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Trade, Environment, and
the Millennium,
Second Edition

EDITED BY
GARY P. SAMPSON
AND W. BRADNEE CHAMBERS

UNITED NATIONS UNIVERSITY

PRESS
The United Nations University is an organ of the United Nations established
by the General Assembly in 1972 to be an international community of scholars
engaged in research, advanced training, and the dissemination of knowledge
related to the pressing global problems of human survival, development, and
welfare. Its activities focus mainly on the areas of peace and governance, envi-
ronment and sustainable development, and science and technology in relation
to human welfare. The University operates through a worldwide network of
research and postgraduate training centres, with its planning and coordinating
headquarters in Tokyo.
The United Nations University Press, the publishing division of the UNU,
publishes scholarly and policy-oriented books and periodicals in areas related to
the University’s research.
Trade, Environment, and the Millennium
This page intentionally left blank
Trade, Environment, and the
Millennium
Second Edition

EDITED BY GARY P. SAMPSON

AND W. BRADNEE CHAMBERS

a United Nations
University Press
TOKYO u NEW YORK u PARIS
( The United Nations University, 2001
The views expressed in this publication are those of the authors and
do not necessarily reflect the views of the United Nations
University.
United Nations University Press
The United Nations University, 53-70, Jingumae 5-chome,
Shibuya-ku, Tokyo 150-8925, Japan
Tel: þ81-3-3499-2811 Fax: þ81-3-3406-7345
E-mail: [email protected]
http://www.unu.edu
United Nations University Office in North America
2 United Nations Plaza, Room DC2-1462-70, New York, NY
10017, USA
Tel: þ1-212-963-6387 Fax: þ1-212-371-9454
E-mail: [email protected]
United Nations University Press is the publishing division of the
United Nations University.
First published 1999
Second edition 2001
Cover design by Joyce C. Weston
Printed in the United States of America
UNUP-1064
ISBN 92-808-1064-2
(ISBN 92-808-1043-X first edition)
Library of Congress Cataloging-in-Publication Data
Trade, environment, and the millennium / edited by Gary P.
Sampson and W. Bradnee Chambers. — 2nd ed.
p. cm.
Includes bibliographical references and index.
ISBN 92-808-1064-2
1. International trade—Environmental aspects. 2. Commercial
policy—Environmental aspects. 3. Environmental policy—
Economic aspects. 4. World Trade Organization. I. Sampson,
Gary P. II. Chambers, W. Bradnee.
HF1379 .T723 2001
3820 .92—dc21 2001007159
 CONTENTS

ACKNOWLEDGEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

LIST OF ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

INTRODUCTION AND OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . 1

Gary P. Sampson and W. Bradnee Chambers

1. TRADE AND ENVIRONMENT: STRENGTHENING

COMPLEMENTARITIES AND REDUCING
CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Rubens Ricupero (Secretary-General, UNCTAD)

2. TRADE AND ENVIRONMENT: HOW REAL IS

THE DEBATE? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Magda Shahin

3. BREAKING THE DEADLOCK: A POSITIVE

AGENDA ON TRADE, ENVIRONMENT, AND
DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Veena Jha and René Vossenaar

4. ENVIRONMENTAL GOVERNANCE AT THE WTO:

OUTREACH TO CIVIL SOCIETY. . . . . . . . . . . . . . . . . . . . . . . 119
Daniel C. Esty

5. THE WTO DISPUTE SETTLEMENT SYSTEM. . . . . . . . . 145

William J. Davey

6. FISHERY SUBSIDIES AND THE WTO . . . . . . . . . . . . . . . . 175

David K. Schorr
vi Contents

7. IMPROVING THE AGREEMENT ON SANITARY

AND PHYTOSANITARY STANDARDS . . . . . . . . . . . . . . . 207
Steve Charnovitz

8. ENVIRONMENTAL LABELLING SCHEMES

REVISITED: WTO LAW AND DEVELOPING
COUNTRY IMPLICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Arthur E. Appleton

9. THE AGREEMENT ON TECHNICAL BARRIERS TO

TRADE, THE COMMITTEE ON TRADE AND
ENVIRONMENT, AND ECO-LABELLING . . . . . . . . . . . . 267
Doaa Abdel Motaal

10. THE PRECAUTIONARY PRINCIPLE . . . . . . . . . . . . . . . . . . 287

James Cameron

11. ENVIRONMENTAL TREATIES AND TRADE:

MULTILATERAL ENVIRONMENTAL AGREEMENTS
AND THE MULTILATERAL TRADING SYSTEM . . . . 321
Duncan Brack

APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353

I. TRADE AND ENVIRONMENT IN THE

GATT/WTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
WTO Secretariat

II. KEY TRADE AND ENVIRONMENT ISSUES:

PROBLEMS AND POSSIBLE SOLUTIONS . . . . . . . . 405
Veena Jha and René Vossenaar

LIST OF CONTRIBUTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423

INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
 ACKNOWLEDGEMENTS

Trade, Environment, and the Millennium was prepared with the assis-
tance of many people. First and foremost we would like to thank the
authors for their contributions, and Janet P. Boileau and Manfred
Boemeke of UNU Press for their flexibility, hard work, and initia-
tive in getting this volume published. We would like to express our
appreciation to Risa Schwartz and Shona E. Dodds for their tireless
dedication in assisting us with the editing of the chapters. We
would also like to thank Miho Komiyama, who continues to lend
her valuable support and help to the Environment and Multilater-
alism Programme of the Institute of Advanced Studies (IAS) of the
United Nations University.
Lastly, we would like to thank Professor Tarcisio Della Senta, Di-
rector of the IAS, who gave his full commitment and support to this
book from the very beginning.
This page intentionally left blank
 ABBREVIATIONS

APEC Asia-Pacific Economic Cooperation Conference

ASEAN Association of South East Asian Nations
BAT best available technology
BSE bovine spongiform encephalopathy (‘‘mad cow dis-
ease’’)
BTA border tax adjustment
CAA Clean Air Act (USA)
CAP Common Agricultural Policy (EU)
CBD Convention on Biological Diversity
CBTF Capacity Building Task Force on Trade, Environment
and Development
CEPA Canadian Environmental Protection Act
CFCs chlorofluorocarbons
CITES Convention on International Trade in Endangered
Species of Wild Fauna and Flora
CPC Central Product Classification (UN)
CSD Commission on Sustainable Development
CTBT Committee on Technical Barriers to Trade
CTE Committee on Trade and Environment
CWA Clean Water Act (USA)
DPG domestically prohibited good
DSB Dispute Settlement Body
DSU Dispute Settlement Understanding
EC European Communities
ECJ European Court of Justice
EFTA European Free Trade Association
EIA environmental impact assessment
EIS Environmental Impact Statement
EMIT Group Group on Environmental Measures and International
Trade
EPA Environmental Protection Agency (USA)
EST environmentally sound technology
EU European Union
x Abbreviations

FAO Food and Agriculture Organization of the United

Nations
FCCC Framework Convention on Climate Change
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GMO genetically modified organism
ICJ International Court of Justice
IGO intergovernmental organization
IPOA International Plan of Action (FAO)
IPRs intellectual property rights
ISO International Standards Organization
ITO International Trade Organization
LCA life-cycle analysis
LMO living modified organism
MAI Multilateral Agreement on Investment
MEA multilateral environmental agreement
MFN most-favoured nation
MRA mutual recognition agreement
MTS multilateral trading system
NAFTA North American Free Trade Agreement
NEPA National Environmental Policy Act (USA)
NGO non-governmental organization
NPR-PPMs non-product-related process and production methods
ODS ozone-depleting substances
OECD Organisation for Economic Co-operation and Devel-
opment
PIC prior informed consent
PPMs process and production methods
PVP Plant Variety Protection
R&D research and development
S&D special and differential (treatment)
SCTE Sub-Committee on Trade and Environment
SMEs small and medium enterprises
SPS Sanitary and Phytosanitary measures
TBT Technical Barriers to Trade
TRIPS Trade-related Intellectual Property Rights
 Abbreviations xi

UNCED United Nations Conference on Environment and

Development
UNCTAD United Nations Conference on Trade and Develop-
ment
UNEP United Nations Environment Programme
UPOV Union for the Protection of New Varieties of Plants
WEO World Environmental Organization
WTO World Trade Organization
WWF World Wide Fund for Nature
 Introduction and Overview
Gary P. Sampson and W. Bradnee Chambers

The world spotlight was on the World Trade Organization (WTO)

at its third meeting of trade ministers in Seattle in December 1999.
At this meeting many had hoped a new round of multilateral trade
negotiations – the Millennium Round – would be launched. Not
only were the new negotiations not launched, the meeting ended in a
state of disarray, with the WTO facing criticism from many quarters.

