Precaution and cooperation in the World Trade Organization: an environmental perspective

Abstract

Introduction: The Trade Environment Nexus:- Proposition 1: Protection of the environment has become exceedingly important, and promises to be more important for the benefit of future generations. Protecting the environment involves [both national environmental regulation and] rules of international cooperation, sanction, or both, so that some government actions to enhance environmental protection will not be undermined by the actions of other governments. Sometimes such rules involve trade-restricting measures. Proposition 2: Trade liberalisation is important for enhancing world economic welfare and for providing a greater opportunity for billions of individuals to lead satisfying lives. Measures that restrict trade will often decrease the achievement of this goal. The above propositions reflect one of the major tensions that governments and international society face today in promoting sustainable development. The principle of sustainable development, a main organisational concept in international environmental law (‘IEL’), seeks to integrate environmental and socio-economic considerations through the development of human systems capable of meeting the basic needs of all individuals, both now and in the future, whilst respecting ecological integrity. Three main arguments support positive synergies between free trade and environmental protection. First, liberalised trade encourages nations to specialise in the production of goods and services for which they have a comparative advantage. This can lead to more efficient use of natural resources. Second, exposure to international competition forces companies to innovate and anticipate demand, which may further improve efficiency. Finally, a correlation has been found between economic growth, generated by freer trade, and citizen demand for environmental protection. There are also three main ways in which free trade can harm the environment. First, tensions between free trade and environmental protection occur when environmental externalities are not taken into account. In such situations, free trade can exacerbate already environmentally harmful resource allocation, because it magnifies economic activity. Second, free trade may lead to a ‘race to the bottom’ or ‘regulatory chill’ on environmental protection, as countries compete to attract investment. This claim is contested and empirical evidence equivocal: while some countries have reduced, or not strengthened, their environmental regulations to increase competitiveness, there is also evidence that freer trade, through increasing economic interdependency, has enhanced environmental protection in other countries. The final area of concern, which is the focus of this paper, is the treatment of environmental interests within the international trade regime’s dispute settlement system. In part due to its high public profile, dispute settlement has become the arena in which conflicts between trade and environmental protection are being fought out. The aim of this paper is to evaluate the environment-related jurisprudence of the panels/AB, in light of the PP and CP. This will allow an assessment of whether the panels/AB are integrating environmental considerations into WTO dispute settlement to the extent necessary to balance the goals of the propositions outlined initially. Section Two examines why the panels/AB should take principles of IEL into account in trade-related dispute settlement and provides a brief discussion of the PP and CP. Section Three analyses the jurisprudence of the panels/AB under the Agreement on the Application of Sanitary and Phytosanitary Measures (‘SPS’) in light of the PP. Section Four considers the recent AB and panel interpretation of GATT Article XX in United States – Import Prohibition of Certain Shrimp and Shrimp Products (Shrimp-Turtle) in light of the CP. Section Five concludes the evaluation of the panels/AB’s integration of the PP and CP into the trade regime.