The World Trade Organizationand Global EnvironmentalGovernance

Gary P Sampson

Preface

This paper is part of series of working papers thatrepresents one of the first outputs from a two-yearUnited Nations University Institute of AdvancedStudies project on International EnvironmentalGovernance Reform, being conducted incollaboration with Kitakyushu University, Japan, andwith support from The Japan Foundation Center forGlobal Partnership.

The project was initiated in response to increasingcalls, from both within the UN and from externalsources, for a more detailed analysis of the currentweaknesses and gaps within the existing system ofinternational environmental governance (IEG) and amore elaborate examination of the various proposalsthat have been put forward for reform. In respondingto these calls, the project has drawn upon theexpertise of several renowned academics andpractitioners in the fields of internationalenvironmental law, science, economics, politicalscience, the humanities, and environmental politics.

The first section of the project focuses on theidentification of weaknesses and gaps within thecurrent system of international environmentalgovernance. The individual research paperscommissioned within this section have concentratedon six key aspects of international environmentalgovernance: the inter-linkages within theenvironmental governance system; thescience/politics interface; industry/governmentpartnerships for sustainable development; theparticipation of NGOs and other civil societyrepresentatives; the interaction between national,regional, and international negotiation processes;and the role of international institutions in shapinglegal and policy regimes.

The second section of the project elaborates uponspecific reform proposals that have been generatedthroughout recent debates and evaluates thepotential of each proposal to strengthen the existingIEG system. The papers commissioned within thissection of the study have focused on exploring thepotential advantages and disadvantages of specificreform models and explained, in detail, how eachmodel may be structured and how it would function.The models of reform that have been exploredinclude: clustering of MEAs; strengthening UNEP;expanding the role of the Global MinisterialEnvironment Forum (GMEF); reforming existing UNbodies; strengthening financing sources andmechanisms; building up the environmentalcompetence of the World Trade Organization (WTO);different possible models fro a a World EnvironmentOrganization; reforming the UN Trusteeship Council;expanding the mandate of the UN Security Council;

The final section of the project combines insightsgained through the first two sections in order toprovide an in depth evaluation of current reformproposals, elaborate on how they may resolvecurrent gaps and weaknesses, and offers alternativerecommendations for reform.

For more information relating to the InternationalEnvironmental Governance Reform Project and fordetails of related publications, please visit the UnitedNations University Institute of Advanced Studieswebsite at http://www.ias.unu.edu or contact ShonaE.H. Dodds dodds@ias.unu.edu or W. BradneeChambers chambers@ias.unu.edu or visit The JapanFoundation Center for Global Partnership website athttp://www.cgp.org/cgplink/ or contact NorichikaKanie kanie@kitakyu-u.ac.jp

List of Contributors

Laura CampbellChad CarpenterW. Bradnee ChambersSteve CharnovitzLorraine Elliott Dana FisherHarris GleckmanPeter M. HaasToru IwamaNorichika KanieYasuko Kawashima

Satoko MoriSebastian OberthürJoost Pauwelyn Gary P. SampsonJonathan StrandRichard TarasofskyMikoto UsuiJacob WerksmanYozo Yokota

THE WORLD TRADE ORGANIZATION ANDGLOBAL ENVIRONMENTAL GOVERNANCE

February 2002

Gary P. Sampson

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Abstract

There are a number of options available to the WTO forenhancing its role in environmental governance:changes could be made to WTO rules and processes,new interpretations of WTO provisions could be madethrough the dispute sett lement process,‘uderstandings’ which spell out specific articles ofagreements could be formulated (as was the case in theUruguay Round), or a higher priority could be assignedto the environmental work of existing WTO ‘business asusual’ committees, such as the Committee on Tradeand the Environment. When assessing these differentpossibilities, there are at least three importantquestions that must be addressed: what changes couldbe made in a technical sense, would it be desirable tomake them, and is it realistic to expect them to beaccepted and implemented by governments?

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THE WORLD TRADE ORGANIZATION ANDGLOBAL ENVIRONMENTAL GOVERNANCE

Introduction ..........................................................................8Some Fundamentals............................................................9Non Discrimination ............................................................11Environmental Agreements ..............................................12Settling Disputes................................................................13

Exceptions .......................................................................13Openness.........................................................................14

Precaution and Risk Management ...................................15Committee on Trade and the Environment.....................18Market Access ....................................................................20Assessment ........................................................................23Conclusion..........................................................................26

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THE WORLD TRADE ORGANIZATION ANDGLOBAL ENVIRONMENTAL GOVERNANCE

Gary P. Sampson*

Introduction

The implementation of the outcome of UNCED is to bereviewed at the ‘Rio plus Ten’ conference – the WorldSummit on Sustainable Development (WSSD) –scheduled for September 2002 in Johannesburg. In thisprocess, one of the priority items to be addressed ishow to secure an improved and strengthenedinstitutional structure for international environmentalgovernance.1 From a trade perspective, an importantquestion, particularly in the aftermath of the WTOministerial meeting in Qatar where environmentalmatters were addressed, is whether there is anenhanced role for the WTO in pursuing this objective.2

There is little doubt that the WTO could become a farmore important player in the field of internationalenvironmental governance than is the case at present.3

The important question is this desirable or not and fromwhose point of view.

The objective of this chapter is to analyze variousoptions available to the WTO for enhancing its role inenvironmental governance. This could come in anumber of ways. There could be changes in WTO rulesand processes, or there could be new interpretations ofWTO provisions through the dispute settlementprocess. There could be Understandings that spell outspecific articles of agreements as was the case in theUruguay Round, or there may be a higher priorityassigned to work on the environment in existing WTO

* The author is Chair Professor of International Economic Relations at the Institute ofAdvanced Studies at United Nations University in Tokyo. He is also Visiting Academic atLondon School of Economics and Professorial Fellow at the Melbourne University. Thischapter is part of a Ford Foundation Project inquiring into the Role of the WTO in GlobalGovernance.1 See the Malmö Ministerial Declaration, Adopted by the Global Ministerial EnvironmentForum - Sixth Special Session of the Governing Council of the United NationsEnvironment Programme, Fifth plenary meeting, Malmö, Sweden, 31 May 2000.2 One response to this question came in a high profile manner when the then DirectorGeneral of the WTO called for a "framework" or an “architecture” within whichenvironment agreements could be dealt with coherently, effectively and efficiently.Renato Ruggiero considered it the responsibility for environmentalists to "put theirhouse in order", and a World Environment Organization could be considered as a meansto bring this order. See remarks by Renato Ruggerio to the WTO High Level Symposiumon Trade and Development, Geneva, 17–18 March 1999.3 When global environmental governance was discussed by EU Environment Ministers inJuly 2000 the “main issue” was whether to copy the WTO model in the environmentalfield. European Commission, An EU Contribution to Better Governance Beyond ourBorders, White Paper on Governance, Report of Working Group 5, May 2001.

