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The Next Generation of Trade and Environment Conflicts: The Rise of Green Industrial Policy

74 Pages Posted: 17 Aug 2014  

Mark Wu

Harvard Law School

James E. Salzman

University of California, Santa Barbara - Donald Bren School of Environmental Science & Management; University of California, Los Angeles (UCLA) - School of Law

Date Written: August 15, 2014

Abstract

A major shift is transforming the trade and environment field, triggered by governments’ rising use of industrial policies to spark nascent renewable energy industries and to restrict exports of certain minerals in the face of political economy constraints. While economically distorting, these policies do produce significant economic and environmental benefits. At the same time, they often violate World Trade Organization (WTO) rules, leading to increasingly harsh conflicts between trading partners.

This Article presents a comprehensive analysis of these emerging conflicts, arguing that they represent a sharp break from past trade and environment disputes. It examines the causes of the shift and the nature of the industrial policies at issue. The ascendance of these Next Generation conflicts transforms both the international and domestic political economies of trade litigation and environmental policy. It raises implications for the choice of forum for trade litigation, the divide between industrialized and developing countries’ strategic interests, the stability of domestic political alliances, and the availability of WTO legal exceptions for environmental measures.

Perhaps surprisingly, the most worrisome implication of Next Generation cases for both environmental protection and trade liberalization arises from often-overlooked trade remedy laws. The choice of litigation forum matters greatly because the compliance options differ depending on the forum. As a result, the environmentally harmful consequences of Next Generation cases are likely to be greater in domestic trade remedies cases than in WTO dispute settlement cases. To mitigate the environmental harms from Next Generation cases and reduce the threat of a green trade war, this Article suggests that we focus on reforming domestic trade remedies rules.

Suggested Citation

Wu, Mark and Salzman, James E., The Next Generation of Trade and Environment Conflicts: The Rise of Green Industrial Policy (August 15, 2014). Northwestern University Law Review, Vol. 108, No. 2, 2014. Available at SSRN: https://ssrn.com/abstract=2481209

Mark Wu

Harvard Law School ( email )

Griswold Hall Room 302
1525 Massachusetts Ave.
Cambridge, MA 02138
United States

James E. Salzman (Contact Author)

University of California, Santa Barbara - Donald Bren School of Environmental Science & Management ( email )

4670 Physical Sciences North
Santa Barbara, CA 93106-5131
United States

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States

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