Reconciling Trade Measures in MEAs with the WTO Agreements: The DDA Negotiation and the Way Forward

Multilateral environmental agreements (“MEAs”) are the centerpiece of the efforts of the international community to address global environmental challenges such as climate change. There now exists hundreds of MEAs covering various of fields of the environment and each of them serves a vital role for the multilateral response to environmental problems. Many MEAs employ trade measures as useful, or for some cases, indispensable means to ensure the effective operation of MEAs and achievement of their objectives. For instance, restrictions on trade in endangered species in CITES and trade restrictions on hazardous wastes in the Basel Convention have proven that such trade measures in MEAs may be effective and crucial to achieve the goals of MEAs. Nevertheless, such trade measures taken in pursuance of obligations under MEAs may be inconsistent with the rules of the WTO Agreements. For instance, prohibition on import or export of certain goods in accordance with MEA obligations may run afoul of GATT Article XI. Application of import or export ban on goods from select countries based on certain environmental criteria provided in MEAs may be inconsistent with the Most Favoured Nation Clause in GATT Article I. If a trade measure results in different treatment of goods of foreign origin vis-à-vis domestically produced goods, that may constitute an inconsistency with the national treatment obligation under the GATT Article III. Still, such trade measures will not be deemed WTO-inconsistent if exempted under GATT Article XX. It has been accepted that GATT Article XX (b) and (g) can be applied to the government measures for environmental policy purposes. Thus, it has been argued that trade measures taken in pursuance of the obligations under MEAs, for their obvious purpose to achieve the environmental goals of the MEAs, will be exempted from being WTO-inconsistent under the GATT general exceptions. However, there is still unclarity in the WTO jurisprudence regarding GATT Article XX, and the WTO panels and the Appellate Body have often been criticized for their questionable methodology and insufficient understanding of the environment policy in their interpretation of GATT Article XX(b), (g), and the chapeau in disputes concerning environmental issues. Further, there are many types of trade measures different in content, form and especially the degree of discretion allowed to the parties to MEAs. Thus, while it is quite possible that a trade measure taken in pursuance of MEA may be accommodated through GATT Article XX, it will require a case-by-case analysis, and one cannot be certain that all of such trade measures will always be accommodated thusly. Therefore, there is unclarity in the relationship between the WTO Agreements and MEAs, and such uncertainty creates problems for both the WTO and MEAs. Recognizing this problem, WTO Members have discussed the ways to reconcile the trade measures in MEAs with the rules of the WTO Agreement, especialy during the Doha Development Agenda negotiation. Although DDA negotiation on this issue did not produce concrete results, the discussions by the Members and the proposals made by some of the Members during the DDA negotiation provided valuable insight into this issue, and the basic ideas therein are still relevant today. Particularly important are the Member’s discussions on the scope of the specific trade obligations laid down in MEAs, or “STOs”, and three key proposals, namely, 1) codification of the principles that govern the WTO–MEA relationship, 2) the presumption of conformity for STOs, and 3) sharing of national experiences of domestic coordination, coupled with the enhanced institutional collaboration between the WTO and MEAs. Importantly, they can serve as the foundation for a new legal framework that reconciles rules of the WTO and trade measures in MEAs. A clear normative framework is necessary to address the unpredictability in this issue and dispel the “chilli