Certain Legal Aspects of the Multilateral Trade System and the Promotion of Renewable Energy

Abstract

The multilateral trade system aims at the eventual total liberalization of cross-border trade through the removal of as many trade barriers – such as tariffs, quantitative restrictions, and trade-distortive practices – as may be politically acceptable to the economic areas involved. For their part, the governing structures of the economic areas concerned – for the most part, the governments of sovereign States – are faced with the task of addressing a much broader set of interests than those pertaining to trade. However, the accession of sovereign actors and regional economic unions (such as the European Union) to international treaty-based organizations, such as the World Trade Organization (WTO), and their acceptance of the relevant international obligations, often commensurately condition their policy-making. In that respect, it is not uncommon for, say, certain measures that WTO members take in order to address some subjective policy objective that is, on the face of it, extraneous to cross-border trade, to infringe upon their international obligations – for instance, such measures may infringe upon obligations owed by WTO members under their WTO membership in a manner that is not in line with WTO rules. On the occasion of recent WTO cases that contain findings against Canada in relation to a regional measure aimed at the promotion of renewable energy, it may be pertinent to examine the degree to which the existing WTO normative framework may permit its members policy space to take measures aimed at promoting renewable energy. To that end, we provide a tour d’horizon of the WTO rules that are likely to be engaged by such policies. As part of this, we examine the GATT/WTO system’s evolved responsiveness towards environmental objectives. Finally, we highlight whatever perceived systemic obstacles might exist to the meaningful bridging of the WTO’s environmental objectives with its core trade liberalization objectives. In conclusion, we find the stronger view to be that the relevant WTO jurisprudence appears to suggest that the WTO system is being fully and effectively used on the part of members in relation to their environmental objectives, and that members’ bona fide environmentally-focused measures that, incidentally, distort or otherwise restrict cross-border trade are ultimately upheld by the WTO system so long as they are bona fide, applied evenhandedly, and not unduly restrictive. That said, while the system, as it stands, is considerably flexible towards ‘externalities’ such as environmental protection objectives, further trade liberalization remains the system’s principal objective. This, however, does not happen in a policy-value vacuum, given that the cause of trade liberalization is increasingly conditioned by environmental protection objectives.

Keywords: World Trade Organization; renewable energy; subsidies; environmental protection; feed-in tariffs; wind power; biodiesels

JEL Classification: K33, Q2, Q4