The author argues that the utility of Article XX of GATT as an environmental protection proviso is compromised by the WTOs broader commitment to free trade. The emphasis is on removing restrictions to trade with the result that environmental protection has an uneasy existence in the framework of the exceptions provided for under Article XX. The limited application of Article XX with respect to environmental protection is entirely flawed because he promotion of free trade is no more important than environmental protection. It is therefore important to strike a fair balance between free trade and environmental protection if the international free trade ambitions of the WTO is going to succeed. After all the underlying policies of the free trade regime is predicated on the belief that international free trade depends almost entirely on cooperation between national regimes.
In this regard, this paper will offer a critical analysis of the utility of Article XX in the framework of the WTOs environmental protection polices and its place within the scope and range of the WTOs free trade regime. This will require an evaluation of the manner in which the WTOs Dispute Resolution Panel and its Appellate Body have resolved conflicts arising out of environmental protection claims. It will be argued that the Article XX is unquestionably well oiled toward the preservation of free trade but rather restrictive in terms of its application to environmental protection. In assessing the utility of Article XX it becomes obvious that WTO consistently emphasizes the significance of free trade quite often to the detriment and neglect of environmental protection policies. In this regard, as an instrument facilitating free trade, the utility of Article XX is almost perfect. However, as an instrument accommodating environmental protection, the utility of Article XX is questionable at best.
The WTOs Environmental Protection Regime
BackgroundOverview
In 1948 the General Agreement on Tariffs and Trade (GATT) was established as a temporary multilateral trade agreement intending to regulate international trade agreements until the International Trade Organization (ITO) could be formally implemented. GATT singularly depended upon the level of commitment of the contracting states and their abilities to negotiate multilateral trade agreements. Ultimately it was finally agreed that developing and least developed nations, overpowered by developed countries could not effectively participate under the GATT regime.
The WTO and Environmental Protection
After a number of negotiations by delegates representing contracting states, under the auspices of the Uruguay Rounds, GATT replaced the WTO in 1995. GATT created new obligations and reshaped existing obligations designed to ensure that contracting states were bound to a trans-border trade regime that removed or at the very least minimized trade restrictions and facilitated increased participation by developing and least developed member states. GATT also commits contracting states to indiscriminate treatment of WTO trade partners. It is therefore not unreasonable t conclude that the WTOs primary objective is the free movement of goods and services among its contracting states. This will be borne out by the discussion on previous decisions made by the WTO Dispute Resolution Panel and its Appellate Body.
There is very little attention to environmental protection within the legal framework of GATT. In fact Article XX of the GATT is the best that the WTO has to offer in the way of environmental protection. As a tool for facilitating free trade, Article XX is entirely reasonable in providing for exemptions to trade restrictions in such a way that they are not unreasonable and do not deliberately compromise the WTOs free trade agenda. However, as a instrument calculated to respect national environmental policies, Article XX is sorely lacking.
To this end, Article XX makes provision for general exceptions on the part of contracting states with respect to free trade obligations to treat member states indiscriminately. Taking a strict approach to the interpretation of GATTs Article XX, its general exceptions allows contracting states to rely on national environmental protection measures that apply to their respective territorial integrity. Article XX(b) in particular mandates that GATT will not be construed so as to prevent contracting states to take measures calculated to protect human, animal or plant life or health. Even so, Article XX(b) is limited by a proviso contained in Article XX(d) which operates to minimize, if not eliminate the freedom to take advantage of the exceptions contained in Article XX. In this regard, Article XX(d) goes on to provide that any measures taken by contracting states are required to be consistent with the GATT agreement.
Separate apart from Article XX the WTOs attention to environmental protection can be found in the Sanitary and Phytosanitary Agreement (SPS) and Measures and Agreement on Technical Barriers to Trade (TBT). The SPS confers upon contracting states an inherent right to establish and regulate their own safety standards over the production of animal and food products, although those safety standards are required to be founded on scientific reasoning. Even so, the emphasis returns to free trade, particularly since any safety standards adopted by contracting states are required to be genuine and not designed so as to place unreasonable restrictions on trans-border trade.
