Over the last couple of months, Russia has been negotiating to join the World Trade Organisation (WTO). True, free trade and associated benefits that WTO has to offer are quite tempting to many countries praying for more "foreign money". Today when terms such as climate change, environmental conservation and sustainability top our agendas, is the current international trade law by which disciples of free trade are obsessed doing any good to our planet? Is the WTO and its dispute settlement body doing enough for the environment? It's time to give a rethink.
Notwithstanding the intensified trade liberalisation that catalyses economic globalisation, the materialistic foundation of free trade is being changed by issues such as environmental degradation and global climate change. While many believe it is agreeable to seek a balance between trade and the environment, the GATT/WTO as an international law regime governing the multilateral trading system should, in my view, ensure the smooth execution of the law to facilitate environmental protection efforts by governments worldwide. In the context of promoting free trade, justifying the unilateral trade measures relating to environmental purposes, including import restrictions/prohibitions, licensing systems and environmental levies, it is one of the instruments which the WTO could employ to achieve the objective of sustainable development as stated in its Preamble. Focusing on the evolving constructions of relevant provisions, this paper is to study the recent dispute cases of the legality of these trade-related measures aimed at protecting the environment in GATT/WTO jurisprudence and hence, arriving at the conclusion that the concept of sustainable development is only to some extent implemented by international trade law.
International trade law and scope of analysis
Brundtland’s definition of sustainable development has over the last two decades introduced new legal thinking into the enactments and interpretations of national and international law of which trade law shares an important domain. World trade law is a multi-layered system incorporating supranational, regional and bilateral components. After Bruntland, many perceive that international trade law of today should be an instrument for sustainable development. With 153 member states, the WTO providing principled trade rules and dispute settlement systems, together with a series of free trade agreements (FTAs), establishes the structure of the world trade law in which its Dispute Settlement Body (DSB) is ‘an unusually powerful institution’.[1] Gehring (2008) suggests that ‘the specific contours of international trade rules and regimes and modes of implementation dictate the degree to which trade advances sustainable development goals’.[2] To borrow his views, the scope of analysis here will be to examine whether the extent to which the existing provisions in GATT 1947/1994 (Marrakesh Agreement) and relevant textual interpretations in major trade dispute cases can legally justify some unilateral trade measures for the objectives of environmental preservation.
Relevant provisions in GATT/WTO jurisprudence
History tells us that the relationship between trade and the environment is no longer a new issue of discussion in the WTO. It is, however, believed that the GATT drafters half a century ago were unable to foresee the severity of environmental problems today and facilitating the growth of free trade was intended to be their primary mission. The GATT articles cited below can be regarded as the most fundamental legal basis for settling trade disputes relating to environmental conservation among its member states:
(1) GATT Articles II, III:1 & 2
Contracting parties are allowed to impose ‘other duties or charges’ (environmental levy of today falls under this category) on the importation of any product for the purpose of environmental protection provided that:
(a) The internal taxation (or environmental levy) is consistent with the principle of national treatment;
(b) It ‘should not be applied to imported or domestic products so as to afford protection to domestic production’; and
(c) The charges ‘shall not be in excess of those applied, directly or indirectly, to like domestic products.’
(2) Article XI:2
Generally, WTO prohibits any institution of quantitative restrictions on the importation and exportation of any product. Nevertheless, such provision is not applicable to the following measures:
(a) Temporary export prohibitions or restrictions ‘applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party’;
(b) ‘Import and export prohibitions or restrictions necessary to the application of standards or regulations for the classification, grading or marketing of commodities in international trade’; and
(c) ‘Import restrictions on any agricultural or fisheries product’ under certain special circumstances.
It is inferred from these exceptions that a state imposing trade restrictions can be exempt from her obligations to WTO on the policy grounds of environmental protection.
(3) Article XX – General Exceptions
It stipulates that contracting parties are entitled to apply measures which are:
‘(b) necessary to protect human, animal or plant life or health’; and
‘(b) necessary to protect human, animal or plant life or health’; and
‘(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption’
‘in a manner which would [not] constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.’ Given that Articles XX(b) and (g) are considered to be concerned with environmental conservation, they are cited and debated most frequently by member states in recent trade disputes for which a set of relatively systematic rules of application have been developed when implementing the dispute settlement mechanism. This will be used as the legal basis in analysing the cases in this paper in the context of environmental sustainability.
Development of environmental provisions in WTO
Of note is that the implementation of GATT is often intertwined with other agreements in the WTO framework. Recognising the dynamic relationship between trade and the environment, WTO, apart from GATT articles, also applies the concept of sustainable development, at least literally, in its preambular text and many multilateral trade agreements (MTAs) are covered under the umbrella agreement eg. Marrakesh Agreement Establishing the WTO (‘WTO Agreement’). Although preambular statements are technically not legally binding in the same way that operational provisions are, they can be one of the references in the interpretation of a treaty or an agreement, especially in identifying the object and purpose of the Agreement.[3] For that reason, understanding the intended meaning of the Preamble to the WTO Agreement before its structure is essential.
(1) The preamble of ‘WTO Agreement’: It is enshrined in the preambular text that ‘…while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.’[4] This obviously reflects that sustainable development has been included in multilateral trading system, and probably the wording of ‘environment’ enters its maiden appearance in MTA.
