1

World Trade Organisation and Protection of Environment

A
PROJECT REPORT
ON
WORLD TRADE ORGANISATION AND PROTECTION OF
ENVIRONMENT
PROJECT SUBMITTED TO:
Mr. Azim Pathan
Faculty of Environmental Law
H.N.L.U

PROJECT SUBMITTED BY:
Palash Bakliwal
4
th
Semester
Roll no-87
B.A. LL.B. (Hons.)
H.N.L.U
HIDAYATULLAH NATIONAL LAW UNIVERSITY, RAIPUR
CHHATISGARH
2
World Trade Organisation and Protection of Environment
TABLE OF CONTENTS-

ACKNOWLEDGMENTS 3
OBJECTIVES 4
RESEARCH METHODOLOGY 5
INTRODUCTION 6
TRADE IMPLICATIONS OF CLIMATIC CHANGE 8
PROTECTION OF ENVIRONMENT AND TACKLE CLIMATE
CHANGE WHILE MAINTAINING TRADE OPEN 9
ARTICLE XX OF GATT/WTO 10
PRODUCTION AND PROCESS METHOD 14
GOVERNMENT SUBSIDIES AND OTHER ENVIRONMENTAL
PROVISIONS 16

CONCLUSION 18
REFERENCES 21











3
World Trade Organisation and Protection of Environment

ACKNOWLEDGEMENTS-
I would like to take this opportunity to express my deep sense of gratitude towards my course
teacher, Mr. Azim Pathan for giving me constant guidance and encouragement throughout the
course of the project.
I would also like to thank the University for providing me the internet and library facilities
which were indispensable for getting relevant content on the subject, as well as subscriptions
to online databases and journals, which were instrumental in writing relevant text.

Palash Bakliwal
4
th
Semester




4
World Trade Organisation and Protection of Environment
OBJECTIVES-
The main objectives of this project are-
1. To study the trade implication of climatic change.
2. To study the protection of the Environment and tackle climate change while maintaining
trade open
3. To understand Article XX of GATT/WTO.
4. To know the production and process methods of different products.
5. To study the Government Subsidies and other Environmental provisions
5
World Trade Organisation and Protection of Environment
RESEARCH METHODOLOGY:
This research paper is descriptive & analytical in approach. It is largely based on secondary
& electronic sources. Books & other reference as guided by faculty of Environmental law are
primarily helpful for the completion of this project.


6
World Trade Organisation and Protection of Environment
1. INTRODUCTION-
In these we would be showing the Interrelation between WTO and Environment. A
growing number of developing countries look to trade and investment as a central part of
their strategies for development, and trade considerations are increasingly important in
shaping economic policy in all countries, developed as well as developing. At the same time,
however, most of the worlds environmental indicators have been steadily deteriorating, and
the global achievement of such important objectives as the Millennium Development Goals
remains very much in doubt. These trends are not isolated; they are fundamentally related.
Much environmental damage is due to the increased scale of global economic activity.
International trade constitutes a growing portion of that growing scale, making it increasingly
important as a driver of environmental change. As economic globalization proceeds and the
global nature of many environmental problems becomes more evident, there is bound to be
friction between the multilateral systems of law governing both. As the integration of trade
and environment is inevitable in practice, a proper framework within the WTO mechanism
itself is essential to strike a balance between the two. The contention of critics of the WTO
1
is
that the Organization is inadequate for the purposes of protecting the environment. This is not
so. The WTO gives great latitude to members to restrict trade to protect the environment.
This is rarely conceded. There are several provisions in the WTO agreements dealing with
environment. There is a reference to sustainable development as one of the general objectives
to be served by the WTO in the Marrakech Agreement which established the WTO. There are
provisions in the Agreement on Agriculture and the General Agreement on Trade in Services
(GATS). However by far and away the most important provisions as far as environmental
issues are concerned are Article XX of the GATT and the Agreements on Sanitary and
Phytosanitary Measures and the Agreement on Technical Barriers to Trade. However
existence of uncertainties, ambiguities and conflict situation between WTO and environment
is not denied. There are certain grey areas which require attention and they had been subject
matter of debate between countries at international negotiations and before the WTO dispute
settlement body. Conflict of relationship exist between Multilateral Environmental
Agreements (MEAs) and WTO. Relationship between the two is still to be clarified. Such a
conflict creates legal insecurity and is injurious to the world trading system. WTO though

1
The main critics of the WTO are a vast array of environmental, conservation and public policy NGOs and
organizations such as Public Citizen, Greenpeace, One World, World Wildlife Fund, Friends of the Earth, Sierra
Club to name a few.

