WTO And Environmental Protection - Essay Example

Topic:  WTO and environmental protection This paper assesses the World Trade Organization or the WTO and its perspective on environmental protection. The paper starts with an introduction on WTO, its objectives and scope as well as the popular criticism leveled against this international body. Next it delves into the debate on whether WTO should play a more active role in the protection of environment and in ensuring that the rapid pace of development and growth due to liberalization and free-trade does not adversely impact on our natural resources and environment. The paper takes the stance that WTO being a platform to provide a multi-lateral trading system, should not further increase its role as an environmental protection body. The rationale for this is that WTOs main objective is trade facilitation and not environment protection. However, it is also understood that trade has impact on environment and that environmental regulations impact trade. Owing to the reciprocal nature of the relationship between trade and environment, it cannot be done that WTO be immune to the need for maintaining a balance between environment and trade. It is however seen that WTO already has provisions, especially in the form of GATT Article 20 that ensure that valid exemptions be allowed for nations to create trade barriers that reduce environmental degradation. Several case studies, of disputes that were filed with the WTO are therefore discussed in this paper. The paper concludes with the understanding that WTO is playing a suitable and apt role of safeguarding the environment as well as ensuring the flow of free-trade in a sustainable manner. Table of Contents WTO Scope of WTO Main Objectives of WTO Criticism of WTO WTO and Environment Environmental case studies France import ban on asbestos and asbestos-containing products United States Restrictions on Imports of Tuna US Import Prohibition on Certain Types of Shrimp and Shrimp Products Venezuela, Brazil versus US- US Discrimination against Imported Gasoline Conclusion World Trade Organization (WTO) WTO or the World Trade Organization is an International Institution that is based on a set of rules and agreements between member nations and which has a legal binding power over the member states. It is in practice a trade negotiation system developed for bringing about sustainable growth across the world and to improve the standard of living for all. WTO is a successor of the GATT or the General Agreement on Tariffs and Trade that had been in uses since the year 1948 to encourage bi lateral and multi lateral trade in goods by reducing tariffs and trade barriers across borders. GATT was also based on multilateral agreements and negotiations that continued till the year 1994, after which the WTO was evolved to replace GATT in 1995. The Uruguay Round of negotiations that culminated in the year 1994 lead to the development of WTO in place of the earlier GATT. However, most of the agreements and rules of GATT were retained with the WTO as GATT 1994 (WTO, 2010). Scope of WTO WTO basically plays a 3-fold role. Firstly, WTO operates as a platform where paced negotiations can be managed among member states towards liberalization of the world trade and economies. This is therefore a place where member nations can sort out their differences, negotiate trade barrier reductions and generally formulate bi-lateral and multi-lateral agreements. Next, WTO acts as a body of rules and regulations that guide international trade in goods, services, and trade related aspects of intellectual property rights. These rules are developed based on negotiations and agreements between member nations on specific trade related issues. The WTO has a main decision making body that comprises of the ministerial conference and this meets every two years. It is made up of Trade Ministers of the member countries and it has the authority to adopt resolutions and sanction agreements that are binding on the member states. The decisions and rules of WTO lead to the formulation of a multilateral trading system that is followed by its signatories, which consist of almost all the trading nations of the world. Finally, WTO also acts as a dispute resolution center. WTO also has a general council that acts as trade policy review body as well as a dispute resolution body. The general council is responsible for both goods and services related trade as well as for trade related aspects of intellectual property. All the three roles of WTO are guided and inspired by is main objectives that include the following: Main Objectives of WTO 1. To ensure that development of trade leads to the improvement in the standards of living across the world and especially for the countries that are least developed or developing slowly. 