As discussion continues in the hope of launching a new round of

negotiations at the next ministerial meeting at Doha in Qatar in
November 2001, and given the increasing attention paid by many
environmentalists to the debate over the apparent conflict in trade
and environment policy, it is clear that trade and environment issues
will loom large at the meeting in Doha. How governments choose
to deal with these issues will have important implications for both
trade policy and environment policy well into the twenty-first cen-
tury.

The issues raised in this debate are complex and touch on some
of the most fundamental aspects of WTO concepts, principles, and
rules. The complexity is further increased owing to the diversity of
views and the number of stakeholders involved. Although all parties
assign a fundamental priority to the protection of the environment,
the perceived role of the WTO in achieving these objectives differs
greatly across groups. Reaching agreement on significant changes in
rules and practices will not be an easy task in an organization where
decisions are adopted on the basis of consensus.
2 Introduction and Overview

Many environmentalists, for example, are of the view that the

WTO rules – and trade liberalization generally – accelerate un-
sustainable consumption and production patterns that cause resource
depletion, loss of species, and other environmental degradation. They
argue that WTO rules constrain domestic legislators from protecting
the environment by using trade measures to enforce environmental
standards internationally. The inability in the WTO to discriminate
between products on the basis of how they were produced runs con-
trary to the objectives of many environmentalists. Some environmen-
tal non-governmental organizations (NGOs) perceive the WTO as an
instrument of globalization that is non-transparent and unaccount-
able to the public at large.
For their part, many developing countries are deeply suspicious
of what could follow from changing the WTO rules and processes
to meet the concerns of environmentalists. Restricting trade on the
basis of how goods are produced for export, for example, may mean
poorer countries being obliged to adopt standards applied by their
developed counterparts in their own production processes. These
standards may not be appropriate in the sense of reflecting the de-
velopment priorities of the countries producing the goods, their re-
source endowments, or their available technology. In addition, it is
feared that, although such policies may well be construed with good
intentions in mind, they might also fall captive to protectionist in-
terests. Further, if standards relating to the environment are ac-
cepted as a basis for trade discrimination in the WTO, why not other
standards that relate to production methods such as labour standards?
On the other hand, many in the trade community (developed and
developing countries alike) argue that the General Agreement on
Tariffs and Trade (GATT) – and now the World Trade Organization
– has been successful over the past half-century at doing what it has
been clearly mandated to do. The WTO has two primary objectives:
first, progressively to remove trade restrictions and distortions that
protect uncompetitive producers and deny consumers the possibility
to purchase goods and services at the most competitive international
prices; secondly, to maintain the open and liberal multilateral trad-
ing system based on non-discriminatory rules as a means to ensure
 Trade, Environment, and the Millennium 3

predictability and stability in world trade. They point to the fact

that more than 6 trillion dollars worth of goods are traded according
to WTO rules and almost 2 trillion dollars of world services. This
figure represents 26 per cent of the world total output and is pro-
jected to increase to 45 per cent by 2010. Through eight rounds of
trade-liberalizing negotiations, tariffs on industrial goods have been
reduced from 45 per cent in 1947 to an average of approximately
4 per cent today. International trade increased at a rate faster than
economic growth by an average 2 per cent per annum between
1948 and 1999,1 leading to higher standards of living and levels of
employment and greater prosperity in many countries. The argu-
ment continues that trade liberalization is not a cause of environ-
mental degradation, but rather a source of increased real resources
that can be directed at the national level towards effective environ-
mental management policies.
Although WTO rules (and those of GATT prior to it) may have
brought stability and predictability to the world trading system, the
sorts of objections raised by the environmental community, as well
as the concerns of developing countries in addressing them, cannot
be ignored. The challenge is how to deal with these concerns with-
out severely damaging the credibility and usefulness of the WTO
and the carefully negotiated Uruguay Round Agreements based
on non-discrimination. Conducting international trade according to
rules – rather than commercial or political power – is accepted by
all WTO members to be one of its most important characteristics.
Not only is accommodating the perceptions of the role of the
WTO held by the stakeholders complex, so too are the issues that
are the subject of the trade and environment debate. In recent years
much of the discussion has centred on the possibility of there being
a natural, or in-built, potential for conflict between trade policy and
policies relating to the environment. The numerous examples in-
clude: higher environmental standards in an importing country than
an exporting country leading to a loss of international competitive-
ness; a lowering of environmental standards to gain international
competitiveness; compensatory border adjustment measures to offset
environmentally driven taxes or subsidies conflicting with trade rules;
4 Introduction and Overview

trade liberalization and economic growth leading to resource de-

pletion and environmental degradation; cross-border pollution or
damage to the global commons, with trade sanctions as retaliatory
measures; disguised protection, with domestic standards tailored to
discriminate against imports; and conflicting obligations in multi-
lateral environment agreements and trade agreements. To these can
be added: health concerns and the future WTO legitimacy of mea-
sures to restrict trade where standards differ across countries (e.g.
with respect to trade in products derived from genetically modified
organisms); the role of precaution in the justification of these differ-
ing standards; the extent to which labelling products according to
the process used to produce them provides a solution; and whether
or not such labelling is in fact WTO legal.
WTO members recognized some time ago the complexity of the
relationship between trade policy and environment policy. As a re-
sult of discussions that coincided with the later stages of the Uru-
guay Round, a Committee on Trade and Environment (CTE) was
established by the WTO General Council in January 1995. The
CTE terms of reference are far-reaching and indicate an early concern
on the part of WTO members with ensuring that WTO rules are
consistent with, and supportive of, environmental policies. The CTE
reported to the first biennial meeting of the Ministerial Conference,
and its work and terms of reference were reviewed in the light of its
recommendations. This report was heavily negotiated, forwarded to
ministers, and adopted in Singapore in December 1996. Although
the work as described in the report has been comprehensive and ad-
dressed many of the complex issues described above, it has fallen
short of fulfilling the expectations of those who saw it as a means to
resolve the issues of concern of environmentalists. The work of this
committee provides a reference point for the current thinking in the
WTO. It is described in some detail in Appendix I.
The motivation behind this book is the belief that, for a variety
of reasons, there is now a window of opportunity to move the debate
on trade and environment forward. First, the WTO Ministerial
Meeting in Doha in November 2001 will provide the opportunity
for serious consideration of the issues to be addressed in whatever
 Trade, Environment, and the Millennium 5