7
World Trade Organisation and Protection of Environment
specifically meant for trade and not for managing environment has no option but to realize its
international public policy objective. Provisions within the covered Agreements pertaining to
environment normally provided in the form of exceptions are itself suffering from
interpretation problems, which is clearly evident from various disputes before the WTO
dispute settlement mechanism. Review of cases in which panel and appellate body ruled on
environmental matters suggests that current legal instruments are not sufficient for
environmental concerns. Article XX of GATT affirms the legal right of WTO Members to
adopt measures that address environmental issues; WTO is yet to come out clearly on
such environmental obligations.
2
The WTO's Committee on Trade and the Environment
(CTE), for its part, has provided a valuable forum for discussions on reconciling
environmental and WTO treaty obligations and other crossover issues. However, it has not
produced concrete proposals for trade policy reform to enforce or promote environmental
goals. Optimal policy is to have an appropriate environmental policy in place, to look after
the environment, and then to pursue free trade to reap the gains from trade. There are
pragmatic steps that the international community is required to take to more intelligently
ameliorate trade-induced environmental degradation and to better balance free trade with
ecological protection. The links between trade and the environment are multiple, complex
and important. Trade liberalization is of itself neither necessarily good nor bad for the
environment. Its effects on the environment in fact depend on the extent to which
environment and trade goals can be made complementary and mutually supportive. A
positive outcome requires appropriate supporting economic and environmental policies.











2
To an extent Asbestos case, Gasoline case, and shrimp case, the rulings have confirmed that countries can
enact environmental measures, even if they affect trade and even if they concern others' Processes and
Production Methods.
8
World Trade Organisation and Protection of Environment

2. TRADE IMPLICATIONS OF CLIMATE CHANGE-
There are no rules in the WTO specific to climate change. However, the WTO tool box of
rules can apply. The WTO provides a legal framework ensuring predictability, transparency
and the fair implementation of such measures.
Climate change has an impact on various sectors of the economy. Agriculture, forestry,
fisheries and tourism are affected by climate change through temperature increases, droughts,
water scarcity, coastal degradation, and changes in snow cover. These are key sectors in
international trade especially for developing countries which have a comparative advantage
on the international trading scene. Extreme weather can also affect ports, roads, airports and
railways. Climate change can disturb supply and distribution chains, potentially raising the
cost of international trade.
Trade itself can also have an impact, positive or negative, on CO2 emissions. Economic
development linked to trade opening could imply a greater use of energy leading to higher
levels of CO2 emissions. However, trade opening has much to contribute to the fight against
climate change by improving production methods, making environmentally friendly products
more accessible at lower costs, allowing for a more efficient allocation of resources, raising
standards of living leading populations to demand a cleaner environment and by spreading
environmentally friendly technologies.
In addition, about 90% of trade is carried out through maritime transport, which is the lowest
contributor to CO2 emissions. It represents less than 12% of the transport sector's
contribution to CO2 emissions, while road transport represents about 73%. Trade can help
countries to adapt to climate change. When countries are faced with food shortages brought
about by climate change, trade can play the role of a transmission belt between supply and
demand.
In the last decade, countries have designed new policies to address climate change. They
range from standards to subsidies, from tradable permits to taxes. In doing so, governments
have to find the right balance between designing a policy that would impose minimal costs
for the economy while effectively addressing climate change. The industrial sector's growing
concern is to remain competitive while climate mitigation efforts proceed.
Today, some governments may be considering the use of trade measures in the fight against
climate change. Border measures may be envisaged to imported products based on their
carbon footprint. Several countries have raised this issue within the United Nations
Framework Convention on Climate Change (UNFCCC) negotiations.
9
World Trade Organisation and Protection of Environment
The details of how that footprint would be calculated in an increasingly globalised market,
where products are manufactured in a number of different countries is also part of the debate.
Global problems like climate change require global solutions which must be based on the
well-known environmental principle of "common but differentiated responsibility" which
means taking into account different level of responsibility in emissions.

