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The Changing Nature of ‘Environmental Protection’: Recent Developments Regarding Trade and the Environment in the European Union and the World Trade Organization

Published online by Cambridge University Press:  21 May 2009

Duncan French
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Extract

Despite almost universal recognition within the international community of the importance of international environmental law, many complex issues continue to elude an appropriate legal response. A particularly controversial issue – and one that is proving increasingly difficult to resolve – is the question of how to reconcile the principle of environmental protection with that of free trade. Moreover, despite such positive platitudes as that contained within the 1992 Rio Declaration on Environment and Development, nation states are quickly discovering that the issue is not simply one of abstract interest, but is actually beginning to influence both their domestic and international regulatory behaviour. This article seeks to present a broad overview of this issue as it relates to the European Union (EU) and the World Trade Organization (WTO). In particular, the article will critically discuss some of the more recent jurisprudence on this issue arising from these two, very different, ‘groupings’ of states. As will be noted, there are important similarities and differences between each ‘grouping’ in terms of its approach. And, of course, whilst it is acknowledged that many of these differences can be resolved by reference to the different aims and objectives of the different ‘groupings’, nevertheless, this article will try to move beyond a strictly comparative approach of the issues, and place them in a broader analytical framework. This is not an attempt to show which approach is ‘best’, but rather, to highlight the tensions between environmental protection and free trade.

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Netherlands International Law Review , Volume 47 , Issue 1 , May 2000 , pp. 1 - 26
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Copyright © T.M.C. Asser Press 2000

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References

2. UN Doc. A/CONF.151/26/REV.1 (Vol. I), p. 3.

3. In discussing the relevant legal situation as regards the environment-trade issue within the European Union, it is actually factually incorrect to refer to EU law. As the environment-trade issue is confined to the European Communities pillar of the European Union, it is more appropriate, strictu senso, to talk in terms of EC law.

4. Whilst the term ‘groupings’ is both ambiguous and legally imprecise, it does, however, resolve the dilemma of the author in finding a collective term for the EU (a partial supra-national organization with no international legal personality) and the WTO (a ‘classic’ international organization, though with a relatively sophisticated adjudication and enforcement mechanism).

5. See Wiers, J., ‘Regional and Global Approaches to Trade and Environment: The EC and the WTO’, 25 Legal Issues of European Integration (1998) p. 114Google Scholar: ‘Any comparative approach & should never ignore the differences & as regards nature, scope, goals and instruments.’

6. Other issues, such as the use of process- (compared to product-) standards, the extraterritorial application of national rules and the role of the proportionality and necessity principles, which are all important in the environment-trade debate, are only briefly mentioned in this article as much good literature already exists, including that referred to in this article.

7. Schoenbaum, T., ‘International Trade and Protection of the Environment: The Continuing Search for Reconciliation’, 91 AJIL (1997) p. 268: ‘Before 1991, the relationship between the protection of the environment and international trade was an arcane specialty that attracted little attention.’CrossRefGoogle Scholar

8. The ‘Bretton Woods’ group were to be the three main international financial institutions established after the Second World War, viz., the World Bank (formally the International Bank for Reconstruction and Development), the International Monetary Fund and the International Trade Organization. Only the first two were ever established. The International Trade Organization never came into being – with the General Agreement on Tariffs and Trade (GATT 1947) ( 55 UNTS p. 194Google Scholar) being applied provisionally. However, since the entry into force of the 1994 Uruguay Round trade treaties, the World Trade Organization now provides the revised GATT and its related instruments with an institutional structure as was originally envisaged in 1944.

9. As well as those who work for international organizations, the author also refers to those who work in national ministries involved in international negotiations.

10. Schoenbaum, loc. cit n. 7, at p. 268: ‘a & clash of very different “cultures”, trade specialists versus environmentalists. At the outset, neither group knew very much about the other.’ This author suggests that this notion of the ‘clash of “cultures”’ is also an apt description for the divisions between trade and environmental lawyers.

11. Emphasis added.

12. 33 ILM (1994) p. 15.Google Scholar

13. ‘Sustainable development’ is the notion that economic development, social progress and environmental protection can be made compatible. As the 1987 Report of the World Commission on Environment and Development, Our Common Future, noted, ‘[it is] development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (p. 43).