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“business as usual” committees (such as theCommittee on Trade and the Environment). In addition,different priorities will almost certainly be assigned tofulfilling the mandate that emerged from Qatar;including in terms of future work in the area ofenvironment. However, in my view, in almost allinstances, it is not in the interests of the trade or theenvironment communities for the WTO to take ongreater formal responsibilities in the area of globalenvironmental governance. On the other hand, I willargue that the effectiveness of the WTO in governancematters relating to the global environment can beenhanced through action outside the WTO, as well asthrough a change in emphasis within the WTO withrespect to its existing functions.

It is not the intention of this chapter to becomprehensive in addressing all the options availableto the WTO. Space would not permit.4 The intention israther to draw on some of the most important exampleswhere change in WTO rules and processes could beundertaken to enhance its role in environmentalgovernance. To avoid launching ideas in a vacuum, theobjective is also to describe what changes could in factbe considered feasible within the boundaries ofpolitical realities. There are in fact at least threeimportant questions: what changes could be made in atechnical sense, would it be desirable to make them,and is it realistic to expect them to be accepted andimplemented by governments. I also address someexamples of the issues that should be dealt withoutside the WTO for it to be more effective in its workrelating to the environment.

The outline of the chapter is as follows. There is first adiscussion of some of the characteristics of the WTO“system” that are relevant for the following sections ofthe chapter. It also serves to highlight some of themarked differences between global trade andenvironmental governance. There is then a discussionof some areas where change could be implemented inthe WTO that would give it a greater role inenvironmental governance. In both sections the choiceof topics is selective, but sufficiently broad to give andidea of the nature and implications of the changesaddressed. I then review the likelihood of acceptance ofsome of the types of proposals advanced. The chapterconcludes with an assessment of the possible futurerole of the WTO in global environmental governance.

Some Fundamentals

4 Thus, some important areas such as trade related aspects of intellectual property rightsare not addressed.

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The World Trade Organization is the product of theUruguay Round of Multilateral Trade Negotiations(1986-94). It came into being on 1 January 1995, and, atthe time of writing, has 142 members, the most recentadditions being China and Taiwan.5 The WTO dealswith all trade agreements attached to the AgreementEstablishing the WTO (signed in Marrakech on 15 April1994). Attached to the Agreement are four annexescontaining all other multilateral trade agreementsreached in Uruguay Round, as well as otherunderstandings and decisions reached during thenegotiations. All individual WTO members haveaccepted these agreements. They constitute a totality interms of an undertaking and there can be no choosingbetween them.6

The Preamble to the Agreement Establishing the WTO sets out theobjectives of the Uruguay Round multilateral trade agreements. Much ofthe language of the Preamble is taken over from the GATT, with someminor modifications. The most important for present purposes is that theAgreement adds the objective of sustainable development, and that of“seeking both to protect and preserve the environment”. The declaredmeans of achieving these objectives is reciprocal and mutuallyadvantageous arrangements directed to the substantial reduction of tariffsand other barriers to trade, and elimination of discriminatory treatment ininternational trade relations. The objective of sustainable developmentdoes not appear in any of the multilateral trade agreements establishingrights and obligations, although there are a number of references to theenvironment in various agreements.The structure of the WTO is such that it is headed byMinisterial Conference, composed of all members of theWTO, which meets at least once every two years. Themost recent meeting was in Qatar in November 2001and prior to that in Seattle in December 1999. Theconference has the power to carry out the functions ofthe WTO and any of the multilateral trade agreements.Between sessions of the Ministerial Conference, theGeneral Council, also made up of the full membershipof the WTO, exercises its functions. It is responsible forthe continuing management of the WTO and supervisesall aspects of its activities. The General Council alsomeets as the Dispute Settlement Body and as the TradePolicy Review Body.

An important characteristic of decisions in the WTO isthat they are taken on the basis of consensus. An issueis first discussed to the point of all Members agreeing,or at least not opposing, the decision. To the extent thatvoting takes place, it is a mere formality, and usually isconcerned with the pre-negotiated terms of accessionof a country to the WTO, or a waiver to permit amember to deviate from a certain rule. Formally eachWTO member has one vote and the normal rule is adecision according to the majority of the votes cast.Matters are far more complicated when it comes toamendments to WTO rules; for certain key articles suchas those relating to non-discrimination, no change ispossible unless all Members agree formally.7

5 In what follows, the governments that constitute the membership of the WTO will bereferred to as the WTO members. While the 15 countries of the European Union areindividual members, they are represented at WTO meetings (with the exception of theBudget Committee ) by the European Commission which speaks on behalf of the 15member states.6 The exceptions are the three relatively unimportant plurilateral agreements in Annexfour.

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Like the GATT before it, the WTO is anintergovernmental organization and does not providefor the participation of non-governmental interestgroups. The closed nature of GATT negotiations canarguably be traced to the realities of the politicaleconomy of protection. The vast literature on this topicmakes clear that distributional coalitions form to resistpolicy change that is not in the specific interest of theirmembers. As interest groups can be adversely affectedthrough a process of trade liberalization, they naturallyuse their influence to resist such change. WTOmembers—and GATT contracting parties beforethem—are familiar with taking decisions that are not inthe interest of all groups in society but are neverthelessthought to be in the interests of the constituencies thatthe governments represent when electeddemocratically.8

A further relevant feature of the WTO is its disputesettlement process. The current practices are inscribedin the Dispute Settlement Understanding (DSU), whichis viewed by many as one of the most significantoutcomes of the Uruguay Round and an effective wayto promote multilateralism in the resolution of tradeconflicts. This lies at the heart of the WTO. In all of thediverse multilateral trade agreements, breaking therules means being taken to (the same) court. If theoffending measures applied by the country found to bein error are not brought into conformity with WTO rules,then compensation and retaliation - with the approval ofthe General Council - are provided for. And in thiscontext, the inter-relationship between the tradeagreements is critical. Compensation can be sought inthe form of improved market access in any of the areascovered by the multilateral trade agreements and notnecessarily with respect to the agreement where thebreach of obligations was committed. Similarly,retaliation can take place in any of the areas covered bythe agreements, not necessarily with respect to the onewhere there was a breach of obligations.

Non Discrimination

The principle of non-discrimination underpins the rulesbased multilateral trading system. It has twocomponents: the most-favoured nation (MFN) clausecontained in Article I of GATT, which stipulates thatWTO members are bound to grant to the products ofother members treatment no less favorable than thataccorded to the like products of any other country.Thus, no member is to give special trading advantagesto another or to discriminate against a particularproduct because of the manner in which it wasproduced or because of the country of origin of theproduct. Article III of GATT stipulates that once goodshave entered a market, they must be treated no lessfavorably than domestically-produced like goods.9

7 For an explanation of how decisions are taken in the WTO, see John Jackson, TheWorld Trade Organization: Constitution and Jurisprudence, Chatham House Papers(London, Royal Institute of International Affairs, 1998), Section 3.4. See also John H.Jackson, “Global Economics and International Economic Law,” Journal of InternationalEconomic Law, March 1998.8 If, for example, saving an efficient domestic motor vehicle manufacturing industryrequires removing tariff protection for a highly protected and inefficient local steelindustry, it is most unlikely that the government concerned would invite steel and carmanufacturers to the multilateral negotiating table.9 Under the GATS, Members are also required to offer MFN treatment to services andservice suppliers of other Members. However, it permits listed exemptions to the MFNobligation covering specific measures for which WTO Members are unable to offer suchtreatment initially. National treatment is only an obligation in GATS where Membersexplicitly undertake to accord it for particular services. Therefore, national treatment isthe result of negotiations among Members.