3. PROTECTION OF ENVIRONMENT AND TACKLE CLIMATE CHANGE
WHILE MAINTAINING TRADE OPEN-

Rules made by WTO provide significant scope to protect the Environment and tackle climate
change while maintaining trade open like. In the preamble to the Marrakech Agreement that
established the WTO, sustainable development, and the protection and preservation of the
environment are recognised as fundamental goals of the organization. The WTO promotes more open
trade with a view to achieving sustainable development. It provides WTO members with the
flexibility they need to pursue environmental and health objectives. A distinction should be made
between trade measures with a genuine environmental goal, and measures that are intended as
disguised restrictions and are applied in an unjustifiable and arbitrary manner.
Specific conditions where trade restrictions are allowed-
The WTO is not an environment agency. The main objective of the WTO is to foster
international trade and open markets but WTO rules permit members to take trade restricting
measures to protect their environment under specific conditions. Two fundamental principles
govern international trade: national treatment and the most favoured nation (MFN).
National treatment means any policy measure taken by a member should apply in the same
way whether the good is imported and produced domestically. Provided they are similar
products imports should not be treated less favourably than domestic goods.
The MFN principle means that any trade measure taken by a member should be applied in a
non-discriminatory manner across to all countries.
The WTO rule book permits governments to restrict trade when the objective is protecting the
environment. The legality of such restrictive measures depends on a number of conditions
including whether they constitute justifiable discrimination. These measures should not
constitute disguised protectionism.
In the preamble of the Marrakech Agreement, which established the WTO, sustainable
development, the protection and preservation of the environment are recognised as
fundamental goals of the WTO. Article XX of the GATT (General Agreement on Trade and
Tariffs) lists exceptions to open trade, among them the protection of the environment. WTO
10
World Trade Organisation and Protection of Environment
jurisprudence has regularly reaffirmed members' right to determine their own environmental
objectives. While there may be conflicts between international trade and the protection of the
environment, WTO agreements permit exceptions to trade principles. Every member is free
to determine its appropriate level of protection but must do so in a coherent manner. If a
country bans the importation of asbestos from another, for example, it must ban asbestos
imports from all countries, as well as banning domestic sales. Countries may also use
technical environmental standards or sanitary and phytosanitary measures when pursuing
their environmental objectives. They may, for instance, impose labelling requirements on a
certain category of products. These technical standards could constitute an unfair obstacle to
trade if they are applied in a manner which is discriminatory or if they create unnecessary
obstacles to trade. The WTO encourages governments to apply international standards where
they exist. It is essential for WTO members to be informed of changes in national policies
and to examine whether they are justified. Any draft technical or sanitary standard should be
notified to the WTO.
There is a wider range of WTO rules relevant to climate change. Rules on subsidies may
apply as countries are currently financing the development of environmental friendly
technologies and renewable energy. Intellectual property rules could also be relevant in the
context of the development and transfer of climate-friendly technologies and know-how.
With growing of number of Environmental problems several provisions are included in the
WTO agreement which deals with environment. There is a reference to sustainable
development as one of the general objectives to be served by the WTO in the Marrakech
Agreement which established the WTO. There are provisions in the Agreement on
Agriculture and the General Agreement on Trade in Services (GATS). However by far and
away the most important provisions as far as environmental issues are concerned are Article
XX of the GATT and the Agreements on Sanitary and Phytosanitary Measures and the
Agreement on Technical Barriers to Trade.

