RELATIONSHIP BETWEEN ENVIRONMENTAL AGREEMENTS AND WTO
Author: Anugra Anna Shaju, I year of B.A.,LL.B.(Hons.) from National University of Advanced Legal Studies
The WTO has dealt with more number of environmental disputes than any other international court or tribunal showing the close connection between trade and environment.
Trade has been booming throughout the world given the liberalization and other trade policies of the WTO. But this happens often at the cost of the environment. Trade and environment are closely related and interconnected. The ramifications of increased trade on the environment are visible.
The World Trade Organization (WTO)
The World Trade Organization (WTO) is an international organization which sets the rules and principles for global trade and is the legal and institutional foundation of the multilateral trading system. It works to reduce tariffs and other trade restrictions i.e. minimize trade barriers among member countries. It was set up as a successor to the General Agreement on Trade and Tariffs (GATT) in 1995. It has 164 members and 24 observer governments and all decisions are taken unanimously. But there is a criticism that it is used by the major economic powers to advance and develop their economies and interests and the developing countries are pushed around due to non-transparent procedures by the powerful countries.
Negative Impact of WTO on Environmental Agreements
The WTO has not done much and is unlikely to do anything much for environmental protection. Again the developed countries are to be blamed for this condition as they are willing to promote only those practices which are advantageous for their economy and support environmental policies only partially. For example, the WTO was unable to prohibit subsidies on illegal fishing at the 11th Ministerial Conference in 2017 just because certain countries insisted that they could not agree to this reform without consensus on other matters under negotiation. They also do not promote adopting greener practices among the developing countries by assuring them that it would only affect their economic development positively rather than adversely. Also, the leaders of developing countries are reluctant to take up the environmental policies as they do not trust the intentions of the developed countries.
The WTO rules conflict with some provisions of several protocols and convention like the Montreal Protocol, the Convention on International Trade in Endangered Species, the Basel and Rotterdam Conventions, the Agreement on Persistent Organic Pollutants, the Cartagena Protocol on Biosafety and the Kyoto Protocol. For instance, the Montreal Protocol does not restrict trade between parties but bans trade in listed ozone-depleting substances with non-parties unless the non-parties have been determined by the parties to Montreal to be in fully complying with its restrictions on production and consumption. The Convention on International Trade in Endangered Species prohibits trade in listed species unless the exporting country and the importing country each determine, inter alia, that the trade will not be detrimental to the survival of the species and the importing country determines that the specimen will not be used for primarily commercial purposes. The Basel Convention says that States should take necessary measures to make sure that the management of hazardous wastes and other wastes including their transboundary movement and disposal is consistent with the protection of human health and the environment whatever the place of disposal, otherwise the State has the sovereign right to ban the entry or disposal of foreign hazardous wastes and other wastes in its territory. The Rotterdam Convention allows the party to decide whether to ban or restrict imports of the chemicals and pesticides, to export only in line with the parties of import’s decision and has to provide prior notice if the substance is domestically controlled. Finally, The Cartagena Protocol requires importers of living modified organisms (LMOs) to approve the import according to their regulatory system or follow the Protocols Procedure, which requires a risk assessment before a final decision.
The Doha declaration was not followed faithfully and often priority was given to WTO rules, trade, tariff and non-tariff barriers. Inability to achieve consensus, impasse along with these factors contributed to the failure of the Doha declaration.
The GATT and WTO have always tried to oppose trade restrictions and regulations against products on their technical regulations including sanitary and phytosanitary standards. Restrictions are not allowed if it was like other national products or imported products irrespective of how it was produced. For example, when the US prohibited imports of tuna and tuna products from Canada, the panel held that there were no restrictions on domestic production and consumption of tuna in the US.
Countries find it difficult to justify trade restrictions to protect the environment or human health as they are required to prove the dangers with scientific evidence. The precautionary principle allows preventive measure without scientific evidence however it is applied only in a limited sense. It again requires proving using scientific risk assessment the environmental or human health threats inherent.
Moreover, the WTO has shown time and again that it is unable to promote environmental matters. For example, the WTO was unable to restrict the use of fossil fuel subsidies.
Trade exacerbates environmental degradation and trade liberalization leads to increased environmental degradation. Without a strong environmental policy in place, countries would be unable to handle the negative environmental externalities. But here also the WTO can act as an obstacle.
Positive steps were taken by WTO for environmental protection
The Preamble of the Marrakesh Agreement establishing the WTO shows that sustainable development is an objective of the WTO. It emphasizes members to include environmental issues in negotiations.
This was reaffirmed in the Doha declaration. The WTO had committees on Trade and Environment to advance negotiations on the Doha declaration. Unfortunately, it failed and talks were suspended.
Though no new rules are made regarding environmental protection, the existing rules are interpreted to include and deal with environmental problems. There are some restrictions on consumption externalities, which refer to the damage to the environment or human health due to consumption of a good, through WTO agreements. Such externalities allow countries to completely ban a foreign product while remaining compatible with WTO agreements. Similarly, restrictions on production externalities, which refer to damage to the environment or human health due to the production of a good are also allowed. These restrictions need to be done fairly, evenly and indiscriminately.
Members are given autonomy to enact and implement environmental legislation, policies and objectives as they want. They can also take necessary measures to protect animal or plant life or health or measures relating to the conservation of exhaustive natural resources.
Even though the WTO rules are authoritative, no country has been forced to remove the restrictions that it has placed on those which are incompatible with WTO rules. But they must be willing to face retaliatory trade sanctions. For example, the EU has a ban on hormone-treated cattle and the United States has a ban on dolphin-unsafe tuna. However, developing countries wouldn’t want to face retaliatory trade sanctions.
The WTO never blocks nor hinders multilateral agreements on environmental protection i.e. it leaves sufficient room for environmental lawmakers. Some Multilateral Environmental Agreements (MEA)’s have reporting and labelling requirements, need for movement documents, import licenses and consent arrangements, excise taxes, quantitative restrictions on imports and total or partial import bans. But no trade restriction in or in alliance with an MEA had been disputed in the WTO. The Shrimp-Turtle, Asbestos and US Gasoline rulings show that MEA’s and WTO rules can co-exist.
The WTO has also shown endurance against conventions and protocols, certain provisions of which are in variance with WTO rules. For example, the Montreal Protocol requires parties to control their consumption and production of ODS. The Protocol defines consumption as production plus imports minus exports, so parties control trade to satisfy their control schedules.
Also, trade regimes and environmental regimes go hand-in-hand, especially during the bargaining process. For instance, the EU held that its support for Russia’s accession to the WTO would be dependent on its ratification of the Kyoto Protocol. The EU has also tabled in the WTO a list of sectors where third world countries have opportunities to provide services, including environmental services.
The Environmental Goods Agreement (EGA) negotiations seek to liberalize trade in environmental goods through tariff liberalization. Several talks have taken place regarding the same but a final agreement has not been concluded yet.
Additionally, the organization has a web-based environmental database that shows all environment-related notifications and trade policies of members.
Finally, the WTO cannot be blamed for insufficient and non-functional environmental protection measures.
The WTO should ensure that there is transparency in its functioning.
Regulations and barriers for green goods should be reduced or removed completely. Like Canada has noted, trade in environmental services can lower the cost of implementing environmental policies and also create jobs. Environmental goods and technologies should be made available at cheaper costs and environmental-safe products should also be made available to all countries. To sum up, the EGA needs to be concluded.
Sustainable development should be promoted especially in developing countries, they should be provided with technical and monetary assistance for the capacity building while conserving the ecology and resources. This should be done by combining environmental, economic and human development.