14. It is not the intention of the author to discuss in detail these economic issues. There is already a substantial amount of literature on this subject. A good introduction to the trade and environment debate is contained in an agora of articles in the 86 AJIL (1992) pp. 700–738CrossRefGoogle Scholar. Moreover, from an economic perspective, the short piece by Bergjik, P. van, ‘International Trade and Environmental Challenge’, 25 Journal of World Trade (1991) pp. 105–116Google Scholar is an interesting read, as is Markandya, A., ‘Is Free Trade Compatible with Sustainable Development?’, UNCTAD Review (1994) pp. 9–20.Google Scholar

15. Markandya, , loc. cit. n. 14, at p. 13.Google Scholar

16. COM (99) 263, p. 3.Google Scholar

17. A related issue is what is termed ‘downward competition’. As Carbaugh, R. and Wassink, D., ‘Environmental Standards and International Competitiveness’, 16 World Competition (1992) p. 89Google Scholar ask, can ‘strict environmental standards in one country result in loss of competitiveness, and perhaps industrial flight to countries with lower environmental standards?’ Their general view is that it does not. As they note, ‘[t]he rationale for anti-environmental policies is that they enhance a nation’s competitiveness, increase corporate profits, and protect jobs. Such a rationale is based on a narrow view of the sources of prosperity and a static view of competition’ (p. 90).

18. Weiss, E. Brown, ‘Environment and Trade as Partners in Sustainable Development: A Commentary’, 86 AJIL (1992) p. 729.CrossRefGoogle Scholar

19. Protocol on Provisional Application of the GATT: 55 UNTS p. 308Google Scholar.

20. 1947 (Geneva, Switzerland), 1949 (Annecy, France), 1951 (Torquay, UK), 1956 (Geneva, Switzerland), 1960–1961 (the ‘Dillon Round’), 1964–1967 (the ‘Kennedy Round’), 1973–1979 (the ‘Tokyo Round’) and 1986–1994 (the ‘Urugua y Round’). The Tokyo Round was the first round that was not solely concerned with tariff reductions; it also resulted in the adoption of new agreements and policies (such as ensuring more favourable treatment for developing states).

21. Other agreements include the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), the Agreement on Technical Barriers to Trade (TBT) and the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) – the details of which are only summarily discussed in this article. Also annexed to the WTO Agreement is the Understanding on Dispute Settlement, which establishes the Dispute Settlement Mechanism (DSM). The DSM comprises the participation of both trade experts and State Parties. Initial decisions on disputes are taken by a panel of experts (subject to a review by an appellate body), whose decision are automatically adopted unless the Dispute Settlement Body (a body comprised of all State Parties) decides by consensus to reject it. This is the reverse of the system prior to the entry into force of the Uruguay Agreements, when panel decisions were not adopted unless all parties, including the unsuccessful party, agreed to their adoption.

22. Art. II WTO Agreement: ‘[it] shall provide the common institutional framework for the conduct of trade relations among its Members. &’

23. The extent and size of such duties is largely contained within the schedule of concessions annexed to the GATT.

24. Art. III(4) is limited to ‘governmental’ action, viz., ‘in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.’ Art. III(2) imposes a similar obligation in respect of internal taxation and charges.

25. MTN/TNC/45(MIN).

26. ‘WTO law’ is an inaccurate, but descriptive, term for the legal rules contained within GATT and the other legal instruments annexed to the WTO Agreement.

27. 1996 Report of the WTO Committee on Trade and Environment (PRESS/TE 014 (18 November 1996)) p. 36.

28. The author intends to distinguish between ‘cooperation’ as evidenced by the existence of such organizations as the United Nations and NATO, and ‘integration’, which inevitably involves a greater pooling of sovereign power.

29. This provision was inserted originally by the 1986 Single European Act.

30. The primary environmental provisions are now contained within Arts. 174–176 (ex Arts. 130r-t). As Art. 174 notes, ‘[c]ommunity policy on the environment & shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.’

31. Following the 1997 Treaty of Amsterdam, the Treaty on European Union now also contains references to sustainable development. Art. 2 states, ‘[t]he Union shall set itself the following objectives & to promote economic and social progress & and to achieve balanced and sustainable development.’

32. It is very clear from Art. 3 EC, which establishes the tasks of the Community that whilst in some areas the Community is bestowed with exclusive competence (i.e., ‘common commercial policy’ [emphasis added]), in other areas – such as the environment – the Community shares its competence with the Member States (i.e., ‘a policy in the sphere of the environment’ [emphasis added]).

