Early years: emerging environment debate in GATT/WTO
Trade and environment, as an issue, is by no means new. The link between trade and environmental protection — both the impact of environmental policies on trade, and the impact of trade on the environment — was recognized as early as 1970.
Growing international concern about the impact of economic growth on social development and the environment led to a call for an international conference on how to manage the human environment. The 1972 Stockholm Conference was the response.
The 1971 GATT study
In 1972, the UN held a Conference on the Human Environment in Stockholm. During the preparations in 1971, the Secretariat of the General Agreement on Tariffs and Trade (GATT) was asked to make a contribution.
The Secretariat therefore prepared a study under its own responsibility. Entitled “Industrial Pollution Control and International Trade”, the study focused on the implications of environmental protection policies on international trade. It reflected the concern of trade officials at the time, that such policies could become obstacles to trade as well as constitute a new form of protectionism (i.e. “green protectionism”).
In 1971, GATT Director-General Olivier Long presented the study to GATT members (or the CONTRACTING PARTIES — written in capital letters — as they were officially called). He urged them to examine what the implications of environmental policies might be for international trade.
In the discussions that followed, a number of GATT members suggested that a mechanism be created in GATT for the implications to be examined more thoroughly.
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EMIT — GATT Group on Environmental Measures and International Trade
In November 1971, the GATT Council of Representatives agreed to set up a Group on Environmental Measures and International Trade (also known as the “EMIT” group), which would be open to all GATT members (i.e. GATT signatories). However, the decision also said group would only convene at the request of GATT members. Therefore, it was not until 1991 when the members of the European Free Trade Association asked for the EMIT Group to be convened. (EFTA, at the time included Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland.)
Why, after 20 years of EMIT’s inactivity, did EFTA make the request?
EFTA referred to the upcoming 1992 United Nations Conference on Environment and Development (UNCED), and said GATT should contribute. In addition, there were a few new developments in both trade and the environment in those 20 years.
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Between 1971 and 1991, environmental policies began to have an increasing impact on trade, and with increasing trade flows, the effects of trade on the environment had also become more widespread. This led to a number of discussions:
- During the Tokyo Round of trade negotiations (1973–1979), participants took up the question of the degree to which environmental measures (in the form of technical regulations and standards) could form obstacles to trade. The Tokyo Round Agreement on Technical Barriers to Trade (TBT), also known as the “Standards Code”, was negotiated. Amongst other things, it called for non-discrimination in the preparation, adoption and application of technical regulations and standards, and for them to be transparent.
- During the Uruguay Round (1986–1994), trade-related environmental issues were once again taken up. Modifications were made to the TBT Agreement, and certain environmental issues were addressed in the General Agreement on Trade in Services, the Agreements on Agriculture, Sanitary and Phytosanitary Measures (SPS), Subsidies and Countervailing Measures, and Trade-Related Aspects of Intellectual Property Rights (TRIPS).
- In 1982, a number of developing countries expressed concern that products prohibited in developed countries on the grounds of environmental hazards, health or safety reasons, continued to be exported to them. With limited information on these products, they were unable to make informed decisions regarding their import.
At the 1982 GATT ministerial meeting, members decided to examine the measures needed to bring under control the export of products prohibited domestically (on the grounds of harm to human, animal, plant life or health, or the environment). This led to the creation, in 1989, of a Working Group on the Export of Domestically Prohibited Goods and Other Hazardous Substances.
- In 1991, a dispute between Mexico and United States put the spotlight on the linkages between environmental protection policies and trade. The case concerned a US embargo on tuna imported from Mexico, caught using “purse seine” nets which caused the incidental killing of dolphins. Mexico appealed to GATT on the grounds that the embargo was inconsistent with the rules of international trade. The panel ruled in favour of Mexico based on a number of different arguments. Although the report of the panel was not adopted, its ruling was heavily criticised by environmental groups who felt that trade rules were an obstacle to environmental protection. (Details here)
During this period, important developments were also taking place in environmental forums. The discussion on the relationship between economic growth, social development and environment that began at the Stockholm Conference continued throughout the 1970s and 80s.
In 1987, for example, the World Commission on Environment and Development produced a report entitled Our Common Future (also known as the Brundtland Report), in which the term “sustainable development” was coined. The report identified poverty as one of the most important causes of environmental degradation, and argued that greater economic growth, fuelled in part by increased international trade, could generate the necessary resources to combat what had become known as the “pollution of poverty”.
As a result of these developments, the EMIT group’s proposal met with a positive response. Despite some countries’ initial reluctance to have environmental issues discussed in GATT, they agreed to have a structured debate on the subject.
In accordance with its mandate of examining the possible effects of environmental protection policies on the operation of the General Agreement, the EMIT group focused on the effects of environmental measures (such as eco-labelling schemes) on international trade, the relationship between the rules of the multilateral trading system and the trade provisions contained in multilateral environmental agreements (MEAs) (such as the Basel Convention on the Transboundary Movement of Hazardous Wastes), and the transparency of national environmental regulations with an impact on trade.
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Rio in 1992 and after
The activation of the EMIT group was followed by further developments in environmental forums.
The 1992 UN Conference on Environment and Development (UNCED), also known as the Rio “Earth Summit”, drew attention to the role of international trade in poverty alleviation and in combating environmental degradation. Agenda 21, the programme of action adopted at the conference, also addressed the importance of promoting sustainable development through, amongst other means, international trade.
The preparatory work for the summit had itself influenced developing countries’ approach discussing trade and environment issues in the EMIT group. The concept of “sustainable development” had established a link between environmental protection and development at large.
These moves were about to yield more concrete results within the trading system. The environment and trade were to be linked more explicitly in the new constitution of the multilateral trading system that was to be signed in 1994.
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Trade and environment in the WTO’s founding charter
Towards the end of the 1986–94 Uruguay Round (and two decades after the EMIT group was set up in GATT), attention was once again drawn to trade-related environmental issues, and the role of the soon-to-be-created World Trade Organization (WTO).
As a result, the preamble to the Marrakesh Agreement Establishing the World Trade Organization, refers to the importance of working towards sustainable development. It states that WTO members recognize:
“that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living... , while allowing for the optimal use of the 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.”
The fact that the first paragraph of the preamble recognizes sustainable development as an integral part of the multilateral trading system illustrates the importance placed by WTO members on environmental protection.
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1994 ministerial decision
In Marrakesh in April 1994, ministers also signed a “Decision on Trade and Environment” which states that:
“There should not be, nor need be, any policy contradiction between upholding and safeguarding an open, non-discriminatory and equitable multilateral trading system on the one hand, and acting for the protection of the environment, and the promotion of sustainable development on the other.”
The decision also called for the creation of the Committee on Trade and Environment.