4. ARTICLE XX OF THE GATT-
The core agreement of the WTO system is the General Agreement on Tariffs and Trade
(GATT). The principal purpose of the GATT was to oblige members to use the same rules to
regulate trade and to ensure in particular that there was no discrimination in trade. All
international agreements need exemptions clauses. These are the mechanisms that ensure that
governments retain the capacity to perform essential functions that might be eroded if the
11
World Trade Organisation and Protection of Environment
basic rules of the treaty are applied. The most common exemption in most agreements is to
preserve freedom of action to protect national security. Article XX specifies what activities
are exempt from GATT rules. These exemptions give members very wide latitude to control
trade to protect the environment.
Article XX waives members of the obligation to apply fundamental commitments,
particularly non-discrimination, in certain cases. They include protection of national
security, protection of morals, and preservation of national cultural heritage. Of
particular importance is the right to waive the rules in order to protect human, animal, plant
health and safety.
Article XX (b) permits restrictions on trade to protect human, animal and plant life health and
safety. Article XX (d) permits restrictions on matters not consistent with the objectives of the
GATT. Article XX (g) also permits restrictions if they complement national programs for
conservation of resources. This is the basis upon which health and quarantine restrictions are
applied to trade in pharmaceuticals, hazardous products, toxic products and products carrying
risk of disease, for example. The capacity of governments to prevent the entry of such
products into their national territory in this way enables governments to maintain the integrity
of national environmental programs in the vast majority of cases. Of necessity, exemptions
clauses must be limited. If they are too wide, they undermine the effect of the principal
provisions of the Treaty. Article XX is limited to a few areas. Members are also bound to
utilize the exemptions only to the extent that it is necessary and are obliged to ensure they are
not disguised restrictions on trade.
The provision relating to conservation of natural resources [Article XX (g)] appears not to
have been drafted with living natural resources in mind; however GATT/WTO panels have
stated that it is reasonable that it should be so interpreted.
3

Experience with use of Article XX of the GATT over many years revealed weaknesses in
some provisions, particularly where the latitude to act was so wide that governments used the
provisions to secure economic protection. Actions were taken to reduce the amount of
discretion governments had to restrict trade. Many countries used the quarantine provisions to
secure economic protection rather than to protect health and safety. The SPS Agreement was

3
This was stated in the second Tuna/Dolphin panel report, although that report was never adopted and it was
restated in the Shrimp/Turtle panel report. United States Import Prohibition of Certain Shrimp and Shrimp
Products WT/DS58/AB/R. 12 October 1998.

12
World Trade Organisation and Protection of Environment
negotiated in the Uruguay Round
4
to contain such abuse. It states that if countries base
restrictions on trade on recognized international standards,
5
the restrictions are deemed as
complying with the agreement. Countries could apply other standards, but they were subject
to challenge by other WTO members to demonstrate that they were based on science and
supported by a risk assessment process.
6
The development of the SPS Agreement coincided
with a global trend to shift away from dealing with risk on a no-risk basis to risk
management. The latter approach leads to better use of resources and better enjoyment of
benefits. The requirement that decisions be based on science and a process of risk assessment
introduced transparency into decision-making by creating a visible check on abuse of
executive discretion. This not only protected the rights of members of the WTO, it also gave
assurance to consumers that governments were not abusing their powers.
The Agreement on Technical Barriers to Trade (TBT) was negotiated in the Uruguay Round,
replacing the Standards Code.
7
It was designed to reduce the scope for countries to use
technical standards as disguised barriers to trade. It obliges members to ensure that national
treatment and non-discrimination apply when technical standards are adopted as mandatory
regulations.
8
Technical standards with restrictive trade effects are permitted for four
legitimate purposes, (including standards developed for the protection of the environment,
for national security requirements, for the prevention of deceptive practices and for the
protection of human health and safety and animal and plant health and life), provided the
effect is not more restrictive than necessary to meet one of those objectives, taking into
account the risk of non-fulfillment. In assessing that risk, the agreement stipulates that
relevant elements of consideration are, inter alia, available scientific and technical
information, related processing technology or intended end uses of products.
9
Members are
also required to base their standards on those developed by international bodies which are

4
Preventing abuse the role of the Agreement on Sanitary and Phytosanitary Measures (SPS). The Uruguay
Round of Trade Negotiations, 1986-1994

5
Specifically those set by the International Office of Epizooty (which sets veterinary and animal health
standards), the International Plant Protection Convention (which sets standards for plant health and science
and Codex Alimentarius (a joint organization of the FAO and WHO which sets standards for human health)

