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WTO rules and environmental policies: introduction

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Note: This webpage is prepared by the Secretariat under its own responsibility and is intended only to provide a general explanation of the subject matter it addresses. It is in no way intended to provide legal guidance with respect to, or an authoritative legal interpretation of, the provisions of any WTO agreement. Moreover, nothing in this note affects, nor is intended to affect, WTO members' rights and obligations in any way.

> For a more in-depth discussion of environment-related disputes, see Environment-Related Disputes.

> Secretariat background note on how GATT Article XX is applied in WTO dispute settlement rulings.

> WTO Analytical Index on GATT Article XX

> The General Agreement on Trade in Services (the GATS) has a similar provision in its Article 14. See WTO Analytical Index on GATS Article 14

 


Measures aimed at protecting the environment come in various shapes and forms. Under WTO rules, as confirmed by WTO jurisprudence, members can adopt trade-related measures aimed at protecting the environment, subject to certain specified conditions. These measures are not necessarily discussed at the WTO. And those that come up for discussion are not necessarily raised as formal disputes; they are often raised and discussed at the Committee level. However, certain measures taken to achieve environmental protection goals may, by their very nature restrict trade and thereby impact on the WTO rights of other members. They may violate basic trade rules, such as the non-discrimination obligation and the prohibition of quantitative restrictions. The Appellate Body in Brazil — Retreaded Tyres recognized that such a tension may exist between, on the one hand, international trade and, on the other hand, public health and environmental concerns. This is why exceptions to such rules are particularly important in the trade and environment context.

These exceptions exist to ensure a balance between the right of members to take regulatory measures, including trade restrictions, to achieve legitimate policy objectives (e.g. the protection of human, animal or plant life and health, and natural resources) and the rights of other WTO members under basic trade rules. Since the entry into force of the WTO in 1995, the WTO dispute settlement body has had to deal with a number of disputes concerning such measures. Four disputes are particularly relevant: the US — Gasoline case (clean air), the US — Shrimp case (turtles), the EC — Asbestos case (human life and health) and the Brazil — Retreaded Tyres case (human, animal and plant life and health).

So far, these disputes have been brought in relation to the application of GATT rules. Several other WTO agreements may be relevant to the protection of the environment as well. In particular, the TBT Agreement and the SPS Agreement seek to ensure that requirements that products must fulfil for environmental purposes do not create unnecessary obstacles to international trade. At the same time, these agreements recognize explicitly members' rights to protect animal or plant health and the environment at the level they choose. (See for more information “Other relevant WTO texts”).

In light of the jurisprudence to date, it is fair to say that WTO rules provide ample space for environmental concerns to be accommodated. Even if a measure is found to be inconsistent with basic WTO disciplines, it may be justifiable under one of the exceptions, for example, if it pursues an environmental or human health objective and if its application does not reveal a protectionist intent.

WTO members have the right to adopt trade-related measures to protect the environment...

WTO members can adopt trade-related measures to protect the environment and human health and life as long as such measures comply with GATT rules, or fall under the exceptions to these rules. This right has been affirmed by panels and the Appellate Body time and again.

In the first case decided by the new WTO dispute settlement body, US — Gasoline, the Appellate Body asserted WTO members' autonomy to determine their own environmental policies. The Appellate Body cautioned, however, that a balance needed to be maintained between market access obligations, on the one hand, and the right of members to invoke the environmental justifications foreseen in the GATT, on the other, so that one objective is not eroded or compromised by the pursuit of another.

... and even to be exempted from basic GATT provisions, as long as the measures are justified under Article XX

Article XX on General Exceptions lays out a number of specific instances in which WTO members may be exempted from GATT rules. Two exceptions are of particular relevance to environmental and human health protection: Articles XX(b) and (g) allow WTO members to justify GATT-inconsistent measures if these are either necessary to protect human, animal or plant life or health, or if the measures relate to the conservation of exhaustible natural resources, respectively.

In addition, the introductory paragraph of Article XX (its “chapeau”) has been designed to prevent the misuse of trade-related measures. Pursuant to the chapeau, an environmental measure may not be “applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.” These additional safeguards seek mainly to ensure that, by allowing a measure to be inconsistent with GATT rules through the use of exceptions, protectionism is not introduced through the back door.
 

Key GATT disciplines
GATT exceptions
Other relevant WTO texts
Environment-related disputes

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