The TBT functions to govern how safety standards are tested, regulated and certified. However, the manner in which these standards are tested, regulated and certified are construed by reference to the requirement that they be reasonable and that they comply with international rather than national standards. Ultimately, both the TBT and the SPS do not operate outside of the WTOs free trade regime and as a result they are interpreted by reference to the obligations provided for in the WTO agreements. In the final analysis, the TBT and the SPS are of very little utility particularly if contracting states set safety standards that somehow restrict cross-border trade and those restrictions can somehow be interpreted as unreasonably restricting free trade across borders in a discriminatory manner.
Ultimately, Article XX and the GATT Preamble together with the SBS, the TBT, provide the only basis for the right to territorial environmental protection. The Preamble provides that the WTO is committed to the liberalization of trade and takes dual approach by promoting free production and trade from the environment while at the same time encouraging and promoting protection and enhancement of the environment.
This dual approach was focused on in United States Restrictions on Imports of Tuna DS, a WTO dispute.
This case can be said to have drawn specific attention to the conflicts and tensions between trade liberalization and environmental protection. In the United States Restrictions on Imports of Tuna (this case is discussed in greater detail in the section below) the WTO Dispute Resolution Panel found that an American law banning the importation of tuna caught by means that could be harmful to the dolphin population contradicted its GATT obligations. In response to this decision, both US and European Community (EC) environmentalists advocated for a modification of the GATT trade regime so that contracting states could be at liberty to implement and enforce their own environmental policies.
The WTOs response to this pressure from the EC and the US was to establish and appoint the Committee on Trade and Environment (CTE) for the purpose of investigating the tensions and connections between trade policies and the environment. The CTE concluded that the best approach to resolving these tensions was the adoption of Principle 12 of the United Nations Conference on Environment and Development (UNCED) which had been solidified in Rio de Janeiro in 1992. To this end, Principle 12 provides that in respect to environmental measures, these measures should not be the subject of unilateral action and should be such that they cannot be construed as a pretext for unreasonably restricting trans-border free trade. Put another way, Principle 12 advocates that environmental issues can be the subject of negotiation within the context of a MEA but by no means can they be imposed singularly.
The Doha Ministerial Declaration 2001 adopted Principle 12 although it did speak to the feasibility of allowing contracting states some liberty in implementing measures pass that are designed to protect its territorial environment. Be that as it may, the Doha Ministerial Declaration, as is characteristic of the WTO free trade inclinations place the emphasis on the significance of limiting the freedom to implement measures so that they did not contradict or compromise the trade liberalization ambit of the WTOs agreement. The new provisions are contained under GATT 1994 which are essentially no different from the provisions contained in GATT 1947 in terms of their attention to environmental protection.
By virtue of GATT 1994 contracting states have general or basic obligations to treat all trade partners indiscriminately under the auspices of the Most Favoured Nation Treatment (MFN). Moreover, contracting states are also required to treat trade partners in a manner consistent with how they treat domestic traders under the ambit of National Treatment. Each of these provisions in operation can place restrictions on any right to calculated to facilitate the contracting states attempt to protect its environment. Article XI of GATT 1994 can be construed as placing further restrictions on the right of contracting sates to protect their territorial environments. Article XI of GATT 1994 provides for the Elimination of Quantitative Restrictions on imports and exports of all products originating from member states. Article XX of GATT 1994 continues to provide for general exceptions to these obligations and are essentially the same as those exceptions contained in Article XX of GATT 1947 at least substantively. The only discernible difference is that Article XX of GATT 1994 attempts to incorporate Principle 12 of UNCED. However, incorporating Principle 12 of UNCED does not advance the utility of Article XX, as it basically clarifies the prevailing practice that preceded its interpretation. If anything Principle 12 of UNCED fortifies the utility of Article XX as a tool for safeguarding free trade in that it will not permit exemptions unless it is the subject of agreement between the relevant contracting states. So while the incorporation of Principle 12 fortifies the utility of Article XX as a free trade safeguard, it does nothing to strengthen the contracting states right to impose restrictions in preservation of its environment. Ultimately Article XX of GATT 1994 accomplishes essentially the same thing that Article XX of GATT 1947 did. Both Articles do no more than mandate that a contracting state is at liberty to take appropriate environmental protection measures provided those measures do not unreasonably restrict trade, are consistent with the various obligations under the WTO and are negotiated by virtue of a MEA.