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The WTO does not inhibit governments from taking themeasures they wish to protect the environment; forexample, measures to avoid damage to theenvironment resulting from the manufacture andconsumption of goods produced and used withinnational boundaries. Final products can be taxed andother charges levied for any purpose thought to beappropriate. Similarly, there are no problems from aWTO perspective with governments levying taxesaccording to the process used to produce somethingwithin their own territory. But the interpretation of nondiscrimination in the WTO agreements is that WTOflexibility only extends to regulation of domesticproducts and processes and not the processes used toproduce imported products. It does not normally extendto the extraterritorial application of measures relating toproduction processes in exporting countries.

In short, from a trade policy perspective, goodsproduced in an environmentally unfriendly manner orare like any other. From an international relationsperspective, this serves to minimise any unwantedencroachment on national sovereignty with powerfulcountries riding roughshod over less powerful ones byforcing them to produce goods according to thepreferred environmental standards of the importingcountry. Importantly, it leaves the space for othertreaties to be negotiated to deal with the establishmentand enforcement of environmental norms. The realitywould seem to be that global environment agreementsdo not have the same legally enforceable discipline andcompliance mechanisms as that found in the WTOAgreements.

Not surprisingly, there has been a call come from anumber of environmental groups for the WTO to modifyits interpretation of like products to permitdiscrimination on environmental grounds. In otherwords, have the WTO adopt the role of an enforcementagency for what are considered universally heldenvironmental norms. If standards are universally held,there is, in principle, no real problem. If all WTOmembers have agreed to forgo their rights not to bediscriminated against in trade when certainenvironmental standards are not met, then tradediscrimination should be acceptable. WTO Membershave already agreed to restrictions on trade inendangered species, living modified organisms, stolengoods, narcotics and many other products.

However, as noted above, decision taking in the WTO ison the basis of consensus, and it may well be that notall countries agree to the preferred environmentalstandards of the countries, and, therefore, the use oftrade restrictions. A country may find the scientificevidence unpersuasive, it may not be able to afford tojoin the agreement concerned, or it may not haveaccess to the necessary technology on favorable terms.It may not agree with a given environmental objectiveor with the means to achieve the objective, or it mayconsider there are more pressing national policyproblems that deserve higher priority. To give the WTOthe role of deciding on which “almost” universally heldstandards could provide a justification for tradediscrimination would increase its role in environmentalgovernance enormously.

Environmental Agreements

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The important question then becomes what is the roleof the WTO in environmental governance if there is nota universal acceptance of environmental norms via amultilateral or regional agreement. Ideally, from a WTOperspective, such an agreement should establish theconditions under which trade restrictions can beinvoked for environmental purposes and the nature ofthe trade measure. If this is not the case, there are atleast two potential problems. The first is when a trade-related measure is taken by a party to an MEA againstanother party of the MEA. The problem arises when themeasure is not specifically provided for in the MEAitself, but is “justified” by the party taking the measureas "necessary" to achieve the objectives of theenvironment agreement. The necessity of this measuremay be challenged by the party against which themeasure is taken. In this case, both parties could bemembers of the WTO and the measure could violateWTO rights and obligations. This could lead to adispute as to the legitimacy of the measure in terms ofeither the MEA or the WTO.

It seems reasonable that such a dispute should bepursued under the dispute settlement procedures of theMEA. In this respect, it would be helpful if MEA partiesstipulated from the outset that they intended tradedisputes arising out of implementation of theobligations of the MEA to be settled under the MEAsprovisions. It could be argued that this approach couldhelp ensure the convergence of the objectives of MEAsand the WTO, while safeguarding their respectivespheres of competence, thus overcoming problemsarising from overlapping jurisdictions. This, however,requires an effective compliance mechanism to beavailable to MEA parties. Most of the MEAs with trade-related provisions do contain mechanisms for resolvingdisputes, but these lack the power of the WTO disputesettlement process. In the absence of an effectivedispute settlement system in the MEA, the disputecould gravitate to the WTO. It has been suggested onnumerous occasions in the CTE that there would bevalue in strengthening MEA dispute settlementmechanisms. This, of course, is outside the terms ofreference of the CTE.

Another problem relates to potentially WTOinconsistent measures, which are specifically providedfor in an MEA and taken by a party to the MEA against anon-party. A problem may then present itself if themeasure is against a WTO member which challengesthe legitimacy of the measure in the WTO disputesettlement process. Dealing with this group ofproblems involves a number of decisions on the part ofthe WTO dispute settlement process. These includewhether the measure can be justified as an exception toWTO rules and what importance to ascribe to theexistence of the MEA in determining if the measure inquestion is really “necessary” (see below on disputesettlement). The likelihood of a positive decision on thenecessity of the measure is presumably enhanced if thegoals of the environment agreement are acceptedglobally in a broad based MEA to which all, or most,WTO members belong. In fact, most proposals relatingto the relationship between WTO and MEA rules arebased on the notion that subject to specific conditionsbeing met, certain trade measures taken pursuant to

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Settling Disputes

Exceptions

Exceptions are provided for in the GATT 1994Exceptions Article (i.e. Article XX) wherenonconforming measures can be taken forenvironmental purposes if they are necessary toprotect human, animal, or plant life or health, or if theyrelate to the conservation of exhaustible naturalresources and are made effective in conjunction withrestrictions on domestic production or consumption. Ifat least one of these conditions is fulfilled, then theremaining requirement is specified in the head note tothe Exceptions Article: that the measures not beapplied in an arbitrary or unjustifiable manner in orderto discriminate between countries where the sameconditions prevail or constitute a disguised restrictionon international trade.

With respect to substance, there is little doubt that theWTO Dispute Settlement Process could play a greaterrole in environment related matters, particularly in itsrulings with respect to exceptions to WTO obligationstaken for environmental purposes. In the Shrimp Turtlecase, a decision had to be taken on whether the term“renewable resources” applied to renewable biologicalresources or was limited to depletable mineralresources. The Appellate Body ruled that in the light ofcontemporary international law, living species, whichare in principle renewable, “are in certaincircumstances indeed susceptible of depletion,exhaustion and extinction, frequently because ofhuman activities.” In taking this decision, the existenceof an MEA was critical. As “all of the seven recognisedspecies of sea turtles are listed in Appendix 1 of theConvention on International Trade in EndangeredSpecies of Wild Fauna and Flora (CITES),” the AppellateBody concluded that the five species of sea turtlesinvolved in the dispute constitute “exhaustible naturalresources” within the meaning of Article XX of theGATT 1994. 10

The Appellate Body also drew on the Preamble to theAgreement Establishing the WTO referred to above.Principles as expressed in Preambles are general legalcommitments rather than specific legal obligations ofstates.11 In its ruling, the Appellate Body clearlyassigned importance to promoting sustainabledevelopment and preserving the environment. Whilethis objective is certainly recognized and supported byWTO Members, the manner in which it is translated intorights and obligations can fundamentally change thecharacter of the exceptions provisions of the WTO.

