The Legal Framework of the WTOs Environmental Protection Policies - Essay Example

Factual Background Both Agricola and Machina are members of the World Trade Organization (WTO). Agricola has taken a position against the use of certain antibiotics in poultry. Machina uses a level of antibiotics in its poultry that Agricola officials determined will cause a health risk. As a result Agricola has placed a ban on all cooked chicken from Machina. Additionally, Agricola passed a statutory provision which bans all lobster harvested in a particular way. The Act is designed to protect the mollusc population. Machina has filed a complaint with the WTO alleging that in both instances Agricola is breaching its WTO obligations. The Legal Framework of the WTO’s Environmental Protection Policies In order to fully understand the WTO’s legal framework and its policies and practices with respect to environmental protection it is first necessary to briefly examine a history and development of the WTO. By understanding the history and development of the WTO it will be easier to predict the possible outcomes for Agricola in the dispute filed by Machina. The WTO grew out of The International Trade Organization (ًITO) which was an attempt to create and cultivate a structured multilateral trade agreements regime in the aftermath of the Second World War.1 Under the auspices of the ITO the General Agreement on Tariffs and Trade (GATT) was implemented in 1947. Its primary purpose was to serve as an interim multilateral trade agreement until such time as the WTO could be implemented and ratified.2 GATT was entirely reliant upon the relative strengths of the participating member states and their respective ability to negotiate multilateral trade agreements.3 The result was a commercial and political culture characterized by inequality of bargaining position since developing and least developed nations were unable to participate on the same level as developed countries under the GATT regime.4 Following a series of negotiations between world leaders referred to as the Uruguay Rounds, GATT was replaced by the WTO and signed in 1995.5 The new WTO made a concrete effort to commit member states to a series of new obligations designed to facilitate free and unrestricted trade between member states emphasising the need and desire to accommodate less developed countries.6 By virtue of the WTO’s treaties and agreements member states are required to extend indiscriminate treatment of all member states with respect to cross border trade agreements.7 In other words the WTO has as its primary aim the free movement of goods and services from one member state to another.8 Focused primarily on relaxation of trade restriction in cross-border transactions between member states, neither GATT and its successor the WTO specifically prioritize environmental issues.9 Only a very broad interpretation of Article XX of the GATT agreement which makes provision for general exceptions to a member state’s obligation to permit indiscriminate trade between member states can be used to allow Agricola to ban the cooked chicken from Machina.10 By virtue of GATT Article XX the general exceptions contained therein, permit member states to implement measures designed to protect their territorial environment.11 For example Article XX (b) provides that nothing in GATT will prevent a member state implementing measures for the protection of ‘human, animal or plant life or health.’12 However, Article XX (d) contains a proviso, which basically constrains liberal application of Article XX exceptions. Article XX (d) provides that measures adopted for the purpose of ensuring adherence to ‘laws or regulations’ are required to be consistent with the GATT agreement.13 The only real effort on the part of the WTO to regulate environmental concerns are found in the Sanitary and Phytosanitary Agreement (SPS) and Measures and Agreement on Technical Barriers to Trade (TBT).14 The SPS permits member states to set their own safety standards with respect to animal and plant food production and these standards are required to be scientifically based.15 Moreover, these standards must be reasonable and may not be used to unreasonably restrict trade.16 The TBT is designed to regulate the manner in which safety standards are tested, regulated and certified.17 Again these standards are required to be reasonable and should comply with international rather than domestic standards.18 In the final analysis, both the TBT and the SPS are required to be read together with the basic obligations contained in the text of the WTO agreements. The result is, these measures have very little use if a member state’s safety regime restricts trade in what can be defined as a discriminatory way. This will be borne out by the remainder of this part of the paper. Aside from the SPS, the TBT, Article XX of GATT and the Preamble to the agreement that established the WTO there are no other environmental protection policies within the legal framework of the WTO.19 The Preamble states that the WTO’s commitment to trade liberalization is two-tiered in that it promotes free production and trade from the environment while advocating for its protection and enhancement.20 A matter similar in nature to the one between Agricola and Machina came up in a WTO dispute titled United States – Restrictions on Imports of Tuna DS 29/R (1994) 33 ILM 839.21 This case was critical for its role in accentuating the residual tension between trade liberalization and environmental protection. In the United States – Restrictions on Imports of Tuna DS 29/R (1994) 33 ILM 839 the WTO Dispute Resolution Panel found that an American law which banned the import of tuna which were caught by virtue of means that were harmful to the dolphin population was inconsistent with its obligations under GATT.22 This decision invoked a response from environmentalists from both the US and the European Union who argued that the GATT regime be modified so as to permit participating states to regulate its environmental polices to allow for restrictions on imports that were produced in ways harmful to the environment.23 The WTO responded by appointing the Committee on Trade and Environment (CTE) which