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The Environment and the Technical Barriers to Trade Agreement: Did the Reformulated Gasoline Panel Miss a Golden Opportunity?

Published online by Cambridge University Press:  21 May 2009

Rex J. Zedalis
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Extract

The various provisions of the General Agreement on Tariffs and Trade (GATT) envision import regulations being triggered because of features or characteristics of products seeking entry into a country's customs territory, not because of the processes utilized in producing or harvesting such products. The origins of this emphasis on products rather than processes dates from at least the GATT decision in the Belgian Family Allowances case, and was explicitly articulated in the well-known and controversial 1991 GATT panel decision in United States – Restriction on Imports of Tuna from Mexico. The precise language of the panel decision in that latter case provided that import measures must be designed to regulate the imported item because of its features or characteristics ‘as a product’, and not because of ‘harvesting’ techniques that may have been employed in gathering or collecting the item. Obviously, this product rather than process oriented approach makes it difficult for non-product based national environmental laws to pass muster under the GATT. By excluding such laws from the ambit of what the basic substantive provisions of the GATT permit in the form of import regulation, national governments are forced to seek the protection of the exceptions of GATT Article XX. These, however, have been very narrowly construed, with the impression given being that of unreceptivity to measures aimed at protecting the environment.

Type
Research Article
Information
Netherlands International Law Review , Volume 44 , Issue 2 , August 1997 , pp. 186 - 208
Copyright
Copyright © T.M.C. Asser Press 1997

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Footnotes

*

Professor of Law and Director, Comparative and International Law Center, University of Tulsa.

References

1. See IV Basic Instruments and Selected Documents (hereinafter BISD) (March 1969).

2. See Zedalis, R.J., ‘Product v. Non-Product Based Distinctions in GATT Article HI Trade and Environment Jurisprudence: Recent Developments’, 6 European Env. LR 108 (1997) p. 108.Google Scholar

3. 1 BISD Supp. 59 (March 1953).

4. 39 BISD Supp. 155 (1993) (Submitted to the Parties, August 16,1991), reprinted in 30 ILM (1991) p. 1594 (not adopted by the GATT Council) (hereinafter Tuna I).Google Scholar

5. Ibid. at para. 5.14.

6. Idem.

7. See generally Kometani, K., ‘Trade and Environment: How Should WTO Panels Review Environmental Regulations Under GATT Articles III and XX?’, 16 Nw. J Int. L & Bus. (1996) pp. 441, 466–477;Google Scholar Charnowitz, S., ‘Exploring the Environmental Exceptions in GATT Article XX’, 25 J. World Trade (1991) p. 37.Google Scholar

8. The exceptions of Art. XX(b), measures ‘necessary to protect human, animal or plant life or health’, and of Art. XX(g), measures ‘relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption’, are of chief importance. For GATT panel decisions rejecting reliance upon these provisions, see e.g., Canada – Measures Affecting Exports of Unprocessed Herring and Salmon, 35 BISD Supp. 98 at paras. 4·5–4·7 (March 22, 1988); and Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes, 37 BISD Supp. 200 at paras. 72–81 (November 7, 1990). For identical GATT panel decisions not adopted by the GATT Council, see e.g., Tuna I, supra, n. 4 at paras. 5·24–5·34; United States – Restrictions on Imports of Tuna, 33 ILM (1994) p. 839Google Scholar at paras. 5·11–5·39 (Tuna II) (Submitted to the Parties, May 20, 1994); and United States – Taxes on Automobiles, DS31/R (October 11,1994), discussed in Charnowitz, S., ‘The GATT Panel Decision on Automobile Taxes’, BNA's Int. Env. Reporter (November 2, 1994) pp. 924–925.Google Scholar

9. See Uruguay Round: Final Texts of the GATT Uruguay Round Agreements Including The Agreement Establishing the World Trade Organization as Signed on April 15, 1994 at 117 (Office of the United States Trade Representative, Executive Office of the President, Washington, D.C., 1994) (hereinafter Final Texts).

