GENEVA--The European Union Oct. 19 joined Switzerland in calling on members of the World Trade Organization to reach a consensus on resolving possible conflicts between WTO rules and global environment agreements. In a paper circulated to WTO members, the EU said members should consider reversing the "burden of proof" in defending trade-related environment measures before WTO dispute panels and establish a "code of good conduct" for the use of trade measures in global environmental agreements.
The EU paper follows a Swiss initiative last June urging WTO members to adopt a decision clarifying the relationship between trade and environmental agreements (23 INER 491, 6/21/00). The EU paper was circulated in advance of an Oct. 24-25 meeting of the WTO's trade and environment committee.
The EU noted that the relationship between WTO rules and multilateral environmental agreements (MEAs) is still ambiguous, a problem demonstrated in the negotiations for a Biosafety Protocol that took place in Cartagena, Colombia, in February 1999 (23 INER 469, 6/7/00). The talks were suspended after the United States, Canada, and other members of the "Miami Group" of agriculture exporters blocked a proposal that would have required shipments of commodities containing genetically modified organisms to be subject to trade-restrictive prior notification and approval requirements. The United States also pushed for language ensuring that the Biosafety Protocol to the U.N. Framework Convention on Biological Diversity would not override the obligations of member governments under WTO agreements (INER Reference File 1, 21:4001 and 21:4051).
An agreement was eventually reached in Montreal last January on a protocol text allowing countries to restrict or prohibit imports of GMOs, subject to a science-based risk assessment.
Defense of GATT Article XX
In addition to the Biosafety Protocol problems, governments have been debating within the WTO on how MEA provisions can be defended under Article XX of the 1994 General Agreement on Tariffs and Trade. Article XX allows governments to claim exemptions from WTO rules for measures considered necessary to protect human, animal, or plant life or which relate to the conservation of exhaustible natural resources. In a landmark ruling issued in October 1998, the WTO's Appellate Body said the United States had the right in principle under Article XX to impose a ban on imports of shrimp from countries without adequate conservation policies for the protection of endangered sea turtles on the grounds that sea turtles were an exhaustible natural resource.
The Appellate Body, however, faulted the United States for failing to administer the ban in a nondiscriminatory way and for failing to first consider other, less trade-restrictive measures for achieving its policy aims.
Malaysia recently announced its intentions to challenge U.S. compliance with the ruling, arguing that Washington is obliged to lift its shrimp import ban. (See related article in this issue.)
Another area of uncertainty in the trade and environment debate is the relationship between the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights and the Convention on Biological Diversity, where questions remain as to whether and to what extent pharmaceutical firms and other companies should pay developing countries for the use of their natural resources in the production of patented goods.
Non-Parties to MEAs
The EU said that one particular problem in the trade and environment debate is the issue of non-parties to MEAs. "So far, no trade measure taken pursuant to an MEA has been challenged in the WTO by a non-party," the EU said. "It is unsure whether this would happen in the future, but the legal ambiguity surrounding the possibilities of such a challenge causes uncertainty and doubt over the effectiveness and legal status of such measures and thus weakens MEAs." To resolve the dilemma of non-parties, "some form of accommodation mechanism is in our view necessary to preserve trade measures taken pursuant to MEAs from undue challenge," the EU said. One possibility is reversing the burden of proof in WTO dispute cases involving Article XX of GATT. Under current rules, the burden falls on a government defending an environmental measure to prove that it meets the requirements under Article XX to qualify for an exemption from WTO rules.
The reversal of burden of proof "would turn that around so that the country challenging the measure would, just like under some provisions of the TBT [the WTO's Agreement on Technical Barriers to Trade] and the SPS [Agreement on the Application of Sanitary and Phytosanitary Measures], have to prove the measures imposed by the other party do not meet the conditions of Article XX," the EU said. "This would, however, not affect the right of any WTO member to resort to dispute settlement nor alter in any way the substantive requirements" of GATT Article XX.
The EU also proposed the development of a "code of good conduct" on the use of trade measures in MEAs. Such a code may "help [to] develop a mutually supportive relationship between MEAs and WTO agreements and to prevent possible conflict," the EU said. "To guarantee mutual supportiveness, such a code would need to be jointly developed by the WTO, MEA secretariats, and UNEP," the United Nations Environment Program.
Swiss Government Issues Follow-up Paper
In a separate paper also circulated Oct. 19, Switzerland followed up its earlier initiative with a paper reiterating the need to clarify the relationship between trade and environment agreements and urging that the issue not be left to WTO dispute panels to resolve. Switzerland said the most recent debate on the issue within the WTO's trade and environment committee July 5-6 showed a clear disagreement between delegations that thought clarification was needed and others that believed the issue was already resolved by the Appellate Body or that no conflict existed between trade and environment agreements.
While "it is true that, at this stage, only a limited number of existing MEAs raise questions about possible conflicts with WTO rules and principles, these include very important MEAs such as CITES [Convention on International Trade in Endangered Species], the Basel Convention [on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal], the Montreal Protocol [on Substances that Deplete the Ozone Layer], the PIC Convention [on prior informed consent for hazardous chemicals and pesticides], and the Biodiversity Convention," Switzerland said. "Secretariats of these conventions have already highlighted the need for clarification."
The Swiss paper rejected the claim that the trade and environment issue has already been resolved by the Appellate Body in its "shrimp-turtle" ruling. While the decision clarified the sequence of steps in analyzing a claim under Article XX and established that "exhaustible natural resources" covered living natural resources, it "did not, however, deal with measures or rules established by an MEA and, therefore, did not clarify the relationship between the WTO and MEAs."
Switzerland added that while some may argue that dispute settlement is the best and easiest way to resolve the trade and environment dispute, such important decisions "should be taken by WTO members and not through litigation."
WTO panels "should determine merely the legal situation of a specific case; it is not their task to set general abstract rules," Switzerland said. "More importantly, the relationship between the WTO and MEAs is not merely a legal question but a politically sensitive issue which has to be addressed in negotiations rather than in the dispute settlement mechanism."
By Daniel Pruzin
Copyright c 2000 by The Bureau of National Affairs, Inc., Washington D.C.:
