Environmental Issues in WTO - Research Paper Example

Environmental Issues in WTO Your name Course Tutor Institution Department Introduction The only international global organization that deals with the trade rules among nations is the World Trade Organization commonly referred to as WTO. It comprises of WTO Agreements that are discussed as well as approved by the majority of the nations that are world’s trading and also carry out implementation within their parliaments. Assisting the producers, exporters, importers and services of goods is the WTO’s main focus. The main concern that arises from WTO is that it does not have an Agreement that is specific that directly deals with environmental issues. Instead, its Agreement focuses on the right of the government for environmental protection, some conditions that are provided are met as well as several of them containing provisions that deal with the concerns of the environment. Gap between the Rich and the Poor The General Agreement on Tariffs and Trades (GATT) has some weaknesses that concern the business environment. The WTO is blamed for promoting social gap among the rich and the poor (Cline, 2004) from this GATT. Khor (2006) explains that WTO fails to control impartiality of the global economy. It has a systematic operation that is bias favoring countries that are rich and corporations that are multinationals hence jeopardizing the survival of smaller countries with power that has less negotiation. This biasness is brought out as follows: in certain products, countries that are well of have the capability of maintaining import duties and quotas that are high thereby being obstacles to imports from countries that are still developing; the rise in barriers that are non- tariff like the anti- dumping measures against the poor countries are permitted; the high protection maintenance of agriculture in well of countries whereas the ones developing are encouraged on market opening and most countries that are developing are not encouraged to participate in the negotiations that take place in Uruguay. TRIPs Agreement limits the incorporation of some technology by the developing countries from abroad origin in the local systems of the developing countries. Unbiased Agreements Khor (2000) insists that countries which are developing do not benefit from the Agreements of WTO hence the system of trade of WTO’s credibility could erode easily. He says, ‘‘one of the major categories of problems of implementation of the Uruguay Round is the way the Northern countries have not lived up to the spirit of their commitments in implementing (or not implementing) their obligations agreed to in the various Agreements.’’ Khor believes the negotiation of the Doha Round diverts from its original direction to a friendly outcome development that leads to a market whereby the poor countries undergo pressure to start up services, agricultural and industrial sectors (Khor, 2006). Asserted by Bhagwati (2005) manufacturers in the developing countries have greater protection of the tariff and are overtaking the count of filings of anti- dumping in the developed countries. Ignorance on Environment and Labor Environment and labor are being ignored at an alarming rate. Charnovitz (1999) asserts that WTO should start addressing the relationship between labor, environmental and trade concern. Failure to this would lead to massive adverse damage whereby, the trade gains will not be much as the cost on environment. The record of the labor rights of the developing countries are condemned by the labor unions in the process of globalization promotions by the WTO. The measures of trade have become a tool for the big social organizations and corporation for interest promotion (Khor, 2000). TRIPs Agreement weaknesses The TRIPs Agreement introduction has some selfish interests. Bhagwati criticizes the TRIPs Agreement because these agendas that are non- trade might overwhelm the functions of the organization. TRIPs have resulted to reduction of welfare for the poor countries so as the world (Panagariya, 1999). Trade sanctions approved by WTO may be utilized in adhering enforcements to norms of the environment that are not shared necessarily or even in use by every nation. Protection of the environment might also be directed towards justification that is fresh for the protection that is old- fashioned. Inadequate coverage of Environmental Issues Most of the controversies that have recently come up over the WTO’s role that is appropriate in obtaining objectives for the environment focuses on Article XX application hence at least explain the extent that should be directed towards gains from efficiency through widening the international trade in view of health and benefits from welfare activities from increasing the quality of the environment. At the heart of this controversy lies the trade- off. WTO intends to be the best at international market that is open hence Article XX describes green cover that is potential for national policies that are protectionist- inspired. Environmental experts view the coverage of the Article XX to be very narrow, whereby it is only concerned with preservation of circumscribed and limited sovereignty of the national in relation to initiatives of the environment (Daniel, 1994). Effects of total confidence in trade as a source of National Income Trade is greatly upheld as the main source of the rising National Income. Issues on environment, other political considerations that are salient such as national defense and distribution of income are viewed as relating to trade tangentially. In the mid- 1990s, some texts relating to international economics brought to attention the possibilities of trade having the environmental effects that are significant or even policies of trade would be utilized in achieving objectives of the environment (Charles, 1953). The prepared study for the 1999 Seattle, WTO parliament concluded that barriers of trade are poor policies for the environment. Practically, it is becoming tough to exclusively justify issues on environment from trade negotiation (Nordstrom and Vaughan, 1999). Effects of Expansion of Trade to the Environment Expansion of trade and protection for the environment raised a potential conflict that became headlines in 1999 November whereby the activists of the environment as well as globalization opponents combined efforts to disrupt ministerial meeting of the WTO. Issues of the environment therefore have attained some legality as a component of diplomacy of the global trade. Trade and Environment in the GATT The GATT in 1971 established a group on measures of the environment and international trade to be used as machinery that is standby of which would act readily at the contracting party’s request where there was need (Nordrom and Vaughan,) the conference on the United Nations on the environment for human, brought out the policies for the environment’s possibility could not consider the competitiveness of the industries of a country. Competitiveness might discourage the adaption of protection of environment that is strong enough. The agenda of the environment as well as trade have widened with time. Negotiations include topics such as natural resource depletion, cattle growth that is promoted by use of hormones, biodiversity reduction, animals and plants genetic modification, in addition to air and water pollution as stated in the Appellate Body report. The new components of the interface of the environment of trade are contentiously increasing due to absence of a scientific basis that is firm. Issues of environment became part and parcel of GATT by 1994 April, when the meeting of ministers at Marrakesh happened to finalize on Uruguay Round of negotiations by the multilateral trade. There was an agreement by the negotiators to establish an environmental and trade committee within WTO that was reformed. Trade and Environment Content Conflicts have recently risen among environmentalists and free traders. These conflicts reflect a number of associated as well as linkage issues found among environmental and trade policies. Environmental experts argue that there exist concerns that are distinct. First concern suggests that damage on environment may be caused by trade expansion. It may be directly if there exists encouragement by the new export opportunities to industries that pollute the environment to enlarge their operations and even increase the goods transportation that is associated with pollution. It can also be indirectly as trade gains conventionally increase consumption and national income. The second concern is brought by countries which incorporate environmental protection that is weak so as to have an increased competitiveness internationally. The third concern is the restraining of individual countries that seek to uphold high standards of environment by GATT of the WTO regulations from utilizing the policy of trade for that purpose. The final concern arises from the rules of the GATT that become an obstacle to corporations internationally to reduce threats of the environment by enforcing usage of sanctions of trade so as to enhance agreement of the environment that are multilateral. Free traders are afraid that protectionists as well as the environmentalists when they form a team would bring down the progress that directs to international markets that are open. Poor nations could be blocked by such kind of a coalition from moving towards development of economy through expansion of export. Promotion of trade has two concerns that are distinct. These are: eco- imperialism instrument may be brought about by trade barriers of the WTO sanctions whereby developed countries force preferred traditions on developing countries; allowance of restriction of trade that aid goals of the environment provide a challenge to protectionism of garden variety. The environmental damage that possibly results from trade expansion directly relates to the central objective of the WTO of maintaining and gaining global trade that is open. Environmental Quality that is Threatened by Trade Expanded trade is viewed by many environmentalists as environmental quality threat. The arising of the threat is perceived to be through some channels either both or one of them. The first channel that is direct is the expansion of trade effect on the output composition in every country. Trades that are freer increase the expansion ability of dirty industries in cases where there is weak regulation of the environment. Pollution increases from the dirty production industry relocation in the countries that are exporting. The second channel that is indirect that puts the environment at risk through globalization is usual net impact that is favorable of trade that has expanded on growth of economy as well as per- capita income. In cases where the externalities of environment such as pollution