Openness

A principal criticisms of the Dispute Settlement Body (DSB) relates toprocess and lack of openness; a common criticism is that all hearingsshould be open to the public and that all briefs by the parties be made

10 See WTO (12 October 1998, adopted 6 November 1998), United States – ImportProhibition of Certain Shrimp and Shrimp Products, Appellate Body Report,WT/DS58/AB/R, paragraph 128.11 Phillipe Sands, “International Law in the Field of Sustainable Development: EmergingLegal Principles,” in Wilfred Lang (ed.), Sustainable Development (Netherlands: KluwerLaw International, 1995).

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publicly available at the time of submission. In this respect, an importantquestion is whether a panel or the Appellate Body is obliged to acceptinformation submitted in the form of amicus briefs by NGOs. This becamea particular issue in the shrimp-turtle case, in which three submissionswere received from NGOs, all with expertise in turtle conservation.12 Thepanel found that it could not accept non-requested submissions fromNGOs, as this would be incompatible with the DSU provisions. It explainedthat the initiative to seek information and to select the source ofinformation rested with the panel alone, and noted that only the parties tothe dispute and third parties could submit information directly to panels.The Appellate Body ruled that “the Panel erred in its legal interpretationsthat accepting non-requested information from non-governmental sourcesis incompatible with the provisions of the DSU.”13

The complaining countries objected to the AppellateBody’s ruling, arguing that this procedure was not inconformity with the working procedures. They arguedthat as WTO Members that are not parties or thirdparties cannot avail themselves of the right to presentwritten submissions, it would be unreasonable to grantthe right to submit an unsolicited written submission toa nonmember when many members do not enjoy asimilar right. Such information might be strongly biasedif nationals from members involved in a dispute couldprovide unsolicited information. The complainingparties reasoned that this would only increase theadministrative tasks of the already overburdenedsecretariat. They also reasoned that the parties to adispute might feel obliged to respond to all unsolicitedsubmissions, just in case one of the unsolicitedsubmissions catches the attention of a panel member.Due process requires that a party know whatsubmissions a panel intends to consider, and that allparties be given an opportunity to respond to allsubmissions. It was argued that the Appellate Body haddiminished the rights of members and intruded uponmembers’ prerogative as negotiators to establish thebounds of participation in the WTO. Such issues shouldbe decided by members. The Appellate Body, whichwas only a judiciary, was in this case writing the rulesof participation.14 With regard to amicus briefs, theAppellate Body had appeared to have "let itself beoverawed by the campaign of NGOs of major tradingentities."15

Precaution and Risk Management

WTO Agreements seek to avoid standards creatingunnecessary obstacles to trade, while recognizing thesovereign right of governments to adopt whatever

12 During the panel proceedings, the panel received briefs from the Center for MarineConservation, the Center for International Environmental Law (CIEL), and the World WildFund for Nature with copies to the complainants. During the Appellate Body proceedings,the United States attached to its submission amicus briefs from three groups of NGOs(paragraph 79 of the Appellate Body Report). In addition, CIEL sent a revised version ofits brief directly to the Appellate Body.13 See Appellate Body Report, paragraph 110.14 See the views of Members as reported in WTO, Minutes of Meeting of the DisputeSettlement Body, WT/DSB/M/50, 14 December 1998, p. 11.15 See WTO, Minutes of Meeting of the Dispute Settlement Body, WT/DSB/M/50, 14December 1998, p. 10.

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standards are appropriate to fulfill legitimate objectiveswhile taking into account the risks that non-fulfillmentwould create. At the same time they recognize that for avariety of reasons, a particular standard may not beappropriate across countries. For example, physicalconditions may differ between areas and, in the light ofscientific evidence, the absorptive capacities for airpollution may differ between countries because ofthese physical characteristics. However, while suchdifferences across countries can presumably bemeasured objectively, this is not necessarily the casewith respect to how different societies wish to managethe risk.16 As risk assessment is the scientificdetermination of the relationship between cause andeffect in situations where adverse effects can occur, itis hard to imagine a role for the WTO in this. Riskmanagement, on the other hand, is the process ofidentifying, evaluating, selecting, and implementingmeasures to reduce risk.17 Determining what is“appropriate” in the light of scientific evidence andwhat constitutes legitimacy in terms of publicpreferences for the management of risk promises to beone of the most contentious areas forenvironmentalists and trade officials alike.

At the heart of the issue is the role of “precaution” inrisk assessment.18 The Precautionary Principleresponds to the gap between banning a product orprocedure until science has proved it is harmless andnot banning it until science has proved that there is areal risk. The theoretical underpinnings of this principleare elusive and difficult to define, and there is noconsensus with respect to its acceptance as a basis forestablishing obligations in national and internationalrules. 19

16 See Steve Charnovitz, “The World Trade Organization, Meat Hormones and FoodSafety,” International Trade Reporter, October 15, 1998.17 National Research Council, Risk Assessment in the Federal Government (Washington,DC: 1983).18 The principle has already secured its place in a number of international agreements.See for example, the Report of United Nations Conference on Environment andDevelopment, Annex 1, Rio Declaration on Environment and Development, Rio deJaneiro, 3–14 June 1992, Principle 15. The Biodiversity Convention, for instance, statesthat “where there is a threat of significant reduction or loss of biological diversity, lack offull scientific certainty should not be used as a reason for postponing measures to avoidor minimise such a threat.”19 For an elaboration see European Commission, Directorate General XXIV, Guidelines onthe Application of the Precautionary Principle, HB/hb D(98), Brussels, 17 October, 1998.

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As far as WTO Agreements are concerned, the Sanitaryand Phytosanitary (SPS) Agreement and the TechnicalBarriers to Trade (TBT) Agreement are both specificallydesigned to avoid standards constituting unnecessarybarriers to trade.20 In the SPS Agreement, themanagement of risk is important in ensuring foodsafety and animal and plant health. The most importantobjective of the agreement is to reduce thearbitrariness of governments’ decisions by clarifyingwhich factors to take into account when adoptinghealth protection measures. The approach is thatmeasures taken to fulfill the objectives of theagreement should be based on the analysis andassessment of objective and accurate scientific data.Thus, an important question in managing risks tohuman, animal, and plant life and health is deciding onthe risk levels and the appropriate standards to adoptto manage the risk.21

International standard-setting organizations offerready-made yardsticks. The SPS Agreement explicitlyrefers to three such groups whose activities areconsidered relevant in meeting its objectives: theCodex Alimentarius Commission, a joint effort of theFood and Agriculture Organizaton (FAO) and the WorldHealth Organization; the International Office ofEpizootics (OIE); and the international and regionalorganizations operating within the framework of theFAO International Plant Protection Convention (IPPC).Many WTO members are involved in those fora, andtheir scientists and health experts participated in thedevelopment of these voluntary internationalstandards.

