Implications of International Trade on Environment

This essay tries to envisage the changes in policy of Environment Protection. It highlights the switch from General Agreement on Tariff and Trade to World Trade Organization regime and its implication on Environment Protection with the help of case laws.

In order to get a better understanding of policies pertaining to protection of environment in International Trade Law, it would be convenient for us to divide the changes into Pre-World Trade Organization regime and Post-World Trade Organization regime.

Pre-WTO Regime

First law which introduced something near to Environment Protection provision was the General Agreement on Tariffs and Trade. Article XX of General Agreement on Tariffs and Trade lays down general exceptions.

In this Article, even though the term ‘environment’ isn’t used but it does talk on similar lines by including natural resources, protection of animal or plant life in its ambit. The first case pertaining to protection of Environment that was decided by GATT Body was the famous case of ‘Tuna-Dolphin’[1]. In Tuna- Dolphin case, United States banned the imports of Mexican Tuna on the alleged pretext of environment protection. This ban was based on the domestic law of United States i.e.  Marine Mammal Protection Act, 1972. United States argued that the process of catching Mexican Tuna was not acceptable as it led to death of dolphins. In the Eastern Tropical Pacific, tuna used to swim below the Dolphins. With the intent of trade, tuna fisherman used this relationship which lead to exploitation of endangered species like Dolphins. Tuna Fisherman used to lay down nets and catch dolphin along with Tuna leading to death of Dolphins. United States started discriminating between “Dolphin Free Tuna” and “Dolphin affected Tuna”. It held in favor of Mexico reasoning its report by deciding that this ban does not fall under the category of environment protection. It went ahead and said this measure does not fulfill the ‘necessary test’ of Article XX (b). Alternative measures suggested by GATT body including agreements among the states to save Dolphins. This measure was then, actually, adopted by United States and Mexico.

WTO Regime

On realisation of failure of General Agreement on Tariffs and Trade, World Trade Organization was introduced to overcome the shortcomings of GATT. World Trade Organization was formed on the basis of Marrakesh Agreement. One of the fundamental goals of World Trade Organization includes protection and preservation of the environment. One of the landmark cases pertaining to environmental policy in World Trade Organization regime is the case of United States Shrimp – Turtl[2]e case of 1998. The cause of action in this case is the ban imposed by United States on the import of shrimp from all the countries that did not adhere to the United States’s mandates laid down for process of cultivating shrimps. United States argued that it wanted to save species like Turtles from being exploited in the process of harvesting shrimps. This mandate was enlisted in the domestic laws of United States. This went to WTO Body on a complaint made by India, Malaysia, Pakistan and Thailand. WTO held that this ban violated WTO rules. It held this ban to be unjustified and arbitrary discrimination.

Comparative Analysis / Progress made in WTO Regime

The problem with Unites States’s Tuna – Dolphin case is that GATT’s Appellate Body took a pro-trade approach in deciding the case. It went into arguments such as the political reasons of United States in imposing of ban. It even took into consideration the Mexico’s argument which said that if United States really intends to save marine mammals such as Dolphins, then why is it only imposing ban on a certain type of tuna i.e. yellowfin tuna and collected from a certain place i.e. ETP (Eastern Tropical Pacific). Even other processes used to catch tuna would injure dolphins at other places, even though the quantity is less. This caselaw signals that the threshold of environment protection is really low in the General Agreement on Tariffs and Trade. Country claiming any environmental measure needs to pass through hurdles such as ‘necessary test’ to actually protect environment. This test is problematic because it requires the country taking environmental measure to have utilised all other alternatives measures of protecting the environment which do not hinder trade. For instance, in the Tuna- Dolphin case, it was pointed out that United States could have entered into bilateral Agreements to accomplish its environmental concern of saving Dolphins. In other words, this could be called as the ‘last resort’ tool for protecting the environment. This is not the end. Even when the measure that a state needs to implement is the last resort, it should affect the trade in the least possible manner. General Agreement on Tariff and Trade, also, does not provide extra-territorial application of the environmental laws. Basically, any environmental law cannot be enforced outside the jurisdiction of a particular country which implies you cannot ask your neighbouring country to stop polluting the environment, even though it is directly affecting the natural resources of your country.

United States’s Shrimp – Turtle case progressed in terms of expanding the ambit of the term ‘natural resources’ used in Article XX(g) to include living species such as turtles. In the pre-WTO era, ‘natural resources’ was given a very narrow interpretation. It only included natural resources that are exhaustible in nature and Article XX(b) included only endangered species. It is also pertinent to note the way WTO’s Appellate body went beyond WTO rules in understanding the context of the case. Appellate Body, also said in passing, that the necessary test may be replaced by what they call as a ‘sufficient nexus’ test. This, basically, means that there needs to be a nexus between the domestic law of the state imposing the environmental measure and factors pertaining to environment that justify the measure taken by the imposing state. Now, the problem arises that Appellate Body has not defined what amounts to ‘sufficient nexus’ in the case. ‘Sufficient nexus’ is being applied very subjectively by the WTO depending upon the facts of the case before it.

Conclusion

After analysing the Pre-WTO regime and WTO regime with the help of Tuna-Dolphin case and Shrimp-Turtle case, it is pertinent to compare it with the debate between International Trade and Environment. Looking at the practical outcome of World Trade Organization and the way the cases are decided by WTO, Appellate body, in my opinion, it has failed to mitigate the environmental concern established bt the protectionist. An individual may agree that this is just a first step towards the protection of environment from International Trade but, for sure, it cannot be held as a last or a fundamental change in the regime.

[1] Mexico etc v. United States: Tuna-Dolphin, 3 September 1991

[2] India etc v. United States: Shrimp-Turtle, 3 September 1991

Authored By:-

Narayan Gupta,

LexisNexis India – Student Ambassador

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