The curious but encouraging evolution of the World Trade Organisation

Trade and Environment, as an established topic, emerged with the creation of the World Trade Organisation (WTO) in 1995.  Its predecessor organization – the General Agreement on Tariffs and Trade (GATT) – never saw environment as an issue in trade.  It assumed that where trade harmed environment, trade would be curbed and included provision (GATT Article XX) which allowed exceptions to trade obligations for environmental purposes.  A Committee set up by GATT to allow members to bring up environmental concerns existed for twenty years, but essentially never met; the members didn’t have any issues that needed resolution!

WTO establishes a place for the environment

Things changed dramatically during the negotiations on the creation of the WTO. The trigger was a challenge by Mexico to a US law allowing it to restrict import of tuna products if the exporter could not demonstrate that the tuna were caught using techniques that minimize dolphin deaths.  The GATT decision to strike down the US measure set off alarm bells across the environment community and was very much in the minds of negotiators when, in the final days of negotiations on the new WTO, they agreed to set up a Committee on Trade and Environment (CTE).  They also included a call in the Preamble of the Marrakech Agreements stating that trade could and should be compatible with sustainable development.

…but a place with little impact

CTE had a very limited mandate – largely focused on the impact of environmental measures on trade – but it did confer on environment the status of a relevant and appropriate topic in the trade context.  That victory proved to be fairly empty for the first six years; indeed, discussions in CTE were lacklustre, no issue was directly resolved, and the mandate of CTE was not expanded.  Instead, discussions went round in circles.

Doha upgrades environmental issues

Despite that, in November 2001, the Doha Ministerial Meeting adopted the mandate for a new Round of multilateral trade negotiations (the Doha Round) and included in it a range of environmental topics.  This “upgraded” environment from a topic for review and discussion to one for negotiation; further the Doha mandate upgraded the preambular call for sustainable development, stating now that trade not only can and should support sustainable development – it must!

…but Doha remains incomplete

As everyone knows, the Doha Round has never been concluded and the environmental issues – limited as they were – are stuck in the doldrums with the rest of the topics.  So, over fifteen years since WTO was founded and environment introduced as a trade-related topic, nothing has been resolved, trade continues to give environment low priority and the call for sustainable development has been studiously ignored.  ?  This bleak assessment may be true of the CTE and of the environmental negotiations, but it is incomplete for three reasons.

1. On the bright side: legislative and judicial changes taking place

First, following the Tuna-Dolphin cases, the WTO’s Dispute Settlement Body has continued to address environmentally-related trade disputes and has thereby established a solid foundation of jurisprudence on how the trading system should regard environmental obligations that appear to contravene trade disciplines.  Further, the resolution of these cases has, in many instances, settled disputes about the members’ environmental obligations that have been stuck for years in the CTE or in the negotiations.  It might fairly be said that the judicial wing of the WTO has managed much of what the legislative wing failed to achieve.  In case after case, the decisions of the Appellate Body have “settled” the question of how WTO should regard the environment and environmental obligations entered into by States, in the process taking a line that is far more sensitive to the environment that might have been expected.

The same applies to the preambular call for a trading system dedicated to sustainable development.  Whereas in the negotiations strictly nothing has happened, the Appellate Body has made it clear that the obligations set out in the Preamble are to be regarded fully as part of the body of WTO law, and not simply as aspirational statements.

2. Environmental issues arise across the WTO

Second, despite the existence of the CTE, environmental issues arise across the work of the WTO.  They are very much part of the work on technical barriers to trade, or that on health and food safety, or those on intellectual property, subsidies, or agriculture.  In fact, there is barely a topic dealt with by WTO that is not linked to the environment, and many of the topics have been advancing well, without any serious challenge to environmental measures.  The position seems to be accepted that the environmental community should decide on what measures are needed and that these will be challenged only if they are unnecessarily trade-restrictive.  Most measures taken by States, or included in environmental agreements, seem to cause no real concern.

3. Trade agreements outside the WTO

Third and finally, while the WTO is the principal forum for global trade negotiations, there is a huge level of activity at the regional and bilateral levels and here the environment has made impressive advances.  Environmental provisions or side agreements began appearing in trade agreements – especially those signed by the US and Canada.  These were often accompanied by a programme of environmental cooperation among the trade partners, including technical assistance and capacity building.

A positive conclusion

Taken as a whole, it can be said not only that trade and environment has now been firmly established and the claim that environment does belong in the trade space are rarely heard.  No major environmental measure has been challenged successfully by the WTO; instead, trade measures that harm the environment are likely to be withdrawn or modified.  And the successive decisions of the WTO’s Appellate Body have gone a long way to clarify how trade and environment rules must interact and how, in the case of conflict, to go about establishing priorities among them.  All in all, this is a satisfactory result – trade and environment has advanced further than trade rule-making has over this period.

October 2012

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Mark Halle's picture

Geneva, Switzerland

Mark Halle is Executive Director of the International Institute for Sustainable Development, Europe. He was born in the United States but... (Read more)

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