The SPS Agreement provides for long term nationalmeasures that exceed the protection levels establishedin international agreements if these are judged not toprovide an acceptable level of protection at the nationallevel. But if challenged, these measures must besupported by scientific evidence based on an objectiveassessment of the potential health risks involved. Whenintroducing a standard that is more trade-restrictivethan Codex, OIE, or IPPC, the SPS Agreement calls formeasures based on the analysis and assessment ofobjective and accurate scientific data. In the absence ofan international standard, each country must conductits own risk assessment and determine its “acceptablelevel of risk.” These commonly include substantialsafety margins as a precautionary measure. Once agovernment has determined its appropriate level ofsanitary and phytosanitary protection, however, inorder to be consistent with the WTO, it should notchoose a measure that is more stringent and trade-restrictive than necessary. Thus the evaluation of thisis important in determining the measure, the effects ofwhich should be proportional to the risk.

20 The Trade-Related Intellectual Property Rights Agreement also establishes minimumstandards for the protection of intellectual property. These standards are not addressedhere.21 The SPS Agreement allows countries to take measures in cases of emergency wheresufficient scientific evidence does not yet exist to support definitive measures. Followingthe bovine scare in 1996 relating to bovine spongiform encephalopathy ("mad cowdisease"), and in the absence of sufficient scientific evidence, several emergency banswere introduced. In accordance with the SPS Agreement, however, these could only beprovisional. In the long term, governments must conduct scientific risk assessment andadapt their measures accordingly, although there is no determination as to how long"provisional" may be.

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However, even in the light of the same scientificevidence, different societies have different preferencesfor the management of risk. It also creates thepossibility of abuse of measures for protectionistpurposes.It is in this sense that the recent dispute on meat treatedwith hormones heralds future potential problems for theWTO. The European Union ban on meat productscontaining hormones went into effect in 1989; it appliedto animals treated with hormones in order to promotegrowth, as the EU maintained that there was acarcinogenic effect associated with human consumptionof the hormone-treated beef. When the case was dealtwith by a WTO panel, the panelists rejected the EUarguments due to a lack of scientific evidence of ahealth and safety risk. They concluded this afterconsulting scientific experts, and there was generalagreement that the hormones posed no risk. The paneldid not consider information presented by publicinterest groups. In the proceedings, internationalstandards played an important role—in particular, theuse of the Codex benchmark standard. The EuropeanUnion argued that Codex did not represent aconsensus-based standard for minimum residue levelsof growth-promoting hormones, since it was adopted bya vote of 33–29, with 7 abstentions. From an operationalperspective, the SPS Agreement thus required that theEU implement food safety standards when the minimumlevels were agreed to by fewer than half of the Codexexperts. They argued that being obligated to acceptstandards that were not accepted on a consensus basisis a process that seems far from the consensus-basednotion of WTO rules.

The panel also considered whether the precautionaryprinciple could provide justification for the ban in theabsence of scientifically based risk assessment. It notedthat the precautionary principle was incorporated intothe SPS Agreement through the use of emergencymeasures permitting members to provisionallyintroduce measures that are not supported by“sufficient” scientific evidence until this evidence isobtained. In the hormone case, emergency measures assuch were not under discussion, as the ban did notrelate to “provisional regulations.” The EU Directive wasa definitive regulation.

The panel report was referred to the Appellate Body,which agreed that the specific wording in the SPSAgreement prevailed over the precautionary principle.However, neither the panel nor the Appellate Bodyaddressed whether scientific risk assessment and theprecautionary principle were potentially at odds. The EUwas restricting the importation of hormone-treated beefwhen scientific risk assessments could not take accountof the fear of society toward the potential risk involved.In fact, the Appellate Body concluded that theprecautionary principle awaits confirmation as acustomary principle of international law.

The lack of clarity as to the application of theprecautionary principle in specific situations has anumber of potentially important implications for theWTO. In the absence of agreement outside the WTO onhow it is to interpreted in specific cases means that theWTO will find itself in a situation where it is the arbiterin a number of potential environment or health related

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controversies. Indeed, the WTO has already beendescribed as the “World Trans Science Organization, aglobal meta-regulator.” It resolves “scientific issuessuch as carcinogenicity, adopts policies concerning theacceptable levels of risk or scientific uncertainty, andmakes decisions about appropriate levels of health andsafety.”22 It is of primary importance for the WTO thatongoing negotiations outside in areas where precautionis important, such as how to deal with trade andlabeling of products derived from GMOs, aresuccessfully completed.

Committee on Trade and the Environment

The Committee on Trade and the Environment (CTE)was established in January 1995. The Committeereports to the WTO General Council. It is mandated toaddress a variety of areas of work and to recommendwhether any modifications to the rules of themultilateral trading system are required to permit apositive interaction between trade and environmentmeasures. The CTE includes all WTO members and anumber of observers from intergovernmentalorganisations. There are no observers from non-governmental organisations (NGOs) despite a numberof requests to be present at CTE meetings. The CTEhas a standing agenda, and meets formally at least twotimes a year and in an informal mode wheneverconsidered necessary. It addresses - inter alia - therelationship between the provisions of the multilateraltrading system and trade measures for environmentalpurposes; in particular, the relationship between WTOrules and compliance procedures, and those of themultilateral environmental agreements.23

The CTE has been soundly criticized24 and accused offailing, among other things, in its task ofrecommending modifications of the provisions of themultilateral trading system “to enhance a positiveinteraction between trade and environmental measuresand for the promotion of sustainable development.” As

22 See Vern R. Walker, “ Keeping the WTO from Becoming the World Trans ScienceOrganization: Scientific Uncertainty, Science Policy, and Factfinding in the GrowthHormones Dispute,” Cornell International Law Journal, Vol. 31, 1998, pp. 251–320.Questions of trans-science in this context are considered to be “those which can beasked of science and yet which cannot be answered by science.”23 A number of MEAs have trade-related provisions that raise questions with respect totheir WTO conformity. A detailed description of the WTO relevant measures in elevenenvironment conventions containing trade measures can be found in WTO (19 September2000).24 See, for example, Steve Charnovitz, “A Critical Guide to the WTO's Report on Trade andthe Environment,” Arizona Journal of International and Comparative Law, vol. 14, no. 2(1997).

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a result, various environmental groups have proposed"mainstreaming" environment issues by factoringenvironmental concerns into the WTO across theboard. In this scenario, each relevant WTO Committeewould deal with environment under its area of authority.While this may hold some appeal, it is difficult how itwould operate in practice. In a formal sense it is notclear how the process could be established and in avery practical sense, resources devoted bygovernments to questions relating to the environmentare already spread thinly in WTO meetings. This isevidenced, for example, by the small number ofdeveloping country delegations that are active in theCTE. Mainstreaming may just lead to a dilution ofalready inadequate resources and a furtherminimization of attention paid to trade and environmentissues.

