (iv) trade with non-parties to the MEA is permitted on the same basis as Parties when non-parties provide environmental protection equivalent to that required by the MEA; and (v) negotiators have explicitly considered the criteria developed by the WTO for the use of trade measures in MEAs.
Canada had also suggested that MEA negotiators use the following criteria in determining the need for trade provisions: (i) trade measures are chosen only when effective and when other alternative measures are considered to be ineffective in achieving the environmental objective, or have proven to be ineffective without accompanying trade measures; (ii) trade measures should not be more trade-restrictive than necessary to achieve the environmental objective concerned; and (iii) the trade measures chosen should not constitute arbitrary or unjustifiable discrimination. Canada had used these guidelines in developing its negotiating positions for new MEAs.
115 CTE Bulletin, supra note 43, items ι and 5.
116 Ibid.
117 Ibid.
118 Ibid.
119 Fletcher, supra note 36 at 362.
120 Ibid, at 362–63.
121 See Dillon, supra note 47 at 364–65, where the author describes the inconsistency of GATT scholars who support regulation of production process where this relates to “desirable” intellectual property rights (and apparently see no problem with GATT coercion of those nations reluctant to adapt their domestic law accordingly), but not when the regulation is based on environmental considerations relating to the method of production. For a detailed discussion of the harmonization option, see Bernabe-Riefkohl, supra note 4.
122 See Jackson, supra note 60 at 323–25, for a brief outline of the evolution and nature of the Generalized System of Preferences [hereinafter GSP]; see also Hudnall, supra note 45 at 212–13.
123 Fletcher, supra note 36 at 363.
124 Ibid. See also Jackson, supranote 60 at 160 and 324; and Hudnall, supra note 45 at 211–12, for a discussion of the general fears of developing countries that incorporating environmental considerations into the GATT could result in North/South “eco-imperialism.”
125 Compare Gaines, supra note 33 at 286, where he makes the following point regarding the reluctance of developing countries to allow external enforcement of environmental measures:
achievement of sustainable patterns of development is a matter of great importance and considerable urgency, and in the political economy of international trade, it is not unusual for leaders intent on promoting broad national interests to take refuge in the mandates of international trade policy as justification for overriding politically powerful economic actors pursuing narrow self-interest. On that basis, enlightened development advocates in developing countries should welcome the occasional use of external trade pressures to overcome domestic resistance to welfare-enhancing environmental protection initiatives. This argument is made more cogent in light of Gaines’ argument that environmental regulation has not been shown to have a negative impact on the trading competitiveness of its subjects.
126 Fletcher, supra note 36 at 367.
127 Ibid.
128 Ibid. [footnotes omitted].
129 See Jackson, supra note 60 at 237. Jackson warns that this type of concept is “fraught with dangerous potential” as “it could be the basis of a rash of import restrictions, often defeating the basic goals of comparative advantage. Government regulations vary so greatly that the already difficult conceptual questions of the world’s rules on subsidies would pale in insignificance beside the problems that the cost of regulation equalization would create.”
130 See, for example, Leopold, Evelyn, “Clinton’s Greenhouse Gas Vow Skirts around Targets,” [Melbourne] Age (June 28, 1997) A 11,Google Scholar where the United States is reported as producing 2 2.g per cent of the world’s carbon emissions while making up only 4.6 per cent of the world’s population, compared with India, which makes up 16.5 per cent of the population and produces 3.8 per cent of the world carbon emissions. See also, Dillon supra note 47 at 360–61, where the author criticizes the common assumption that “the contemporary Western standard of environmental health and protection is high” when compared to developing countries.
131 Dillon, supra note 47 at 385–86.
132 Hudnall, supra note 45 at 208, citing Kennedy, Kevin C., “Reforming U.S. Trade Policy to Protect the Global Environment: A Multilateral Approach”(1994) 18 Harv. Envtl. L. Rev. 185, 229–30.Google Scholar Related to this idea is the proposed establishment of a new international trade and environment institution or forum to deal with policy development and negotiation as well as dispute settlements in this area. See Dunoff, Jeffrey L., “Resolving Trade-Environment Conflicts: The Case for Trading Institutions” (1994) 27 Cornell Int’l L.J. 607.Google Scholar Hudnall cites the Adelaide University Centre for International Economic Studies in supporting the development of such an organization on the basis that it could “redirect environmentalists’ attention away from the use of trade measures and towards ensuring the implementation of more appropriate policy instruments for achieving environmental objectives.” Hudnall, supra note 45 at 214.
133 GATT, Report on Trade and the Environment, GATT Doc. 1529 (February 3, 1992), 4 W.T.M. 37 (1992) at 45-46. But see Dillon, supra note 47 at footnote 3, where it is suggested that in this report, the GATT Secretariat demonstrates clearly that it “accepts as fact that trade alone creates wealth, and that whatever harm is done to the environment through production for export is not a central concern.”
134 See Gaines, supra note 33, for an elaboration of this concept and related ideas.
135 Ibid, at 277.
136 See note 143 and accompanying text. See also DFAT, Emissions Trading: Harnessing the Power of the Market, Address by Alexander Downer, Minister of Foreign Affairs, to the ABARE International Conference on Greenhouse Gas Emission Trading, Sydney, May 21, 1998, online at the DFAT homepage: hppt: // www.dfat.gov. au/e η vi ron ment/climate/cop4_background. html (date accessed: November 20, 8), and DFAT, Climate Change Background, The Fourth Conference of the Parties to the Framework Convention on Climate Change (October 29, 1998), online at the DFAT homepage http://www.dfat.gov.au/environment/climate/cop4_background.html (date accessed: November 20, 1998), where it is noted that
[t]he flexibility mechanisms international emissions trading, Joint Implementation, and the Clean Development Mechanism offer scope for far-reaching cooperative action, and have the potential to engage the energies of the marketplace, enabling the necessary emissions reductions to be achieved at the least possible cost. Australia will be seeking the development of rules and guidelines for the flexibility mechanisms which promote their openness and transparency, and which ensure that their full potential for achieving low-cost emissions reductions is realised.