form the multilateral negotiations take in the future. Secondly, a

great deal of groundwork has been done in the WTO, by environ-
mental NGOs, by various international organizations (e.g. the UN
Conference on Trade and Development, the UN Environment Pro-
gramme, the Organization for Economic Cooperation and Devel-
opment), and elsewhere to introduce change if thought necessary.
Comprehensive proposals on most of the major issues have been dis-
cussed at length in the WTO and many are described in the report
of the CTE to ministers in Singapore. Thirdly, a great deal of work
is already under way in the regular bodies of the WTO, such as the
General Council and the Dispute Settlement Body, addressing many
of the concerns of the environmental community. These include in-
creasing the transparency of WTO operations, accelerating the de-
restriction of documentation, and intensifying the contact between
the WTO and public interest groups.
Also of considerable importance is the apparent political aware-
ness in the industrialized countries that something needs to be done
to build public support for future negotiations in the WTO, and
possibly for a new round of multilateral trade negotiations. Ex-
pressions of political will, however, are not enough to set a process of
change in motion. As will be argued by some of the authors of the
following chapters, many of the proposals related to trade and envi-
ronment put forward by developed countries have lacked sensitivity
to the needs of developing countries. They frequently do not pay
due regard to core principles, such as: common, but differentiated,
responsibility; the right to development; or even the right to basic
human needs such as food, health, and education that developed
countries take for granted. In other words, they do not respond to
the concerns of developing countries. In a consensus-based organi-
zation where two-thirds of the membership comprises developing
countries, their concerns cannot be ignored.
The intention of this book is to provide a constructive input into
future WTO negotiations pursuant to the Ministerial Meeting in
Qatar by elaborating the concerns of both developing countries and
environmentalists. The intention is also to raise the awareness of a
number of the key issues that will have to be addressed in any future
6 Introduction and Overview

negotiations. Meeting this objective has provided the chapters with

a strong policy orientation. The contributors have been drawn from
academia, government, and civil society, and each is a leading au-
thority in his or her particular field. In providing the substantive
chapters of this book, the contributors have been asked to utilize
their wealth of knowledge and experience in an effort to provide
clear policy recommendations that will be useful within the frame-
work of future WTO negotiations.
The book contains 11 chapters. The first chapter is a visionary
overview by Rubens Ricupero of some of the principal considera-
tions in the trade and environment debate. The next three chapters
describe the various viewpoints on trade, environment, and the
WTO of two groups of stakeholders – developing countries and
environmental NGOs. Chapter 5 describes and comments on the
WTO dispute settlement process, considered by many to be the
heart of the WTO, and a key element in most of the policy chapters
that follow. Each of the following chapters addresses a specific issue
that will be central for any future multilateral trade negotiations
that bear on trade and the environment.
In the first chapter, Rubens Ricupero notes that many develop-
ing countries have now become more committed to the defence
of the multilateral trading partners than the major trading partners,
for whom unilateralism is always an alternative and a temptation.
Attempts to amend existing trade rules, for example to accommo-
date trade measures under multilateral environmental agreements
(MEAs), may have implications for a wide range of topics. In par-
ticular, pressure from some to make the WTO treatment of non-
product-related process and production methods (PPMs) a central
and systemic issue causes deep concern to the developing countries,
because it implies substantive changes in the operation of the multi-
lateral trading system.
Further, proposals with respect to the agenda of future negotia-
tions seem to focus on accommodating measures that could restrict
trade rather than on measures that promote trade. As long as devel-
oping countries fear that engaging in negotiations on trade and en-
vironment could result in further accommodation of trade-restrictive
 Trade, Environment, and the Millennium 7

measures on environmental grounds, thereby limiting their market

access, it is unlikely that they would be inclined to accept a trade-off
between environment and market access.
Notwithstanding the consensus of developing countries, Rubens
Ricupero makes clear that the multilateral trading system has to be
responsive to legitimate environmental concerns. If there were con-
sensus among WTO members that certain provisions of the multi-
lateral trading system stand in the way of achieving sustainable de-
velopment objectives, then it is important collectively to examine
possible adaptations, based on equity and other Rio principles.
The author stresses that concerns about the impacts of global-
ization on human well-being and environmental quality have to be
taken seriously. However, in the search for a balance of viewpoints,
there is a need to promote an enhanced understanding and broader
consensus on the root causes of environmental degradation and the
best ways of tackling them. It is also necessary to understand the
WTO’s limitations in resolving environmental problems.
The author notes that in more general terms poverty eradication
requires a broad approach, taking into account not only economic
considerations but also social, human, and environmental dimen-
sions. Integrating trade and the environment in a manner supportive
of economic development requires mechanisms that span several di-
mensions of national and international economic activity. Global
economic policy-making must be seen in a broad perspective, in-
volving the various agencies of the United Nations that deal with
social, environmental, and cultural matters.
Chapter 2, by Magda Shahin, examines trade and environment is-
sues from the perspective of a developing country negotiator with
considerable experience in how the debate has evolved in the WTO.
The author raises many of the questions and expresses many of the
concerns voiced by developing countries. She poses the question of
whether developed countries are genuinely concerned over social and
environmental issues at the international level or, rather, is it he-
gemonic and commercial interests that are the real motivators. Is
linking trade to environment a justified concern with honest envi-
8 Introduction and Overview

ronmental goals or are additional protection measures at play? Irre-

spective of the answer to this question, the author draws attention to
the difficulties of developing countries in dealing with the complex
issues, given their resource constraints, poor information flows, and
lack of scientific knowledge.
The author elaborates the position of many developing countries
on specific topics addressed in the WTO; for example, the relation-
ship between the provisions of the multilateral trading system and
trade measures pursuant to multilateral environmental agreements
(MEAs), and the relationship between environmental measures and
the WTO Agreement on Trade-related Intellectual Property Rights
(TRIPS). She also addresses market access issues and the concerns
that have been expressed by many developing countries over the effect
that eco-labelling schemes could have on their access to developed
countries’ markets. She cautions that multilateral environmental re-
gimes and measures that go beyond a country’s own borders, for the
sake of protecting the environment, are ‘‘a flagrant violation of WTO
rules and regulations, which do not allow for extra-territorial mea-
sures.’’ Today ‘‘we see growing concern by environmental groups at
the national level forcing the issue of national sovereignty against the
country’s obligations to abide by WTO judgements.’’
In much of this chapter, a common theme is a concern over
changing WTO rules to permit the regulation of trade on the basis
of process and production methods (e.g. with respect to the use of
eco-labelling schemes) rather than on the characteristics of the prod-
ucts themselves. Justifying discrimination between ‘‘like products’’
and making market access for exports conditional on complying with
production standards ‘‘would upset the entire trading system and
would have devastating effects, in particular on developing country
exports.’’ This is a statement of the importance ascribed by develop-
ing countries in general to avoiding any discrimination in trade ac-
cording to the manner in which exports are produced. In this sense,
developing countries are not ‘‘natural allies’’ for those environmental
NGOs that are critical of the WTO for not permitting discrimina-
tion according to production methods (e.g. on the basis of life-cycle
analysis).
 Trade, Environment, and the Millennium 9

In fact, this concern emerges as a key issue not only in this chapter
but in many other parts of the book – with respect to, for example,
the accommodation of MEAs by the WTO, the use of unilateral
measures to impose certain standards in other countries, revising the
WTO exceptions provisions to accommodate environmental con-
cerns, justifying standards on the grounds of protection of the envi-
ronment, eco-labelling schemes based on acceptable methods of pro-
duction, and many others. In offering advice to developing countries,
the author states that they have to remain firm on their positions on
trade and environment in regard to changing of the rules; ‘‘such a
move would only serve as a prelude to the integration of the ‘social
clause’ in the WTO, which has wider implications for developing
countries and should be of more serious concern.’’ Maintaining the
consensus-based nature of the WTO and maintaining control over
policy in the hands of its members (as against, for example, the Ap-
pellate Body deciding policy through litigation) are also important
themes that express the concerns of many developing countries.

The author comments that, as the preparations for the fourth

WTO Ministerial Conference to be held in November 2001 in Doha
are in top gear, the trade and environment debate has again surfaced
as an issue for the next round of multilateral trade negotiations.