Nevertheless, there is certainly a need to monitor themanner in which environmental concerns are dealt within the various post Qatar negotiating groups. In thisrespect there is a potentially important role for the CTE.It could, for example, provide the forum where thosecountries that have chosen to conduct reviews of thetrade and environment linkages of the negotiationspresent their results. It could also provide the focalpoint for the identification and discussion of linksbetween the various elements of the negotiatingagenda and the environment. This role could be furtherbroadened if a similar mandate was given to theCommittee on Trade and Development (CTD). The CTEand the CTD could each provide a forum to identify anddebate the developmental and environmental aspectsof the negotiations, including the synergies betweentrade liberalization, economic development andenvironmental protection. The work of the two bodieswould be complementary and would help to ensure thatthe negotiations reflect the preamble of the WTOAgreement on acting in accordance with the objectivesof sustainable development and responding to theneeds of the developing countries and especially of theleast-developed countries.

There is also an important role for the CTE in terms offuture relations with MEAs. At the time of its inception,there was active discussion in the CTE on therelationship between the WTO and MEAs. This hasserved a useful purpose. It could be argued that one ofthe reasons that there has never been a dispute relating

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to an MEA brought to the WTO is because of theincreased understanding created through informationsessions in the CTE where the secretariats ofenvironmental agreements have been invited to presentrelevant information with respect to the rules of theiragreements.25 These sessions have clearly facilitated amutual understanding of the linkages between themultilateral environment and trade agendas, and builtawareness of the use of trade-related measures inMEAs.

This debate has recently been enlivened with a numberof far-reaching formal proposals to the CTE bygovernments. This is perhaps a reaction to thecommercial, political and social importance of somerecent MEAs that could well impact on trade, and theclaim that that the lack of clarity between WTO andMEA rules has lead to confusion in the negotiation ofthe MEA. It has been argued that the negotiationssurrounding the Bio-safety Protocol, for example,proved to be difficult, "precisely because of the lack ofclarity with regard to the relationship of the Protocol tothe WTO".26 The renewed interest could also be due tohigh profile trade and environment disputes that havecome to the WTO in recent times, and recognition of thefact that they probably never would have arisen had aneffective MEA been in place. An additionalconsideration is that the debate in the WTO has beenenriched with a large amount of useful work beingundertaken by reputable non-governmentalorganisations, intergovernmental institutions andacademics.

In Qatar in November 2001, trade ministers launched anew Round of multilateral trade negotiations, andbrought precision to how they want to deal with theWTO and MEAs. With a view to enhancing the mutualsupportiveness of trade and environment, they agreedto negotiations on the relationship between existingWTO rules and specific trade obligations set out inmultilateral environmental agreements; procedures forregular information exchange between MEASecretariats and the relevant WTO committees; and, thereduction or, as appropriate, elimination of tariff andnon-tariff barriers to environmental goods and services.

Market Access

25 The most recent of these information sessions was held on 24 October 2000. Thefollowing Secretariats responded to questions from CTE Members: the Convention on theInternational Trade in Endangered Species of Wild Fauna and Flora; the BaselConvention on the Control of Trans-boundary Movements of Hazardous Wastes and theirDisposal UNEP Chemicals on the Rotterdam Prior Informed Consent Convention and thedraft Persistent Organic Pollutants Convention; the Intergovernmental Forum onForests); the UN Framework Convention on Climate Change and the Executive Secretaryof the Convention on Biological Diversity also attended this session. For a report on themeeting see WTO (12 December 2000).26 See, WTO (19 October 2000), Clarification of the Relationship Between the WTO andMultilateral Environmental Agreements, Submission by Switzerland, WT/CTE/W/168.

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In discussions pertaining to improved market accessthrough negotiated trade liberalization, there have beencalls for a multilateral framework for the assessment ofexpanded trade on the environment.27 After makingsuch a proposal in 1994, the Commission onSustainable Development was mandated bygovernments to provide the institutional coordinationnecessary to undertake an assessment of theenvironmental and social development aspects of tradepolicies. At the High Level WTO Symposium on Tradeand Environment held in March 1999, the United Statesannounced that it will join the European Union andCanada in carrying out an assessment of theimplications of the post 2000 WTO negotiations on theenvironment.

While there has been some discussion in the WTO ofthe possibility of all Members agreeing to carry outsuch environmental impact assessment studies, theidea has not gained broad based support. For mostcountries, whether or not to conduct such studies is anational choice with little to do with the work of theWTO as such. In addition, the task of evaluating theenvironmental benefits derived from removing traderestrictions and distortions is complicated not only bythe complexity of the changes in the resource usageand consumption patterns that follow tradeliberalization, but also by the limited capacity tomeasure the environmental impact.

Work has proceeded in the CTE, however, with anarrower focus on identifying sectors whereenvironmental benefits follow trade liberalization.28

Notwithstanding the complexities of the task, a numberof conclusions can be drawn that enable priorities to beassigned to various sectors. 29 In the Qatar Declaration,Ministers instructed the Committee on Trade andEnvironment, in pursuing work on all items on itsagenda within its current terms of reference, to giveparticular attention to the effect of environmentalmeasures on market access, especially in relation todeveloping countries, in particular the least-developedamong them, and those situations in which theelimination or reduction of trade restrictions anddistortions would benefit trade, the environment anddevelopment.

The work on these issues should include theidentification of any need to clarify relevant WTO rules.The Committee on Trade and Environment is to reportto the Fifth Session of the Ministerial Conference, andmake recommendations, where appropriate, withrespect to future action, including the desirability ofnegotiations. The outcome of the work carried out inaccordance with the ministerial declaration is to becompatible with the open and non-discriminatorynature of the multilateral trading system, not add to ordiminish the rights and obligations of Members underexisting WTO agreements, in particular the Agreementon the Application of Sanitary and PhytosanitaryMeasures, nor alter the balance of these rights andobligations, and will take into account the needs ofdeveloping and least-developed countries.

27 See for example, WWF International, Initiating an Environmental Assessment of TradeLiberalisation in the WTO, WWF Discussion paper, March, 1999.28 Comprehensive work has been done in this area by the OECD secretariat. Thesecretariat has studied the environmental effects of trade liberalisation in three sectors:environmental goods and services, the freight sector and the fossil fuel sector. See, forexample, OECD, Environmental Effects of Liberalising Trade in Fossil Fuels,COM/TD/ENV/(98)129, 25 November, 1998.29 For an analysis on a sector by sector basis of the environmental implications ofremoving trade barriers see the Secretariat document, Environmental Benefits ofRemoving Trade Restrictions and Distortions, WT/CTE/W/67, 8 November 1997.

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In the more colloquial language, this is a response tothe fact that WTO members have been exploring thepossibilities of trade liberalization in industrialcountries where “win-win” scenarios exist. Industrialcountries win when they remove trade restrictions thatare environmentally harmful in their own countries. Anddeveloping countries win when exports grow followingthe removal of environmentally harmful traderestrictions in the importing developed countries.

