Privately Subsidized Recycling Schemes and Their Potential Harm to the Environment of Developing Countries: Does International Trade Law Have a Solution?

35 Pages Posted: 25 Apr 2004

See all articles by Arie Reich

Arie Reich

Bar-Ilan University - Faculty of Law

Date Written: March 4, 2004

Abstract

The article discusses the problem of privately subsidized recycling schemes, that are common in the developed countries and that may in certain circumstances harm the environment of developing countries, as a result of the asymmetry in economic development and environmental protection between them and the developed countries where the products originate. This may happen, for instance, when such products are exported to developing countries and have a negative impact on the economic viability of collection and recycling of their own waste. Newly established and still struggling recycling plants, unsupported by private or governmental subsidies or other protective measures prevailing in the rich and more environmentally conscious countries, may be forced to close down. Alternatively, they may decide to abandon expensive collection of local waste, in favor of free or subsidized waste imported from developed countries. In both cases, collection and recycling activities in the importing countries are reduced, and sometimes eliminated. The objective of this article is to document and draw attention to this problem, that has not yet been discussed in the rich literature on trade & environment, and to examine the question of what remedies, if any, may be offered under international trade law (in particular GATT/WTO rules) to affected countries. Would countries in situations as those described above be permitted to take measures against imports harming their recycling activities? Of particular interest in this regard, is how to relate to privately paid, but governmentally induced, subsidies under the WTO Subsidies Agreement? Such subsidies, while fulfilling most economic definitions of subsidies, appear to have escaped the attention of the Agreement's drafters and may therefore be outside its scope. Importing member countries would therefore be precluded from taking countervailing measures against products enjoying such subsidies. These and other potential protective measures will be discussed in the article, in light of recent case law of the WTO, in particular in the matter of United States - Measures Treating Export Restraints as Subsidies. This discussion will demonstrate the formalistic nature of the existing WTO jurisprudence and show how a more purposive, teleological approach to interpretation of international trade rules could lead to a better solution to the problem at hand.

Keywords: International Trade, Environment, Subsidies, Recycling, Developing Countries

JEL Classification: F13, K32, K33

Suggested Citation

Reich, Arie, Privately Subsidized Recycling Schemes and Their Potential Harm to the Environment of Developing Countries: Does International Trade Law Have a Solution? (March 4, 2004). Available at SSRN: https://ssrn.com/abstract=514903 or http://dx.doi.org/10.2139/ssrn.514903

Arie Reich (Contact Author)

Bar-Ilan University - Faculty of Law ( email )

Faculty of Law
Ramat Gan, 52900
Israel
+972 3 5318416 (Phone)
+972 3 5351856 (Fax)

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