2. To ensure that sustainable employment is made available to all the people of the world 3. To make the trade and development related benefits available in an equitable manner to all the member nations and especially to the least developed countries or the LDCs 4. To ensure that all development is made in la steady and sustainable manner and to protect the environment (Fatoumata and Kwa, 2003). The above objectives of the WTO are therefore based on the premise that development should be inclusive and sustainable and that it should be aligned with environmental protection. The ideals of the WTO give direction and guidance to all the trade agreements that are negotiated under its aegis. Criticism of WTO However, the proceedings of the WTO have been severely criticized by different nations and NGOs for their over-emphasis on pro-development with the help of liberalization and globalization. It has been debated that WTO has moved away from its aims and objectives of sustainable and inclusive development and has become a mere instrument in the hands of the rich nations and power groups to drive down trade barriers and promote free trade even at the cost of the poor nations (Fatoumata and Kwa, 2003). There have been charges on WTO for avoiding environmental protection issues and leading to a skewed world growth where the rich nations got away with few concessions or changes and the poor nations were taken for a ride (Cline, 2004). The allegations against the WTO continue though most of the nations still believe in its capacity to benefit the overall trade system of the world and to make positive changes as can be seen in its growing membership of 153 members till date (WTO, 2008). WTO and Environment World Trade Organization is a world body that is concerned with streamlining and advancing the trade relationships between different countries in order to bring about growth and development. However, the liberalization of trade across the world and the rapid pace of economic development are accompanied by rampant usage of natural resources and with an increase in pollution and environmental degradation (Barton et al, 2008). On the other hand there is also the emergence of environment protection legislation that places curbs and checks on the pace of industrial and economic development. As such there is a reciprocal interaction and impact of environment related legislation on the liberalization and increase of world trade and of this liberalization on the environment (WTO, 2008). WTO, being a body committed to bringing about more and more liberalization so that all the regions of the world are able to enjoy the economic benefits of free trade, is therefore concerned with the environmental legislation that places hindrances in the path of this growth. However, one of he aims of WTO also include that it should ensure that all development is sustainable and also that environment is not harmed by the growth of economic and trade related activities. This aim of the WTO is often in confrontation with its prime goal of liberalizing world trade and WTO is tasked with the job of balancing the two. It is for this reason, that there has even been a debate whether it is feasible for the WTO to include environmental protection in its mandate at all (Oxley, 2000). WTO was mandated to provide a platform for the countries to sort out their differences, make reciprocal concessions and to generally help in the expansion of trade across borders. Its founding aim was therefore to help the nations develop to their potential and to extract the maximum benefits from mutual and multi-lateral trade agreements. In such a scenario, it is questionable if WTO should concern itself with the environmental protection aspects (Oxley, 2000). However, there are two prominent reasons why WTO should involve itself with the environmental protection mandate. One being the fact that WTO cannot really shy away from acknowledging the impact of the environmental legislation on the world trading policies. There are numerous international and national agencies like the EPA that are committed to conduct research and lobby for legislation to protect the environment from the onslaught of economic development. Some of these environmental policies that are developed as a result of community pressure and others are based on research or scientific extrapolations. In any circumstances, the environmental legislation does result in placing restrictions to the free trade. WTO as a body that tries to facilitate free trade is therefore required to be aware of environmental legislations that place restrictions. Additionally, WTO should not only be aware of these legislations and lobbies, but it should also take active interest in understanding the background research and in exploring alternative solutions for free trade for the nations involved. This, in fact has already been done when GATT was in operation, where the EMIT or Environmental Measures and International Trade was set up within GATT. Also, various rounds of GATT had been involved discussing the trade-related environmental issues (WTO, 2010). Another reason why WTO should have environmental protection in its mandate is for the apparent reason of ensuring that any development that is achieved now is also available for the future generations as well. By appreciating the adverse impacts of rapid economic growth which is not tailored to be sustainable or to be environmental friendly, WTO can better formulate its recommendations and trade related policies. Understanding that environment is important and that trade should not unduly degrade the environment does not however imply that the WTO should be burdened with the task of formulating or enacting environmental laws. WTO being a trade negotiating platform and should therefore concentrate on its main objective without digressing into the complexities of developing environmental protection norms and resolutions. It is through several of its trade related policies – that are practically aimed at changing how trade is done and hence as a multiplier effect change the impact of the trade practices on the