The Rights of Nature under the World Trade Organization and the General Agreement on Tariffs and Trade
Photo by Wil Stewart at unsplash.com
by Jason Grewal and Spencer Moore
Introduction
The World Trade Organization (WTO) was established in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT). The GATT was founded to reduce tariffs, and much of its original text is still in effect under the WTO’s framework. Since its inception, the WTO has worked to liberalize international trade and increase global prosperity -- at least according to its own interpretation of what it means to be prosperous.
According to the WTO, the responsible use of nature and the promotion of sustainable development is fundamental to achieve its objectives. Trade liberalization and economic progress are reliant upon stable and predictable conditions. These conditions are dependent on a robust planetary environment. Trade and the environment have a dynamic relationship that has been recognized by the 1992 Rio Summit, 2002 Johannesburg Summit, and the 2005 UN World Summit. These conferences have been accepted and referenced by the WTO.
Environmental Critique of the WTO
Prior to discussing the WTO’s environmental rules, it is important to establish upfront that many consider the WTO’s liberalized trade agenda to be fueling global environmental degradation. Here are a few examples as to why. First, free trade favors countries that have the loosest environmental laws, incentivizing a “race to the bottom” for environmental protection. Second, the WTO also favors goods from countries that heavily subsidize environmental degradation, such as through mining and fossil fuel subsidies. Finally, the underlying philosophy of the WTO is to maximize GDP regardless of impacts on nature and human communities. Why not maximize environmental and human prosperity, instead?
WTO Rules to Protect the Environment
With that background in mind, the WTO does provide members a vehicle to adopt rules and regulations to protect the environment. These rules enforce a balance (uneven as it may be) between trade and nature, allowing members the right to restrict trade for ‘legitimate purposes’. Legitimate purposes are defined by Article XX of the WTO regulations, instructing member states (i.e., countries) to protect “humans, animal or plant life and health, and natural resources.” These rights for members have been confirmed in various WTO dispute settlement rulings.
A significant legal dispute in 1998, India Etc. v U.S., (known as the ‘shrimp-turtle’ case) reaffirmed member states ability to protect “human, animal or plant life and health and to take measures to conserve exhaustible resources.” But before digging into this landmark decision, it is helpful to understand the basic environmental landscape of the GATT.
Exceptions for Environmental Measures under the GATT
The GATT does not address specific environmental questions. The dispute resolution mechanism outlined by the organization, however, has been frequently used to settle environmental disputes between states. These disputes were in regard to important general exceptions under Article XX of GATT. Several panel reports found that certain trade restrictions were either discriminatory or unnecessary to achieve environmental objectives.
Environmental concerns are addressed by paragraphs (b) and (g) under Article XX of GATT. The rule states that GATT shall not prevent the adoption or enforcement or measures that are:
(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 effective in conjunction with restrictions on domestic production or consumption;"
Note that there are exceptions to these rules, such as if a trade body determines that an environmental measure is actually a disguised restriction on international trade. Another exception is if an environmental measure is unjustifiably discriminatory against certain countries. But basically, a state is allowed to pass laws that justifiably protect its environment -- although, to many, this should never be in question.
Interpreting the GATT: Environmental Disputes Prior to the US – Shrimp Case
With that caveat in mind, GATT panel decisions have interpreted some of the key terms in the Article XX environmental exceptions -- including the terms ‘necessary’, ‘relating to’, ‘in conjunction with’, and ‘exhaustible natural resources’. The panel decisions also analyzed the jurisdictional reach of acceptable state action. Consider the following examples:
- General Application: The party to invoke Article XX is responsible for the burden of proof. Also, before the Panel will examine any Article XX claim, there must be a violation of the substantive obligations under the GATT.
- The Preamble: In United States – Imports of Certain Automotive Spring Assemblies, the panel made clear that the effect, not the substance, of the measure taken by a state must be scrutinized.