(2) Environment-related provisions in a series of agreements: It includes ‘General Agreement on Trade in Services’, ‘Agreement on Trade-Related Aspects of Intellectual Property Rights’, ‘Agreement on Technical Barriers to Trade’, ‘Agreement on the Application of Sanitary and Phytosanitary Measures’, ‘Agreement on Subsidies and Countervailing Measures’ and ‘Agreement on Agriculture’. The relevant provisions institute the discipline and criteria which bind the measures member states adopted for environmental preservation.
(3) Ministerial declarations or resolutions: An example is the work programme on ‘trade and environment’ adopted in 2001 Doha Ministerial (MC4)[5], followed by a re-affirmation of Doha’s mandate aimed at enhancing the mutual supportiveness of trade and environment in 2005 Hong Kong Ministerial (MC6).[6]
It is deduced from the above that, unlike other issues such as investment and intellectual property rights, WTO has yet to reach any single agreement on environmental protection. Instead, it is manifested through the member states’ acceptance of environment-related exceptions under certain specific conditions, which is principled but very decentralised and conceptual. Thus, the relevant provisions can only be gradually clarified and ascertained after being brought into the dispute settlement mechanism. This highlights the value of research into WTO case law regarding the environment. The results of the GATT/WTO cases below provide solid clarification on the most controversial environmental provisions, which have formed a practice of related dispute settlement in WTO and hence, revealed its attitude and basic principles towards environmental sustainability that guide the policy behaviours of member states.
Case analysis
Loose constructions of Agreement provisions
The construction of relevant provisions is the first step in applying WTO agreement clauses. The principles and approaches employed in these interpretations determine the extent to which the GATT/WTO, or international trade law, can deliver the objective of sustainable development. In the cases below, it is obvious that the Dispute Settlement Body (DSB) has loosened the standards in interpreting provisions relating to environmental conservation. The examples here demonstrate that only to some extent, do unilateral environment-related measures gain their legality under the DSB’s consideration of environmental sustainability.
(1) ‘Exhaustible natural resources’
‘Exhaustible natural resources’, according to the legislative background and common understanding, this refers to limited resources such as coal and mining products, instead of renewable or biotic resources. However, the later stages of GATT has shown broader interpretation of the term.
In the first case heard in WTO, the US – Gasoline Case (1995), both the Expert Panel and Appellate Body (AB) considered that ‘clean air’ is an exhaustible natural resource within the meaning of GATT Article XX(g) and ‘the fact that a resource was renewable could not be an objection’ to it being an exhaustible natural resource,[7] demonstrating that the DSB is expanding the coverage of its trade-measure provisions aimed at protecting the environment.
Besides, in the US Shrimp-Sea Turtle Case (1998), the AB’s Report proclaimed the DSB’s stand on this issue. AB explained that: (i) Textually, ‘exhaustible’ natural resources and ‘renewable’ natural resources are not mutually exclusive, living species, theoretically, capable of reproduction or, ‘renewable’, are indeed vulnerable to depletion, exhaustion and extinction due to human activities; (ii) Treaties should be interpreted according to ‘by definition, evolutionary’ (contemporary development) principle. The preamble of the WTO Agreement and other covered agreements explicitly acknowledges the importance of environmental protection and sustainable development. Modern international conventions and declarations refer ‘natural resources’ to both living and non-living resources. Under these circumstances, has GATT1994 Article XX(g) become somewhat obsolete as it is only concerned with conserving exhaustible mining products or abiotic resources? (iii) The two adopted GATT1947 panel reports on the US – Tuna (1982) and Canada – Salmon & Herring (1988) Cases previously found that fish is an ‘exhaustible natural resource’ within the meaning of Article XX(g); and (iv) the DSB noted that all participants and third participants in this case had conceded the exhaustibility of sea turtles and those five species involved were in fact listed in the ‘Convention on International Trade in Endangered Species of Wild Fauna and Flora’.[8] Pursuant to paragraphs 128-132 of the US – Shrimp-Sea Turtle Case AB’s Report, it is apparent that the DSB interpreted the treaty as broadly as possible, considering the ordinary meaning, legislation change, follow-through practice of the Agreement, sources of other international laws and the specific situation of complainants. That the construction of ‘exhaustible natural resources’ has been loosened provides contracting parties with substantial legal legitimacy to execute trade-related measures for environmental protection in the WTO framework.
To read the full article, see "Sustainability of international trade law: an introductory discussion on the legality of unilateral trade measures for environmental protection in the GATT/WTO framework", International Journal of Green Economics, Volume 6 (No. 1). Geneva: Inderscience Publishers. (Forthcoming, Jan/Feb, 2012)
[1] Avafia, T. “Does the WTO DSU Promote Sustainable Development?” in Gehring, M. W. et al. “Sustainable Development in World Trade Law”, New York: Kluwer Law International, 2005.
[2] Gehring, M. "Sustainable development in world trade law." In Sustainable development in international and national law, by H. C. Bugg, 271. Groringen: Europa Law, 2008.
[3] Ibid. (n 8).
[4] Agreement Establishing the World Trade Organisation, The Preamble para. 1.
[5] WT/MIN(01)/DEC/1, Doha Ministerial Declaration, 20 November 2001, paras. 31-33.
[6] WT/MIN(05)/DEC, Hong Kong Ministerial Declaration, 22 December 2005, para. 30.
[7] United States: Standards for Reformulated and Conventional Gasoline (20 May 1996) WT/DS2/AB/R.
[8] United States: Import Prohibition of Certain Shrimp and Shrimp Products Sector – Report of the Appellate Body (12 October 1998) WT/DS58/AB/R [128-132].
Email me at winstonkm.mark@googlemail.com
No comments:
Post a Comment