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WTO and the Environment: Activist Groups Consider Some World Trade Organization Rulings Environmentally Destructive and Demand Reforms

by Bette Hileman, Chemical and Engineering News - November 2, 1998

A primary function of the World Trade Organization (WTO) is to settle disputes among nations when their individual trade laws come in conflict. Since its creation out of the old General Agreement on Tariffs & Trade (GATT in 1995, WTO's dispute resolution panels have handled hundreds of cases.

But for some of those cases, specifically those involving environmental and public health issues, a backlash is building among environmental activist groups, which believe WTO is making international trade a clear winner at the expense of the global environment. And no decision has angered these groups more than WTO's ruling in October that a U.S. law intended to protect endangered species of sea turtles from being killed in shrimp nets is really a trade barrier and need not be enforced.

Environmental groups see WTO promoting an economic order that is increasing pollution and harming human health. They believe WTO, in pursuit of improved trade, may bring down both national and state environmental laws. As a consequence, they are demanding major reforms in the organization. "We cannot build an ecologically sustainable global economy on trade rules that ignore the environment and public health," says Daniel A. Seligman, senior fellow in the Sierra Club's responsible trade campaign.

But industry spokesmen claim that few, if any, of the cases decided by WTO were clear losses for the environment or public health. What the environmental community considers a threat is often considered benign or neutral by the business community. "Our view is that the dispute settlement procedure has worked quite well since its inception," says K. James O'Connor Jr., director of international trade for the Chemical Manufacturers Association.

Both sides agree that WTO is clearly needed as it is the only international body that deals with resolving disputes over trade rules among nations. "WTO's underlying principles of nondiscrimination and multilateralism are fundamental to a healthy trading system and also to an effective coordination between trade and the environment," says John J. Audley, director of international programs at the National Wildlife Federation (NWF).

WTO is a major improvement on GATT, because it provides ... a way of settling disputes which reach conclusion, " says Timothy E. Deal, a senior vice president for the U.S. Council for International Business. "IN GATT, countries would raise complaints against another country's trade activities, and there was no enforcement mechanism."

Despite this consensus, environmental groups point to a number of cases that make them fear that WTO may eventually trump many environmental laws and agreements. For them, the most egregious case is the October shrimp-turtle decision. Five out of seven species of sea turtles are endangered, and even now after many nations have started using turtle excluder devices (TEDs) to prevent turtles from suffocating in shrimp nets, about 150,000 sea turtles are estimated to die in nets each year. Sea turtles travel long distances, so protection must be global to conserve populations.

WTO ruled that the U.S. law--which bans imports of shrimp caught without TEDs--though inherently valid, had not been applied fairly because the U.S. had given Latin American countries three years to begin using TEDS, whereas India, Thailand, Malaysia, and Pakistan were given only four months. Consequently, the U.S. law must not be enforced, WTO said.

A number of other WTO decisions have angered environmental groups. For example, environmentalists are disturbed by WTO's decision on trade of hormone-treated beef. They say the ruling tramples on countries' sovereignty. In May 1997, WTO decided that the European Union's ban on imports of beef from hormone-treated animals was illegal, e.g. the EU had no scientific support. However, the ban was put in place originally because of widespread fears in Europe over chemicals in food and was applied to all beef wherever it was produced.

Although activist groups recognize there is no scientific consensus on whether hormones in beef pose a health risk, they believe that countries should not be forced to accept possible risks if they prefer not to. This case demonstrates that to withstand a challenge from WTO, governments must prove that a scientific justification exists for the law, environmentalists say, even though science does not usually present an unequivocal picture of risks.

Environmentalists also claim that WTO is capable of interfering with U.S. state laws. For example, Massachusetts passed a law that puts a pricing penalty on state procurement contract bids from companies doing business in Myanmar (formerly Burma) to protest human rights violations in Myanmar. But that law is likely to be challenged in the WTO by the EU and Japan.

Furthermore, activist groups fear that, in the future, WTO may be used to invalidate multilateral environmental agreements (MEAs). Environmental groups especially fear that WTO will be used to invalidate the so-called Basel ban. The Basel ban, an amendment to the Basel Convention on international shipment of hazardous wastes, prohibits all hazardous waste exports from Organization for Economic Cooperation & Development countries to developing countries.

Trade officials in the U.S. have argued that the Basel ban should be scrapped because, they say, it might not be compatible with WTO rules. "If the arrogance of WTO's assumption that GATT is a supra treaty holding authority over all others goes unchallenged, many landmark environmental treaties may be seriously undermined, and the Basel Convention and the Basel ban will certainly be included in that list," says Jim Puckett of the Seattle based Basel Action Network, an international network of activists against toxic materials.