environment – that the WTO is already doing a good job of protecting the environment. It has several agreements like the Subsidies and Countervailing Measures under the Agreement on Agriculture, General Agreement on Trade in Services, Agreements on Sanitary and Phyto-sanitary Measures, the Agreement on Technical Barriers to Trade and GATT Article 20 that all promote the case for sustainable development with environment protection (Oxley, 2000). More specifically, Article 20 of GATT that was incorporated in the WTO categorically states that as a trade facilitating body or in its objectives of liberalizing trade, WTO would not indulge in actions that prevent countries from adopting appropriate measures to protect their environment. Over the course of GATT and also of WTO, there have been several incidents and disputes among nations and among environmental protection agencies and governments that have brought to the forefront the reciprocal impacts of trade and environment and how WTO has dealt with them with its existing policies and processes. Article 20 has been repeatedly called in action by countries to legalize and validate their environmental protection laws on their trading partners and to create non-tariff barriers. These non-tariff barriers, when found to be in accordance with the Article 20 are upheld by the WTO and if found to be discriminatory are condemned. Some of these disputes are discussed below and highlight how WTO is able to assist environmental protection activities without getting involved in environment related legislation development Environmental case studies There are numerous disputes that have been filed with the WTO as one nation’s environmental protection policies and legislations have placed alleged barriers for other nations to conduct free trade. Some of the most popular disputes that are suited to the current topic at hand are discussed below, with the view that WTO is equipped adequately to meet out good judgment that balances both trade and environment protection. France import ban on asbestos and asbestos-containing products Canada is among the largest producer and exporter of asbestos, especially Chrysotile asbestos, that is intensely used in construction and other industries due to its high temperature resistance. However, the Chrysotile asbestos is also greatly toxic and causes various occupational diseases among workers who are exposed to it for long hours. These health issues range from asbestosis to lung cancer and mesothelioma, and constitute of a high death rate among workers who work long hours in conditions that expose them to asbestos. France initiated a complete ban on the use of Chrysotile asbestos and also on the products that contain asbestos within its industries and such extended the ban to imports of the substance. This ban adversely affected Canada which lodged a complaint with the WTO against the European Community for affecting an import ban on all products containing asbestos. Canada’s contention was that EC was using an alternative material to asbestos, the health hazards associated with which had not been fully researched, and as such it was discriminatory for the EC to ban asbestos and use another product which could be equally dangerous. This contention of Canada was based on the understanding of the Article III of GATT which stated that governments should mete out equivalent treatment to all ‘like-products’ – simply put meaning that if two products may be producing similar hazards, the ban should be imposed on both and not only on the use of one. The WTO panel did find that the French ban on asbestos indeed violate the Article III provision as the asbestos substitute that France was using did fall under ‘like- product’. However, in spite of this, the decision was made in favor of France on the basis of the Article XX of GATT which stated that governments can take actions to prevent damage to human, animal, or plant life and health. Canada’s appeal in the Appellate Body was also rejected giving importance to the Article XX and establishing the right of governments to tale adequate measures to safeguard their people and land from products that place environmental and health hazards. Further, the Appellate body of WTO reiterated that the concept of ‘like-products’ should be expanded to include the impacts of the products on health and environment as opposed to likeness on the basis of their chemical make up or industrial usage as stated in Article III. This case is an apt example of how interpretation and reading of the law can lead to making decisions that are based on common sense as well as that favor environmental protection where necessary. Even though there was case for the Canadian government on the basis of its allegation that France was allowing the use of a like product while banning Canadian asbestos imports, the WTO was able to make the correct distinction based on the appreciation of the specific health hazards that asbestos caused. The decision to allow the French ban was therefore a reflection of the fact that the WTO, though not involving itself on the debate about environmental issues, did have the ability to interpret and validate environmental protection laws. United States Restrictions on Imports of Tuna In another similar instance of environmental protection being used as a reason for creating embargo and barriers to trade, a case was filed against the US by Mexico in the year 1991 with the then existing GATT. Under