Upon any construction of the WTOs free trade regime, the primary purpose is to accommodate and provide for liberal trade between the Member States. Based on this objective is entirely possible that any national environmental protection policy will have difficulty succeeding in terms of meeting the cohesion test within the WTOs legal regime unless those environmental protection measures are agreed to under a MEA or some other multi-lateral or bi-lateral trade agreement between contracting states. This is borne out by the approach taken by the WTO Dispute Resolution Panel and its Appellate Body.
Ultimately Article XX leaves the protection of the environment to MEAs. MEAs are replete with diversity in that some MEAs cover specific environmental issues or cover a specific region. As of 2001 there were more than 500 MEAs each of which are divided into various categories such as chemicals and hazardous wastes conventions, atmosphere conventions, biodiversity-related conventions, atmosphere conventions and regional seas conventions. These conventions have the common goal of protecting the environment against abusive use by promoting sustainable development. Essentially, if a WTO contracting state is not a party to a MEA, they are for all intents and purposes not bound to environmental restrictions in the production and trade in goods. The only restraints in such circumstances are those provided for with respect to safety standards under the SPS and TBT.
WTO Environment Disputes
In the United States Restrictions on Imports of Tuna, GATT BISD (39th Supp. 1993) 155 pursuant to national law the US banned yellow-fin tuna imports on the grounds that the practices used for catching this brand of tuna was injurious to the dolphin population. Mexico filed a GATT complaint alleging that the US was in breach of Article XI(1) obligations which prohibited the implementation of national measures that placed restrictions on imports and exports. The US argued that the applicable US legislation could be permitted under Articles III(1) and III (4) of GATT since that legislation complied with the MFN and National Treatment regimes. For the US the issue was the right to protect its environment on the basis that it was a proper exemption under Article XX and did not encroach the MFN and favoured nation tenets of the WTOs free trade regime.
The GATT Dispute Resolution Panel did not agree with the arguments put forth by the US and ruled Article III was only applicable to the actual products and not the manner in which products were harvested. It therefore followed that the national law banning tuna imports could not be justified so that the US ban was a breach of the USs obligations under GATT. This case came up again (previously referred to at p 3) when the US banned tuna imports processed in member states who imported the yellow fin tuna from countries who had caught the tuna in a manner inconsistent with the US law. At previously noted the WTO Dispute Resolution Panel essentially followed the same reasoning as before.
A similar issue came up before the WTOs Appellate Body in 1997 in United States Import Prohibition of Certain Shrimp and Shrimp Products. The disputing parties were Thailand, Pakistan, Malaysia and India who alleged that the US ban on shrimp and shrimp products under US Public Law 101-102 were inconsistent with its obligations under the WTO. Under the US Endangered Species Act 1973 certain species of turtles are characterized as endangered. The 1973 Act requires that in the course of shrimp trawlers within the US use certain turtle excluder devices must be uses so as to safeguard the safety of these specific turtles. Section 609 of the US Public Law 101-102, supplements the 1973 Act by providing that any shrimp trapped by devices that could harm sea turtles are liable to import bans into the US. The complainants argued that the US ban was contrary to Articles I, XI and XIII of GATT 1994.
Once again the WTO Dispute Resolution Panel ruled that the ban was a violation of Article XI(1) of GATT 1994 which essentially prohibited placing restrictions that could not be justified under Article XXs exemptions. The Appellate Body however, revisited the Panels decision and held that the US measures could be justified on environmental protection grounds under Article XX of GATT. However, the manner in which those measures were applied were arbitrary and discriminating and therefore could not properly be invoked under Article XX. The Appellate Body went further to state that since the US had provided both financial and expert support to some of its other trade partners for adding them in the use of the turtle-excluder devices and had failed to provide the same support to the claimants the treatment was therefore discriminatory and as a result entirely unjustifiable.