In practice, she sees two principal constraints to addressing trade

and environment issues in future negotiations. First, there are the
developing country concerns outlined above that pertain directly to
the trade and environment debate itself and the unpreparedness of
many to start negotiating rules and disciplines. In this respect she
mentions in particular the new issues, such as genetically modified
organisms (GMOs) with all their complexities (see chap. 9). Second,
there are constraints of a more general and comprehensive nature re-
lating to the Round itself and the new pressures emerging around it,
which make the trade and environment debate look of less immedi-
ate relevance.
In chapter 3, Veena Jha and René Vossenaar point out that most
developing countries are strongly resisting the inclusion of trade
and environment in future trade negotiations and acknowledge that
10 Introduction and Overview

there may be sound reasons for them to oppose broad WTO nego-
tiations based on environmental considerations. They add that de-
veloping countries may have good strategic reasons for opposing the
inclusion of environment in the build-up to the Seattle Ministerial
Conference. However, the authors also argue that it may be difficult
for developing countries to sustain their opposition to addressing the
environment in future WTO negotiations. Therefore, the authors
provide the elements of an initiative by the Secretary-General of
UNCTAD to promote a ‘‘Positive Agenda’’ as an alternative ap-
proach to future trade and environment negotiations. Although the
authors warn that the potential for consensus between developing
countries may be limited, they suggest that such a positive agenda
should promote, at least, the principle of common, but differentiated,
responsibility and the closer integration of developing countries into
the global economy.
Before outlining the elements of the agenda, the authors present
what they consider to be the legitimate apprehensions of developing
countries with respect to the WTO debate on trade and the envi-
ronment. The authors assess the costs and benefits of engaging in
discussions on trade and environment, and find that there is scope
within the current framework to accommodate the concerns of de-
veloping countries. The approach adopted by the authors is to iden-
tify the points of entry for developing countries into a debate that
they characterize as having been polarized so far.
It is not surprising that there is a considerable concordance of
view with the previous chapter, particularly in identifying issues of
concern to developing countries. Although a number of concerns are
addressed, the authors assign priority to: accommodation, through a
change in WTO rules, of trade measures taken pursuant to multi-
lateral environmental agreements; accommodation of trade measures
based on non-product-related production methods on environmental
grounds, particularly in the context of eco-labelling; and greater
scope for the use of the precautionary principle. All these issues are
taken up in some detail in later chapters.
The authors also address an issue raised on a number of occasions
in later chapters of the book, particularly the chapter by Daniel
 Trade, Environment, and the Millennium 11

Esty: the pressure exerted by the non-governmental community for

greater access to the WTO processes; for example, to its dispute
settlement mechanism through the submission of amicus briefs. The
authors note that civil society – both non-governmental organizations
and the business community – can play an important role in pro-
moting a balanced trade and environment agenda. They flag, how-
ever, one of the reasons for resistance on the part of developing
countries to proposals to open the WTO to greater participation
from public interest groups. A number of proposals ‘‘that may be
labelled under the heading ‘transparency,’ such as the those facili-
tating the submission of amicus curae briefs to dispute settlement
panels, could, in practice, accentuate certain imbalances . . . because
NGOs in the South have fewer financial resources to avail them-
selves of such opportunities.’’ In the preceding chapter Magda
Shahin expressed the same reserve but rather in the context of
maintaining the intergovernmental character of the WTO and its
tradition of being an organization where policy is decided by the
member governments alone. In conclusion, the authors draw atten-
tion to the Plan of Action adopted at UNCTAD’s tenth Conference
in Bangkok in February 2000. This Plan calls upon UNCTAD
to ‘‘ensure balance in the trade and environment debate by high-
lighting issues of concern to developing countries and strengthening
the development dimension.’’ It was inter alia agreed that special
attention should be given to ‘‘identifying specific capacity-building
needs of developing countries and promoting a broad programme of
capacity building on trade, environment and development.’’ In the
view of the authors, it is significant that, in the context of the posi-
tive agenda on trade, environment, and development referred to
above, UNCTAD member states called for analysis and consensus-
building with a view to identifying issues that could yield potential
benefits to developing countries, including in the area of trade and
environment.

In chapter 4, Daniel Esty presents the view of many non-

governmental organizations: broadly speaking, it is in the interests
of the WTO itself to be more receptive to NGO views and involve-
ment. In so doing, however, he first acknowledges the important
12 Introduction and Overview

role the WTO has to play as a facilitator of economic interdepen-

dence, but notes that, if the WTO is to play its role effectively, it
must be seen as having legitimacy, authoritativeness, and a com-
mitment to fairness. ‘‘Absent these virtues, decisions that emanate
from the WTO will not be accepted as part of the process of global
decision-making.’’ To achieve this, the author considers it necessary
for the WTO to become better connected to the non-governmental
organizations that represent the diverse strands of global civil society.
The author proceeds to elaborate how the WTO could increase its
legitimacy by demonstrating that it has genuine connections to the
citizens of the world and that its decisions reflect the will of the
public at large. In this respect, non-governmental organizations
represent an important mechanism by which the WTO can reach
out to citizens and build the requisite bridge to global civil society.
The WTO could increase its authoritativeness through increased in-
puts from NGOs that have in-house analytical and technical skills
and whose ‘‘raison d’être is to sharpen thinking about policy issues.’’
They also provide an ‘‘important oversight and audit mechanism’’ –
they can ‘‘act as watchdogs on national governments and report
on whether they are fulfilling their WTO obligations.’’ In the view
of the author, fairness can be enhanced through providing oppor-
tunities for the public to submit views to the dispute settlement
process in the form of amicus briefs and to observe how outcomes are
reached in the dispute process.
The author is aware that his case for the WTO to have broader
links with non-governmental organizations will be challenged. He
therefore sets about stating the points of resistance (some of which
were raised in chapters 2 and 3), and offers his rebuttals. In short,
his conclusion is that some of these arguments ‘‘represent little more
than traditional trade community cant. Other concerns have a more
serious foundation. But none of the claims bears up under scrutiny.’’
The author’s view is that, for the international trading system, the
presence of 20,000 protestors in the streets of Seattle during the
WTO’s 1999 Ministerial Meeting, many of them motivated by
hostility to globalization in general and to the trade liberalization
agenda of the WTO in particular, marks a watershed. The era of trade
 Trade, Environment, and the Millennium 13

negotiations being conducted by a ‘‘close-knit group of trade cogno-

scenti out of sight from the rest of the world is gone forever.’’ His
view is that the WTO will never again be able to operate ‘‘under the
cover of darkness.’’ Civil society groups of all sorts are now tracking
the work of the trade regime, and the WTO must acknowledge this
reality – and perhaps even turn it to advantage.
Although the cause of a more open WTO was probably advanced
in Seattle, the author notes that the push for substantive refinement of
the GATT rules, especially the provisions that address environmental
concerns, lost ground. ‘‘The protests in the streets, driven by a coali-
tion of environmentalists and protectionists marching arm-in-arm,
confirmed in the minds of most developing country delegates the
suspicion that the ‘trade and environment’ agenda was protectionist
at its core.’’
He concludes that the ‘‘Seattle débâcle undoubtedly represents an
awkward ‘first dance’ for the WTO with civil society. But the mis-
steps on both sides must be overlooked because the ongoing rela-
tionship matters – and must be strengthened.’’
In chapter 5, William Davey makes the important observation
that it would ‘‘make little sense to spend years negotiating the de-
tailed rules in international trade agreements if those rules could be
ignored.’’ In the commercial world, security and predictability are
viewed as fundamental prerequisites to conducting business interna-
tionally. For this reason a system of rule enforcement is necessary.
Because the same WTO dispute settlement process is common to
the enforcement of all its agreements, it is not surprising that it is
referred to on numerous occasions in the following chapters.
The author describes the WTO dispute settlement process by
outlining its four basic phases: consultations, the panel process, the
appellate process, and the surveillance of implementation. He points
to the fact that the WTO dispute settlement process differs in im-
portant ways from that of GATT. In particular, automaticity comes
from the new rules under the Dispute Settlement Understanding
(DSU) on the adoption of decisions taken in the WTO. The DSU
also offers a more structured approach, with stricter timetables and
14 Introduction and Overview