this dispute, Mexico had argued that the US’s embargo on tuna and tuna products exports from Mexico was invalid as it opposed the principles of GATT (Trachtman, 1991). The US had placed import restrictions under its own domestic law, the US Marine Mammal Protection Act (MMPA) that dictated technical regulations for domestic fishing of tuna in eastern tropical Pacific Ocean (WTO, 2010). The MMPA act dictated that yellofin tuna can only be harvested in a manner and using technology that ensures that the dolphins of the region are no harmed. Additionally, the act also mandated that the US government place embargo on any nation who does not use adequate technology for fishing yellowfin tuna in the eastern Pacific. As a result of this policy, exports from Mexico and also from various intermediary countries that exported the processed and canned tuna harvested from the eastern Pacific were banned by the US (WTO, 2010). This dispute was logged under the GATT agreement and at the time there was no specific framework developed for dealing with such issues (Trachtman, 1991). The panel constructed by the GATT to look into the matter concluded that such a ban was not valid as one country could not be allowed to dictate terms to the other country for the process through which a product was acquired. The panel stated that the importing country could place quality standards for the imports but it should not go beyond to dictate how the product was prepared or obtained by the exporter. This dispute was resolved out of the realm of GATT through bilateral agreement between the US and the Mexico. The above case was presented pre-WTO and the GATT panel’s decision was also not followed through at the time by the parties involved. This case, though never culminated into a law or a precedent as it was not adopted at the GATT, still is of relevance to the debate between environmental protection and trade. The opinion of the GATT panel appeared to be anti-environmental, because it allowed for countries to continue fishing in an irresponsible manner without any concern for the accidental death of dolphins in the region. However, it was based on the premise that one country should not have the right to burden the other nation with its own technological or ethical standards. The rationale behind this opinion was therefore to create a trade regime that was equitable and also facilitated free-trade voluntarily between countries. It was not the result of apathy towards environmental concerns, but it was a perspective taken to ensure that one nation single-handedly should not enact laws and try to enforce them on others. The case is therefore a landmark as it led to the understanding of the requirement of multi-lateral agreement on environmental protection laws and also on the need to have a more active part for the WTO – the successor of GATT – for issues that involved interpretation of what is a valid domestic legislation for international trade. The case discussed below is an example of the considerable role that WTO played in another similar dispute involving the US and several Asian countries over the import of shrimp. US Import Prohibition on Certain Types of Shrimp and Shrimp Products The United States of America has used its indigenous Section 609 of US Public Law 101–102 of 1989 to defy importation rights for shrimps to several countries of Asia. This act of the US was based on the fact that US identified 5 species of turtles as endangered or threatened (as per the US Endangered Species Act of 1973) and forbade their being captured or otherwise harmed due to human activities – like fishing (Shaffer,1999). Turtles are known to be caught in fishing nets inadvertently, unless the fishing trawlers used turtle exclusion devices or TWDs. In the US, therefore it is mandatory that all shrimp trawlers employ the TWDs especially in areas that were rich in turtles. By extension, the US also required that any country that is importing shrimp to the US should also follow certain measures to ensure that turtles are not destroyed during the shrimp fishing. For this, the US placed an embargo on India, Malaysia, Thailand and Pakistan as the shrimp caught in these countries were not certified to having adopted measures that minimize the harm to the turtles and reduced the incidental killing rate of identified endangered turtles to that of the US. The US mandate therefore meant that either the Asian nations ensure that all their shrimp trawlers were equipped with the TED devices at considerable costs, or they were excluded from importing their shrimps to the US market (Shaffer, 1999). The four countries lodged a complaint with the WTO in the year 1997 against this US embargo and won the case against it. However, the ruling of the Appellate Body of the WTO though appearing to favor free trade over environmental protection, was not so in reality. In fact, the WTO ruling acknowledged that the US and all the other members of the WTO are completely free to propose trade restrictions based on their own indigenous laws as per the GATT Article 20. However, these restrictions are to be imposed in a non-discriminatory manner and should be applied to all the trading partners (WTO, 2010). In the case of the US, it was only the four Asian countries on which the US evoked its Section 609 of US Public Law, while at the same time ignoring similar violation by other countries from the Caribbean. It was apparent by the US conduct that environmental protection