are proportionally roughly to output higher pollution would be translated by higher output. Further growth of nations enables the adoption of stronger policies of the environment by the leaders (Charnovitz, 2000). Policies of the Environment as an International Competitiveness Determinant Policies of the environment that are national affect cost of production. Absence of technology differences in poor countries would be advantageous in industries that are dirty. Environmental experts acknowledge that developing countries are however at risks of becoming sites for pollution due to their struggle to gain growth in economy neglecting the safeguards of the environment. There will be competition for global markets and investments directly at foreign level through standards of the environment reduction. In the WTO context, environmental dumping could be in form of environmental standards harmonization whereby developed nations are encouraged to dumping to the developing countries (Bhagwati, 2005). GATT Restrains on Protection of the Environment Nationally In order to facilitate competitiveness of trade, countries may fail to uphold safeguards for the environment. The effects of trade are due to standard difference through different countries. Impact on advantage comparatively would be less if two countries imposed simultaneously decreases or increases that are equal. A problem that is centrally faced by the international community is finding means that are efficient in improvement of performance by the global environment without subjecting the developing countries to costs that are unacceptable (Bhagwati, 2005). Addressing the Environment Issue To lower the damage caused on the environment to a level that is optimal under social grounds, tax could be levied by the government on logs in a situation where there is destruction of habitat species. The tax imposed should be equal to the worth value of dollar of the external effect that is negative. This tax would enable loggers to observe safeguarding of the natural habitat. Quantitative limits could also be imposed on logging such as the use of logging permits that are transferable which would rise cost per log of the loggers by equal amount of tax as the amount of dollar. Practically, these principles rectify this damage on environment issues at the source. One of them would be the most preferred since it is cost effective when implementing. The policy of trade attracts another method of minimizing damage caused by logging. In a case where a country exports log, tax imposed on the export also known as quota would reduce the returns that domestic loggers attain. This will in turn reduce logging domestically due to the taxation and formalities that are tiring in attaining the permit. Through the tax imposed on export, people from the exporting country would benefit from reduced prices which will eventually encourage use of logs domestically in manufacturing or various constructions. Approach of trade hence is considered a meaningful means for corrective measures to damage of environment from logging. Special case may arise where a country that exports becomes unwilling in the implementation of taxation on goods that cause damage to the environment whereby the levied tax is equal to the dollar value of the externality. In such kind of a case, other countries may come into act appropriately in reduction of the environmental damage through reduction of imports of goods exported by that exporting country reluctant to uphold safeguard of the environment. An example to this is the banning of all exports of mahogany in Brazil in the year 2001. The banning was due to illegal harvest of wood on Indian and public land (Karp and Jordan, 2002). According to Brazil, restrictions of trade were important in profit reduction of illegitimate logging thereby preservation of Amazon Forest would be implemented. A case that arose on taxation imposed on export goods was the action reinforced by the (CITES) members commonly referred to as Conference on International Trade in Endangered Species in 1960s. They imposed a policy whereby killing or selling of endangered species was highly restricted. The application of this policy was due to the countries that export which in the contrary have failed to enforce it. This led to the members of the CITES imposing taxation on goods to be exported to protect the endangered species from being exported. Weaknesses of GATT In the GATT, Article XX allows the imposition of tax on the exporting goods for the objectives of the environment to be achieved albeit restriction of trade is done. There have been two cases of high profile that have shown the weakness of the application of this policy on GATT in the WTO. The case where dolphins were incidentally drowned known as the Tuna Dolphin. In the early 1972, non- trade measures of policy were applied in the United State. This included requirements for Dolphin safe net for the ships in the US as well as every ship that sailed in the waters of the United States, labeling of dolphin safe tuna voluntarily and the pressure by the government on US canners that are major to shun dolphin- unsafe tuna purchases. These measures led to the massive reduction of the mortality of the dolphins by 105000 between 1986 and 1991. The States however imposed a tuna ban import from five countries including Mexico. There was an ultimate uphold of the immediate protest of Mexico to the