10. Final Texts, ibid.

11. See Charnowitz, S., ‘The WTO Panel Decision on US Clean Air Act Regulations’, 13 BNA's Int. Trade Reporter (March 13, 1996) p. 459 at p. 463 (‘some commentators suggested that the TBT agreement would help countries defend their environmental laws before a WTO tribunal’). See also ‘Press Summary of Uruguay Round Agreement Issued December 14,1993, by General Agreement on Tariffs and Trade’, reprinted in 10 BNA's Int. Trade Reporter (December 22, 1993) (TBT Agreement ‘recognizes that countries have the right to establish protection, at levels they consider appropriate, for example for … the environment, and should not be prevented from taking measures necessary to ensure those levels of protection are met’).Google Scholar

12. See United States – Standards for Reformulated and Conventional Gasoline, WTO Doc. WT/DS2/R (January 29, 1996),Google Scholar reprinted in 35 ILM (1996) p. 274Google Scholar (hereinafter Panel Report); United States – Standards for Reformulated and Conventional Gasoline, WTO Doc. WT/DS2/AB/R (April 29, 1996), reprinted in 35 ILM (1996) p. 603 (hereinafter Appellate Report).Google Scholar

13. See Panel Report, ibid. at para. 6·43. Given the fact the panel decided not to address the applicability of the TBT Agreement in the Reformulated Gasoline case, there is every reason to believe it possible that the case can be read as standing for the proposition that, when there is a conflict between what the GATT and its case law requires (e.g., invalidation of import standards focusing on PPMs) and what the TBT Agreement requires, the latter is overridden by the former.

14. See Appellate Report, supra n. 12 at pp. 9–12 (the US did not appeal the panel decision on the inapplicability of the TBT Agreement, and the arguments of Venezuela and Brazil with regard to examining the matter of the applicability of the TBT Agreement failed to properly place the issue before the Appellate Body).

15. See Final Texts, supra n. 9 at p. 69.

16. At the time the writing of this article was being completed, preliminary news reports indicated a WTO panel decision – not then available for public release – had been reached in favor of the United States and Canada. See Andrews, E.L., ‘Europe's Banning of Treated Beef is Ruled Illegal’, New York Times (May 9, 1997)Google Scholar at Al, col. 6. On the historical background of the hormone dispute, see generally Meng, W.P., “The Hormone Conflict Between the EEC and the United States Within the Context of GATT, 11 Michigan JIL (1990) p. 819.Google Scholar

17. See Final Texts, supra n. 9 at p. 9.

18. See ibid. at p. 21.

19. For a discussion of the matter of linkage, see the text accompanying infra nn. 109–112.

20. See Final Texts, supra n. 9 at p. 117.

21. Id. at p. 118, Art. 2.2.

22. Idem.

23. Idem.

24. Idem.

25. Idem.

26. See ibid. at p. 117.

27. Ibid. at p. 132, Art. 1 of Annex I.

28. See the text accompanying supra nn. 20–23.

29. On the narrow product oriented interpretation given the relevant GATT substantive provisions, see the text accompanying supra nn. 2–7.

30. See the Agreement on Technical Barriers to Trade, done March 29, 1979, MTM/NTM/W/192/Rev. 5, reprinted in Agreements Reached in the Tokyo Round of the Multilateral Trade Negotiations, HRDoc. No. 153,96th Cong., lstSess., pt. 1 (1979) (hereinafter Tokyo Round). On the 1979 TBT Agreement generally, see Bourgeois, J.H.J., ‘The Tokyo Round Agreement on Technical Barriers and on Government Procurement in International and EEC Perspective’, 19 CML Rev. (1982) p. 5;Google Scholar Sweeney, R.E. Jr, ‘Technical Analysis of the Technical Barriers to Trade Agreement’, 12 Law & Pol. Int. Bus. (1980) p. 179.Google Scholar

31. See Tokyo Round, Ibid. at p. 214.

32. Ibid. at p. 216.

33. Ibid. (employing ‘technical regulations and standards’).

34. Ibid. at p. 244.

35. Idem.

36. Ibid. at p. 240.

37. See Stewatt, T.P., ed., The GATT Uruguay Round: A Negotiating History (1986–1992), Vol. III (1993) p. 65 at pp. 105–135Google Scholar (text of the Agreement (1990) on Technical Barriers to Trade). In particular, see ibid. at p. 128, Art. 1, Annex 1, providing that ‘technical regulation’ means a document setting forth ‘characteristics for products, processes, and production methods …, with which compliance is mandatory’.

38. See United States Draft Proposal, Processes and Production Methods, GATT Doc. No. MTN.GNG/NG8/W/24 (February 18, 1988).