6
See Articles 2.2, 3.3 and 5

7
The Standards Code of 1979 was developed in the Tokyo Round of trade negotiations.

8
Article 2.1
9
Articles 2.2
13
World Trade Organisation and Protection of Environment
presumed to be in compliance with the Agreement.
10
In other cases, and where measures have
a significant impact on trade, parties are obliged to notify the measure and provide
opportunities to other WTO members to comment. Sound regulation, standards and eco-
labeling. Making decisions transparent and setting objective criteria by which they could be
challenged as provided or in the SPS and TBT Agreements is consistent with the doctrine that
regulations should be imposed by governments only to protect health and safety. When
Governments regulate for other reasons, they interfere in the market and exercise influence
which favours some parties in the economy and damages others. There is large body of
standards which aim to improve the quality of goods and services and provide information to
consumers. Most of these are national standards and are set by national standard setting
organizations. A set of international standards is produced by the International Standards
Organization. Well-known quality standards developed by that organization include the ISO
9000 series (to improve quality in organizations) and ISO 14000 (to set quality standards to
improve environmental management.). These are voluntary standards and in most countries
are developed by private organizations.
When Governments adopt these standards and make compliance compulsory, they become
official regulations.
11
If a company requires suppliers to comply with specified standards
struck by national standards organizations or ISO, this does not constitute a trade barrier. It is
a commercial requirement. However when a government stipulates that unless such standards
are complied with imports or exports are not permitted, these are trade restrictions that must
comply with WTO rules, including the provisions of the SPS and TBT Agreements. Where
eco-labelling systems are not mandated by governments, but are applied by commercial
entities for the information of consumers, these are voluntary standards and WTO provisions
do not apply.
12
When an eco-label is mandated under government regulation, then the
regulation needs to comply with the provisions of the WTO. As shown in the foregoing, the

10
Article 2.4
11
The WTO Agreement on Technical Barriers to trade differentiates between standards with which compliance
is mandatory, termed technical regulations and standards with which compliance is not mandatory, termed
standards.

12
The Code of Good Practice under the TBT Agreement applies to voluntary standardising bodies and voluntary
standards. There is no legal obligation on these bodies to comply with the Code, however there is an obligation
on the central government standardising body take all reasonable measures to ensure they accept and comply
with the Code. (Article 4 and Annex 3)

14
World Trade Organisation and Protection of Environment
terms of Article XX and of the SPS and TBT agreements make ample provision for use of
eco-labels.

5. PRODUCTION AND PROCESS METHODS-
A complaint about the WTO provisions is that trade restrictions on how a product is produced
or processed are not permitted. The general point was that the WTO did not permit one
member to restrict trade with another on the basis that they did not apply policies which the
first party preferred.
The environmental case is that if one method of processing (such as a method of fishing for
tuna) causes environmental damage (high levels of incidental kill of dolphin) then an
importer should be able to express preference for the product (tuna) processed in a way that
does not cause environmental damage (caught using fishing methods that reduced the
incidental kill of dolphin).
13

WTO provisions generally do not allow trade to be restricted on those grounds. The TBT
Agreement recognizes related processing technology as a relevant consideration for
applying a mandatory technical standard to protect the environment.
However this is a limited application and the extent of its meaning has not been tested. The
general case for not making provision in the WTO for the right to restrict an import according
to the environmental effect of the way in which it was processed or produced is that to do so
assume the WTO should include provisions to secure public policy objectives other than
trade. There is a difference between allowing exceptions to protect national policies and
creating provisions which enable governments to force other to adopt non-trade objectives.
It is argued that the purpose of the WTO is to enable countries to gain the benefits of an open
trading system. If it is to be used as an instrument to achieve environmental purposes, the
case in principle is made for it to be used to secure objectives in other areas of international
public policy such as health, labor standards, postal services, human rights and air transport
standards. If this were to happen, the WTO would cease to be effective in meeting its primary
purpose, not just because it would be overloaded with policy objectives which have not
intrinsic functional relationship to trade, but because giving members of the WTO the right to
pick and choose specific areas in which they could insist on certain standards being met
before trade was permitted would undermine the capacity of the WTO to allow members to
exploit comparative advantage. The case to alter the WTO to permit trade restrictions on

