International Trade Law VIS–A-VIS Environmental Law

Overview

The objective of GATT was the promotion and liberalization of free trade in goods and services. The expansion of International trade has overlapped with a dramatic rise in global environmental degradation, in the form of increased air and marine pollution, desertification and deforestation, loss of biological diversity and climate change. Two sets of questions arise from this (1). The first is that the liberalization and expansion of international trade in some way responsible for the global ecological crisis? Or make free trade increased global competition and greater wealth help to promote environmental protection? The second is about the explicit institutional perspective of international trade and environmental policy: whether the rules of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) system but also bilateral and regional trade agreements facilitate or obstruct environmental protection efforts? Furthermore, are international environmental agreements consistent with the rules and obligations of the WTO order? The central question is whether the links Between Trade and the Environment Are international trade and environmental protection compatible or in conflict?

Though international policy does not seek to give free trade priority over environmental protection, neither does it endorse any general exception for environmental purposes. Acknowledging the divergence, Marrakesh Agreement intends to attain the balance between the two and its preamble affirms that the WTO recognises the fact that the expansion of production and trade must allow for: “optimal use of world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.”(2)

International Trade Rules and Environmental Protection.

The creator of GATT also recognised that governments might occasionally need to restrict trade in the interest of public health or nature conservation.

Article XX of GATT exclusively refers to environmental issues and concerns. It sets out the conditions for restricting international trade in the interest of human, animal or plant life or health (Article XX(b)) and the conservation of natural resources (Article XX(g)). The GATT thus permits exceptions from its trade regulations related to environmental concerns, but also tries to ensure avoidance of discrimination or protectionism due to these measures.

Multilateral Environmental Agreements, Trade Measures, and the WTO.

The three primary purposes of these MEAs are to target environmental harm, to promote compliance and regime effectiveness and to encourage participation in the environmental regime. MEAs include trade measures among their regulatory instruments. In global environmental policymaking, trade restriction plays an important role, and it leads to concern that these rules will indirectly come into conflict with WTO rules. The Convention on Trade in Endangered Species (CITES) is an MEA that uses trade restrictions to control and when necessary ban the transboundary movement of animal and plant species that are close to extinction. Another example is the Montreal Protocol on ozone layer depletion, which entails a phase-out schedule for specific chemical substances that harm the stratospheric ozone layer. The treaty also includes a ban on trade in these substances with countries that have not ratified the Protocol, the so-called non-parties.

Cases Related To Environmental Dispute And The WTO

The Tuna-Dolphin Case: the US banned the import of tuna from countries that do not employ a dolphin-safe fishing method to protect the dolphins. The ban was put under the Marine Mammal Protection Act (MMPA) 1972 which required US fishers to use dolphin-safe fishing methods to prevent the unwanted trapping of dolphins in purse seine nets used by tuna fishing fleets (3). In 1990, Mexico filed a complaint with the GATT and argued that the US cannot coerce them to abide by its domestic law. The GATT panel that heard the case decided in Mexico’s favour. Though the decision never became legally binding, it created an outrage among environmentalists.

The US–Gasoline Case: the United States amended the Clean Air Act (CAA) to improve air by reducing adverse emissions from gasoline use. The dispute was about the use of baseline as foreign producers had to follow an average benchmark set up by Environmental Protection Agency (EPA). It was argued by Venezuela and Brazil to be discriminatory toward imported and thereby leading to the violation of Article III of GATT. United States claimed that their act is justified by Article XX. WTO Appellate body took the broader view and held that the member countries are free to set their environmental objectives regarding domestic and foreign goods, but they should do it in conformity with WTO rules.

The Shrimp–Turtles Case: This complaint was filed by India, Malaysia, Pakistan, and Thailand against US decision to force foreign shrimp trawlers to use so-called ‘turtle excluder devices’ (TEDs) when fishing in areas where sea turtles are present. The plaintiffs argued that it bans the foreign producers if they do not comply with its domestic environmental law. Dispute Settlement Body of WTO ruled that in certain circumstances countries can use trade measures with the aim of protecting natural resources. The measures adopted by the US were discriminatory, and thus it lost the case. The ruling also pointed out that restrictions do not arbitrarily and unjustifiably discriminate between different countries, trade can be restricted based on the process and production method in another country.

The Brazil-Retreaded Tyres Case: Brazil imposed restrictions on non-MERCOSUR about retreaded tyres (reconditioned old tyres for further use) as disposal of these tyres create environmental as well as human health problems. EU took the matter to WTO panel. WTO ruled that Brazil discriminated between MERCOSUR and non- MERCOSUR countries and thus its policy cannot be justified by Article XX. Therefore, Brazil complied with the DSB’s request and revised its law to make in consonance with WTO rules.

The role of Sustainable Development in resolving the conflict.

Principle 12 of the Rio Declaration identiﬁed international trade as an essential means to promote development that would also be environmentally sustainable. Principle 12 stipulates that: “States should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation.”(4)

Next generational Environmental Conflict:

The divergence between international trade and environmental security is yet again on the rise after a decade of harmony. Major trading powers are still challenging each other’s pro-environmental policies in the name of global trade rules. In March 2012, the United States, EU, and Japan joined forces to challenge China at the World Trade Organization (WTO) over China’s export restrictions on rare earth minerals, enacted allegedly for environmental reasons. Two weeks later, a WTO panel heard oral arguments in a case brought by Japan and the EU over Ontario’s feed-in tariffs for renewable energy. In May 2012, the U.S. slapped punitive tariffs on Chinese solar panels up to 250%, denouncing Chinese manufacturers for unfairly dumping their goods into the American market. China, in turn, attacked U.S. states’rebates for renewable energy installations. By September 2012, the EU had opened its own investigation into unfair practices of China’s solar panel manufacturers. Weeks later, China responded by filing its own WTO case against the European feed-in tariffs for violating WTO rules. The year ended with a WTO panel finding Ontario’s feed-in tariff illegal (5). This list is a sampling of the growing conflicts. As we shall see, 2013 has proven to be equally contentious, with several important WTO rulings and confrontations over tariffs imposed on renewable energy goods. Though the classic form of Environment – trade conflict remain relevant, another conflict emerged related to the aggressive promotion by both developing and developed countries of industrial policies with environmental benefits and protectionist results. Since 2008, green industrial policies have already given rise to twelve significant trade and environment conflicts.

Conclusion

Thus it may be concluded from the above cases that WTO accepts the trade-related restrictions based on the environmental protection, but it must also not be discriminatory in essence.

Still, today, trade and environment nexus remain a controversial topic. We have already observed the adjudication of the dispute by WTO and with that CTE( Committee on Trade and Environment) has also been tasked with addressing the relationship between MEAs and WTO. As climate change is the biggest issue of the globe, it is also going to affect international trade. Trade measures will be part of the State efforts to combat global warming caused by Climate change.