Introduction

INTRODUCTION TO WTO AND ENVIRONMENT

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The main purpose of the WTO is to enable countries to gain the benefits of an open trading system and to help producers of goods and services, exporters, and importers conduct their business. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.

The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. It did not take long for the General Agreement to give birth to an unofficial, de facto international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations. The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).

WTO is basically a trade oriented organization and as clearly spelt in the WTO website “WTO is not an Environmental Protection Agency”. However, there are several provisions in the WTO agreement which deal with environment and facilitate action by governments to protect the environment. In fact, the Marrakesh Agreement which established the WTO in its preamble affirms the importance of working towards sustainable development. The first paragraph to the Agreement Establishing the WTO (The WTO Agreement) recognizes the extent to which political, economic and environmental factors are inextricably linked within the WTO structure. It reflects assumptions about the interrelationship between economic development and environmental quality. The first paragraph states that;

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavor should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development,

Trade and Environment under GATT Regime.

The trade and environment debate is not new. The link between trade and environment protection, consisting of both the impact of environmental policies on trade, as well as the impact of trade on the environment, was recognized as early as 1970. Under the growing international concern regarding the impact of trade on social development and the environment, Conference on the Human and Environment was convened in Stockholm in the year 1972. As a preparatory work to the conference the secretariat of the GATT had conducted a study entitled “Industrial Pollution Control and International Trade”. The study focused on the implications of environmental protection policies on international trade. Discussion on the outcome of this study took place among the GATT contracting parties. It was agreed among the members to establish a Group on Environmental Measures and International Trade (Known as “EMIT” Group). However no action were further undertaken in this connection till 1991.

Since 1948, there have been eight rounds of trade negotiations under GATT. The early six rounds focused on lowering tariffs. However during the 7^th round of trade negotiations in Tokyo (1973-79), GATT for the first time tackled non-tariff trade barriers and considered the question of the degree to which environmental measures (in the form of technical relation and standards) could form obstacles to trade. The negotiation resulted in series of agreements on non-tariff trade barriers. Important being an Agreement on Technical Barriers to Trade, known as the “Standard Code”. Amongst the other things it called for non-discrimination in the preparation, adoption and application of technical regulations and standards, and for their transparency.

8^th round of negotiation which took place in Uruguay known as Uruguay Round of Negotiations (1986-1993) took trade-related environmental issues very seriously. Negotiation resulted in several modification to the standard code. The negotiation resulted in several agreements most of which addressed environmental issues. Few of such important agreements includes General Agreement on Trade in Services (GATS), the Agreements on Agriculture, Sanitary and Phytosanitary Measures (SPS), Subsidies and Countervailing Measures (SCM), and Trade Related Aspects of Intellectual Property Rights (TRIPS).

The debate of linkages between trade and environment protection came to a heightened attention in the year 1991 when a dispute between Mexico and the United States took place with regard to the import of tuna from Mexico. Dispute arose regarding a US embargo on the import of tuna from mexico caught using nets which resulted in the incidental killing of dolphins. Mexico claimed that the embargo was inconsistent with GATT rules. The panel ruled in favour of Mexico based on a number of different arguments. Although the report of the panel was not adopted, its rulling was heavily criticized by environmental groups who felt that trade rules were an obstacle to environmental protection.

In the background of these developments members of the European Free Trade Association (EFTA) felt a need for a forum whereby the trade related environmental issued could be addressed under the regime of GATT. This need resulted in reactivation of the EMIT group. The EMIT group focused on the effects of environmental measures on;

• International trade;
• The relationship between the rules of the multilateral trading system and the trade provisions contained in Multilateral Environmental Agreements (MEAs) and;
• The transparency of national environmental regulations with an impact on trade;

Activation of the EMIT group was followed by further developments in environmental fora. In 1992, the UNCED, also known as the “Earth Summit”, drew attention to the role of international trade in poverty alleviation and in combating environmental degradation. Agenda 21, the programme of action adopted at the conference, addressed the importance of promoting sustainable development through, amongst other means, international trade.

Uruguay round of negotiation resulted in the establishment of WTO. The organization gave  more attention to the trade-related environmental issues. Marrakesh Agreement which established WTO in its preamble referred the importance of working towards the sustainable development.

In April 1994, a Ministerial Decision on Trade and Environment was adopted, calling for the establishment of a Committee on Trade and Environment (CTE). The Committee so established has a task of identifying the relationship between trade measures and environmental measures in order to promote sustainable development and to make recommendation for any modifications required if any to the multilateral trading system.

The Declaration of the 4^th session of the WTO’s Ministerial Conference (the so-called Doha Declaration) held on November 2001 marks a watershed in the history of the Trade and Environment debate within the WTO. Doha Declaration  presents a significant opportunities to build environmental concerns into the WTO. It reaffirmed WTO’s Commitment to health and environmental protection and agreed to embark on a new ground of trade negotiations, including negotiations on certain aspects of the linkage between trade and environment. Mandate under the declaration led to the establishment of Committee on Trade and Environment Special Session (CTESS) where the negotiations with regard to the matters listed under the Declaration is carried. In addition to launching of new negotiations, the Doha Declaration requested the Committee for Trade and Environment to give attention to give attention to

i)                    the effect of environmental measures on market access,

ii)                  the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights; and

iii)                 labelling requirements for environmental purposes

In addition, the Committee for Trade and Environment and the Committee for Trade and Development were asked to act as a forum in which the environmental and developmental aspects of the negotiations launched at Doha could be debated.

Conclusion

GATT/WTO rules provide significant scope for Environmental Protection. WTO members recognize however, that the WTO is not an environmental protection agency and that it does not aspire to become one. Its competence in the field of trade and environment is limited to trade policies and to the trade-related aspects of environmental policies which have a significant effect on trade. In addressing the link between trade and environment, WTO Members do not operate on the assumption that the WTO itself has the answer to environmental problems. However, they believe that trade and environmental policies can complement each other. Environmental protection preserved the natural resource base on which economic growth is premised, and trade liberalization leads to the economic growth needed for adequate environmental protection. To address this, the WTO’s role is to continue to liberalize  trade, as well as to ensure that environmental policies do not act as obstacles to trade, and that trade rules do not stand in the way of adequate domestic environmental protection.