had as it goal the investigation of the connection between trade policies and the environment.24 The CTE came away with the conclusion that Principle 12 of the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro in 1992 provided the best approach to international trade and environmental concerns.25 Principle 12 basically mandates that environmental measures should not be left to “unilateral action” and should not be used as an excuse to unreasonably restrict trade.26 In other words environmental concerns can be negotiated under MEAs but by no means can they be imposed singularly. The Doha Ministerial Declaration 2001 by and large adapted Principle 12 although it did speak to the utility of permitting a member state to pass laws that protected its territorial environment.27 Be that as it may, the Doha Ministerial Declaration emphasised the importance of measures that did not contravene the provisions contained in the WTO’s agreement.28 These provisions, which confer obligations on the part of Member or Contracting States, are contained under GATT 1994 which are not unlike the provisions contained in GATT 1947.29 The principle aim is to facilitate free and unrestricting trade across borders among the various Member States. The free and restricted trade agenda under GATT 1994 confer upon its Member States general or basic obligations to treat all trade partners equally (Most Favoured –Nation Treatment)30 and to treat trade partners in the same manner as they treat domestic traders (National Treatment).31 Even more constraining, Article XI of GATT 1994 makes provision for the ‘Elimination of Quantitative Restrictions’ on imports and exports of all products from member states.32 Article XX of GATT 1994 makes provision for general exceptions to these obligations and are reflective of Article XX of GATT 1947 and Principle 12 of UNCED.33 In other words, a member state may take appropriate measures to protect its environment provided the measures are not unreasonable, not inconsistent with its obligations under the WTO and does not represent unilateral action. Advise on the Legal merits, Issues and Problems on the Prohibition of Machian Cooked Chicken by Agricola. An examination of the facts of the case in the context of the WTO’s free trade polices and the parameters in which environmental protection may permit a departure from the free trade mandate, it appears as though Agricola’s trade restrictions are inconsistent with the WTO trade policies. It can be successfully argued that both the ban on cooked chicken from Machina and the restrictions imposed by the MPLP Act are contrary to the WTO’s general obligations on the part of contractions states and cannot be justified on the basis of the general exceptions contained in Article XX. The first legal issue arises out of the prohibition of Machina cooked chicken. Although the SPS permits member states to set their own safety standards with respect to animal and plant food production, these standards are required to be scientifically based with reference to international standards.34 AQA has conducted a risk assessment without scientific evidence they just conclude in the report that the high levels of antibiotic on Machina cooked chicken can increase the development of antibiotic resistance. This assessment is retroactive and not based on scientific evidence in a reactive sense. In other words Agricola is attempting to set their own safety standards which they are not permitted to do unless they can justify these standards by reference to scientific proof of the claim. This was the position taken by the WTO Dispute Resolution body in European Communities – Measures Affecting the Approval and Marketing of Biotech Products Panel Report WT/DS 291/R (29 Sept. 2006). Another difficulty for Agricola arises out of its practice of allowing the importation of fresh duck, which contains high levels of antibiotic from some members of states. This can used as evidence to demonstrate that Agricola’s ban on Machina’s cooked chicken is unreasonable and therefore inconsistent with the mandate for general exceptions under Article XX and its obligations under the WTO in general. Discriminate treatment is specifically forbidden under the WTO under the Most Favored Nation doctrine discussed earlier. This was the position taken in United States – Import Prohibition of Certain Shrimp and Shrimp Products, Appellate Body Report, WT/DS58/AB/R (12 Oct. 1998). Even if Agricola can prove that the tests administered by the AQA were scientifically based and that the side affects of the high levels of antibiotic on Machina cooked chicken posed a risk to health, they are still in jeopardy of losing ground to Machina since they are allowing the importation of fresh duck that have a high levels of antibiotic form some state members. This conduct is evidence of discriminate treatment of trade partners within the WTO and is conduct specifically forbidden within the WTO’s legal framework and trade policies. As decided in United States – Import Prohibition of Certain Shrimp and Shrimp Products such disparate treatment will nullify trade restrictions since it will be regarded as proof that the ban is unreasonable and likely only used as an excuse to restrict trade. Based on the preceding discussion, Agricola’s position is quite weak against Machina’s claims. The ban on Machina’s cooked chicken cannot be justified under the WTO trade policies and legal framework. In order to be justified, measures such as these must be based on either international standards or scientific proof. Moreover, the manner in which these measures are executed must be all inclusive in the sense that a similar position must be adopted with respect to all other member states. Agricola is attempting to apply its own standard for risk assessment and is not basing the risk assessment on scientific proof. Moreover, Agricola is departing from the Most Favored Nation mandate of WTO by permitting imports from other member states of Ducks with similar antibiotic levels as the Machina’s cooked chicken. In all the circumstances the ban on the Machina chicken is a contravention of the WTO’s trade policies and its legal framework and cannot be justified under Article