greater surveillance to ensure that the panel or Appellate Body rul-

ings are implemented. In the view of the author, the WTO dispute
settlement system has operated well; WTO members have made ex-
tensive use of the system, suggesting that they have confidence in it.
The author points to one of the salient characteristics of the dispute
settlement process in the period since Seattle, namely, the increasing
resort to compliance proceedings. In his view, this development is
probably not desirable. ‘‘It suggests [he writes] that some WTO
members are making only minor changes to measures found to be
WTO inconsistent, perhaps hoping that they will be able to post-
pone full compliance until the complaining member completes a
second round of dispute settlement proceedings.’’ As such, the cur-
rent structure of compliance proceedings encourages foot-dragging,
and the ultimate WTO remedy for compliance – ‘‘retaliation’’
through trade sanctions – may not always be effective.

Faced with the challenge of greater transparency for WTO oper-

ations, the author draws attention to the fact that ‘‘panel and
Appellate Body reports (and all other WTO documents relating
to specific disputes) are issued as unrestricted documents and placed
on the WTO website immediately after their distribution to mem-
bers.’’ There have, however, been proposals, particularly by non-
governmental organizations, that the WTO dispute settlement pro-
ceedings be open to the public, that submissions be made public,
and that non-parties be permitted to file ‘‘friend-of-the-court’’ sub-
missions to panels. As argued by Esty in chapter 4, the credibility of
the system would be much enhanced if it were more open and that
openness would have no significant disadvantages. A similar concern
is expressed in chapter 5. In addressing these concerns, the author
reminds readers that ‘‘some members view the WTO system as
exclusively intergovernmental in nature and hesitate to open it to
non-governments. In their view, if a non-governmental organization
wants to make an argument to a panel, it should convince one of
the parties to make it and, if no party makes the argument, those
members would view that as evidence that the argument is not
meritorious.’’
 Trade, Environment, and the Millennium 15

The author points to the lack of outcome of the 1998–99 review

of the DSU in terms of changes to it, and notes that the principal
concern of developing countries is the resource difficulty that many
of them face when they participate in the dispute settlement sys-
tem. The DSU addresses this problem by requiring the WTO Secre-
tariat to provide legal assistance to such countries and by conducting
training courses that either include or are exclusively focused on
dispute settlement. The author considers the best hope for a signifi-
cant improvement in dealing with inadequate developing country
resources to be the Advisory Centre on WTO law, which would
be an international intergovernmental organization providing legal
assistance to developing countries in respect of WTO matters.
Chapters 6 to 11 address a number of areas that are highly rele-
vant for future WTO negotiations. What they all have in common
is that they bear directly on important issues in the area of trade and
environment. In chapter 6, David Schorr addresses one of the most
discussed topics in the Committee on Trade and Environment;
namely, the manner in which the removal of trade restrictions and
distortions can lead to a ‘‘win–win’’ outcome. The first win comes
from the fact that the removal of certain trade restrictions in devel-
oped countries will be beneficial to the environment of those coun-
tries themselves. The second win follows if the products facing the
trade restrictions and distortions are of current or potential export
interest to developing countries. In a win–win scenario, improve-
ment of the environment in developed countries coincides with ex-
port expansion in developing countries. In this chapter, the author
presents the results of his research on a particular case-study that
represents a potential win–win scenario: the removal of government
subsidies to fisheries. A particularly interesting feature of this chap-
ter is that it demonstrates that it is possible to find areas where there
is potential for WTO rules to be used positively to deal directly
with environmental problems.
According to estimates cited by the author, 60 per cent of the
world’s fisheries are overexploited or already exploited at maximum
rates, largely because there are ‘‘too many fishing boats chasing too
16 Introduction and Overview

few fish.’’ His answer to the question of what keeps so many fishing
boats afloat as fish stocks shrink is ‘‘huge government payments that
promote excess harvesting capacity and reward unsustainable fishing
practices.’’ The link with the WTO is that many of these subsidies
are ‘‘administered in open violation of existing international trade
rules [and] constitute a profound failure of both economic and envi-
ronmental policy.’’ Removing these distortions would be beneficial
for the preservation and building up of fish stocks worldwide. As far
as developing countries are concerned, fish and fish products are an
important export item for them as they account for over one half of
world trade in these products and represent a large net export-earner
for developing countries collectively.
The author describes the nature and extent of the subsidies paid
to the fisheries sector as well as the relevant WTO obligations with
respect to what is prohibited by WTO rules, what is actionable under
the WTO, and what is non actionable. In his view, the Subsidies
Agreement appears to create significant opportunities for challenges
to fishery subsidies, although substantial questions about the legal
limits on such challenges remain.
The broader question is whether there is a role for the WTO
in addressing the problem in the case of fisheries. He concludes
that ‘‘there are good reasons to contemplate a more direct role for
the WTO on the fishery subsidies issue. First, fishery subsidies do
cause trade distortions . . . The WTO has experience with handling
subsidies-related disputes and with negotiating subsidies disciplines
(e.g. the Agriculture Agreement). The operations of the WTO Sub-
sidies Committee (including oversight of the notification process)
could also provide the seed of a structure for a fuller notification and
monitoring system on fishery subsidies. Finally, the WTO system
offers a ready-made process for binding dispute resolution and a
plausible context for negotiations to forge new fishery subsidies
rules.’’ The author, however, cautions that the WTO does not hold
all the solutions. It is clear that several classes of important fishery
subsidies appear ‘‘unlikely’’ to be disciplined under these rules,
whereas some environmentally beneficial subsidies remain subject to
attack.
 Trade, Environment, and the Millennium 17

One of the principal obstacles to developing countries in accessing

the markets of developed countries is meeting the required standards
for their exports. Thus, chapters 7, 8, and 9 all deal with mandatory
and voluntary standards to protect the environment and health.
The two key agreements covering standards under the WTO are the
Agreement on Sanitary and Phytosanitary Measures (SPS) and the
Agreement on Technical Barriers to Trade (TBT). Within both of
these agreements, an attempt has been made to strike a balance be-
tween the sovereign right of members to adopt legitimate standards
to protect to their citizenry and the adoption of standards that serve
as unnecessary obstacles to trade. Striking the right balance is the
difficult task that confronts trade officials when interpreting and en-
forcing the two agreements. The standards provided for under the
agreements and their relationship to the legitimacy of WTO label-
ling are also an issue of considerable importance, particularly for de-
veloping countries whose market access could depend upon the sta-
tus of these requirements.
In chapter 7, Steve Charnovitz analyses what promises to be one of
the most important WTO agreements in coming years, namely, the
Sanitary and Phytosanitary (SPS) Agreement. This is particularly the
case for developing countries, and the author notes that there are
surely ‘‘numerous questionable SPS barriers that impede exports to
industrial countries.’’ He expresses some surprise that so far there has
been no SPS litigation involving a developing country. In his view,
this is certainly related to the complexity of the subject-matter and
the ‘‘complicated’’ nature of dispute settlement when it comes to
SPS matters. He observes that rich countries ‘‘with large govern-
mental legal staffs that are repeat litigants will have the advantage in
SPS adjudication.’’
The author sets about explaining the SPS Agreement against the
backdrop of three cases that have been dealt with by WTO panels:
the complaint by the United States and Canada against a European
Commission ban (begun in 1989) on the importation of meat pro-
duced with growth hormones; the complaint by Canada against an
Australian ban (begun in 1975) on the importation of uncooked
salmon; and a complaint by the United States about a Japanese
18 Introduction and Overview

