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Trade & Environment Law in Trade & Environment Law in the Context of Sustainable the Context of Sustainable

Development Development

Dr Markus Gehring, LL.M. (Yale)Lecturer in European and Int’l Law, Centre of Int’l Studies, University of

CambridgeLead Counsel, Trade, Investment & Competition, Centre for Int’l

Sustainable Development Law

Marie-Claire Cordonier Segger, MEM (Yale), LLB & BCL (McGill), BA HonsDirector, Centre for Int’l Sustainable Development Law / Fellow, LRCIL,

University of Cambridge

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Sustainable Development in World Sustainable Development in World Trade LawTrade Law

Outline:

Part I: Introduction1. Globalisation and Sustainable Development2. Development of World Trade Law

Part II: International Trade Law in the WTO3. Trade and Environment in the WTO 4. Trade and Development in the WTO5. Sustainable Development in WTO Disputes (Exercise)

Part III: Outlook6. Integrated Trade Law and Policy-Making 7. Conclusion

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“Mutual Supportiveness of Trade & Environment” Rio Declaration / Agenda 21, 1992 Rio Earth Summit

… “Globalisation for Sustainable Development”

Joburg Declaration / JPOI, 2002 Johannesburg World Summit on SD:

“Globalization offers opportunities and challenges for sustainable development. We recognize that globalization and interdependence are offering new opportunities to trade, investment and capital flows and advances in technology, including information technology, for the growth of the world economy, development and the improvement of living standards around the world. At the same time, there remain serious challenges, including serious financial crises, insecurity, poverty, exclusion and inequality within and among societies.”

Part I - Sustainable Part I - Sustainable Development Development

… and Globalisation?… and Globalisation?

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Part I -Introduction to International Part I -Introduction to International Trade LawTrade Law

1. GATT/International Trade History2. The World Trade Organization (WTO)3. Governance Structure of the WTO4. Key concepts – Tariffs, Most

Favoured Nation and National Treatment, Non-discrimination

5. Dispute Settlement6. Reform – Trade Negotiations

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- one of the oldest areas governed by int’l rules- multi-layered trading system: bilateral, regional, intra-regional and global- provisional set of rules - originally 23 contracting parties - enacted 1 January 1948 - terminated 31 December 1995- negotiated eight multilateral trade "rounds" - reduced tariffs, attempted to reduce other trade barriers - converted int’l trade to a rules-based system

1. The General Agreement on Tariffs 1. The General Agreement on Tariffs and Trade (GATT) / International Trade and Trade (GATT) / International Trade

HistoryHistory

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- Objectives ?- Main functions: implementation, administration and operation of the covered agreements; negotiation of trade agreements; settlement of trade disputes; review of trade policies; fostering coherence in policy making- Pillar structure: GATT, GATS, TRIPS and horizontal agreements: DSU, TPRM and plurilateral agreements

2. The World Trade Organization2. The World Trade Organization

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3. Governance Structure of the 3. Governance Structure of the WTOWTO

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-Tariffs (reciprocal and mutually

advantageous basis) - Actual value tariffs- Tariff schedules (Art. II GATT)- Tariffication of other barriers to trade- Brussels Convention on Tariff Classification- Harmonized system of customs

classification

4. Key Concepts - Tariffs4. Key Concepts - Tariffs

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- Art. I GATT – Any advantage, favour,

privilege, or immunity in negotiated

concessions extends to all WTO members.- Unconditionally, like products, de facto discrimination- Rationale of MFN - Important exceptions: Grandfathered preferences, Art. XXIV on RTAs, Enabling Clause, Waivers such as for the Cotonou Agreement.

4. Key Concepts – Most Favoured 4. Key Concepts – Most Favoured Nation PrincipleNation Principle

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- Art. III GATT prohibits discrimination of foreign producers vis-à-vis domestic producers - Early GATT jurisprudence: a formally origin neutral taxation can violate Art. III:2 GATT- Centrality of likeness- Non-fiscal measures (Art III:4 GATT)- Relationship with Art. XX GATT

4. Key Concepts – National 4. Key Concepts – National TreatmentTreatment

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- Integrated dispute settlement system based on Articles XXII and XXIII GATT and the DSU- Function of the DSB- Coverage: goods, services and intellectual property - Procedures: strict time-limits - Adoption of panel reports: negative consensus principle - Appellate Body Review - Non-compliance with recommendations

5. Dispute Settlement5. Dispute Settlement

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- Consultation phase - Panels (Art. 6-8 DSU)- Panel process (Art. 12 DSU) - Panels time periods (Appendix 3) - Appeals process (Art. 17 pp. DSU)- Adoption of reports- Compliance - (Cross) retaliation

