Environmental regulations: concession or enforcement

As pressures grow to develop more stringent economic obligations to address global climate change problems, there is an increasing possibility of a damaging clash between the WTO and MEA regimes. Many governments have continued in other international fora to agree to new MEA commitments that relate to trade policy without a clear understanding of how the design and implementation of those commitments are affected by WTO rules. This policy disconnect is problematic and must be addressed on multiple fronts.

MEAs seek to facilitate compliance and participation through political means or market-based incentives – partly because it leads to a more effective result for the environment, and partly because they do not generally have the kind of political and economic leverage that could force compliance with dispute settlement
findings.

In contrast, WTO rules are enforced through an active dispute settlement system backed up by economic sanctions. Although some WTO cases so far may have been favourable to environmental priorities, the prospect of a WTO panel overseeing a dispute over an MEA trade-related measure, with no mandate or expertise to assess the legitimacy of an MEA measure, is problematic. The WTO has no inherent expertise on environmental issues and therefore may place trade liberalization priorities at the forefront in a conflict with environmental provisions. This is unsatisfactory from an environmental policy perspective and will only increase the incoherence in global governance.

Environmental regulations not well specified could take a direction as to violate WTO rules. The impacts of WTO rules on negotiations for the Biosafety Protocol are, however, well documented: agricultural commodities were subject to less rigorous trading rules than other GMOs and efforts to have clear provisions addressing the relationship to other international agreements were relegated to the preamble in ambiguous form.

Moreover, parties to the Biosafety Protocol may find they have difficulty implementing the agreement against economically powerful non-parties, such as the United States, which may emphasize the predominance of their WTO entitlements.

The MEA-WTO relationship has been at the heart of discussions in the WTO’s
Committee on Trade and Environment (CTE) since its inception in 1995. Specifically, the CTE was mandated to examine ‘the relationship between the provisions of the multilateral trading system and trade measures for environmental purposes, including those pursuant to multilateral environmental agreements (MEAs); and the relationship between the dispute settlement mechanisms in the multilateral trading system and those found in MEAs.’40 In the years that followed, many of the WTO Members represented in the CTE maintained that there was no inherent conflict between MEAs and WTO rules and that, if there were, it would be resolved in a mutually supportive way, within existing rules and frameworks. Other Members have proposed reforms aimed at greater clarity. They believe there is a potential conflict between WTO rules and MEAs that might subvert MEA objectives by inappropriately impeding the implementation of MEAs or overly constraining the design of MEA trade measures.

Members in favour of reform have put forward proposals ranging from suggested amendments to the substantive and procedural rules themselves, to the introduction of processes designed to facilitate MEA and WTO harmony. The demandeurs of reform have, for the most part, comprised the European Communities (EC) and other European Members while several developing-country Members have resisted reforms seen as opening the door to veiled protectionism in Northern markets.

Source: www.chathamhouse.org.uk