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Dispute rulings in general

Is it true that WTO rulings don’t allow governments to take the environmental measures they need to protect their natural resources?

It isn’t true. WTO member governments can take the environmental measures they consider to be necessary.

However, WTO rules contain basic principles, including non-discrimination (most-favoured-nation treatment and national treatment) and the prohibition of quotas.

The rules allow exceptions for environmental or security concerns. The WTO takes environmental and health and safety concerns into consideration and recognizes the right of all governments to take measures to protect the environment. Such measures, however, must be applied without discrimination.

GATT’s Article XX allows governments to take “measures necessary to protect human, animal or plant life or health” (Art. XX(b)) and “measures related to the conservation of natural resources” (Art. XX(g)).

The opening part of Article XX says that any environmental action must be applied without arbitrary or unjustifiable discrimination and must not constitute a disguised restriction on international trade.

In other words if a government wants to improve its environment, such measures must be applied even-handedly to like domestic and foreign products. Therefore, discrimination is not permitted but a government can take action to protect its environment and natural resources.

   


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Reformulated gasoline case

Did the WTO ruling go against the United States’ Clean Air Act. Did it lower environmental standards?

No. The ruling did not go against the US act, and it did not lower environmental standards. The issue here was discrimination — unequal treatment.

In the reformulated gasoline ruling, the US had every right to adopt the highest possible standard to protect its air quality.

What the WTO’s Appellate Body confirmed is that WTO members may enact any environmental protection legislation they choose so long as it does not discriminate against foreign imports.

The US lost the case because its requirements for its own domestic gas producers were less stringent than those imposed on imported gasoline (in this case from Venezuela and Brazil) — it applied its gasoline standard in a discriminatory manner.

This difference in treatment (a violation of national treatment) could not be justified. The goal of WTO rulings is to encourage countries to respect the multilateral trading system’s rules, which they themselves have negotiated and agreed, not to lower environmental standards.

   


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The shrimp/turtle dispute

Why did the WTO rule against the US measure for protecting an endangered species?

Many have failed to recognise the importance of the Appellate Body’s ruling in the so-called shrimp/turtle case.

The ruling recognised that under WTO rules governments have every right to protect human, animal or plant life and health and to take measures to conserve exhaustible resources.

Again, the US lost the case because it discriminated. It provided countries in the western hemisphere — mainly in the Caribbean — technical and financial assistance and longer transition periods for their fishermen to start using turtle-excluder devices (TEDs).

It did not give the same advantages, however, to the four Southeast Asian countries (India, Malaysia, Pakistan and Thailand) that filed the complaint with the WTO.

This was a violation of the most-favoured nation principle — treating one’s trading partners equally.

   


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Integrating sustainable development into WTO agreements 

Environmental NGOs demand that the WTO integrate environmental concerns and sustainable development issues in its agreements. Will this happen in the next round? In fact, it is already the case

In the shrimp/turtle dispute the Appellate Body expressly recognized that the reference to sustainable development in the preamble of the WTO Agreement “gives colour, texture and shading to the rights and obligations of members under the WTO Agreement.”

At the Doha Ministerial Conference, Ministers reiterated the importance of sustainable development.

Proposals from WTO members, such as the EU and Norway explicitly call for more environmental concerns to be incorporated into the international trade framework. Other governments propose reductions in subsidies linked to production in agriculture, energy, mining and fishing.

These proposals are essentially driven by environmental concerns. Generally, there is growing recognition (both in advanced and developing economies) that the removal of certain trade restrictions and distortions, would lower environmental damage.