phytosanitary measure (begun in 1950) that banned imports of

apples, cherries, nectarines, and walnuts potentially infested with
coddling moth.
The author explains the SPS rules in terms of seven disciplines.
First, any SPS measure is to be based on scientific principles. Second,
governments are to ensure that their SPS measures are based on risk
assessment. Third, distinctions in the levels of health protection are
not to result in disguised restrictions on international trade. Fourth,
SPS measures are not to be more trade-restrictive than required to
achieve their appropriate level of protection. Fifth, SPS measures are
to be based on international standards. Sixth, an importer is to accept
an exporter’s SPS measure as equivalent to its own if it achieves the
level of protection. Finally, the WTO is to be notified of regulations
and affected governments must be allowed to make comments.
As in other chapters, the author finds a flaw in an otherwise ‘‘rea-
sonable’’ dispute settlement process – its secretive, closed nature.
His view is that it ‘‘seems contradictory for governments to make
sanitary decisions with open, transparent procedures and then have
them reviewed at the WTO behind closed doors.’’ Although this
problem is common to all WTO dispute settlement, in his view it
is perhaps most acute in the area of health and environment. He
notes that ‘‘not only are panel sessions closed, but panels so far have
been unwilling to entertain amicus curiae briefs submitted by non-
governmental organizations. For example, when an NGO submitted
an amicus brief to the Hormones panel, it was rejected by the WTO
Secretariat.’’

The author considers that there are at least three controversial

issues that should be addressed in any future WTO negotiations.
The first is the highly intrusive regulatory consistency requirement,
which provided the grounds on which the defendants in both the
Australian Salmon and the Japanese Agricultural Products disputes lost
their cases. Second is the precautionary principle. The use of the
precautionary principle is increasing under international law and has
become the basis for environmental protection in several multilateral
agreements such as the Biodiversity and Climate Change Conven-
 Trade, Environment, and the Millennium 19

tions. The principle remains highly theoretical, however, because

no practical implementation guidelines have been established. Sev-
eral key questions in regard to its practical application remain un-
answered. These questions include the definition of ‘‘irreversible
damage,’’ the level of certainty necessary to justify action, and the
issue of how to balance costs against potential damage. The third
issue raised in chapter 7 relates to product labelling. This transcends
both the SPS and the TBT agreements and is dealt with, more
comprehensively, in the chapters by Arthur Appleton and Doaa
Abdel Motaal.
With respect to improving the accessibility of developing coun-
tries and the protection offered to them by the SPS Agreement, the
author is sceptical of the progress being made. Despite a recognition
in the March 1999 report of the SPS Committee, the author believes
that the Committee has made very little progress on enhancing tech-
nical assistance to developing countries, particularly with regard to
human resource development, national capacity-building, and the
transfer of technology and information. Consequently, the author
proposes that, in Seattle or any subsequent negotiations, the Com-
mittee could be invigorated by giving it a broader mandate and
authorizing more coordination with external agencies. The author
concludes by noting that, although high SPS standards are needed
throughout the world, ‘‘it is in developing countries that the regu-
latory regimes are weakest. By working with those countries to im-
plement international food safety standards, the WTO could reduce
potential barriers to food exports by those countries.’’
In chapter 8, Arthur Appleton examines eco-labelling schemes,
the goal of which is to discriminate against products that are
perceived to be less environmentally sound. Although the overall
goal of eco-labelling schemes – using market forces to improve the
environment – is laudable, the author analyses why they are of both
systemic and commercial concern to developing countries. From a
commercial perspective, producers in developing countries lack the
resources and political expertise to influence the development of for-
eign labelling criteria. Also, developed countries may formulate eco-
labelling criteria on the basis of conditions in their own countries
20 Introduction and Overview

that are not appropriate for developing countries. Further, wage con-
siderations, regulatory requirements, and the enforcement of regu-
lations are often viewed as sources of comparative advantage. Labelling
schemes that alert consumers to serious discrepancies in the above
may disadvantage developing countries and be based on what can be
very subjective factors.
From a systemic perspective, the author introduces one of the
‘‘most controversial trade issues’’ which has been a recurring theme
in this book; namely, ‘‘whether a WTO member should be permitted
to apply its trade policy to influence the selection of manufactur-
ing processes in other countries.’’ He notes that WTO members
have little problem with the idea that a particular state can regulate
production processes within its own jurisdiction, or that a member
can establish performance-related environmental standards applic-
able to products within its own jurisdiction. Controversies arise when
a member seeks to apply its laws to influence production processes
and methods outside its jurisdiction.
The relevance of this issue relates to the fact that certain environ-
mental labelling schemes provide a means of discriminating between
products by informing consumers when production methods do not
meet particular environmental, labour, or other criteria. From the
trade law perspective, this issue is intertwined with the ‘‘like prod-
uct’’ distinction made in WTO agreements that restrict the right of
importers to discriminate between and among foreign and domestic
like products on the basis of how they were produced. The result has
been that ‘‘process and production methods’’ that cannot be de-
tected in the final product are not relevant in making a like product
determination. The author provides a comprehensive legal analysis
of the consistency or otherwise of eco-labelling schemes with key
GATT provisions, such as most-favoured-nation treatment, national
treatment, and limitations on the use of quantitative restrictions, as
well as the Technical Barriers to Trade Agreement. The author draws
attention to the recent and controversial Asbestos decision, which he
considers as representing ‘‘a move towards an interpretation of like-
ness that is on the one hand more sensitive to economic consid-
erations (conditions of competition), but on the other hand more
 Trade, Environment, and the Millennium 21

pragmatic to the extent that it examines a broader group of product-

related characteristics, including health considerations.’’
In the view of the author, whereas from an environmental or la-
bour perspective the disregard for the manner in which a product
was produced may be subject to criticism, from the trade perspective
it is justified on the grounds that differentiating between goods
based on production methods would increase trade barriers and result
in increased trade discrimination. Developing countries have been
particularly adamant in opposing trade restrictions based on produc-
tion methods out of fear that they would lose economically.
However, the author notes that, although the policy consid-
erations presented above are serious, at this point there is little evi-
dence to suggest that eco-labelling schemes have significantly altered
consumer buying habits or manufacturing practices. Instead, fears
concerning labelling schemes currently appear exaggerated. He con-
cludes from this that, from the developing country perspective, the
strong opposition in many quarters to labelling schemes may be a
strategic decision. By keeping the attention of the trade community
focused on eco-labelling, other more important issues, such as the
internalization of environmental externalities and labour-related la-
belling, have been kept off the agenda.
In chapter 9, Doaa Abdel Motaal outlines the manner in which
eco-labelling has been discussed in the Committee on Trade and
Environment (CTE) and the Committee on Technical Barriers to
Trade (CTBT) and, as such, provides insights into the extent to
which there can be different interpretations on the part of various
delegations of key WTO terminology. In the CTE, eco-labelling has
been examined within the broader context of all product-related en-
vironmental requirements, and in the CTBT within the context of
the Agreement on Technical Barriers to Trade (TBT).
The author identifies two main questions that have been raised
by WTO members. The first concerns the coverage of the TBT
Agreement; some members have questioned the extent to which the
Agreement covers eco-labelling schemes. The second concerns the
consistency of eco-labels with the provisions of the TBT Agreement.
22 Introduction and Overview

