By Aakanksha Mishra, Gujarat National Law University,  Gandhinagar.

The World Trade Organization was fashioned by the international order to promote free trade: to remove barriers between countries, to allow them to concentrate on products with a comparative advantage, leading to maximum international productivity. This, however, often challenges rules protecting the environment.  Even though the WTO has shown an increasingly open approach towards environmental issues, free trade is still the organisation’s backbone and trade liberalisation its main goal. International environmental law, on the other hand, provides the global institutional means for engaging in the global ecological challenges. It comprises of a loose affiliation of treaties, principles and customs and is a complex system of law which is still evolving and is further exacerbated by a dizzying array of stakeholders. There is considerable tension between the environmental goals and the rapid growth in international trade that places pressure on the earth’s ecosystems.

The Multilateral trading regime regulated by the WTO has been often subjected to sharp criticism by environmentalists for its disregard to environmental concerns. This attack is four pronged- firstly, expansion of trade will lead to environmental damage either directly (free trade and new export opportunities will encourage polluting industries to expand their operations) or indirectly (conventional gains from increasing free trade will lead to rise in national income which will manifest itself by way of magnified levels of consumerism); secondly, weaker environment protection rules within the WTO framework will permit some countries to push forward their agenda of international competitiveness; thirdly, members seeking to maintain high environmental standards by use of trade policy will often find themselves restrained by or in violation of their obligations under WTO; and fourthly, WTO obligations mostly supersede obligations of members under Multilateral environmental agreements. On the other end of the spectrum, the advocates of free trade and the developing countries and LDCs fear that inclusion of stringer eco-friendly rules within the WTO framework will be misused by the developed country members as an excuse for old-school protectionism and will take us a step backwards in global trade. The arguments and counter-arguments make it clear that environmental issues will remain a concern for WTO even after two decades of its existence. In the above context, it is worthwhile to peruse briefly through the provisions within WTO that try to address the trade-environment nexus.

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Prior to the Uruguay round, A.XX of GATT was the only provision which provided for relaxation/ exemption of trade policy obligations on grounds of environmental concerns. Cases such as the US Tuna Dolphin laid down the permissible limits for environmental exceptions to obligations under GATT rules. The Uruguay Round witnessed a diffused attempt to bring the trade-environment nexus under the WTO umbrella. There was a marked absence of an agreement explicitly devoted to this area, however the other Uruguay Round agreements had many provisions highlighting the interaction between trade and environment. The Agreement on Technical Barriers to Trade(TBT) and the Agreement on Sanitary and Phyto-sanitary Measures(SPM) allowed members to delineate such product  standards to ensure food safety and to promote human, plant and animal health. These standards however had to be strictly based on scientific assessment of risk and had to be based on the product’s end –use or content. It could be applied only in a non-discriminatory manner without MFN or National Treatment violation. The most relevant restriction based on these principles is the WTO’s restriction of process and production methods (PPMs) – one of the knottiest controversies in the trade-environment debate. PPMs refer to any activity undertaken in the process of bringing goods to the market. These may address a product’s environmental effects through its life-cycle – and as such limit the above provisions’ effect, since the SPS Agreement lacks an environmental exception to the MFN principle, for example. Whether standards based on production methods are permissible remains a grey area and has been a subject matter of discussion in many cases like US Shrimp Turtle, EC Beef Hormones etc. The Agreement on Subsidies and Countervailing Measures (SCM) and the Agreement on Agriculture (AoA) also have provisions that provide exceptions for subsidies with environmental objectives. In the service sector, the GATS has a provision analogous to A.XX of GATT. Even TRIPS Agreement takes into account environmental concerns, for example Article 27 of TRIPS permits members to deny grant of patents which will threaten human, plant and animal life and pose serious risk of damage to the environment.

The founding agreement of WTO recognizes sustainable development at the core of global trade, however, it is interesting to note that this goal is couched in the non- legally binding language of the preamble to GATT agreement and thus sustainable development remains an oblique part of international trading regime. The mandate of WTO dictates that the adjudicatory process involves scrutiny of the trade friendliness of environmental laws and not whether the member’s actions or laws are adequately green. Its’ role is limited to ensure that environment policies do not impede trade liberalization and that trade rules do not undermine legitimate adequate domestic environment protection by its members. This is something that WTO continues to strive for with utmost dedication. However it must again be highlighted that the WTO functions on the belief that trade and environment policies can complement each other, but the WTO in no way proceeds on the assumption that WTO has to find solutions to environmental problems.

The fact that the WTO neglects the question of how Multilateral Environmental Agreements (MEAs) with trade restrictions affect WTO provisions can be seen to undermine these agreements. The world community has placed emphasis on MEAs to deal with international environmental problems. Till this date however, there has been no coherent step taken for seeking a waiver of WTO provisions in respect of MEAs and the position is unlikely to change in the future. Clarification of MEAs legal status within the WTO context is urgently needed.  The dilemmas arising out of such fragmentation are hurdles in the way of international coordination in the trade-environment sphere.

Having said that, the World Trade Organisation remains the only body under the current legal regime which overlooks the interplay between environmental concerns and trade restrictions; and maybe a separate specialised body addressing environmental issues that may arise in international trade is the need of the hour. Fresh issues such as border tax adjustments and newer environmental standards re-establish the need for such a separate forum for the equal protection of both – liberalisation of trade and the environmental protection. However, this protracted quest for the perfect multilateral arrangement may push the world to a point where irrevocable damage is already done.

Hence, in the interim period, the World Trade Organisation, heralded as one of the most successful creations of the international legal order, must rise to the occasion to provide some clarity, some respite.  The challenge before WTO is thus, to harmonize two specialised fields of International law – trade law and environmental law in a constructive manner to do justice to their equally valid but not necessarily compatible claims of authority.

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