39. See Processes and Production Methods, Proposal by New Zealand, GATT Doc. No. MTN.GNG/NG8/W/58 (November 22, 1989).

40. See Agreement on Technical Barriers to Trade: Aspects of the Agreement Proposed for Negotiation, Note by the Secretariat, GATTDoc. No. MTN.GNG/NG8/W/25 (February 26,1988). Apparently, some argued that 14·25 meant PPMs were subject to the disclipines of the 1979 Agreement, while others contended that it meant they could be challenged only in the context of a specific showing that they were used with the intent of evading the strictures of the Agreement. See ibid. at p. 14. At least from the standpoint of the US, the principal motivation for including PPMs within the obligations of the TBT Agreement was to be found in commercial realities. Modern product regulatory standards are focused less on after-harvest or after-production characteristics, and more on the methods and processes utilized in growing, collecting, or manufacturing the goods concerned. See United States Draft Proposal, supra n. 38 at p. 2.

41. On the fact that, shortly after the 1979 Agreement was put together, debate developed over whether the definition of ‘technical specification’, taken in conjunction with Art. 14·25's reference to dispute settlement regarding PPMs, envisioned challenges to regulations written in terms of processes and production methods, see the Report of the Committee on Technical Barriers to Trade presented to the CONTRACTING PARTIES at their Thirty-fifth Session, GATT Doc. No. L/5068, reprinted in 27 BISD Supp. at 39 (US challenge to EEC poultry chilling measure).

42. See Markel, S.G., ‘MTN Agreements’, in Stewart, , ed., op. cit. n. 37, Vol. I, at pp. 1009, 1098.Google Scholar

43. See Agreement on Technical Barriers to Trade, Report by the Chairman of Informal Negotiating Group on Technical Barriers to Trade, GATT Doc. No. MTN.GNG/NG8/W/83/Add.3 (July 23, 1990) (text prepared June 26, 1990).

44. See ibid. at p. 1.

45. See Markel, , loc. cit. n. 42, at pp. 1100–1101.Google Scholar

46. See Agreement on Technical Barriers to Trade, GATT Doc. No. MTN.GNG/NG8/W/83/Add.3/Rev.1 (October 18, 1990).

47. See Meeting of 18 October 1990, GATT Doc.No. MTN.GNG/NG8/21 (October29,1990) at p. 5 (statement by Chair of negotiating group).

48. See text accompanying supra n. 37.

49. See Stewart, , ed., op. cit. n. 37, at p. 108 (Commentary accompanying Agreement (1990) on Technical Barriers to Trade).Google Scholar

50. See Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Ibid. at pp. 457, 525.

51. See Markel, loc. cit. n. 42 at p. 1105.Google Scholar

52. See supra n. 50 at p. 544 (Dunkel Draft) and supra n. 37 at p. 128 (Brussels Draft).

53. See Final Texts, supra n. 9, at p. 118.

54. See supra nn. 2–6.

55. See text accompanying supra nn. 2–6.

56. See idem..

57. See text accompanying supra nn. 19–54.

58. See e.g., Arts. I, III, and XI of the GATT, supra n. 1.

59. See text accompanying supra nn. 2–6.

60. See Final Texts, supra n. 9, at 117.

61. For GATT 1947, see supra n. 1. For GATT 1994, see Final Texts, supra n. 9, at p. 23.

62. See GATT 1994, Ibid.

63. For a discussion of this see the text accompanying supra nn. 52–54.

64. Done, May 23, 1969, entered into force, January 27, 1980, UN Doc. A/CONF.39/27 (1969), reprinted in 63 AJIL (1969) p. 875.CrossRefGoogle Scholar The US is not a party to the Convention, nevertheless it has recognized much of the Convention as reflecting customary international law. See S. Exec. Doc. L., 92d Cong., lstSess. (1971) p. 1;Google Scholar Am. L. Inst., Restatement of the Foreign Relations Law of the United States (Revised), Tent. Draft No. 6, pt. III, intro. note no. 2 (1985); Frankowska, M., ‘The Vienna Convention on the Law of Treaties Before United States Courts’, 28 Va. JIL (1988) p. 281.Google Scholar

65. See ibid. at Art. 30, para. 1.

66. See ibid. (referencing Art. 103 of the Charter, indicating the Charter is supreme).

67. See ibid. at Art. 30, para. 2.

68. See ibid. at Art. 30, para. 3 (cross referencing Art. 59.)

69. See ibid. at Art. 30, para. 4.

70. See ibid. at Art. 30. para. 5 (cross referencing Arts. 41 and 60).

71. See Harvard Research in International Law, Draft Convention on the Law of Treaties, Art. 22 (a), comment, reprinted in 29 AJIL (1935) p. 1009 at p. 1011 for a similar observation made with regard to an earlier draft convention on treaties.CrossRefGoogle Scholar