alone was not its concern but its policies were backed by political agendas. The US has provided not only larger times for transitioning period to its Caribbean neighbors, it also provided them with financial and technical support which it had denied India and other Asian countries. This was the main reason why the Appellate body of the WTO made a decision in favor of the Asian countries. The above case shows that the WTO is successfully being able to maintain a balance between environmental protection and trade liberalization objectives. The WTO has provisions for validating and acknowledging environmental protection legislations of member nations and respects their placing restrictions on trade based on these valid national environmental laws. However, WTO also tries to safeguard the sanctity of its objective of non-discriminatory free trade regime and therefore ensures that any import restrictions based on environmental concerns are equally applicable to all the other nations without discrimination. Also, any discrimination should be based on valid reasons and not arbitrarily used to favor one nation over the other. This case therefore shows how the WTO forum is able to promote and help both the cause of environment and free-trade with its existing policies and agreements. Venezuela, Brazil versus US- US Discrimination against Imported Gasoline In the year 1995, Venezuela filed a complaint against the US for discriminating against its gasoline exports and favoring its own indigenous gasoline producers. The United States Environmental Protection Agency (EPA) had amended its Clean Air Act to ensure that gasoline harmful emissions were curbed. Toward this, EPA had specified a baseline cleanliness for all gasoline to be sold in the most polluted parts of the US as well as fixed a criteria of cleanliness based on the levels of 1990 for the rest of the country. Towards this, EPA required all the refineries to set up their own base line standards of 1990 and to produce gasoline of the same cleanliness (WTO, 2010). For refineries that were not in existence in 1990, EPA used average national baselines to set the cleanliness criteria. These gasoline norms were applicable to all the indigenous producers as well as imports of gasoline. However, the domestic producers were allowed to set their own baselines base on individual 1990 levels – meaning that if these producers were producing gasoline of low quality even in 1990, they were allowed to produce the same quality under the Clean Air Act – while the importers were not allowed this benefit (Hackett, 1997). Venezuela therefore targeted the US Clean Air Act and with charges of discriminating against its imported gasoline. These charges also leveled against the US by Brazil and were found by the WTO to be valid. However, WTO reiterated that clean air is an exhaustible resource and measures taken by countries to preserve it are welcome. The reason behind condemning the US on this issue was the discriminatory nature of the rule that the country was applying, which prevented the imported gasoline from getting the same treatment as the domestically refined one. The WTO stated that US policy violated the concept of ‘national treatment’ that required that any nation should treat both the domestic and the foreign producers at par. Further, it was also found that though US was within its bounds to enact measures to ensure that air pollution is minimized on its lands as per the provisions of Article 20, it’s using the law to discriminate against imports (WTO, 2010). This discrimination was a violation of the introductory paragraph of article 20 that contained the overall essence of why and when the non-tariff barriers can be validated. This case again shows how the WTO upholds the sanctity of the concept of environmental protection but at the same time ensures that nations do not use their environmental laws to create trade barriers and restrict liberalization. Conclusion The above environmental case studies show the role that WTO plays as a protector and promoter of free trade while at the same time respecting the necessity for environmental protection and the rights of individual nations to set their standards. There main environmental debate that WTO is involved in revolve around two issues – one whether WTO should be concerned with disputes and litigations concerning environmental protection at all and the other that WTO is actually used as tool by nations to by-pass environmental concerns and indulge in rapid and unsustainable development. The above case-studies as well as the discussion on the WTO and environment presented before the case studies highlights the WTO stand on the environmental issues. It is seen that WTO, is primarily a trade facilitation entity that is committed to convincing governments worldwide to reduce their tariff and non-tariff barriers and to open up their economies to each other. However, this is not read to believe that development should be rash or at a pace that destroys environment or human life and health. To safeguard against such a rampant economic growth – that is bound to result due to liberalization and reduction in barriers to trade that WTO advocates – the WTO has specific provisions in its mandate. The Article 20 of GATT that was incorporated in the WTO mandate makes space for providing exemptions to countries from reducing or removing trade-barriers if such barriers are necessary for the protection of their domestic