WTO Rules of Environmental Relevance

Before depicting some of the important WTO regulations of potential environmental impact, it is vital for the assessment of this impact to anticipate a key observation: the environmental agenda of the WTO is mostly set by its rules and their interpretation in the course of dispute settlement. Two peculiar aspects endorse this assessment. In the first place, as mentioned above, the WTO secretariat has no competency for its own environmental policy, hence rendering fairly impossible any ex ante coordination of regulatory activities in the fields of trade and environment [23]. Second, though WTO law presents no closed legal circuit, it implies an essential particularity as compared to other bodies of public international law: WTO obligations are reciprocal rules, that is, unlike MEA regulations (which are integral rules), they are not "immutable obligations to be respected at all times and as between all WTO members," but instead "can, at times, be supplemented or deviated from as between some or all WTO members, by other rules of international law" [24]. As a result, WTO rules, such as those presented in the remainder of this section, are not carved in stone or universally applicable; instead, their impact is comparably flexible, such that ad hoc decisions in the course of WTO dispute settlement present the ultimo ratio of the WTO's legal stance on ecological issues. One should therefore not mistake the following principles for an indisputable corrobora-tion of arguments brought up by trade skeptics about the watering-down of environmental standards.

Two of the most noteworthy WTO principles which overlap with the trade provisions of some MEAs are included in the GATT and in the General Agreement on Trade in Services (GATS). According to the most-favored-nation clause (MFN) in Article I GATT (Article II GATS), parties have to grant any trade advantage (with regard to customs duties and charges of any kind) which they concede to any one country (no matter if or not this country is a party to the WTO) to all members. In the so called national treatment principle (NT), Article III GATT (Article XVII GATS) prohibits the discrimination of foreign goods (services) as compared to like domestic goods (services). The chief environmental implication of this principle stands and falls with the understanding of the term "like products". Taken at face value, GATT and GATS generally do not allow for the discrimination of goods and services on the basis of their origin, regardless of environmental or labor standards in the respective countries. However, as will be shown in the upcoming section, this

* http://www.wto.org/English/tratop_e/envir_e/envir_backgrnd_e/c1s3_e.htm (14 April 2006). Nonetheless and especially in the new millennium, several efforts have been made to provide the CTE with a more active role and to extend its mandate. Some of these attempts will be considered in Section 10.6.

understanding has been subject to changes across various reports of the GATT's and WTO's Dispute Settlement Body (DSB).*

Moreover, GATT and GATS include provisions which qualify the applicability of the MFN and NT principles. For instance, waivers can be granted for non-WTO environmental rules, on a case-by-case basis under Article 25(5) GATT. However, in order to take effect, this procedure would require the consent of a three-quarters majority of WTO members, which is a quite unlikely scenario. A more promising approach for suspending the non-discrimination principles is based on Article XX GATT (and Article XIV GATS, respectively) which grants "general exceptions" to the agreement's regulations. Eligible for such exceptions are measures "necessary to protect human, animal or plant life or health" (XX[b]) and measures "relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption" (XX[g]).

The abstract phrasing of both formulas opens up considerable room for speculations—and hence leaves more concrete interpretations to the Dispute Settlement Body. Regarding clause XX(b), inter alia, controversies have arisen about the inclusion of measures to save not only domestic, but also extraterritorial human, animal or plant life (i.e., in the countries of origin). Likewise, debates addressed the scope of allowable measures under clause XX(g): does it only apply to restrictions of the trade in endangered natural resources, or also to import bans on goods whose process and production methods (PPMs) have endangered these very resources [25]? Furthermore, the term "exhaustible natural resources" itself needed clarification; in the decision on the so called Shrimp Turtle Case, "endangered species" were finally subsumed under that term (1998) [26].

The most remarkable difference in the conditionality of both clauses is the introduction of a so-called necessity test: the GATT only demands measures under clause XX(b) to be "necessary"; clause XX(g) contains no similar wording. This implies that the latter does not require eligible measures to be as little trade-restricting as possible; measures under clause XX(b), however, have to undergo a test which has to reveal that no measure less inconsistent with the GATT would have an equally positive effect for the protection of human, plant or animal life.*

* In addition to the MFN and NT clauses, another prominent anti-discrimination principle in WTO law is the prohibition of quantitative restrictions on imports and exports under Art XI GATT and Articles XVI + VI GATS, respectively.

* On the other hand, Art. XX(g) measures have to stand a so called "chapeau test" or "cap test" which, according to Chambers (ibid.), is perhaps the most difficult to apply: In this test, certain general provisions must be met, such as non-discrimination or non-arbitrariness, in order to strike a balance "between the right to invoke the exception and the rights of Members to the main provisions contained in the WTO". Such main provisions with an ecological bias can be found in the preamble of the Agreement Establishing the World Trade Organization (WTO Agreement) which thus presents another major source of environmentally relevant WTO law. The preamble's first paragraph explicitly names sustainable development as well as the protection and preservation of the environment as objectives of importance equal to economic growth. Regarding the efforts to be taken by WTO members in order to pursue these objectives, the preamble refers to the principle of common but differentiated responsibility, which has been established by Principle 7 of the 1992 Rio Declaration on Environment and Development.

Another WTO treaty with far-reaching environmental implications is the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS)— and not only because it includes the non-discrimination principles such as MFN and NT. In fact, with its predominant goal to protect certain rights (instead of facilitating international trade which is the core goal of the bulk of WTO treaties), TRIPS takes a rather exceptional approach. The agreement's Part II on "Standards concerning the availability, scope and use of Intellectual Property Rights" touches upon the issues of biological diversity and genetic engineering. Article 27(3), states that "[m]embers shall provide for the protection of plant varieties either by patents or by an effective suigeneris subsystem or by any combination thereof".* This promotion of individual patents can have ambiguous ecological consequences, while the protection of intellectual property rights of environmentally sound procedures and products might promote the dissemination of such technologies and goods, the privatization of hitherto openly accessible knowledge and publicly protected species can equally threaten biological diversity [25].

Finally, the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) and the Agreement on Technical Barriers to Trade (TBT) are WTO treaties with a potential environmental impact—especially, due to their treatment of PPMs: both agreements permit product labeling, if the production method has an effect on the final characteristics. In addition, the SPS permits safety measures up to import bans, however, these depend on scientific proof (to be provided by the importing party) of any health risks. This conditionality contradicts the genuine precautionary principle which puts the burden of proof on the exporting party. The SPS perspective might thus bear peculiar consequences for the trade in goods whose health implications can hardly be predicted (e.g., living modified organisms (LMOs)).

The above compilation of environmentally significant WTO law is far from being exhaustive, either with regard to the number of treaties or in terms of their various environmental implications.1 Nonetheless, this synopsis of the most important regulations should serve as useful background information for the following sections: it is now time to consider these regulations in action, i.e., when applied or referred to in the course of actual conflicts with environmental law.

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