72. See Report by Lauterpacht, H., Special Rapporteur, Doc. A/CN.4/63, ILC Yearbook (1935) Vol. II, p. 90, at p. 156,Google Scholar Art. 16(1), A/CN.4/SER.A/1953/Add.l. See also Second Report on the Law of Treaties, by SirWaldock, Humphrey, Special Rapporteur, Doc. A/CN. 4/156 and Add. 1–3, ILC Yearbook (1963) Vol. II, p. 36, atp. 55, para. 7 (hereinafter 1963 Waldock Report) (suggesting his view that Lauterpacht only envisioned invalidity applying in cases in which a later agreement resulted in one of the parties to both the later and the earlier agreement breaching an obligation owed to a third State under the earlier agreement).Google Scholar

73. See Third Report by Fitzmaurice, G.G., Special Rapporteur, Doc. A/CN.4/115, ILC Yearbook (1958) Vol. II, p. 20, at p. 27, Art. 18 (5). See also 1963 Waldock Report, supra n. 72, at p. 55, para. 9, and p. 56, para. 12 (suggesting Fitzmaurice allows a later agreement to prevail in cases in which a State not a party to an earlier inconsistent agreement is involved, as well as in cases in which no new State participates, but fewer than all the parties to the earlier agreement become party to the later agreement).Google Scholar

74. See 1963 Waldock Report, supra n. 72 at p. 53, Art. 14 (l)-(2) (Waldock suggests that priority of the later agreement turns on the principles governing interpretation of international commitments, and is supported by the PCIJ case of Oscar Chinn, PCIJ, Ser. A/B, No. 63 (1934), and European Commission of the Danube, PCIJ, Ser. B, No. 14 (1927)).

75. See Art. 26(2)–(3), Draft Articles on the Law of Treaties, Report of the International Law Commission on the Work of its Eighteenth Session, Geneva, May 4–July 19, 1966 (hereinafter ILC 1966 Draft Convention), UN GA, 21st Sess., Off. Rec. Supp. No. 9, Doc. A/6309/Rev. 1, reprinted in 61 AJIL (1967) p. 253, at pp. 263, 270–271.Google Scholar For the Draft Articles on the Law of Treaties and Commentaries, see ibid. at p. 285. Art. 26 in particular is discussed at pp. 341–348. What became the text of Art. 26 in the ILC 1966 Draft was provisionally adopted as Art. 63 at the Commission's Sixteenth Session in 1964. See ibid. at p. 341, para. 1. For the actual text of Art. 63, see Report of the International Law Commission Covering the Work of its Sixteenth Session, May 11–July 24, 1964, Doc. No. A/CN.4/173 (1964), reprinted in 59 AJIL p. 202 at p. 227.CrossRefGoogle Scholar

76. See supra n. 64 (referencing para. 1 of Art. 30), and the heading of Art. 30, ‘Application of successive treaties relating to the same subject-matter’.

77. See Off. Rec. UN Conf. on The Law of Treaties, 1st Sess., Doc. A/CONF.39/11 at 164, 165, para. 13, SR. 31st mtg. (19 April 1968).

78. See Off. Rec. UN Conf. on the Law of Treaties, 2nd Sess., Doc. A/CONF.39/11/Add. 1 at 218, 222, para. 41, SR. 84th mtg. (10 April 1969).

79. See ibid. at para. 45.

80. For the text of that revised version, see ibid. at p. 252, para. 35, SR. 91st mtg. (16 April 1969).

81. See ibid. at p. 253, para. 41, SR. 91st mtg. (16 April 1969) (emphasis added).

82. Idem.

83. See ibid. at para. 42.

84. See ibid. at p. 57, para. 59, SR. 13th mtg. (6 May 1969).

85. See ibid. at pp. 56–57, paras. 50–58.

86. See Sinclair, I., The Vienna Convention on the Law of Treaties (1973) pp. 68–69 (relying on generalia specialibus non derogant).Google Scholar

87. See e.g., Akehurst, M., ‘The Hierarchy of Sources of International Law’, BYIL (1974–1975) pp. 273, 275. For the proposition that the doctrine allows treaties to prevail over inconsistent custom, see Advisory Committee of Jurists, Proces-Verbaux of the Committee, PCIJ 1920 at 337 (comments by Ricci-Busati). For the same idea allowing special custom to prevail over general custom, see Right of Passage case, ICJ Rep. (1960) 6 at 44.Google Scholar

88. See supra nn. 66–67, and 70.

89. See supra n. 67.

90. On the possibility of tacit termination or suspension see the commentary to the ILC's 1966 Draft Convention, Art. 56 (which became Art. 59 in the 1969 Convention), supra n. 75 at p. 420, commentary paras. 1–4.

