The Relationship Between Trade and Environment Regimes

Since the World Trade Organization (WTO) entered into existence in 1995, member states have been trying to determine the legal relationship between multilateral environmental agreements (MEAs), commonly called environmental regimes, and the now formally institutionalized trade regime embodied by the WTO.

Additional Resources Trade and Environment Home

The need for more clarity about the relationship between trade and environment regimes builds on the fact that the WTO has a formal dispute mechanism built into the system for member states with trade conflicts. When these conflicts are related to an existing multilateral environmental agreement that also has trade related clauses, the legal issue becomes one of assigning weight to each set of laws in a dispute settlement procedure. Generally dispute settlement procedures can be weighted to either trade considerations, environmental considerations or a combination of both.

The lack of a formal agreement on the issue to date is indicative of the general tensions in the international trade arena in the early years of the WTO era. Since its inception, member states have been unsuccessful at reaching a broad multilateral trade agreement. The Doha round, started in 1991, will reach the end of its time limit as far as United States law is concerned, when President Bush's fast track authority expires on June 30, 2007. Reaching agreement on agriculture trade issues has always been a major hurdle throughout the combined GATT-WTO post-WWII trading era. The Doha round has thus far not proved to be an exception to that general trade rule of thumb.

Despite the lack of a formal agreement on the nature of the relationship between MEAs and the WTO, member states have made substantial progress outlining the facts and guiding principles for organizing their thinking about the issue.

As far as the facts go, the most recent list presented by the Trade and Environment Committee of the WTO, outlines fourteen different environment agreements in which trade is at least tangentially discussed.

• INTERNATIONAL PLANT PROTECTION CONVENTION
• INTERNATIONAL CONVENTION FOR THE CONSERVATION OF ATLANTIC TUNAS
• CONVENTION ON INTERNATIONAL TRADE IN ENDANGERED SPECIES OF WILD FAUNA AND FLORA (CITES)
• MONTREAL PROTOCOL ON SUBSTANCES THAT DEPLETE THE OZONE LAYER
• BASEL CONVENTION ON THE CONTROL OF TRANSBOUNDARY MOVEMENTS OF HAZARDOUS WASTES AND THEIR DISPOSAL
• CONVENTION ON BIOLOGICAL DIVERSITY
• CARTAGENA PROTOCOL ON BIOSAFETY
• UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE
• KYOTO PROTOCOL
• INTERNATIONAL TROPICAL TIMBER AGREEMENT
• UN FISH STOCKS AGREEMENT
• ROTTERDAM CONVENTION ON THE PRIOR INFORMED CONSENT PROCEDURE FOR CERTAIN HAZARDOUS CHEMICALS AND PESTICIDES IN INTERNATIONAL TRADE (PIC)
• STOCKHOLM CONVENTION ON PERSISTENT ORGANIC POLLUTANTS (POPS)

The International Tropical Timber Agreement is among the most trade friendly MEAs listed. It generally sets out an agenda to promote sustainable development of member states' forest lands as the basis for their trade policies. However, member states take note in article 36, "Nothing in this Agreement authorizes the use of measures to restrict or ban international trade in, and in particular as they concern imports of and utilization of, timber and timber products".

Almost by definition, The Convention on Trade in Endangered Species (CITES) stands at the other end of the trade friendly spectrum, in the sense that its purpose is to regulate trade in all wildlife, plants and fauna that the global scientific community considers endangered or threatened.

The International Institute for Sustainable Development notes the appearance of two different interpretive approaches (narrow and broad) to the problem of assigning the weight given to MEAs vs. trade agreements in any specific trade dispute. The narrow approach, supported by the United States, generally begins with a review of U.S. regulatory history in three different MEAs, (CITES, POPs and PIC) and proposes that the success of these regimes can be traced to their limited and focused use of export restrictions.

The European Community (EC) submitted the most recent broad interpretative proposal (WORLD TRADE ORGANIZATION TN/TE/W/68 30 June 2006 (06-3162)) in instances where trade law conflicts with environmental law. These views had been circulating for a couple of years and follow four basic principles, no-hierarchy, mutual supportiveness, deference and transparency. The text of the proposal is as follows:

"2. With a view to pursuing sound multilateral governance, the following principles shall govern the relationship between MEAs and WTO rules:

(a) Mutual supportiveness: Under WTO rules, no country shall be prevented from taking measures for the protection of human, animal or plant life or health, or of the environment ensuring the level of protection it considers appropriate. Efforts to safeguard the non-discriminatory multilateral trading system must go hand-in-hand with the commitment to sustainable development. All WTO bodies shall ensure that the interpretation and application of WTO rules takes due account of, and is mutually supportive with, the provisions of MEAs.

(b) No subordination: Both MEAs and WTO Agreement constitute legitimate bodies of international law of equal standing. Due respect must be accorded to each.

(c) Deference: MEAs and the WTO have distinct competences within a mutually supportive multilateral governance framework. Their respective expertise in environment and trade matters shall be valued and utilised.

(d) Transparency: with a view to enhancing the mutual supportiveness of trade and the environment, a mechanism for regular information exchange between the WTO and MEAs shall be implemented."

Additional Information

Paragraph 31(i) MEA-WTO Relationship - Formal Proposals
This page provides a comprehensive set of member state positions on MEAs and the WTO.

© 2006. Patricia A. Michaels