13
Centre for International Environmental Law and Greenpeace International, Safe Trade in the 21
st
Century
A Greenpeace Briefing Kit, September 1999, www.greeenpeace.org accessed August 2001.
15
World Trade Organisation and Protection of Environment
environment grounds is loaded anyway. Those who make that claim are obliged first to
explain why more normal means of achieving international agreement to meet international
public policy objectives are not used. The United Nations Conference on Environment and
Development (UNCED) in 1994 laid down some principles on trade and environment.
14
They
stated that the preferred international approach to protecting the environment was to create
multilateral agreements expressly for that purpose in which members would agree to adopt
commonly agreed measures in their national law or practice. They also stated that use of trade
measures to protect the environment should be avoided. To apply this approach in the case of
the tuna/dolphin issue, rather than have one country threaten a trade sanction unless another
complied with its preferred environmental (fishing) policy (as was the US position) to
achieve international environmental protection, all countries fishing in the region would enter
an international agreement to required their fishing fleets to use the same fishing techniques,
as they now do in a regional fishing agreement.
15

The proponents of the sanction approach would argue that were it not for the coercion, the
regional agreement would not have been adopted. This may be so, but this is to justify the
morally-odious and internationally-censured option of applying coercion because it
disregards the national sovereignty of nations simply on the grounds that the more normal
approach of seeking an international agreement is too slow. In the case of the effect of
dolphin in the Eastern Tropical Pacific region, there was no case for urgency. The species
concerned were not endangered.
Therefore, members of WTO aimed at protecting the environment, subject to certain
specified conditions included in various WTO agreements. Some of these measures are as
under:
(i) Article XX of the General Agreement on Tariffs and Trade (GATT), 1994 permits WTO
Members to depart from their GATT obligations for legitimate national policy
objectives. These objectives include:
(a) Article XX (b): Measures to protect human, animal or plant life or health; and
(b) Article XX (g): Conservation of exhaustible natural resources.
(ii) The General Agreement on Trade in Services (GATS) also contains an exception to
GATT Article XX (b).

14
See Annex The UNCED Trade and Environment Principles.

15
The Agreement on International Dolphin Conservation Program 1999, Inter-American Tuna Commission

16
World Trade Organisation and Protection of Environment
(iii) Article 27 of the Trade Related Intellectual Property Rights (TRIPS) Agreement states
that Members may exclude from patentability inventions, the prevention within their
territory of the commercial exploitation of which is necessary to protect human,
animal or plant life or health or to avoid serious prejudice to the environment.
(iv) Agreement on Subsidies and Countervailing Measures (ASCM) contained an exemption
for certain environmental subsidies (provision has since lapsed).
(v) Agreement on Technical Barriers to Trade (TBT Agreement) recognizes protection of the
environment as a legitimate objective and allows Members to take necessary measures
towards this end subject to meeting certain requirements.
(vi) Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement)
allows Members to use sanitary or phytosanitary measures to protect humans, plants and
animals from contaminants, disease-carrying organisms, and pests. It elaborates rules for
the application of the provisions of Article XX (b).
(vii) The Preamble of the Agreement on Agriculture (AOA) reiterates Members' commitment
to reform agriculture in a manner that protects the environment. Under the agreement,
domestic support measures with minimal impact on trade (known as green box
measures) are allowed and are excluded from reduction commitments. Among them are
expenditures under environmental programmes, provided that they meet certain
conditions.

6. GOVERNMENT SUBSIDIES AND OTHER ENVIRONMENTAL PROVISIONS -
In the Agreement on Agriculture, there is scope to permit subsidies which are for
environmental protection. This was part of the Agreement on Agriculture which was
negotiated in the Uruguay Round. Re-negotiation of that agreement has begun. The European
Union has indicated that it wants general provisions to permit trade restrictions on
environment grounds. Others, such as members of the Cairns Group coalition of agricultural
exporters want to minimize the extent to which such measures can create new grounds for
protection of economic interests. There is a general recognition in the General Agreement on
Trade in Services of sustainable development as an objective of the Agreement.

There is clear evidence around the world that payment of subsidies by Governments
diminishes the regard in which users of resources hold them. Subsidies to farmers encourage
overexploitation of land, subsidies of fertilizers encourage over use, for example causing
excessive levels of nitrates in the water table in European Community farmlands, subsidies to
17
World Trade Organisation and Protection of Environment
forestry and fishery resources result in poor management, and in all these cases, there is
environmental degradation.
The WTO Agreement on Subsidies and Countervailing Measures restricts the extent to which
governments can pay subsidies. It therefore creates a positive framework to foster sustainable
management of resources. It does not apply to subsidies to agriculture which are covered by
the Agreement on Agriculture. Much higher levels of subsidies are permitted in agriculture.
There is a commitment by member of the WTO to negotiate further reductions.



























18
World Trade Organisation and Protection of Environment
CONCLUSION-
The literature on the interface of trade and environment, as well as the evaluation of
trade measures within MEAs indicate that trade restrictions are not the only nor
necessarily the most effective policy instrument to achieve the environmental objective
of the MEAs. The root cause of environmentally unsustainable development is the
existence of market or regulatory failures, when the true value of environmental
resources or cost of polluting economic activities are not reflected in market prices
due to structural defects in the system or due to improper government policies. Co-
operative environmental efforts as reflected by MEAs remain important to address
transboundary and global environmental problems, and trade measures can play an
important role in some of these MEAs. Indeed, India noted in an initial paper in 1996
to the CTE that, in dealing with only one element of an MEA, namely, the trade measure, we
may be unconsciously encouraging dependence on trade measures to achieve environmental
objectives, when we are all agreed that this is not the best way of handling environmental
concerns .
Given the rise in environmental consciousness and concerted efforts across the globe to
tackle genuine environmental problems (which defy national jurisdictions) through
MEAs, one cannot disregard trade obligations pursuant to such MEAs within the WTO
especially when those directly relate to certain trade rules. India has recognized the
principle to support environmental initiatives and has been Party to most major MEAs.
At the same time, India recognizes that gains from fair and free trade are important to
support sustainable development at home. The current negotiations on para 31 (i) of the
DMD need to be successfully arrive at an interpretative decision, since it is long
overdue.
Although the present provisions within the GATT/WTO allow for unilateral trade measures
on environmental grounds, a new decision on the relationship between STOs pursuant to
MEAs and rules of the multilateral system is essential to curb the trend in unilateralism.
The jurisprudence in a recent environmental-trade dispute ruling indicates that bilateral
good faith efforts to protect the environment can make departure from free trade
justifiable, since the interpretation of the GATT Article XX provisions has been
significantly broadened (e.g. Malaysia-US Compliance Dispute on Shrimp-Turtle 2001).
19
World Trade Organisation and Protection of Environment
Given the recognition of autonomy of a WTO Member in determining domestic
environmental regulations (which can affect trade with Members), and the widening of
interpretation of justifiable trade restrictions, the multilateral trading system is at risk
of protectionism. By default any domestic environmental regulation would take into
consideration only its own environmental/ ecological and economic interests, with complete
disregard to other countries. Yet, such local environmental considerations are neither
ecologically nor economically efficient. A WTO decision that supports specific trade
obligations pursuant to MEAs (represented by large participation of countries from
various regions and stages of development) is the only way to restrain unilateral measures
that currently threaten multilateralism.
The EC, the main demander of the environment agenda in the WTO, regards MEAs and
WTO as holding equal legal status, even though the two distinct regimes defy such ranking.
The broad agenda of the EC (supported by Switzerland and Norway), poses risk to the
multilateralism it claims to uphold, since some MEAs allow Party discretion to undertake
unilateral restrictive trade measures based on the Party s environmental priorities or
evaluation. Thus the broad agenda of EC carries a potential threat of regionalism/
unilateralism.
There is also a risk of protectionism in the definition of individual terms within the current
negotiations. While it may seem that the WTO Members have engaged in semantics of
each term contained in Paragraph 31.1 of the DMD, the final interpretation of the
provisions under the MEAs hinge on these definitions. Even supporters of the
broader agenda, like Japan, have acknowledged that the discretion provided in some
MEAs make the definition of STOs difficult, and indeed a case-by-case analysis may
be required for those MEAs. In this light, a restrictive definition of STOs as adopted by
India is a sound approach, especially to check for the protectionist pitfalls of a broader
definition.
Finally, a structured MEA-by-MEA analysis is a judicious negotiating stand to clarify the
relationship between of STOs pursuant to MEAs with WTO rules, since this would lead to
a clear understanding of what kind of trade measures for environmental purposes are
consistent under the WTO. It is important for India to work towards such a multilateral
interpretative decision and understanding within the WTO. A conceptual understanding is
20
World Trade Organisation and Protection of Environment
particularly significant in the face of unilateral trade restrictions on environmental being
sanctified in the post-WTO era.
It is in the best interest of India to re-affirm her commitment to promoting sustainable
development along with trade liberalization, as set out in the Preamble to the WTO
Agreement and the Decision on Trade and Environment), and continue to support
environmental initiatives through MEAs. After all, the WTO is not an environmental
policy making body, and should continue to promote trade liberalization with due
respect to multilateral environmental consensus coming from organizations specializing
in those issues.

