There is, in fact, a third win. Numerous empiricalstudies have demonstrated that the link between tradeliberalization and economic growth is unequivocal.Empirical evidence supports the contention thatcountries that have opted for an outward-orienteddevelopment strategy have been the fastest growing inthe developing world. This does not mean, however,that the link between growth and liberalization cannotbe challenged. Economic growth may lead to morewealth but does not in itself ensure an egalitariansociety. Nor does it mean that growth will automaticallylead to an improvement in the environment.Nevertheless, higher gross domestic product per capitaand fewer resources used to produce each unit ofoutput mean a higher national income and moreresources available for the implementation of soundenvironmental policies.

One important question is whether win-win situationsdo in fact exist. The answer is that they do—inprinciple. From a trade perspective, differentenvironmental resource endowments (such as thephysical capacity to absorb pollution) are themselves abasis for differences in true comparative advantage.Furthermore, different societies and individuals withinthem also have different levels of tolerance with respectto environmental degradation. As long as nationalsovereignty prevails with respect to environmentalpriorities, the extent to which externalities areinternalized will be determined by awareness of theenvironmental problem, the government’s capacity toadopt the necessary policy measure to deal with it, thenation’s physical capacity to absorb the environmentaldamage, and societal preferences relating toenvironmental conditions and the quality of life. This inturn will influence the impact on relative pricesnationally and internationally. Trade restrictions candistort the well functioning of markets, and thus theexploitation of comparative advantage, just as they canfrustrate the implementation of sound environmentalmanagement policies.

Discussion in the CTE has revealed that win-winsituations exist in practice as well as in principle. In thecase of fisheries, a sector of considerable importanceto developing countries,30 the link between depletedfish stocks and bad government policy seems to bewell accepted. Fisheries subsidies are widespread,distorting trade and undermining the sustainable use ofthe resource base. One reason for giving priority to thissector is that useful substantive work has already beendone in the WTO, by non–governmental organisationsand elsewhere and there is now concrete evidence thatthe political will to address the problem appears to bestrengthening.31

30 Developing countries account for over one half of world trade in fish and fish products;in 1996, exports exceeded imports 17 billion US dollars. See FAO, State of WorldFisheries and Aquaculture, Rome, 1999.31 See the chapter by David Schorr in Gary P. Sampson and Bradnee Chambers (eds),Trade Environment and the Millennium, United Nations University Press, Tokyo, 2000.

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At the Ministerial Conference in Doa, Ministers agreedto negotiations aimed at clarifying and improvingdisciplines under the Agreement Subsidies andCountervailing Measures while taking into account theneeds of developing and least-developed participants.In the context of these negotiations, the intention is toclarify and improve WTO disciplines on fisheriessubsidies, taking into account the importance of thissector to developing countries.

There are also win win possibilities in the sector ofagriculture. Agricultural subsidies have lead tointensified land use, increased applications ofagrochemicals, the adoption of intensive animalproduction practices and overgrazing, the degradationof natural resources, loss of natural wildlife habitatsand biodiversity, reduced agricultural diversity, and theexpansion of agricultural production into marginal andecologically sensitive areas. Agricultural assistancethrough output-related policies in many industrialcountries has imposed high environmental costs onother nations which have a comparative advantage inagricultural production and trade.

Not all subsidies are of course harmful. Adopted duringthe Uruguay Round, the Agreement on Agricultureseeks to reform trade in agricultural products andprovides the basis for market-oriented policies. In itsPreamble, the Agreement reiterates the commitment ofMembers to reform agriculture in manner whichprotects the environment. Under the Agreement,domestic support measures with minimal impact ontrade (known to as 'green box' policies) are excludedfrom reduction commitments. These includeexpenditures under environmental programmes,provided that they meet certain conditions. Theexemption enables Members to capture positiveenvironmental externalities.

In additions, WTO Agreements do not prohibit subsidesper se. The WTO Agreement on Subsidies, whichapplies to non-agricultural products, is designed toregulate the use of subsidies. Under the Agreement,certain subsidies are referred to as 'non-actionable'.These are generally permitted by the Agreement.Amongst the non-actionable subsidies mentioned, aresubsidies to promote the adaptation of existingfacilities to new environmental requirements imposedby law and/or regulations which result in greaterconstraints and financial burden on firms. Suchsubsidies, however, must meet certain conditions.Making such subsidies non-actionable enablesMembers to capture positive environmentalexternalities when they arise.

A further sector where liberalization could be beneficialfor all is trade in environmental goods and services(pollution control equipment, for example, or solidwaste management). The value of world production inthis sector is considerable and has been estimated tobe in the order of $450 billion a year.32 In this sector, asin others, it is in the interest of all WTO members thatenvironmentally sound goods and services be madeavailable on the international market at the cheapestprevailing world prices. After studying liberalization inthis sector, the OECD Report to the Council of Ministersconcluded that goods and services would becomecheaper meaning that "limited environmental protectionbudgets can be stretched further" and "expandedmarket opportunities can encourage technologicalprogress, as well as providing economies of scale and

32 See OECD, Future Liberalisation of Trade in Environmental Goods and Services:Ensuring Economic Protection as well as Economic Benefits, COM/TD/ENV (98)37, 4March 1999.

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Buying goods and services at world market prices is ofcourse an option available to all countries, asgovernments can unilaterally remove barriers toimports in these goods and services and so serve theirown interests. In practice, however, governments seek“concessions” in negotiations even when acting intheir own interests, and the possibility of obtainingsuch concessions is greatest in multilateral rounds ofnegotiations where the removal of barriers to imports inone sector can traded off against liberalization inanother. In recent years, however, traditional cross-sectoral trade-offs have not always been necessary toencourage governments to enter into sectoral trade-liberalizing negotiations. Reaping the advantages thatensue from trade liberalization and a more efficientresource use on both the consumption and productionside has been the driving force in a variety of sectors;examples include information technology,pharmaceutical products, basic telecommunications,and financial services. It seems reasonable that WTOsectoral negotiations should extend to environmentalgoods and services.

Importantly, in all these areas of improved marketaccess that are linked to better environmentalgovernance, no change in WTO rules is required;simply a change in negotiating and other priorities.Assessment

A number of the potential changes for the WTO in termsof its role in global environmental governance - such asa reinterpretation of non discrimination - would requireconsensus in the WTO. Experience has shown thatchanges to GATT rules were rare, even with far fewercountries involved. Since the establishment of GATT in1948, there were only two amendments—one in 1955and another in 1964,34 and there is no indication thatthe things will be different in the future. This is notsurprising. As noted, consensus would require 142countries at very different levels development and withvery different priorities to agree. Further, given thecontractual nature of WTO agreements, members willonly agree to a rule change if the outcome is clear andwithout risk. The dispute settlement process, with thethreat of retaliation and compensation is the Damocles’sword hanging over those that have to live with theinterpretation of the new rules. A further considerationis that change in WTO rules will be resisted by thosewho believe that first GATT, and now the WTO, havebeen particularly successful at doing what they weremandated to do. Changing rules in an organization justseveral years old will be a priority for few members.One observer, for example, has expressed the view ofmany not only in the trade community by remarkingthat the “multilateral trading system at the beginning of

33 Results reported in OECD, Report on Trade and Environment: Council at MinisterialLevel, 26-27 May 1999, C/MIN(99), 12 May 1999.34 There were, however, understandings negotiated in the Uruguay Round relating tosome of the principal GATT articles.35 See Martin Wolf (2000) in Gary P. Sampson (ed.), The Role of the WTO in GlobalGovernance, United Nations University Press, Tokyo, Japan.