XX. Agricola Legal Merits, Issues and Problems on (the MPLP Act) In order to determine the merits of Machina’s challenge to Agricola’s MPLP it is necessary to examine the manner in which the WTO’s Dispute Resolution Body has treated complaints of a similar nature in the past. The case of United States – Restrictions on Imports of Tuna, GATT BISD (39th Supp. 1993) 155 provides a good reference point because the facts are vastly similar to the current case for discussion. This case is useful for predicting the likely stance the WTO Dispute Resolution Panel will take with respect to Machina’s challenge to Agricola’s MPLP. In the first Dolphin case, United States – Restrictions on Imports of Tuna, GATT BISD (39th Supp. 1993) 155 the US acting under the authority of local legislation35 placed a ban on imports of yellow-fin tuna claiming that methods used to catch this specific tuna was harmful to the dolphin population.36 Impacted by the US ban against yellow-fin tuna imports, Mexico filed a complaint under GATT claiming that the US violated its obligations under Article XI (1), which essentially prohibited measures that restrict both imports and exports.37 In turn the US argued that the relevant US legislation was equally applicable to US trade and therefore consistent with Articles III (1) and III (4) of GATT.38 Article III (1) provides for national treatment obligations requiring that member states’ internal measures must not be used ‘to afford protection to domestic production’.39 Article III (4) takes a position against the treatment of imported products in a manner ‘less favourable’ than that accorded domestic products.40 The GATT Dispute Resolution Panel disagreed with the position taken by the US in response to Mexico’s claim ruling that Article III referred to products and not the manner in which products were ‘harvested.’41 Therefore the US local legislative provision which banned the import of tuna, which was a product could not be justified and the resulting ban was therefore contrary to the US’s obligations under GATT.42 Another GATT Dispute Resolution Panel once again heard the matter when the US placed a ban on the import of tuna processed in countries that had imported the tuna from countries that had caught tuna contrary to the provisions contained in the US legislation.43 The panel followed much of the same ruling and reasoning in the previous case essentially holding that the US’s unilateral ban on tuna exports was inconsistent with GATT’s position against unreasonable and unjustifiable trade restrictions.44 In light of the position taken by the GATT Dispute Resolution panel in the case of United States – Restrictions on Imports of Tuna, GATT BISD (39th Supp. 1993) 155, it is clear that Agricola is in a breach of WTO rules and its obligations under WTO when it enacted the MPLP Act. Agricola violated its obligations under Article XI (1) of the GATT, which essentially prohibited measures that restrict both imports and exports. Even if Agricola argued that the relevant Agricola legislation was equally applicable to Agricola trade and therefore consistent with Articles III (1) and III (4) of the GATT Machina is at liberty to counter as Mexico did with the US on United States – Restrictions on Imports of Tuna, GATT BISD (39th Supp. 1993) 155, that Article III referred to products and not the manner in which products were ‘harvested.’ Therefore Agricola’s domestic legislative provisions which allow the banning of the import of lobster unless they have been caught by specific methods as provided for under the MPLP is not justified. The fact is the ban responds to the manner in which the product is harvested rather than the product itself. Another fact that works against Agricola is the fact that the MPLP permits the import of lobsters harvested by use of an instrument manufactured in Agricola. Based on the manner in which the WTO’s Dispute Resolution Panel advocates against trade restrictions and strictly construes the Most Favored Nation mandate it is conceivable that the panel will regard the Act as having an agenda to promote domestic trade. Article XX’s general exceptions with regard to environmental protection will not apply if it can be inferred that the measures taken are designed to promote domestic products. Conclusion Based on the foregoing discussion it is difficult to imagine how Angola can successfully defend against the claims made by Machina. Even if they attempt to argue as the US had in United States – Restrictions on Imports of Tuna that the MLPL was consistent with the WTO agreement in that it was equally applicable to domestic traders, that defence will fail for the same reason it failed for the US. The fact is the product was not banned on its own merits. It was banned for the maner in which it was harvested. As previously stated the ban on cooked chicken from Machina will also fail since it cannot be justified within the ambit of Article XX. This is so because Agricola’s risk assessment was not scientifically based and since the risk assessment purports to represent Agricola’s own safety standard it will not be indorsed by the WTO. Bibliography Abdul Ghafur Hamid, Khin Maung Sein and Nik Ahmad Kamal Nik Mahmod‘The WTO Rules Versus Multilateral Environmental Agreements: The Search for Reconciliation’ (2008) 5, MqJCIL at 57-58 accessed September, 15 2008 European Communities – Measures Affecting the Approval and Marketing of Biotech Products Panel Report WT/DS 291/R (29 Sept. 2006) GATT 1947 Narlikar, A. The World Trade Organization: A Very Short Introduction (2005) Pierre Sauve and Robot Stern (eds) GATS 200, New Directions in Services Trade Liberalisation (2nd Editions, 2000) The Marine Mammal Protection Act (MMPA), October 21 1972, 16, USC Chapt. 31 accessed September 17 2008. United States – Import Prohibition of Certain Shrimp and Shrimp Products, Appellate Body Report, WT/DS58/AB/R (12 Oct. 1998) United States – Restrictions on Imports of Tuna DS 29/R (1994) 33 ILM 839 United States – Restrictions on Imports of Tuna, GATT BISD (39th Supp. 1993) 155 Vogel, David. Trading UP (1995) World Trade Organization.’Understanding the WTO Agreements: Standards and Safety.” (n.d.) accessed Sept. 15, 2008. Read More