21
World Trade Organisation and Protection of Environment
BIBLIOGRAPHY-

NEWSPAPER ARTICLES-
Sawhney, Aparna, Trade and Environment Negotiations at the WTO: The Interface of
Multilateral Environmental Governance and Multilateral Trading System, GALT Update,
The Energy and Resources Institute (TERI), New Delhi, March 2007, Nanda, Nitya,
Trade and Environment: In Search of a Global Agenda, GALT Update, TERI, March
2007.
Cheyne, Ilona, Risk and Precaution in World Trade Organization Law, Journal of World
Trade, October 2006, Vol. 40 Issue 5.
Rachel, McCormick, A Qualitative Analysis of the WTOs Role on Trade and
Environment Issues, Global Environmental Politics, February 2006, Vol. 6 Issue 1
Kirchbach, Friedrich Von, and Mimouni, Mondher An Assessment of
Environmentallyrelated Non-tariff Measures by Lionel Fontagn, World Economy,
October 2005, Vol. 28 Issue 10.
Uppal, Shaban. The WTO and Environment, Economic Review, January 2005, Vol. 36
Issue 1.
Eckersley, Robyn, The Big Chill: The WTO and Multilateral Environmental
Agreements, Global Environmental Politics, May 2004, Vol. 4 Issue 2.

BOOKS-
Environment and Trade: A Handbook, Second Edition, The United Nations Environment
Programme Division of Technology, Industry and Economics Economics and Trade Unit
and the International Institute for Sustainable Development, Canada, 2005.
Trade and environment: A resource book, ed. by Najam, Adil; Halle, Mark and Melndez-
Ortiz, Ricardo, International Center for Trade and Sustainable Development, New York,
2007.
Guru, Manjula and Rao, M.B., WTO Dispute Settlement and Developing Countries, Lexis
Nexis Butterworth, 2004.
Wardha, Harin, WTO and Third World Trade Challenges, Common Wealth, New Delhi,
2002.
Bhandari, Surendra, World Trade Organisation and Developing Countries, Deep and Deep
Publications Pvt. Ltd., New Delhi, 1998.

22
World Trade Organisation and Protection of Environment
ONLINE RESOURCES-
CTE documents are found in the WTOs trade and environment official
http://www.wto.org/english/tratop_e/envir_e/cte_docs_list_e.htm
Brack, D., The World Trade Organization and sustainable development: A guide to the
debate. Energy, Environment and Development Programme (EEDP), Chatham House.
London, U.K., 2005
Charnovitz, S. Exploring the Environmental Exceptions in GATT Article XX. In
Journal of World Trade 25(5),1991
Copeland, B. R. and Taylor, M.S. (2003) Trade and the Environment: Theory and
Evidence. Princeton University Press. Princeton, USA.