Sizing Up the WTO: Trade-Environment Conflict and the Kyoto Protocol
38 Pages Posted: 28 Sep 2015
Date Written: 2000
Trade-related environmental measures play a key role in several MEAs. The importance of resolving the conflict between such measures and the GATT/WTO cannot be overstated. It is clear that Article XX of the GATT alone is insufficient to resolve the trade-environment conflict in the near future. Its terms are too ambiguous and its interpretation to date too one-sided. In addition, although GATT/WTO jurisprudence is creeping towards a more environmentally friendly stance, WTO dispute settlement panels are ill-equipped to deal with the conflict at present. While it may be argued that there is an implicit, informal understanding that parties to an MEA will not challenge any of its trade measures under the GATT/WTO, or that such measures are exempt from the GATT/WTO, the parties concerned would be wise to demand more certainty than this.
One way to achieve greater certainty would be to amend the GATT. Another would be to create a separate WTO agreement on MEAs. The trade-environment conflict is coming to a head. At the very least, the Sixth Session of the Conference of the Parties to the FCCC should give the matter serious consideration at The Hague in November in particularizing the flexibility mechanisms of the Kyoto Protocol. Preferably, measures that could potentially breach the GATT or other WTO rules but that are agreed to be acceptable should be specifically identified as such. In addition, a separate dispute resolution body with environmental expertise as well as trade knowledge should be established to hear disputes arising under the Kyoto Protocol, and potentially other MEAs. Finally,careful analysis of the likely changes in the levels of emissions of developing countries and countries in transition to a market economy should also be conducted in structuring the emissions trading system.
If the Conference fails to consider the free trade implications in determining the mechanisms for implementing the Kyoto Protocol, there is a real risk of a GATT/WTO challenge being brought against these mechanisms. At best, this will create uncertainty and unnecessary costs in time and money. At worst, it will prove lethal to the system of emission credits, allowances and trading, and the chance of winding back the clock on global warming will be squandered.
Keywords: World Trade Organisation, multilateral environmental agreements, Kyoto Protocol, trade-environment conflict
Suggested Citation: Suggested Citation