GATT basing on the principle of restriction on imports cannot be solely done on the process and production methods of the basis of the basis of the exporters (Ford, 1994). This act is evident that GATT in the regulation of WTO is not environmental friendly (Weinstein & Charnovitz, 2001). The tuna dolphin decision implies that a nation that is importing needs to compensate affected exporters before carrying out its exportation. The outcome was a disappointment to the people who saw trade as a level with potential to achieve objectives that affected the environment. The process and production methods began to be the main target of activists who argued that goods were excluded in the favor of PPM was not consistent with the principles of GATT. The shrimp turtle which are endangered species faced the same issue as that of the tuna dolphin. The prohibition in the US on imports of shrimp from countries that lacked adequate safeguard of sea turtle as in accordance to the US authorities was contested successfully by four countries from Asia in the WTO. The Appellate Body of the WTO had their ruling initially in the year 1998 on the grounds that they were very narrow (Weinstein and Charnovitz, 2001). The panel made a conclusion that bans on imports of that similar case could not have sufficient proof while the Appellate Body found that the administrative procedures of the US were the ones with faults and not the restriction of import. The four countries which brought forward that case were treated harshly than other certain countries. After exchanging the implementation way of the law in 2001, the United States was winners to the appeal that was presented finally. Some of the activities that were done differently included the efforts of the US to open negotiations internationally on the endangered sea turtle protection, assisting the poor countries financially in the negotiations and installation assistance and training of the use of nets that were turtle safe for the governments that were interested (United States Trade representative, 2001). Conflicts of the GATT/WTO with multilateral Environmental Agreement Regulation of the environment is implemented largely at the sub national and national level although there is interdependence of the ecosystems on economies. The global commons are the environmental goals that are major, that range from upholding biodiversity all the way to the ozone layer protection. Actions that may be taken by the particular country especially countries that are smaller, for the goals, create benefits that are globally diffused and enjoyed specifically by the countries that are outside its boundary. The choosing by nations individually as a result, basing on their own citizens benefit tend to perform below the expectations; protection of the environment is not sufficiently supplied from the perspective of the globe. International cooperation is required for an approach that is effective to global or even regional issues that are common. An Intellectual benchmark for a similar cooperation is the undertaken action by an inclusive hypothetical organization that is effective known as the WTO. This organization is capable of enforcing formulated policies that are appropriate in internalizing externalities of the environment. In the contrary, the WTO has treaties and agreements that narrowly define most salient issues of the environment. The Multilateral Environmental Agreements have objectives that are extremely specific. Those that have fifty parties and above are only six (Krist, 2001). About twenty MEAs that have provisions of trade as well as implications are the ones that the WTO has identified. Trade dispute has so far not arisen from the operations of the MEA on the principles of the WTO. However, blanket is sought by environmentalists in the authorization by the WTO to use sanctions of trade as an enforcing means to be complied by the MEA members of even preventing undermining of non- members of an agreement that is effective. Over time, this scope is delineated as actions on enforcement promote disputes of trade as well as resolution in WTO. Agreements in the Multilateral on the other hand take long to attain status of operation and the relationship ambiguity concerning MEA and WTO increases the challenges of attaining agreements of the international problem solving environmental issues. Eco- Imperialism and Trade Sanctions To achieve higher standards of the environment internationally or locally, production costs that are high will be entailed as well as national income sacrifice as measured conventionally. A country that engages in trading with other countries will incur higher costs of production which would show competitiveness loss internationally in industries that are affected to countries whose standards do not match the higher ones implemented locally. Results of imports increased enabled a country with high standards to consume goods with damage of environment on their production hence incurs part or none of the damage associated. The importing country will however suffer from profits and outputs that are lower. The less controlled abroad producers therefore have unfair competition. The parties injured may opt to seek import restrictions to goods whose low cost is brought up by lower standards of the environment of the nation that export. Due to the tastes, incomes and conditions of the environment differences, individual nations are