environment. WTO therefore recognizes the rights of the individual nations to formulate their domestic environmental policies. This Article 20 is apt to give guidance to the WTO to ensure that environmental protection is given due credibility in international trade. However, WTO, as of now, is not equipped with the facility or the scope to verify the exemptions on the basis of the environmental hazards that they deem to prevent. This is to say, that WTO does not concern itself in verifying if a given domestic environmental law actually leads to the reduction of environmental degradation or not. Instead, WTO assesses the credibility of a non-tariff barrier [based on the domestic environmental protection policies] on the basis of the barrier being discriminatory or not. This means that while WTO acknowledges that nations can enact and evoke domestic laws if they deem necessary, it does not foray into evaluating the environmental impact of these laws. The Article 20 also comes with a caveat that exemptions can be valid only if they are deemed necessary and also if they result in trade barriers that are applicable to all the countries equally. This caveat ensures that nations cannot use the pretext of domestic environmental laws to discriminate against other countries as per their wish. With this framework of assessing the validity of environmental legislation, WTO is able to further its role as a body to facilitate equitable trade among nations. WTO only concerns itself with the trade related impact of the domestic environment laws. This is appropriate as WTO is not an environmental protection agency or an environmental regulation one – it’s a trade and development organization and therefore its perspective on assessing the impact of environmental legislation on trade is the right one. It is seen in several cases that were brought to the WTO that accuses nations were employing domestic environment related laws to mete out discriminatory treatment to different countries. In the cases of the US embargo on imports on shrimps from India and other Asian countries and of the US embargo on tuna from Mexico it was seen that US used its domestic laws in a discriminatory manner. Similarly, in the case of Venezuela gasoline imports, the US appeared to be favoring its domestic gasoline refineries over the imports under the guise of its Clean Air Act. In all the three circumstances, WTO took the trade perspective that US should not be allowed to use environmental protection laws as a ruse for benefiting some favored nations and discriminating against others or in order to provide benefits to domestic producers. Even in these cases, the WTO maintained that the domestic governments had the right to come up with their own domestic laws and that environmental protection and protection of exhaustible resources was a just cause. In another instance, where France placed a ban on asbestos imported from Canada, the WTO upheld the ban because it was not discriminatory. The cases discussed in this paper elaborate upon the perspective of the WTO and also show that the organization displays respect and concern for environment and ensures that nations are not able to use environment as an excuse for curbing free trade. References Barton, J. H. J. L. Goldstein, T. E. Josling, R. H. Steinberg 2008. The Evolution of the Trade Regime: Politics, Law, and Economics of the GATT and the WTO. UK: Princeton University Press Cline, W. R. (2004). "Conclusion". Trade Policy and Global Poverty. UK: Peterson Institute. pp. 264. Fatoumata, J. and A. Kwa, (2003). Behind the Scenes at the WTO – the real world of international trade Negotiations UK: Zed Books Hackett, S. C. 1997. Environmental and natural resources economics: theory, policy, and Environmental and natural resources economics: theory, policy, and the Sustainable Development. , Armonk, NY, U.S.A: M. E. Sharpe Incorporated pp. 3o3 Peet, R. (2009)Unholy Trinity: The IMF, World Bank and WTO, Second Edition. UK: ZED Books Oxley, A. 2000. ‘WTO and the Environment’ International Trade Strategies Pty Ltd PDF Available at: http://www.apec.org.au/docs/oxley2001.pdfRetrieved on June 21, 2010 Shaffer, G. (1999) United States-Import Prohibition of Certain Shrimp and Shrimp Products. The American Journal of International Law, Vol. 93, No. 2 (Apr., 1999), pp. 507-514 Trachtman, J. P. (1991) ‘United States--Restrictions on Imports of Tuna’ The American Journal of International Law, Vol. 86, No. 1 (Jan., 1992), pp. 142-151 WTO (2010) ‘What is the World Trade Organization?’ [Online] available at: http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm Retrieved on June 15, 2010 WTO (2010). ‘Early years: emerging environment debate in GATT/WTO’ [Online] available at: http://www.wto.org/english/tratop_e/envir_e/hist1_e.htmRetrieved on 14 June 15, 2010 WTO (2008), ‘Members and Observers’ [Online] available at: http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm Retrieved on 14 June 15, 2010 WTO (2010), ‘India etc versus US: ‘shrimp-turtle’ [Online] available at: http://www.wto.org/english/tratop_e/envir_e/edis08_e.htm Retrieved on 14 June 15, 2010 WTO (2010) Mexico etc versus US: ‘tuna-dolphin’[Online] available at: http://www.wto.org/english/trat Retrieved on 14 June 15, 2010 Retrieved on 14 June 15, 2010 WTO, 2010, Venzuela, Brazil versus US: gasoline, [Online] available at: http://www.wto.org/english/tratop_e/envir_e/edis07_e.htm#legallyspeaking Retrieved on 14 June 15, 2010 Read More