91. See the text accompanying supra nn. 59–61.

92. Furthermore, the GATT 1994 does not explicitly spell out any objectives, as such. Its incorportation of GATT 1947, however, pulls in the objectives of that instrument, as set forth in its preamble. These consist of raising standards of living, ensuring full employment and a growing volume of income and demand, developing full use of resources and expanding the production and exchange of goods. See GATT, supra n. 1. Nothing appears with regard to ‘product(s)’ having, or not having, a particular meaning.

93. See Texaco Overseas Petroleum v. Libyan Arab Republic, International Arbitral Award, January 19, 1977, reprinted in 17 ILM (1977) p. 1 (paras. 49–52 of opinion).Google Scholar

94. See the Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, Final Texts, supra n. 9, at p. 145.

95. See the Agreement on Subsidies and Countervailing Measures, Final Texts, supra n. 9, at p. 229.

96. See supra n. 15.

97. Supra n. 94 at p. 145.

98. Supra n. 95 at p. 260.

99. Supra n. 96 at p. 70.

100. See Final Texts, supra n. 9, at p. 3 (‘Table of Contents’). The Uruguay Round agreements fall into four major groupings: Final Act; Agreement Establishing the World Trade Organization (WTO); Ministerial Decisions and Declarations; Understanding on Commitments in Financial Services. The principal substantive agreements are found under the Agreement Establishing the WTO, and it is comprised of four Annexes: Annex 1A – Multilateral Agreements on Trade in Goods; Annex IB – General Agreement on Trade in Services; Annex 1C – Agreement on Trade-Related Aspects of Intellectual Property Rights; Annex 2 – Understanding on Rules and Procedures Governing the Settlement of Disputes; Annex 3 – Trade Policy Review Mechanism; Annex 4 – Plurilateral Agreements. Annex 1A contains all of the agreements related to trade in goods, including GATT 1994 (with GATT 1947 incorporated) and the TBT Agreement.

101. See Agreement Establishing the World Trade Organization, Final Texts, supra n. 9, at p. 9.

102. See Annex 1A to the WTO Agreement, ‘General Interpretive Note to Annex 1A’ Final Texts, supra n. 9, at p. 21.

103. See ibid. at first para, of the Preamble.

104. Recall supra n. 13, indicating that one interpretation of the Reformulated Gasoline case supports the view that the GATT takes precedence over the TBT Agreement.

105. See Panel Report, supra n. 12 at p. 289, para. 3.74, and at p. 290, para. 3.77.

106. See idem.

107. See ibid. at pp. 289–290, para. 3·75 (Venezuela); ibid. at p. 290, para. 376 (Brazil).

108. See ibid. at p. 292, para. 4·6. Norway also supported the complaint by Venezuela and Brazil under the TBT Agreement. However, apparently no precise argument was advanced. See ibid., para. 4.9.

109. See ibid.. at para. 6·43.

110. See supra n. 26.

111. See The GATT Uruguay Round Agreements: Report on Environmental Issues, Office of the US Trade Representative, Executive Office of the President at pp. 90–91 (August 1994), reproduced in 1994 WestLaw 761804 (referring to the permissibility of import restrictions on the basis of PPMs unrelated to the physical characteristics of a product as an issue not yet resolved by the TBT Agreement).

112. Indeed, the narrow interpretation was suggested by one authority in the context of US deliberations on the TBT Agreement. See Testimony of Robert Housman, Staff Attorney, Center for International Environmental Law, Before the Trade Subcomm. of the House Ways & Means Comm., February 2, 1994 at pp. 36, 41–41, reproduced in LEXIS–NEXIS, Fed. Doc. Clearing House Cong. Testimony, Section: Capitol Hill Hearing Testimony.

113. See the text accompanying supra nn. 19–20.

114. For evidence of interest in a balance, see Gatt, , International Trade, Vol. 1 (1992) pp. 90–91.Google Scholar