33. In addition, the Community may find its own environmental and public health measures questioned in relation to their compatibility with WTO law, as was evidenced by the recent WTO case, EC Measures Concerning Meat and Meat Products (Hormones), the details of which can be taken from the WTO internet site, see http://www.wto.org.

34. The phraseology is taken from Art. 30 (ex Art. 36) EC.

35. Scott, J., EC Environmental Law (London, Longman 1998) p. 64.Google Scholar

36. Ibid. In respect of measures taken under the legislative basis of the Community’s environmental policy (Art. 175 EC), Art. 176 states ‘[t]he protective measures adopted pursuant to Article 175 shall not prevent any Member State from maintaining or introducing more stringent protective measures. Such measures must be compatible with this Treaty & ‘ In respect of measures taken to harmonize the laws of Member States (Art. 95 (ex Art. 100a) EC), Arts. 95(4)-95(7) provide a mechanism whereby a Member State can try to persuade the Commission that it must maintain (or introduce) domestic measures ‘on grounds of major needs referred to in Article 30, or relating to the protection of the environment or the working environment’ (Art. 95(4) EC). The Commission must then ‘verif[y] whether or not they are a means of arbitrary discrimination or a disguised restriction on trade between Member States and whether or not they shall constitute an obstacle to the functioning of the internal market” (Art. 95(6) EC).

37. Ibid.

38. It has been traditionally agreed that the exemptions contained within Art. 30, among which include the reference to the protection of animal, human and plant life and health cited above, are exhaustive. However, as this article will argue, this traditional approach does not now look as secure as it once was.

39. Rewe-Zentrale AG v. Budesmonopolverwaltung für Branntwein (Cassis case) (Case 120/78, [1979] ECR 649, para. 8). The Cassis case built upon the Court of Justice’s earlier decision in Dassonville (Case 8/74, [1974] ECR 837), which held that ‘measures having equivalent effect’ should be interpreted to mean ‘all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.’

40. Wiers, loc. cit. n. 5, at p. 98.

41. This statemen t remains true notwithstanding the fact that the Court of Justice has consistently held that environmental protection is a mandatory requirement As was emphasized in Commission v. Denmark (Case 302/86, [1988] ECR 4607), measures taken to safeguard mandatory requirements must be also shown to be proportionate and necessary, in a similar way as is required under Art. 30 (ex Art. 36) EC.

42. Criminal Proceedings against Keck and Mithouard (Cases C-267 and 268/91, [1993] ECR 1–6097).

43. Such rules including ‘requirements as to designation, form, size, weight, composition, presentation, labelling, packaging’ (para. 15).

44. The author can only agree with Wiers when he states: ‘I purposely simplify things here so as not to get entangled in the discussions on the interpretation of Keck, interesting as they may be’ (Wiers, loc. cit. n. 5, at p. 99).Google Scholar

45. Ibid.

46. United States – Restrictions on Imports of Tuna, 30 ILM (1991) p. 1622.Google Scholar

47. Cf., Opinion of Advocate-General Slynn in Commission v. Denmark (Case 302/86, [1988] ECR 4607 at 4626): “The level of protection sought must be a reasonable level.’

48. The similarity between this provision and Art. XX(b) GATT should not go unnoticed.

49. India, Pakistan and Thailand emphasized in United States – Import Prohibition of Certain Shrimp and Shrimp Products (Appellate Body) (WT/DS58/AB/R) (1998) (see 38 ILM (1999) p. 118) the ‘mention of minerals, such as manganese, in the context of argument made by some delegations’ at the preparatory conferences to the 1947 GATT.Google Scholar

50. There is also some evidence that a number of states wished to include an explicit exemption in the chapter on commodity agreements concerning ‘the conservation of reserves of exhaustible natural resources’; further evidence of the emphasis on non-living ‘natural resources’.