likely to fail the adoption of standards that are identical in relation to protection of the environment. Countries that are developing get concern to the imposed standards on all exporters of the developed countries who are their trading partners. Eco dumping and conventional dumping are examples of benefits of the countries importing but the losses are created for the producers who are competing in the importing. The cases discussed above of the shrimp turtle and the tuna dolphin are both situations that were sought by the United States, keeping in mind the imposition of the priorities of the environment on the producers in nations that are developing. Green Cover for Protectionism from Concerns of the Environment Suspicion arises when free traders share the same concerns as those of the experts of the environment. Objectives of the environment that are highlighted provide simply an excuse that is convenient for protectionism that is old- fashioned. The fishing fleets in the US would- be protectors of dolphin favored the ban on the imports in the US of unsafe dolphin tuna. In the destructive protest of the ministerial meeting of the WTO in the Seattle in 1999, NGOs that deal with environment worked closely with labor unions of the US that favored perennially restrictions of imports. Economists internationally have slowly recognized that issues of the environment are most likely to remain a concern in the WTO. International economists as well as policies of trade point out rightly those policies of trade are however the best fastest way of achieving goals of the environment. Environmental safeguarding is a worthier objective that is non- economic from a perspective of the social world than the reduction of senescent industry that is uncompetitive. According to the free traders, investment and trade are components of factors that support growth of the economy. If the reverse of the globalization process is succeeded by environmentalist, lower growth and efficient usage of resources would be the price to pay. Most of the free traders look up to the association that is generally favorable between incomes, which are higher, as well as increased attention to the concerns of the environment. It is however important to keep in mind that the described process is not close from automatic. Poverty can also contribute to certain forms of degradation of the environment albeit wealth increase cannot also ascertain practices that are harmful to be deduced. The Agreements of the Uruguay Round Advance significance of the Uruguay Round was to come up with concerns from their negotiations on specific areas on the nexus of trade- environment. Article XX of GATT provided exceptions for the sole basis to policies of trade, until the Uruguay Round negotiation, and the concern of the objectives of the environment. Apart from the rulings of the panel in disputes of formal trade like in the case of tuna dolphin which had come up with bounds that exceptions of the environment would be permitted to the obligation of the trade policy of a country in and around the framework of the GATT, Article XX was the only component of the treatment of issues of environment in the pre- Uruguay Round GATT that had been risen by the negotiations done internationally. The Agreements of the Uruguay Round did not come up with a trade and environment explicit terms that would centralize international trade as well as environmental issues linkages. Taking an approach that is more diffused, negotiations introduced environmental references and exception to policies of trade obligation into codified areas that are new. The Agreements that resulted from barriers to trade that are technical, measures of the phytosanitary and sanitary, intellectual property rights that were related to trade, measures of countervails and subsidies, agriculture as well as services contained language that is specific that affects the environment and trade objectives interaction. URA’s failure of inclusion of trade agreement and environment led to a directive of the WTO to form a committee that dealt with environment and trade that would monitor, assess and identify relating issues of environment and trade. Article XX of GATT remains the underlying key component that links trade and environment in the system of WTO even though new areas under the URA were developed. URAs are still significant in cases where some countries may seek to defend actions that may be trade- restriction on the grounds of the environments (Stilwell, 2001). There are new areas that are codified that are related to the environmental grounds as well as incentives of the economy that are created in the URA agreement as follows: Intellectual Property This is an agreement of the Uruguay Round that involves an exception of the environment that is explicit. The agreement is known as the Trade- Related Aspects of Intellectual Property rights commonly referred to as TRIPs. It strengthens the regulations that are protective to patents, copyrights, trade secrets and trademarks. Article 27 of TRIPs is one link that connects the environment and the intellectual property that gives permission to the government to avoid giving out of patents that are known to carry human threats, plant life threats, and animal threat or even can damage the environment seriously. Economic Policy and Externalities of the Environment Most issues that arise from the environment from the views of