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International Trade and the Environment: The WTO and the New Beginning

Robert Page

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The Multilateral Trading System and International Environmental Agreements (IEAs)

At the October 1994 meeting of the subcommittee, the relationship between the GATT/WTO system and IEAs was discussed. The debate focussed on both IEAs and the strong feelings on environmental unilateralism. Many countries, including Canada, strongly denounced unilateralism. All efforts should be put into achieving international consensus to avoid "arbitrary discrimination" or "disguised protectionism." But there were important exceptions. The Austrian representatives argued that Austrian citizens might demand trade measures to achieve environmental goals outside of existing IEAs and some countries had to show leadership before others would follow. The United States also took an activist approach. Unilateralism took many forms and care had to be exercised when employing this complex term. Multilateral approaches were clearly preferable, but difficult to achieve. The WTO had to devise creative structures to facilitate the measures required. IEAs often required lengthy and difficult negotiations, hindered by vested interests. In these circumstances, countries found it necessary to resort to trade measures "without the cover" of an IEA. The WTO should sanction the use of trade measures "where these enforced or implemented a prevailing scientifically based environmental or conservation norm which had a degree of international legitimacy." Many countries, including Canada, rejected such selfdefinition of principles and returned repeatedly to the potential for arbitrary or protectionist actions. They sought clearly defined and understood international standards beyond the manipulation of lobbyists. The debate reflected the wide concerns of small and middle powers on the issue of unilateralism.

On the main issue of IEAs which contained trade provisions there was more focussed debate. As yet, only a few IEAs include trade provisions, and none of these have been subject to a legal challenge. Some argued that existing structures, including the WTO disputesettlement process, could handle any issues which might arise. Some developing countries expressed concern about IEAs which included trade sanctions against nonsignatory parties who might be in no position to sign yet, and thus should not be penalized. But there was general agreement that there were problems in the area. Unless the WTO was proactive, it could invite further trade provisions in IEAS which would increase disputes between the trade and environmental institutions. Two approaches were suggested for handling IEAs, within the WTO system:

1. Ex Post Approach ¾ On a casebycase basis they could rely on recourse to the waiver provisions of the WTO to exempt specific environmental measures.

2. Ex Ante Approach ¾ The negotiation of a collective interpretation or amendment to the existing WTO provisions to deal specifically with the issue.

There was general support that trade measures should be the least trade distortive alternative, and they must be in support of clearly defined scientific goals. Discussions will continue.

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