51. Both the Tuna-Dolphin and Shrimps cases involved the United States passing domestic legislation regulating the capture of tuna and shrimps as a means of protecting dolphins and turtles (respectively). The United States also required measures to be taken by fishermen beyond its jurisdiction if they wished their catches to enter the US market In the Tuna-Dolphin dispute, one of the principal reasons behind the decision of the GATT panel not allowing the US to rely on Art XX was the fact that the extrajurisdictional nature of the US measure meant one state ‘could unilaterally determine the conservation policies from which other [states] could not deviate without jeopardizing their rights’ under the GATT ( 30 ILM (1991) p. 1621Google Scholar). The Appellate Body in the Shrimps case laid less emphasis on the extrajurisdictional issue and emphasised the arbitrary and unjustified discrimination caused by imposing different criteria on the fishermen from other states.

52. See supra n. 46.

53. Ibid., at p. 1607. Mexico also argued that as the dolphins were not ‘actually in danger of extinction’ they could not be considered exhaustible natural resources. The US responded by arguing Art. XX(g) referred to ‘exhaustible’ not ‘exhausted’. Nevertheless, as Mexico made clear, that was a secondary argument; its primary argument was simply that living resources could not be included within the definition of’exhaustible natural resources’.

54. See 35 ILM (1996) p. 274 at p. 288.Google Scholar

55. Ibid.

56. See supra n. 49, at p. 154.

57. Ibid.

58. Ibid.

59. See United States – Prohibitions of Imports of Tuna and Tuna Products from Canada (L/5198) (1982); and Canada – Measures Affecting Exports of Unprocessed Herring and Salmon (L/6268) (1988).

60. See supra n. 46. Arguably, the panel had implicitly accepted the view that living resources are ‘exhaustible natural resources’ as its discussion focused on the issue of the extrajurisdictional nature of the US measures – an unnecessary discussion if the panel had decided such resources fell outside the ambit of Art. XX(g).

61. See supra n. 54, at p. 299.

62. Ibid.

63. Ibid.

64. See supra n. 49, at p. 154.

65. Ibid.

66. Ibid., at p. 155.

67. Ibid., at fn. 109. For the full opinion of the International Court, see ICJ Rep. (1971) p. 31.Google Scholar More recently, the International Court of Justice in the Gabdkovo-Nagymaros case (Hungary/ Slovakia), ICJ Rep. (1997) p. 7Google Scholar made the following comment: ‘In order to evaluate the environmental risks, current standards must be taken into consideration & new [environmental] norms have to be taken into consideration, and such standards given proper weight, not only when States contemplate new activities but also when continuing activities begun in the past. This need to reconcile economic development with protection of the environment is aptly expressed in the concept of sustainable development’

68. Ibid., at pp. 154–155.

69. 21 ILM (1982)p. 1261.Google Scholar

70. 31 ILM (1992) p. 822.Google Scholar

71. UN Doc. A/CONF.151/26/REV.1 (Vol. I), p. 9.Google Scholar

72. Ibid., at p. 156.

73. Ibid.

74. The Appellate Body, in a footnote, makes the comment that ‘the drafting history does not demonstrate an intent on the part of the framers of the GATT 1947 to exclude “living” natural resources from the scope of application of Article XX(g).’ Ibid.

75. Case 240/83, [1985] ECR 531.

76. Case 302/86, [ 1988] ECR 4607.

77. See Case 46/67, [1977] ECR 5 Bauhuis. See also Weatherill, S. and Beaumont, P., EU Law (London, Penguin Books 1999) pp. 525–526Google Scholar: ‘The Court is absolutely unwilling to extend the scope of available heads of justification.’ It is the intention of this article to suggest that this statement may no longer be correct.

78. Case C-2/90, [1992] ECR 1–4480.

79. Case C-2/90, [1992] ECR 1–4457.

80. See also the opinion of Advocate-General Fennelly in Re Criminal Proceedings Against Ditlev Bluhme (Case C-67/97, [1999] 1 CMLR 612 at 623), in which he notes, ‘I agree with the statement made at the oral hearing by the agent for the Commission that the correct approach to a restriction i n part of a Member State is to consider what the position would be if the restriction applied to the whole national territory.’

81. Case C-2/90, [1992] ECR 1–4457.

82. The Court’s judgment only differed in relation to non-hazardous waste. In relation to hazardous waste, both the Advocate-General and the Court of Justice held that th e Wallonian ban was inconsistent with the harmonized procedure put in place by Directive 84/63 I/EEC on the supervision and control within the European Community of the transfrontier shipment of hazardous waste.