What has been discussed with respect to both these viewpoints has
been the extent to which such schemes differentiate between prod-
ucts on grounds that are accepted by the WTO; namely, the manner
in which the goods were produced.
The author points to a number of arguments to support the
avoidance of differentiation on the basis of production methods. The
first relates to the preservation of territorial sovereignty, because
preventing discrimination on the basis of production methods is to
prevent intervention from the outside in rule-setting within national
boundaries. The author notes that it is ‘‘precisely because the WTO
is able to offer such security to its members that its membership has
expanded to the size it is today.’’ The second is that avoiding differ-
entiation based on production methods ‘‘allows countries to set stan-
dards (environmental or otherwise) that are appropriate for their level
of development’’; it ‘‘allows countries to trade their developmental
needs against their needs for environmental protection in a manner
that is consistent with how they themselves value these needs (and
not on the basis of how others value them for them).’’ Finally, ‘‘dif-
ferences in environmental absorptive capacities, priorities and prob-
lems in different parts of the world can be taken into account’’
through providing for different production processes.
The author notes that, in the period since Seattle, the issue of
eco-labelling has expanded into a much broader ‘‘labelling’’ debate.
In other words, discussion on labelling requirements in the WTO
has moved beyond environmental labels to mandatory labelling re-
quirements imposed on genetically modified soya and maize. Those
countries advocating such labels argue that the requirement is nec-
essary to provide consumers with information, and that it does not
have to do with food safety. However, a number of countries have
complained that labels identifying genetically modified grains, for
example, create a false distinction between products of modern bio-
technology and conventional agricultural crops, since conventional
crops are themselves genetically modified through traditional plant-
breeding techniques.
The author notes that, although it is ‘‘often stated that a North–
South divide characterizes trade and environment discussions in the
 Trade, Environment, and the Millennium 23

WTO . . . [n]umerous standpoints have been taken in the CTE on

the extent to which eco-labels are covered by and are consistent with
WTO rules . . . Although it may be argued that there is a distinctly
Southern perspective in the CTE on this issue, it cannot be stated
that a distinctly Northern viewpoint has emerged.’’ Among the
views that have emerged in the WTO are that: eco-labels are both
covered by and consistent with the TBT Agreement; they are not
covered by the TBT Agreement but scope needs to be created for
them; they are not covered by the TBT Agreement and creating
scope for them could endanger the trading system; and they are in-
consistent with the TBT Agreement and should not find any ac-
commodation within the WTO system.
In chapter 10, James Cameron examines the Precautionary Prin-
ciple and its importance and relevance with respect to trade agree-
ments. He identifies the principle as ‘‘part of a system of rules
designed to guide human behaviour towards the ideal of an envi-
ronmentally sustainable economy. Fundamentally, it provides the
philosophical authority to take public policy or regulatory decisions
in the face of scientific uncertainty.’’ The author notes that the
‘‘precautionary principle began to appear in international legal in-
struments only in the 1980s, but it has since experienced what has
been called a meteoric rise in international law.’’ He describes it as
a statement of commonsense, ‘‘with utility in balancing the com-
peting concerns of economic development against limited environ-
mental resources. The economics of globalization continue to place
ever-increasing demands on resources while increasing the efficiency
of their use. This essential paradox, together with well-organized
opposition to trade liberalization from the environment lobby, has
informed the search for balance between trade and environment
policy.’’
This chapter details a brief history of the principle, as evidenced
in the usage of explicit precautionary language in law. It then ana-
lyses in some detail the core concepts inherent in the precautionary
principle and examines the status of the principle in international
law. It discusses a number of procedural aspects of implementing
the principle, and finally reviews the precautionary principle in in-
24 Introduction and Overview

ternational trade situations, specifically those within or related to the

WTO.
The author recognizes that the principle is an ‘‘elusive concept,’’
and therefore has questionable status in international law, or ‘‘at
present . . . is not a term of art.’’ However, the precautionary prin-
ciple ‘‘does have a conceptual core’’; it reflects ‘‘a lack of certainty
about the cause-and-effect relationships or the possible extent of a
particular environmental harm. If there is no uncertainty about the
environmental risks of a situation, then the measure is preventative,
not precautionary. In the face of uncertainty, however, the precau-
tionary principle allows . . . for the state to act in an effort to miti-
gate the risks. Put best, ‘the precautionary principle stipulates that
where the environmental risks being run by regulatory inaction are
in some way uncertain but non-negligible, regulatory inaction is
unjustified’.’’
According to the author, the WTO has already adopted sustain-
able development – and the notion of the precautionary principle –
as an orientation for trade liberalization. He draws attention in this
respect to the Preamble to the Agreement Establishing the WTO,
which refers to ‘‘the optimal use of the world’s resources in accor-
dance 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 impor-
tance of the precautionary principle for international trade agree-
ments is also underscored by the fact that it is directly relevant for
two WTO agreements: the Agreement on the Application of Sani-
tary and Phytosanitary Measures and the Agreement on Technical
Barriers to Trade. At issue with respect to these agreements is the
extent to which measures can be taken to restrain trade in the ab-
sence of scientific evidence, a consideration also taken up by Steve
Charnovitz in relation to the SPS Agreement. Additionally, the ex-
ceptions provisions of GATT can be informed by the principle, and
the author outlines its significance in some of the most controversial
WTO dispute settlement cases. The author also draws attention to
the extent to which the precautionary principle has become an im-
 Trade, Environment, and the Millennium 25

portant principle for some of the most significant multilateral envi-

ronment agreements, some of which are identified by Duncan Brack
in the following chapter as being potentially inconsistent with
WTO rules.
In chapter 11, Duncan Brack examines the key issues in the de-
bate over how best to reconcile the two objectives of environmental
protection and trade liberalization as they emerge in two bodies of
international law – that found in multilateral environmental agree-
ments (MEAs) and that of the multilateral trading system overseen
by the WTO. Trade liberalization and environmental protection
may both be desirable objectives, but the legal regimes that govern
them are developing largely in isolation. This chapter summarizes
the key issues at stake, examines various options for the resolution of
the debate, and concludes that a new WTO Agreement on MEAs
would provide the optimal solution.
The author predicts that, given the continued degradation of the
global environment, the negotiation of further MEAs is almost
bound to form an increasingly prominent part of the international
agenda. Further, given the inescapable interaction of trade liberal-
ization with environmental protection, and a shortage of policy in-
struments with which to enforce MEAs, an increasing number of
environmental treaties are likely to contain trade measures.
Three broad sets of reasons for trade restrictions having been in-
corporated in MEAs are addressed in this chapter: to provide a
means of monitoring and controlling trade in products where the
uncontrolled trade would lead to or contribute to environmental
damage; to provide a means of complying with the MEA’s require-
ments; and to provide a means of enforcing the MEA by forbidding
trade with non-parties or non-complying parties.
A practical consideration raised by the author is that national
trade departments generally tend to wield greater political clout
than do environment departments and agencies, environmental ob-
jectives are not well integrated into policy across the board, and at
the international level the multilateral trading system and the WTO
(and in particular its dispute settlement system) are considerably
26 Introduction and Overview

more powerful and influential than are MEAs and the various envi-
ronmental institutions such as UNEP or the UN Commission on
Sustainable Development. He draws attention to the fact that the
trade implications of particular MEA requirements can in theory be
subject to scrutiny by the institutions of the multilateral trading
system, but there is no provision anywhere for the environmental
implications of the trading system to be subjected to scrutiny by
environmental institutions. The existing hierarchy of international
law therefore favours, in practice even if not in the letter, the trading
system over MEAs. In the author’s view this is an undesirable situa-
tion if one accepts that the two objectives of trade liberalization and
environmental protection are of equal validity.
The author poses the question of whether the use of trade mea-
sures in these MEAs against WTO members can be regarded as an
infringement of WTO rights. The author concludes that there is a
potential for conflict; for example, WTO members are not permitted
to discriminate between traded ‘‘like products’’ produced by other
WTO members, or between domestic and international ‘‘like prod-
ucts,’’ yet CITES, the Montreal Protocol, and the Basel Convention
discriminate between countries on the basis of their environmental
performance, requiring parties to restrict trade to a greater extent
with non-parties than they do with parties.

