Looking for a Signpost the WTOs Effect on Domestic and International Environmental Policies and Standards

The deterministic nature of these and other classical assumptions strongly suggests the need for profound empirical evidence. But how to provide this evidence—that is, how to reliably assess the WTO's impact on the environment? A closer look at the aforementioned hypotheses might at least help to distinguish possible research endeavors from impossible ones. In fact, any clear-cut corroboration of the respective first item on both lists—each one focusing on economic growth, though under reversed premises—seems unfeasible. The causal chain from free trade to ecological degradation (or improvement) is simply too complex and too long for precise forecasts concerning the influence of the numerous third factors on the environment, let alone side-effects and unintended consequences.* These difficulties notwithstanding, several efforts have been made to develop and apply tools for a comprehensive environmental impact assessment of the international trade regime. However, "empirical studies of the social and ecological effects of free trade are still in their early days" and first need further methodological development [l6,17].f

Regarding the second win-win assumption (i.e., trade liberalization curbs ecologically harmful subsidies), the avenue of causation from the WTO to a potentially positive environmental impact appears significantly shorter. And indeed, in the fisheries sector, the link between depleted fish stocks and trade-distorting subsidies is well accepted. Likewise, subsidies in the agrarian sector may encourage intensive farming, and, subsequently, overgrazing, land conversion and the loss of forests [17]. Moreover, subsidies on carbon-intensive

* Moreover, since economic growth assumes the status of an intervening variable in such a research design, one would additionally have to substantiate the causality between free trade on the one side and economic growth on the other. t Since 1999, a very promising instrument for Sustainability Impact Assessment (SIA) has been designed and partially tested on behalf of the European Commission (e.g., for the forest sector, cf. Katila and Simula (Sustainability Impact Assessment of Proposed WTO Negotiations 2005)). However, critics complain about a pro-liberalization bias of the original SIA design, since the conceptions do not include scenarios of less or no trade liberalization (Santarius et al. 2003: 41). Further studies of environmental impact assessment were announced by Canada and the United States (see also Section 10.6.3).

polluting sources, as they currently exist in a number of OECD member states, hamper the expansion of renewable energies in these countries. However, as plausible as these arguments might sound, it is too early to praise the WTO's role in removing global subsidies. As is well known, controversies about agricultural subsidies are still at the core of WTO's internal disputes, and they are far from being solved. Similarly, lengthy discussions in different WTO forums on the removal of fisheries subsidies have not yet produced significant results.* The same goes for the debate on the export of domestically prohibited goods (DPGs) which present a danger to the environment or the health of humans, plants or animals.* As will be shown in Section 10.3.2, this stagnation or idleness goes back to the fact that the relevant organs have no authority to develop a proper WTO environmental policy. All in all, these current observations about ineffectual efforts at subsidies removal indicate that the above assumption remains tenuous, at best.*

Finally, the third win-win assumption about the need for adequate ecological accounting is even less helpful for the WTO's outlook. Such ideas—in their most modest forms like environmental taxing which rather runs counter to WTO principles—have at best been realized in a handful of national economies of highly industrialized countries. And they certainly play no role whatsoever in current WTO negotiations.

When bearing in mind these methodological or empirical obstacles to investigation of most of the above assumptions, what is left for a more reliable examination are but two of the listed predictions voiced by trade skeptics (items 2 and 3). Both hypotheses—risk transfer and race to the bottom—share a focus on environmental standards and rules. But it is particularly the race-to-the-bottom assumption whose causal inference stops at these standards, treating them as dependent variables. In other words: this third assumption does not focus on end-of-the-pipe impacts on the environment, but rather on the WTO's more immediate effects on particular environmental policies and norms, both multilateral and domestic. This immediacy should allow for more

* Discussion on fisheries subsidies are taking place in the context of the Agreement on Subsidies and Countervailing Measures (SCM) in the Negotiating Group on Rules. Furthermore, such subsidies have been discussed at length in the CTE under item 6 of its work program (http:// www.wto.org/English/tratop_e/envir_e/envir_backgrnd_e/c4s1_e.htm [23 April 2006]).

t The GATT had taken up this subject as early as 1982 and established a notification system which, however, proved unsuccessful and was abolished after 8 years. Though the DPG issue was included into the Marrakesh Agreement, further attempts to revive the notification system have failed; apparently, the WTO has left the matter to multilateral agreements which were originally designed for the issue, e.g., the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (http://www.wto.org/English/tratop_e/envir_e/envir_-backgrnd_e/c4s3_e.htm [23 April 2006]).

* Moreover, the WTO Secretariat anyway voiced concerns about the extent to which the positive ecological impact of the removal of subsidies could be correctly assessed. In a 1997 background note on "Environmental Benefits of Removing Trade Restrictions and Distortions", the secretariat pointed out that these benefits are likely to be indirect and not readily identifiable in general terms (Doc. WT/CTE/W/67, http://docsonline.wto.org/imrd/directdoc.asp?DDFDocuments/t/ wt/cte/w67.wpf [23 April 2006]).

dependable—though far from exhaustive—findings about the international trade organization's environmental role. In the terminology of international regime theory, such an approach corresponds with an output level perspective [18-20]. This perspective implies that the ensuing sections will focus on the institutional hardware (output), i.e., the bodies and norms produced by an international regime (in case of the trade regime: the WTO and the agreements under its auspices, as explored in Section 10.3) and their respective influence on the output of other institutions—for our purpose: domestic environmental policies and standards (Section 10.4) as well as multilateral environmental agreements (Section 10.5).*

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