The Appellate Body modification of the WTOs Dispute Resolution Bodys decision is significant in that it did recognize the importance of environmental protection and went so far as to say that MEAs were binding on the WTO provided all disputants were members to the MEA in question. Even so, what could have been a potentially groundbreaking case in resolving the tension between free trade and environmental protection was defeated by the ruling that environmental protection provisions on both a domestic and multilateral levels could only be binding on WTO member states if the manner in which it was applied was equitable as between all member states. It places an onerous burden on contracting states to provide economic andor expert support to all member states seeking to export goods that are harvested in a manner harmful to the target states environment.
The WTOs Dispute Resolution Body took a more liberal approach in a more recent decision. In European Communities Measures Affecting Asbestos and Asbestos-Containing Products Appellate Body Report (12 March 2001) WTDS 135ABR the WTO Canada challenged a French statute banning asbestos imports, which had been exported by Canada. Canada argued that the French ban damaged its trade in asbestos export and the ban was entirely inconsistent with Frances obligations under the WTOs framework since France itself permitted the use of the product within France under certain circumstances and for specific purposes.
Canada argued further that there was further discrimination under Frances law in that one brand of asbestos (the type exported by Canada) was caught by the Act and another brand of asbestos (the type used in France) was not. Canada therefore submitted that France contravened and disrepected the national treatment proviso contained in GATTs Article III ans well as GATTs provision against quantitative import restrictions as contained in its Article XI. Moreover, Canada submitted, that the French provision banning imports of Asbestos also violated Article 2 of the TBT agreement which permitted the implementation of reasonable safety measures in the production of certain potentially dangerous products.
The WTOs Dispute Resolution Panel agreed with the arguments presented by Canada and ruled that the French provision did violate Article III of GATT by failing to equally treat like products in the same way. Even so, the Panel ruled that the measures taken by France could be justified on the grounds that under Article XX it was necessary for the protection of life and health. On an appeal to the WTOs Appellate Body the decision of the Panel was affirmed. This case at the very least demonstrates that the WTO is willing to acknowledge that protection of the environment is a matter for domestic control provided such measures were extended indiscriminately to WTO member states.
The WTO Dispute Resolution subscribed to essentially the same reasoning in the case of United States Standards for Reformulated and Conventional Gasoline Appellate Body Report WTDSABR (29 April 1996). Brazil and Venezuela took a position against a US environmental protection regulation that required certain gasoline products imported in the US be processed so as to meet a minimum degree of clean air emissions. standards However, the clean air emissions standard was measured one for gasoline origination from the US gasoline and another way for gasoline originating from abroad. As a result foreign gasoline refiners and exporters incurred greater expense than domestic.
The claimants argued that the US contravened the national treatment doctrine contained in Article III of the GATT 1994. It was also argued that Article XXs exceptions on environmental grounds could not be invoked to justify the US clean air emissions regulation. The WTO Dispute Resolution Panel accepted the arguments made by the complainants and the decision was affirmed on appeal by the Appellate Body. This case can be distinguished from the fact of the European Communities- Measures Affecting Asbestos case on the grounds that the US did not actually ban the import of a potentially dangerous product, but rather placed erroneous conditions on the exports. It is doubtful however, whether the WTO would have ruled against the complainants had the US placed a total ban on the products. It is difficult to predict with any degree of precision since the WTO has demonstrated that it is entirely inconsistent in its rulings. The only consistency appears to be in the WTOs emphasis on promoting free and fair trade among its Member States. It therefore follows that if the WTO Dispute Resolution Panel can rationalize the setting aside of a ban in favour of free trade it will.
In the European Communities Measures Affecting the Approval and Marketing of Biotech Products Panel Report WTDS 291R (29 Sept. 2006) 6 EC member States imposed an EC mandated ban on imports made up of genetically modified food products which had a sunset clause intending to run from 1998 to 2003. The US, Argentina and Canada opposed the ECs bans before the Dispute Resolution Panel and argued that the bans were inconsistent with the WTO trade policies. The Panel ruled the moratorium from 1998 to 2003 provided for such a lapse of time that it was inconsistent with Article 8 of the SPS Agreement causing excessive delays for EC approval.