The author examines various possible routes to resolving the issue

and concludes that the distinctly preferable route is to create a new
WTO side agreement. The advantage is that it avoids attempting to
amend existing rules, with probable implications for a wide range of
topics; it creates a very clear set of rules which would apply only to
MEAs (i.e. which would not encourage further unilateral actions);
and it is probably easier to negotiate. The author elaborates on the
content of such a WTO side agreement to accommodate MEAs in
the WTO context.

The author concludes that, as in the rest of the trade–environment

debate, the problem is partly one of the failure of policy integration;
environment negotiators, in all countries, tend to support their free-
dom to incorporate trade measures in MEAs, whereas trade negotia-
 Trade, Environment, and the Millennium 27

tors, again in all countries, tend to be far less aware of environmental

arguments and priorities, and predisposed to view any barrier to
trade liberalization as nothing more than self-interested protection-
ism. He adds that over the past few years there have been many
attempts at improving communication between the trade and envi-
ronment communities and undoubtedly both ‘‘sides’’ are better in-
formed than they used to be. There is plenty of scope for a deeper
analysis of the problem – which could, for example, help to defuse
developing countries’ probably unjustified fears of trade measures in
MEAs. These fears were apparent in earlier chapters, particularly
chapter 2 by Magda Shahin.

Note
1. These data are drawn from http://www.wto.org/wto/anniv/intro.htm.
This page intentionally left blank
 1
Trade and Environment:
Strengthening Complementarities
and Reducing Conflicts
Rubens Ricupero
Secretary-General of UNCTAD

It is with great pleasure that I have accepted the invitation by the

United Nations University to contribute a chapter to this important
book on Trade and Environment.1 The fact that it is to be launched
before the Ministerial Conference of the World Trade Organization
(WTO) in Seattle is both a challenge and a reason for caution. On
the one hand, I think that the conference and its preparatory process
provide a good opportunity to reflect on progress made in trade and
environment and on what is needed to move towards further inte-
gration of the trade and environment regimes. This is particularly
important in the process of greater trade liberalization that is likely
to follow. At the same time, however, many of my friends among
developing countries’ negotiators in Geneva are deeply concerned
about the prospect that trade and environment could be included in
a possible new round of multilateral trade negotiations.
This does not mean that developing countries are not interested in
trade and environment issues. On the contrary, our experience at the
United Nations Conference on Trade and Development (UNCTAD)
shows that developing countries attach great interest to them. This
30 Complementarities and Conflicts

can be witnessed in their strong interest in policy analysis and tech-

nical assistance for capacity-building, as well as in their efforts to
benefit from new trading opportunities that are arising on account of
environmental concerns. Developing countries have nevertheless ex-
pressed concern about developments in trade and environment issues
in the context of the multilateral trading system (MTS).
In this chapter I will first address the question of why there is not
much excitement among developing countries in Geneva regarding
the prospects of a new round of multilateral trade negotiations, par-
ticularly where environmental issues are concerned. The intention is
not to spread pessimism among those who see the round as an
opportunity to make progress on specific issues, but rather to
warn against excessively high expectations that later may turn into
unnecessary disappointment and unjustified frustration. Then I
will reflect on the extent to which trade and environment regimes
are either complementary or in potential conflict with each other.
Finally, I will make some suggestions about what could be done to
move ahead on trade and environment, both within and outside the
MTS.

1. A new round: Little enthusiasm among

developing countries, in particular when
it comes to the environment
With regard to the prospects of a new round of trade negotiations,
I have already mentioned that developing countries are not exactly
thrilled by the idea.2 In my recent statement to a conference or-
ganized by Columbia University,3 I highlighted that the reasons for
that attitude generally fell into one of four categories: the financial
and economic crisis; problems with the functioning of the world
trade system; the revival of protectionism; and a growing frustration
with the gap between the promise and reality of trade liberalization.
Turning now to the reasons that many developing countries are so
deeply concerned about the prospects of trade and environment be-
ing included in a new round, they largely overlap with those men-
 Trade, Environment, and the Millennium 31

tioned above. But there are also additional reasons, such as the fail-
ure of developed countries to live up to the commitments made at
the United Nations Conference on Environment and Development
(UNCED) in Rio de Janeiro in June 1992. Let us discuss some of
them.

The resurgence of protectionism

Developing countries are concerned that the recent international

economic and financial crisis appears to be inducing renewed re-
course to protectionism and unilateral measures, including measures
taken under the guise of environmental concerns. There is also con-
cern about the continued pressures to accommodate the use of trade-
restrictive measures for non-trade purposes. It is feared that such
pressures also may spill over into other areas, such as labour issues.
Concerns about the resurgence of protectionism cannot be dis-
missed as being based on a lack of information or on exaggerated
fears that legitimate environmental policies in developed countries
will have widespread adverse effects on the competitiveness of prod-
ucts exported by developing countries. On the contrary, such con-
cerns have emerged first and foremost because of the renewed re-
course to old-fashioned protectionism. First, making progress on
agriculture has proven to be far more difficult than anticipated. For
example, speaking before the US House Agricultural Committee,
Ms. Charlene Barshefsky accused the Common Agricultural Policy
(CAP) of the European Union (EU) of responsibility for 85 per cent
of the world’s agriculture export subsidies. Ms. Barshefsky referred
to this practice as ‘‘the largest distortion of any sort of trade.’’ A few
months earlier, the Cologne meeting of the EU had already con-
firmed how difficult it would be to undertake a serious reform of
the CAP as a necessary basis for future liberalization of agricultural
trade. There has also been a resurgence of protectionism in some in-
dustrial sectors. In steel products, for example, we are now witness-
ing what I personally consider the worst single setback since the
Uruguay Round: the return of so-called ‘‘voluntary’’ export restraint
agreements; in other words, the comeback in force of ‘‘managed
32 Complementarities and Conflicts

trade.’’ Here we have a clear-cut case of prohibited grey-area mea-

sures that are resurrected.
If we add to what we could call ‘‘grandfather protectionism’’ the
‘‘New Wave’’ variety (that is, the serious danger that legitimate
concerns regarding the environment and labour will inevitably be
misused as protectionist tools), we will understand why so many
developing countries fail to see any promising prospects of redress-
ing past imbalances in a new round.

Systemic issues

There are concerns about systemic issues. The difficulties encountered

in some cases (e.g. bananas) are well known. Let me go straight to the
environmental issues. Recent decisions by Appellate Bodies of the
WTO have fundamental implications that still need further analysis,
for example with regard to subparagraph (g) of Article XX of the
General Agreement on Tariffs and Trade (GATT) 1947 and the issue
of trade measures based on non-product-related process and produc-
tion methods (PPMs). Although welcomed by many in the developed
countries, these measures have generated new concerns in developing
countries over the use of trade measures to impose the environmental
policies and priorities of developed countries on developing country
trading partners. They have also created some alarm about the im-
plications of clarifying trade and environment issues on the basis of
case-law and Appellate Body decisions.
In this context, it should be noted that many developing countries
have now become more committed to the defence of the multilateral
trading system than the major trading partners, for whom uni-
lateralism is always an alternative and a temptation. Attempts to
amend existing trade rules, for example to accommodate trade mea-
sures under multilateral environmental agreements (MEAs), may
have implications for a wide range of topics. Similarly, pressure from
some to make the WTO treatment of non-product-related PPMs a
central and systemic issue causes deep concern to the developing
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