an economist come from externalities that arise like the consumption effects and production that others feel. Air and water pollution are generated from externalities that entail negativities whereas clean- up of the environment generates externalities that are positive. The consideration basis is the producer or consumers extent to which the decisions and actions that others are affected are not involved directly. Interpretation to this criterion may be narrowly done in the sense that effects that are physical go beyond the private property of the agent or widely for inclusion of externalities that are psychological. In the context of international deals, distinction is further made on effects that occur externally within the entire border of a single country as well as effect that are trans boundary that other countries are spilled over. In the presence of an externality that is negative, implications made state that the cost rises from externalities caused by producers and consumers falls under the social cost. When the government corrective action is absent, polluting goods are produced and consumed and are also market- determined will often be high when viewed socially since the basis of decisions I done on private cost other than costs on social aspects (Coase, 1960). On the other hand, the positive externality level will in turn be low. From viewing economically, the level of pollution that is socially optimal as well as the other damage on the environment can never be zero unless there was no elimination cost on the damage. The optimal level that is social generally is dependent on social cost in the grounds where economic output is foregone of reduction that is done further. This includes the abatement opportunity cost. The pollution level is optimally in social grounds when the cost on social that is in the output that is foregone enables balancing of benefits from the social grounds that resulted from that decrease. In designing of policies of the environment, usage of analysis that is cost benefit intends to achieve similar balance. Practically, this approach in itself is a challenge since it requires those people making decisions to relate the value of dollars to the intangible benefits to cleaner air or even biodiversity that is greater. Eventually, effects extend to the future hence must be accordingly be discounted. The basic types of policies to improve the outcomes of the environment are the instruments that are market- based as well as controls that are direct. Designed taxes that are appropriate make attempts on internationalizing of the externalities thereby enable decision maker to pick on actions on the basis of social costs that is fully done and not just the private cost. Difficulties that are faced in the cost measures as well as benefits make such policies to fail to in achieving the exact targeted goal. The makers of policies may opt for a direct limit quantity approach rather than fine- thinning response of the market. Regardless of whichever chosen policy, makers of policies are most likely able to consider less the benefits or even costs that are experienced outside the relevant jurisdiction boundaries yet outcomes that are globally efficient require effects that are trans boundary to be considered in a similar manner. An assumption that is reasonable is the incompleteness of the internalization through policy: measures of policies do not offer full internalization of externalities of the environment as well as the larger gap remaining in the effects that are Trans boundary. Environment and the Economic Growth It is known that growth would obviously lead to damage of the environment through the effect of scale though this growth negativity impact may be higher than the laid composition that is favorable and effects on the techniques. Conclusion A progress to issues on environment is prevented by the WTO. However, the Appellate Body tries to make decisions to encourage corporations to aim at achieving the goals of the environment. The main goal of the WTO is to expand trade globally. Some economists have argued that this improves environmental conditions but in the real sense, the contrary is true. Increased trade affects the environment through the effect of scale as well as composition effect and increased pollution of the environment. The WTO should strive at coming up with direct strategies that would support the environment as much as trade is undertaken. Ant dumping champagne should be formalized to reduce on the pressures of trade in the developing countries which eventually cause damage on environment as an outcome to the unfair competition. If the WTO lay out straight forward agreements and treaties then the whole world would enjoy the benefits of a good environment. References Bhagwati, J.N., and T.N. Srinivasan. (1963). Domestic Distortions, Tariffs, and the Theory of the Optimum Subsidy, Journal of Political Economy, 71(1), 44-50. Bhagwati, J. (2005). Reshaping the WTO, Far Eastern Economic Reviews Charles, P. (1953). International Economies. Charnovitz, S. (1999). Addressing Environmental and Labor Issues in the World Trade Organization. Charnovitz, S. (2000). World Trade and the Environment: A Review of the New WTO Report. http://www.gets.org/pages/steve.charnovitz.cfm Cline, R. (2004). Conclusion. Trade policy and Global Poverty. Peterson institution Coase, R. (1960). 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