The difficulty with this case was that the WTO narrow interpretation of risk assessment failed to go beyond the required standard contained in the SPS. The EC had a legitimate concern that genetically modified foods had not been proven to be safe. In the final analysis the ECs position was not based solely on market considerations whereas the WTOs was primarily motivated by policies connected to trade liberalization.
The EC challenged a Brazilian ban on retreaded tyres in Brazil Measures Affecting Imports of Retreaded Tyres, Panel Report, WTDS 332R (2007). The Brazilian ban did not extend to other Mercosur countries and the EC took the position that he ban contravened GATT 1994 Articles 1(1), III (4), XI (1) and XIII(1). The WTOs Dispute Resolution Panel essentially agreed ruling that the measures could not be justified under the ambit of Article XX of GATT since it was discriminatory in its application.
Each of these cases demonstrate that the WTOs concern is not with the specific aspect of the environment that national measures intend to protect. Rather the WTO turns its attention to the manner in which those protection measures are applied between member states. Ultimately, if the WTO is convinced national environmental protection measures are administered discriminately it will not uphold the measures under Article XXs exemption regime
Recognizing and accepting that environmental issues are growing more important in todays international climate, the WTO should adopt a position in which MEAs take precedence over WTO trade policies. The exemptions under Article XX, as they are currently applied, appear to depend on entirely illogical grounds. It is illogical in that the WTO starts out with the emphasis on removing barriers to trans-border trade so that any exemption regardless of how reasonable will be struck down unless it is an extraordinary case and somehow manages to facilitate free trade. Rulings suggesting that the environmental protection measure is unjustified in circumstances where the measure taken are not applied to all member states do not appear to be entirely fair. Certainly the WTO does not intend to suggest that a contracting state accord all member states the same financial and expert support that it provides other trade partners. Nor can it be in the interest of fair and free trade to expect that contracting states equally deny all member states financial and expert support in safeguarding its environmental protection policies. Logically, the level of financial and expert support accorded a member state to another is proportionate to the value of their respective trade agreement and the member states ability and facilities. Moreover, these kinds of rulings fail to take into account the seriousness of the environmental element requiring protection.
Certainly, if the discriminate application of the measure is not justified, the WTO should take the position that it is either applied equally or it is not applied at all. If a Member State is serious about the environmental element it seeks to protect by implementing a protective measure then it would have no difficulty agreeing to such a finding. This is preferable to the current trend by the WTO in finding that the indiscriminate application of an entirely reasonable environmental protection measure is illegal.
The only reasonable method for improving the utility of Article XX is for it to be amended. In this regard, Article XX should specifically provide for environmental protection as an exemption to contracting states obligations under GATT. This is far more preferable to the current human, animal or plant life or health exemption under Article XX. But as Hamid argues, amendments to GATT requires negotiations and meetings which have the capacity to absorb time and money and have historically yielded vague agreements that have given rise to the current confused and vague legal framework in the first place. In this regard, it would appear that WTO contracting states will have to live with the inherently useless nature of Article XX as it relates to the environment. The best that can be hoped for, is that contracting states may be able to convince the WTO in the meantime, that protection of the environment should be a matter for domestic regulation and should therefore be a clear exemption to GATT under Article XX. As for the utility of Article XX as an instrument safeguarding free trade and safeguarding against unreasonable restrictions on free trade, WTO contracting states are assured of the right to the removal of trade restrictions.
The environmental protection steps that are taken by WTO contracting states should take precedence over WTO trade policies in circumstances where those measures do not obviously intend to restrict cross-border trade. This would facilitate the agenda of contracting states who have signed MEAs and by doing so, are bound by trade restraints specifically designed to phase out certain exploitations among member states and to exclude trade with non Member States. To this end, the WTOs Dispute Resolution Body should always have regard to the MEA agreement to which a defendant is attached and consider whether or not the disputant is a prohibited trade party under the particular MEA. In such a case the MEA should prevail provided its mandate has a legitimate cause. After all the WTO itself claims to have the protection of the environment at the forefront of its liberal trade policies. It is perhaps time that the WTO through its Dispute Resolution Panel and Appellate Body begin to prove this commitment to environmental protection by giving equal weight to MEAs and its members environmental protection policies and practices. The line should only be drawn when the protection measure is obviously for purely altruistic reasons.
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