National environmental policies and multilateral trade rules

This paper provides an overview of institutional, economic and legal aspects of the relationship between national environmental policies and the multilateral trading system. In particular, it analyses some of the difficulties the WTO Dispute Settlement System faces when having to evaluate disputes on national environmental policies that have an impact on trade. From an economist's point of view it would be desirable that optimal environmental policies, i.e. policies that correct existing market failures, be ruled consistent with multilateral trade law. This paper argues that WTO law in theory provides appropriate tools to ensure rulings that are consistent with economic thinking. Yet, the paper also argues that economists have a rather imperfect knowledge of the precise welfare effects of different types of environmental policies. In practice, therefore, it is questionable whether economists are able to give adequate guidance to legal experts when it comes to the evaluation of national environmental policies. This is one of the reasons why there continues to be some degree of uncertainty as to the possible interpretations of certain WTO rules in the context of environmental disputes.

No: ERSD-2004-01


Marion Jansen and Alexander Keck Ś WTO

Manuscript date: January 2004

Key Words

environmental policy, international trade, national treatment, WTO

JEL classification numbers  

F18, K33, Q58

back to top

Disclaimer and acknowledgements

The opinions expressed in this paper should be attributed to the authors. They are not meant to represent the positions or opinions of the WTO and its Members and are without prejudice to Members' rights and obligations under the WTO. The authors would like to thank Robert Teh, Frank Wijen and participants at the conference on Globalization and National Environmental Policy (Veldhoven, 22-24 September 2003) for their comments on earlier drafts of this paper. All remaining errors and omissions are the fault of the authors.

Download paper in Word format (262KB, 34 pages)