- “Necessary”: In Thailand – Cigarettes, the “least inconsistent” test was established. The panel held that an import restriction is “necessary” under Article XX(b) “only if there were no alternative measures consistent with the General Agreement, or less inconsistent with it.” So basically, measures must be as consistent with GATT as possible.
- “Relating to”: In Canada – Herring and Salmon, the panel stated that, “[a trade measure] had to be primarily aimed at the conservation of an exhaustible resource…to be considered ‘relating to’ within the meaning under Article XX(g).
- “In conjunction with”: In the same case, the panel stated that a trade measure “[could] only be considered to be made ‘in conjunction with’ production restrictions if it was primarily aimed at rendering effective these restrictions.”
- “Exhaustible natural resources”: The Panel under the GATT and the Appellate Body under the WTO have given a broad meaning to the term “exhaustible natural resource.” Under the US – Tuna case, tuna stocks were said to be an exhaustible resource in need of conservation. In US – Auto Taxes and US - Gasoline, it was determined that clean air was also an exhaustible natural resource that needed to be protected from depletion.
- Jurisdictional reach: Although governments are unable to coerce other states to adopt certain conservation policies, they have authority to pursue environmental objectives by regulating the conduct of their nationals beyond their own borders. For example, the Panel in US-Tuna II found that “...states are not in principle barred from regulating the conduct of their nationals with respect to persons, animals, plants, and natural resources outside of their territory.”
The US-Shrimp Case
As described above, many have criticized the WTO’s stance on the environment. The Appellate Body decision in the US-Shrimp case, however, cracked open the door towards the protection of the global environment under WTO rhetoric. (Note that the case came after the implementation of the WTO, which evolved from the GATT.)
The case was brought to the WTO by Malaysia, Thailand, India, and Pakistan, who argued that Section 609 of the US Endangered Species Act (ESA) violated the WTO’s non-discrimination and quantitative restriction rules. Using the ESA, the US would only import shrimp from countries with comparable laws to the US regarding the protection of sea turtles when fishing for shrimp.
After being heard by several panels, the Appellate Body ultimately ruled against the United States, finding flaws in its application of Section 609. First, the US required states to essentially apply the same policy as the United States, instead of allowing them to use other techniques based on local conditions. Second, the US did not seriously attempt to reach a multilateral solution with the complainants before imposing its restrictions. Third, the US discriminated against certain states by applying different compliance deadlines for the new rules.
However, there were some positive environmental outcomes from the decision. For example, the Appellate Body found that NGOs are allowed to submit amicus briefs, ensuring that civil society has a voice in international trade disputes. The Appellate Body also made clear that countries have a right to protect the environmental through trade action, so long as they correctly navigate trade rules. It also found that trade measures to protect wildlife, such as sea turtles, are legitimate under Article XX. And in fact, the WTO later upheld US trade rules regarding turtles after they made adjustments based on the Appellate Body’s decision.
Rights of Nature and the WTO
Nature’s fundamental rights are increasingly upheld, predicated on laws from the Ecuadorian constitution and other governmental bodies across the globe. Recent victories have occurred in New Zealand, Mexico City, Colombia, and California, amongst other places. Advocates believe that nature should have rights and privileges similar to people. And why shouldn’t the Earth have ample opportunity for life, liberty, and the pursuit of wellness?
But the global economy continues to treat environmental exploitation as a “cost” and environmental degradation as a “benefit.” And despite some progress, the WTO seems to be perpetuating this flawed framework at the global level.
So ELC is asking the question: Does the WTO framework allow for the enforcement of the legal rights of nature through trade rules? Could a country like Ecuador, which recognizes the rights of nature nationally, implement trade measures that ensure nature’s rights are fully enforced? Or is global enforcement of the rights of nature inherently incompatible with the WTO?
To answer these questions, ELC has assembled a team of legal experts to analyze WTO rules. During summer 2018, we will draft a report with analysis and specific recommendations, based on many of the above trade dispute decisions as well as the language of the GATT itself. And ultimately, we will call for necessary changes to international trade law in order to ensure that nature can be protected and restored to health as a legal right. Please join us!
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