137 UNFCCC Report to the WTO, supra note 15 at para.7.
138 Perlis, supra note 8.
139 Ibid.
140 For a discussion of this point as well as an overview of other potential problems arising from the proposed emission trading scheme, including institutional and equity concerns and the impact on sovereignty, see Forsheit, Tanya L., “International Emissions Trading: Equity Issues in the Search for Market-Based Solutions to Global Environmental Degradation” (1997) 18 U. Pa. J. Int’l Econ. L. 689.Google Scholar The author concludes, at 728, that “[g]iven the relatively brief history of international environmental law and of significant political attention to the severity of global environmental degradation, these efforts at cooperation in the area of emissions trading should be viewed as auspicious and a sign of things to come.”
141 Perlis, supra note 8. The political tension at work in these negotiations is also evident in the continuing disagreement over the implementation mechanisms for the emission trading scheme. While the United States is in favour of a very flexible and liberal system, the EU is reportedly less supportive to the extent that this will allow the United States to avoid fulfilling its domestic obligations. See “Aid Pledge,” supra note 31.
142 Gaines, supra note 33 at 290.
143 For a less favourable analysis of the proposed emission trading scheme, see Suzuki, David, “Climate Meeting to Test Worth of Kyoto Pact,” [Montreal] Gazette (November 10, 1998) B3,Google Scholar where the author describes this scheme as an attempt to “water down” the Kyoto agreement and that for the developed countries “not to make the most of [their] emission reductions at home trades away the health of [their citizens] and ignores the many environmental, social and economic benefits that would result from a gradual transition to cleaner energy sources.”
144 Regarding the tendency of the GATT system to treat environmental issues as external concerns, Dillon, supra note 47 at 3g 1, observes that “when vital issues (e.g., the capacity of the earth to support life) have to be classed as externalities, it is time to restructure basic concepts and start with a different set of abstractions that can embrace what was previously external.”
145 Dunoff, supra note 132 at 614. Dillon, supra note 47, makes this point more forcefully when she states, at 355, that
by its nature ever-expanding international trade is accelerating the degradation of our global environment as a whole, and thus cannot be made environmentally benign through minor doctrinal adjustments. The GATT/WTO system must not be “reformed” so as to include “environmental considerations” until this question is examined with the seriousness and concreteness it deserves.
It is arguable that the infrastructure supporting international free trade is a significant environmental concern in itself, particularly in regard to the huge fuel requirements of the transportation system that necessarily accompanies an ever-increasing international exchange of goods. Dillon, supra note 47 at 378–79.
146 See Dillon, supra note 47 at 382, where the author notes that “[e]ven if the GATT/WTO is reformed in order to take environmental concerns into account, the main thrust of GATT thinking can never be other than in favor of ever-increasing free trade”; see also Bernabe-Riefkohl, supra note 4 at 223, where the following observation is made:
Traditional economic growth refers to growth of the market economy based upon consumption of non-renewable resources. Mere economic growth has become confused with economic health, development, or progress. The only reason traditional economic growth is considered growth at all is due to the statistical sleight of hand called GNR In reality, GNP ignores many real costs such as depletion of non-renewable resources, and environmental, health, social, and political costs and disregards relevant beings outside the formal marketplace.
147 Dillon, supra note 47 at 366; see also Bernabe-Riefkohl, supra note 4 at 222, where it is noted that “[t]his perspective on environmental protection, which subordinates it to free-trade theory, is truly inadequate. First, the underlying theories of globalization and free trade simply do not reflect reality. Economic growth or development, particularly as measured by a country’s Gross National Product (GNP), is not the best indicator of ‘progress’ or of better living conditions.”
148 Dillon, supra note 47 at 390.
149 But see Heilbrunn, Jacob, “Europe vs. the U.S. Clash over Globalization Seems Likely as Europeans Elect Socialists,” [Montreal] Gazette (October 27, 1998) B3.Google Scholar where it is predicted that the recent rise of neo-socialist governments in Europe (particularly in France and Germany) may result in less support foi globalization; and also “Free Trade Takes a Hit — At APEC, Japan Refuses tc Back $t.5-trillion Tariff Treaty,” [Montreal] Gazette (November 16, 1998) Bi which discusses the impact on the global free-trade movement of Japan’s recent refusal to enter a new APEC tariff reduction treaty.
150 Fletcher, supra note 36 at 368.
151 The impact of changing public expectations regarding the environment is evident in the fact that many multinational corporations have modified theii behaviour in recent years so as to protect their image for marketing purpose: such that
many of these same corporations have adopted internal policies requiring equivalent levels of environmental performance at all of their facilities throughout the world, regardless of less-rigorous environmental standards in some countries. Of course, equivalency does not mean strict observance of exactly the same practices, and widespread differences remain in the degree to which local facility managers adhere to, or are held accountable to, such general corporate policies. Nevertheless, the trend is strongly in the direction of worldwide standards of environmental performance, not only for production management, but in corporate investment policies and joint venture arrangements as well [emphasis added].
Gaines, supranote 33 at 270 [footnotes omitted].
152 Shrimp-Turtle case, supra note 68 at para 185.
153 Gaines, supra note 33 at 247 and 236 respectively.
154 Schultz, supra note 48 at 21.