Eco-labeling--that is, making specific environmental claims on a product label--required by governments and private firms, is already under challenge in WTO, says NWF's Audley. Eco-labeling is used, for example, on some specialty hardwood lumber sold in the U.S. But labeling by its very nature is discriminatory if countries use these labels to achieve certain social policy or environmental objectives, he explains.

It is not surprising that eco-labeling is under attack because some business groups are adamantly opposed to it. 'Eco-labeling is not something we support," Deal says.

Voluntary eco-labeling programs are not likely to be challenged in WTO, according to John B. Weiner, an associate at the Washington, D.C., law firm Beveridge & Diamond, whose practice includes counseling and representing industry on trade and environmental issues. "But if rules require you to go along with eco-labeling requirements to enter the market, then the rules could be challenged," he explains.

Because of these concerns, some activist groups are demanding major changes in WTO. For example, they believe that if the deliberations of the dispute panels are opened up to the public, and if environmental experts serve on the dispute panels, WTO decisions will be more friendly to the environment.

When governments disagree over a trade matter, the opposing arguments are first heard by a WTO dispute panel. This panel generally has three members, usually trade experts. If the decision of the dispute panel is appealed, it goes to an appellate body, which has about 15 members, also mostly trade experts. The deliberations of both bodies take place behind closed doors.

The environmental community would like the dispute proceedings to be open to the public. "We are now engaged in an exercise of opening up WTO in many of the ways the World Bank and the International Monetary Fund were opened up," Audley says. People need to be able to observe the dispute processes and understand the outcome," he says.

Beveridge & Diamond's Weiner agrees. Public involvement in the dispute resolution process "may be important," he says, especially in environmental disputes where the expertise of a WTO panel "may not be very strong." CMA's O'Connor, however, says WTO "cannot tolerate" public involvement.

Furthermore, the environmental groups say dispute panels and appellate bodies should include environmental experts as well as trade experts. But industry opposes this idea. "What environmentalists want is really inappropriate," Deal says. "These guys on the dispute panels act as judges," he says. They have to draw on their expertise to decide cases ranging from the Kodak-Fuji- film dispute to the hormones-in-beef case, he explains. "For the Kodak case, did they need a judge who is an industrial expert?" he asks. Moreover, Deal says, the dispute bodies have increasingly turned to experts from the outside to supplement their work.

Dispute processes are carried out so much in secret that the briefs written by the various parties are available to the public only to the extent that the parties to the process permit it, Weiner says. If the briefs are unavailable, this makes it difficult to write amicus curiae briefs, he says. However, starting with the shrimp-turtle decision, WTO has declared that it has the option of accepting unrequested amicus briefs.

In addition to keeping the dispute proceedings secret, WTO keeps its governmental negotiations almost entirely closed to the public. "There are also significant delays in getting access to important documents," Weiner says. "You can have a historical reaction to the negotiation, but it's hard to participate in the process,' he says.

This situation contrasts sharply with multilateral environmental negotiations, Weiner explains. These meetings are usually fairly public until the deadline for reaching an agreement is near and tough bargaining begins.

Deal disagrees with the idea of opening WTO negotiations to the public. It would be "a major mistake" to involve the public in WTO's negotiations, he says. "Bringing groups into WTO to meet on a free-for-all kind of basis is going to accomplish nothing." he says. Special-interest groups should make their views known through their governments, he adds.

It is to be expected that WTO sometimes trounces national and state laws, Weiner says. "We're talking about sovereign governments in the first place who have signed an agreement presumably with an awareness of the consequences of being a member of WTO," he says. The WTO charter itself states that the members' laws must be consistent with their WTO obligations.

Four years ago, the Committee on Trade & the Environment (CTE) was set up to advise WTO decisionmakers on the environmental implications of trade. So far, CTE has done some fact finding but made virtually no decisions.

One of the issues CTE is supposed to tackle is whether MEAs are consistent with trade rules and how to address that so that disputes arising from MEAs are not brought to WTO. One idea the U.S. suggested is to incorporate what is termed a "savings clause" into each MEA. The savings clause would say that "if the MEA has any provisions that are not consistent with trade law, the trade law is superior an prevails," Weiner says. "So you couldn't have an inconsistency between the two because the one defers to the other."

The environmental community objects strongly to this proposal. It want MEAs to stand as equals or superiors to trade laws. "Nowhere has it ever been stated that GATT is the 'constitution' of international law, holding dominance over all treaties, such that all other treaties must amend their carefully negotiated agreements to satisfy the free-trade enthusiasts," Puckett says.

Considering its lack of progress, it seems unlikely that CTE will resolve any major issues. But they may be settled over the next few years in a new round of trade talks. At a WTO ministerial meeting in late 1999, delegates are expected to call for a new round of global trade negotiations.


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