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Notwithstanding the probable resistance to changingWTO rules, the GATT, and now the WTO, have provento be flexible instruments where “changes” have beenpossible through techniques that have ranged fromsimple non-enforcement of certain rules (such asArticle XXIV of the GATT 1994) to a variety of relativelyinformal actions or interpretations through the disputesettlement process. The question then is whether thesenon-rule change options can be used to alter thetraditional interpretation of terms such as "likeproducts" and providing for discrimination amongimports on the basis of production methods. Suchchanges would profoundly alter the role of non-discrimination that lies at the heart of the WTO legalsystem and would be strongly resisted.36 In my viewthis is inadvisable. It has already been argued by somemembers that the Appellate Body has extended itsauthority beyond that granted to it by members, and isplaying a role in policy formulation through litigation.The DSU limited the jurisdiction of the Appellate Bodyto issues of law covered in panel reports, and to legalinterpretations developed by panels, and prohibited theAppellate Body from adding to, or diminishing, therights and obligations provided in the coveredagreements. A number of countries have argued thatthere has been an “evolutionary” interpretativeapproach adopted by the Appellate Body which hadoverstepped the bounds of its authority by underminingthe balance of rights and obligations of members.37

In my view, the solution to dealing with the use of no-conforming WTO measures to deal with environmentalconcerns lies in ensuring the existence of effectivemultilateral environment agreements to deal with trans-boundary environmental problems.38 If agreedstandards and trade-measures are adopted by WTOmembers in an environment agreement, and the WTOmembers agree to forgo their WTO rights not to bediscriminated against, then there seems little reasonwhy the WTO members should not formally recognizethis fact if it is considered useful for the purposes ofenvironmental governance. If, however, the standardsor the measures taken are disputed – for examplethrough the dispute settlement process - the WTObecomes both the body that establishes the standardsand enforces them.

What is sure, however, is that the members of the WTOhave no desire to become arbitrators on matters welloutside the realm of conventional trade policyconsiderations. To expect to find solutions requiringmultilateral agreement in the case of disputes involvingfood safety or protection of endangered species that

36 This concern manifests itself in a resistance to any attempts to provide for theextension of domestic production standards in industrial countries into developing onesin order for their exports to be acceptable for import. The strength of feeling on thismatter on the part of many developing countries cannot be overstated, and was recentlyevident in the discussion of an Appellate Body ruling that appeared to leave the questionopen. See the remarks by of a number of developing countries in WTO, Minutes ofMeeting of the Dispute Settlement Body, WT/DSB/M/50, 14 December 1998, discussingthe shrimp-turtle dispute, where it was argued that dictating fishing practices in othercountries was an encroachment on national sovereignty.37 See comments by Malaysia, India, Pakistan, and others in WTO, Minutes of Meeting ofthe Dispute Settlement Body, WT/DSB/M/50, 14 December 1998.38 See Gary P. Sampson, “Effective Multilateral Environmental Agreements and Why theWTO Needs Them”, The World Economy, forthcoming.

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cannot be settled bilaterally is not reasonable. Norshould the problem be relegated to a dispute settlementprocess where trade officials on a de facto basis takedecisions that will almost by definition (because thereis no agreement at the national level) be unpopular withlarge parts of the public. The way to deal problemssuch as how to deal with risk management in a WTOcontext must be discussed in terms of policy choicesrelating to the use of the precautionary principle, notlitigation. There must be a coherent approach todealing with problems where scientific evidence alonedoes not make the policy choices clear. Such issuescan not be dealt with through the rough and tumble ofdaily negotiations.

On the other hand, where there is scope for a greaterrole in environmental governance for the WTO,however, is in improving the market access within thecontext of win win scenarios. There are many goodreasons for promoting a win-win approach. It wouldgive force to the commitment of WTO members to usethe world's resources optimally and in accordance withthe objective of sustainable development. It wouldprovide evidence of their desire to protect and preservethe environment and to enhance the means for doingso precisely when they are being criticized for notdoing enough. Viewed constructively, by adopting awin-win approach, public support can be garnered forundertaking reform in sectors where some interestgroups may be adversely affected by policy reform, butwhere reform is in the interests of the community atlarge. The initiative is already viewed positively bysome environmental nongovernmental organizationsthat have been hostile to the WTO in other areas. Inaddition, improving market access holds attraction fordeveloping countries where few other advantages areseen in the trade and environment debate.

There is also scope for imaginative proposals forchanges in processes that would remove some of thepressure for rule and process change in the WTO. Inthe words of the President for World Wide Fund forNature International with respect to the WTO DisputeSettlement Mechanism: “The speed, power, andefficiency of the system are both frightening andfascinating to environmental groups. It is the verypower and authority of the system that has led to calls

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for reforms”.39 He notes that because of its adversarialnature, formal WTO dispute settlement may not be thebest means to resolve disputes of this kind. Hesuggested that WTO members should explore theestablishment of multi-stakeholder consultativeprocesses in which relevant facts could be put on thetable by all interested parties from governments, non-governmental organisations, industry, academia andlocal communities. In fact, the Dispute SettlementUnderstanding formally creates the option of parties tothe potential dispute to request the good offices of theDirector-General to engage in consultations to settlethe dispute. Such a consultative process could assist inproviding the countries involved with an opportunity toconsider a range of policy instruments suitable toresolve any trade related environmental issue whichmay have arisen.

Conclusion

In attempting to bring more coherence to globalformulation, there are those that see the vacuum at theinternational level being at least partially filled with theWTO taking on even more responsibilities. Theargument at its most fundamental level, is that therecurrently exists a strong multilateral rules-based traderegime - attained through the WTO - and this isessential to developing an effective system ofgovernance of the global market. It is reasoned that thetrading system can not act in isolation when thereexists a wide variety of issues, such as theenvironment, that belong on the international agenda,and which are directly affected by trade itself or therules that govern it. Without a common appreciation ofthe role of the WTO, the end result is that many think itis acting irresponsibly or somehow not fulfilling itsfunctions.

The fact of the matter is that there is no worldgovernment or supra-national body to determine theappropriate division of labour among existingmultilateral institutions. There clearly needs to be acoordinated response on the part of the institutionsinvolved and a coherent approach to policy formulationat the global level. The key question is how can this bedone. Many proposals have been forthcoming on thepart of former and future Director Generals of the WTO:Peter Sutherland proposed a global summitconference; Renato Ruggiero has called for a WorldEnvironment Organisation and Dr. Supachai hassensibly supported a proposal for an Eminent PersonsGroup outside the negotiating process to find the wayforward.

39 See Claude Martin (2000) in Gary P. Sampson (ed.), The Role of the WTO in GlobalGovernance, United Nations University Press, Tokyo, Japan. The remarks are by thePresident of World Wide Fund for Nature International. See Martin (2001).

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