5. Dispute Settlement5. Dispute Settlement

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- Ministerial Conference between Green rooms and NGO scrutiny- Consensus decision making (Art. XI WTO) - Panels time periods (Appendix 3) - Trade negotiation committee- Doha-Round: Agriculture as the most contested issue (initially also competition and investment)- Draft Hong Kong Ministerial Declaration

6. Trade negotiations6. Trade negotiations

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Physical linkages (impacts) - Complex relationships- Neither good nor bad (shades of grey)

Legal linkages- Three distinct bodies of international law- Areas of intersection and integration

Institutional linkages- WTO vis-à-vis MEA Secretariats and IGOs, - UNEP, UNDP- National and international NGOs

Part II - Rapid Evolution in Law and Policy Part II - Rapid Evolution in Law and Policy

on Trade, Environment & Developmenton Trade, Environment & Development

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The trade perspective Economic growth through trade will solve all

environmental problems

The environment perspective The environment is threatened by the status

quo

The development perspective Poverty needs first and foremost policy

attention

2. Part II – Different Perspectives2. Part II – Different Perspectives

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Part II – Global Environmental Part II – Global Environmental ManagementManagement

Principal MEAs Early Agreements

- CITES- UNCLOS- Basel Convention- Montreal Protocol

Rio Agreements- CBD- Desertification- Climate Change

New Generation- PICs- POPs

Trade Measures:- Trade ban- Protection provisions- Trade restrictions- Trade prohibition 3. Part

Trade Measures:- Cartagena Protocol: control

of LMOs- Kyoto Protocol: Trade links

Trade Measures:- Trade restriction- Trade ban

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Part II – Relevant WTO ProvisionsPart II – Relevant WTO Provisions

WTO AgreementTrade in Goods GATT TBT SPSTrade in Services GATS

Trade in IPRs TRIPS

Preamble; Art. V. 2

Art. III, XX GATT Art. 2.2, 2.6 TBT Art. 2.1, 5 SPS

Art. XIV GATS

Art. 7, 30 TRIPS And new Doha Negotiations

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Growing membership of developing countries

New Development Theory GATT: Article XVIII GATT: Part IV Enabling Clause The WTO Agreements

Part II – Trade and DevelopmentPart II – Trade and Development

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Instructions for exercise:Instructions for exercise:Form a working group, with a rapporteur and

chair.In 20 – 30 min, answer the following questions for

your case:- What are the main trade provisions at stake?- What are the environment issues?- How would the WTO AB resolve the case in trade

law (3 – 4 elements of a solution)?- What do you think is a ‘sustainable’ solution? US – Shrimp Turtle Case (GATT) EC – Asbestos Case (GATT) EC – Beef Growth Hormones Case (SPS / TBT) EC – Biotech (SPS / TBT)

Part II- WTO Disputes (Exercise)Part II- WTO Disputes (Exercise)

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Cases for Exercise:Cases for Exercise:

US – Shrimp Turtle Case (GATT) EC – Asbestos Case (GATT) EC – Beef Growth Hormones Case

(SPS / TBT) EC – Biotech (SPS / TBT)

Part II- WTO DisputesPart II- WTO Disputes

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Article I GATT 1994General Most-Favoured-Nation Treatment1. With respect to customs duties and charges of any kind imposed on or in connection withimportation or exportation or imposed on the international transfer of payments for imports orexports, and with respect to the method of levying such duties and charges, and with respect to allrules and formalities in connection with importation and exportation, and with respect to all mattersreferred to in paragraphs 2 and 4 of Article III, any advantage, favour, privilege or immunity grantedby any contracting party to any product originating in or destined for any other country shall beaccorded immediately and unconditionally to the like product originating in or destined for theterritories of all other contracting parties.

Article III GATT 1994National Treatment on Internal Taxation and Regulation1. The contracting parties recognize that internal taxes and other internal charges, and laws,regulations and requirements affecting the internal sale, offering for sale, purchase, transportation,distribution or use of products, and internal quantitative regulations requiring the mixture, processingor use of products in specified amounts or proportions, should not be applied to imported ordomestic products so as to afford protection to domestic production.