83. Ibid., at p. 4480.

84. Ibid. Moreover, the Court of Justice further justified its decision on the basis of the principles of self-sufficiency and proximity as contained in the 1989 Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal ( 28 ILM (1989) p. 657Google Scholar), of which the EC was a signatory. However, at the time of the Court’s decision, the Treaty had not yet entered into force.

85. The Court of Justice seemed to ignore the issue as to whether or not the regional ban was proportionate – a test that the Court in the Danish Bottles case had emphasized was an essential element in determining the legality of domestic measures.

86. See his opinion in Chemische AJvalstoffen Dusseldorp BV and Others v. Minister van Volkshuisvesting, Ruimtelijke Ordening en Milieubeheer (Case C-203/96, [ 1998] 3 CMLR 873 at 900).

87. Case C-67/97, [1999] 1 CMLR 612 at 637–638.Google Scholar

88. Ibid. The chamber was referring to the Convention on Biological Diversity, signed at Rio de Janeiro in 1992.

89. Ibid., at p. 628.

90. Case C-203/96, [1998] 3 CMLR 873.Google Scholar

91. Ibid., at p. 597.

92. Ibid., at p. 601. Advocate-General Cosmas makes a similarly broad statement when he notes that ‘the protection of the environment amounts to a fundamental national objective which may also limit the application of the prohibitions in Article 30 [new Article 28].’ Ibid., at p. 597.

93. Ibid., at p. 601.

94. Ibid., at pp. 601–602: ‘the effectiveness of [the] policy of progressively eliminating from the national fleet aircraft not meeting the stricter noise standards would be undermined if their number could be increased, to an extent not foreseeable by the national authorities, by aircraft from other Member States. Legislation of the kind at issue & therefore does not appear to be disproportionate.’

95. Ibid., at p. 601.

96. Case C-203/96, [1998] 3 CMLR 873.Google Scholar

97. The rules were contained within Directives 75/442/EEC on waste, as amended by the 1991 Framework Directive on Waste (91/156/EEC).

98. See supra n. 96, at p. 898. One case that Advocate-General Jacobs would certainly have had in mind is Groenveld v. Produktschap voor Vee en Vlees (Case 15/79, [1979] ECR 3409).

99. Ibid., at p. 899. Advocate-General Jacobs summarizing Dusseldorp’s argument said this: ‘imperative requirements [another term for “mandatory requirements”] can constitute justification for measures caught by Article 34 [new Article 29] only in the event that the measure is applicable without distinction. That of course suggests that imperative requirements can never justify measures caught by Article 34 [new Article 29] since measures are only caught by that article if they are discriminatory.’

100. Ibid., at p. 914. The export restriction was also contrary to Art. 82 (ex Art. 86) and Art. 86 (ex Art. 90) relating to the abuse of a dominant position by an undertaking given special or exclusive rights by a Member State.

101. Ibid.

102. Jans, J., ‘Analysis’, 11 Journal of Environmental Law (1999) p. 152.Google Scholar

103. Para. 49 notes: ‘It must therefore be concluded that the object and effect of application of the principles of self-sufficiency and proximity to waste for recovery & is to restrict exports of that waste and is not justified, in circumstances such as those in the present case, by an imperative requirement relating to the protection of the environment or the desire to protect the health and life of humans in accordance with Article 36 [new Article 30] of the Treaty.’

104. The ‘features’ in question include the requirement that the national measures satisfy the principles of proportionality and necessity.

105. Weatherill and Beaumont, op. cit., n. 77, at p. 580.

106. Oliver, P. ‘Some Further Reflections on the Scope of Articles 28–30 (Ex 30–36) EC’, 36 Common Market Law Review (1999) p. 805CrossRefGoogle Scholar argues that in fact Dusseldorp is rather a rather weak example of the assimilation between mandatory requirements and Art. 30 exemptions. He notes that in two non-environmental cases; Case C-34/95, Konsumentenombudsmannen v. De Agnostini, [1997] ECR 1–3843 and Case C-120/95, Decker v. Caisse de Maladie des Employés Privés, [ 1998] ECR 1–1831 the Court of Justice ‘albeit tacitly & considered] whether a measure which discriminated against imports was nevertheless justified under one of the mandatory requirements.’

107. Art. 211 EC requires the Commission to ‘ensure that the provisions of this Treaty and the measures taken by the institutions pursuant thereto are applied.’ One must presume that the ‘measures taken by the institutions’ includejudgments of the Court of Justice.