Article XX GATT 1994General ExceptionsSubject to the requirement that such measures are not applied in a manner which would constitute ameans of arbitrary or unjustifiable discrimination between countries where the same conditionsprevail, or a disguised restriction on international trade, nothing in this Agreement shall be construedto prevent the adoption or enforcement by any contracting party of measures:(a) necessary to protect public morals;(b) necessary to protect human, animal or plant life or health;(g) relating to the conservation of exhaustible natural resources if such measures are made effectivein conjunction with restrictions on domestic production or consumption;(h) undertaken in pursuance of obligations under any intergovernmental commodity agreementwhich conforms to criteria submitted to the CONTRACTING PARTIES and not disapproved bythem or which is itself so submitted and not so disapproved;

Important GATT rulesImportant GATT rules

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Important WTO rulesImportant WTO rules

Article II GATSMost-Favoured-Nation Treatment1. With respect to any measure covered by this Agreement, each Member shall accord immediatelyand unconditionally to services and service suppliers of any other Member treatment no lessfavourable than that it accords to like services and service suppliers of any other country.

Article XIV GATSGeneral ExceptionsSubject to the requirement that such measures are not applied in a manner which would constitute ameans of arbitrary or unjustifiable discrimination between countries where like conditions prevail, ora disguised restriction on trade in services, nothing in this Agreement shall be construed to preventthe adoption or enforcement by any Member of measures:(a) necessary to protect public morals or to maintain public order;(b) necessary to protect human, animal or plant life or health;(c) necessary to secure compliance with laws or regulations which are not inconsistent with theprovisions of this Agreement including those relating to: (iii) safety;

Article 3 DSUGeneral Provisions2. The dispute settlement system of the WTO is a central element in providing security andpredictability to the multilateral trading system. The Members recognize that it serves to preserve therights and obligations of Members under the covered agreements, and to clarify the existingprovisions of those agreements in accordance with customary rules of interpretation of publicinternational law. Recommendations and rulings of the DSB cannot add to or diminish the rights andobligations provided in the covered agreements.

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US – Gasoline / US – Tuna Dolphin Cases… US - Shrimp Turtle Case

WTO AB: the objective of sustainable development “must add colour, texture and shading to our interpretation of… the WTO Agreement.”

EC – Beef Growth HormonesWTO AB: the precautionary principle is incorporated in Art 5.7 of the SPS Agreement, though this does not exhaust relevance.

EC – AsbestosWTO AB: Carcinogenicity is relevant to product likeness, and ban could be “necessary for… human health…”

EC - Tariff Preferences CaseWTO AB: EC Tariff preferences were not based on sustainable development objectives.

EC - Biotech

Part II- WTO Disputes (Exercise Part II- WTO Disputes (Exercise Solutions)Solutions)

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Part III – Outlook: Integrated Part III – Outlook: Integrated Trade Law and Policy-MakingTrade Law and Policy-Making

Development that can meet the needs of the present without compromising the needs of future generations (Brundtland Report)

Reconciliation of development and environmental objectives (ICJ in Gabcikovo-Nagymaros Case)

Balance / integration / mutual support between economic growth, social justice and environmental protection objectives (WTO AB Report from US – Shrimp Dispute)

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Part III - OutlookPart III - Outlook

An integrated agenda for the ongoing ‘Doha An integrated agenda for the ongoing ‘Doha Development Round’ in the WTO (1)Development Round’ in the WTO (1)

Procedural integration: - consultations in CTE & CTD, - sustainability impact assessment (inc. human rights impact assessment), - transparency & participation (WTO Symposia),- reform of dispute settlement procedures (amicus curia briefs, public hearings), - other proposals?

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Part III - OutlookPart III - Outlook

An integrated agenda for the ongoing An integrated agenda for the ongoing ‘Doha Development Round’ in the WTO ‘Doha Development Round’ in the WTO (2)(2)

Substantive integration (beyond ‘the sandbox’)- standards (TBT, SPS), - agriculture, - intellectual property rights, - investment- services - and other negotiations?

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Part III - OutlookPart III - Outlook

Innovations in regional trade agreements and (integration) processes:- the European Union, - the Mercosur / Andean Com / CAC - the NAFTA / NAAEC / NAALC & BTAs- the SADC / ASEAN- the FTAA...? - the EU – ACP Cotonou Agreement EPAs..?

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ConclusionsConclusions

Current WTO negotiations and cases reflect that the objective of sustainable development has become an integral part of the world trading system.

Legal arguments encompassing an integrated developmental and environmental approach have been made by the parties and accepted by the relevant trade dispute settlement organs.

However, WTO dispute settlement organs will not lightly accept sustainable development as a trump card. A solid legal understanding of the objective and its underlying principles is required to make a successful sustainable development argument in world trade law.

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Thank you.Thank you.

www.cisdl.orgwww.cisdl.orgMarkus W. Gehring / mwg24@cam.ac.uk

Marie-Claire Cordonier Segger / mccs2@cam.ac.uk