Trading Away the Environment

By Sforza, Michelle | Multinational Monitor, October 1999 | Go to article overview

Trading Away the Environment


Sforza, Michelle, Multinational Monitor


WTO Rules Thwart Environmental Agreements, Punish Innovation

Five YEARS OF THE WORLD TRADE ORGANIZATION (WTO) have convinced environmentalists that their worst fears were right: the global commerce agency is fundamentally flawed, its basic rules antithetical to environmental, as well as consumer, worker safety and other non-commercial interests.

In the WTO's very first ruling on one country's challenge to another's law, a tribunal ordered the United States to scrap a U.S. Clean Air Act regulation or face economic sanctions simply because the regulation might adversely impact foreign gasoline. Under WTO rules, countries which lose a tribunal decision must alter their laws to comply with the WTO agreements or accept perpetual trade sanctions or fines. In the Clean Air Act case, the Clinton administration moved to change the offending regulation.

Soon thereafter, another WTO tribunal held that a European ban on beef from hormone-treated cows violated WTO rules requiring countries to prove that products are actually dangerous before taking them off the market (as opposed to a requirement that companies demonstrate that products are safe before they are put on the market). At the urging of European consumers and public health advocates, the EU has defied the WTO ruling, and is now paying the price: small European family farms are suffering $200 million in retaliatory tariffs against their products each year until the EU revokes the ban.

A quarter of the WTO's enforceable rulings have been against food safety rules, product standards and environmental regulations. The WTO has never upheld a challenged environmental regulation, rejecting claims that the contested environmental safeguards met genetic WTO rules or satisfied requirements for the WTO's environmental exceptions clause.

While the WTO has made clear its willingness to override hard-won, domestic public health and environmental laws, it is now becoming increasingly clear that laws adopted to comply with international agreements on the environment are equally vulnerable to challenge under WTO rules.

In 1998, a WTO appellate panel ruled the United States could not maintain an embargo on shrimp from countries that have not adopted regulations to protect endangered sea turtles from drowning in shrimp nets. The U.S. took such action under the CITES (Convention on Trade in Endangered Species), an agreement signed by over 146 nations to protect animals threatened with extinction. The WTO panel chose not to interpret the U.S. shrimp embargo as a legitimate exercise of its obligations under CITES, even though the agreement lists the sea turtle as a species that signatory countries must protect.

Now, environmentalists believe, cases on the WTO's horizon are showing how far-reaching WTO rules are, revealing the potential multifaceted conflicts with multilateral environmental treaties, demonstrating how narrow corporate interests can hijack the WTO's machinery for their own purposes, and highlighting how corporations can manipulate WTO rules to chill the development of a new generation of rules for an ecologically sound global economy.

WTO VS. KYOTO

In 1997, representatives from 150 countries convened in Kyoto, Japan to establish legally binding limits on emissions of greenhouse gases. Thirty-seven industrialized nations, including the EU, the United States and Japan, agreed to significantly limit greenhouse gas emissions.

To comply, in 1998 Japan revised its "Law Concerning Rational Use of Energy," which includes rules setting standards for automobile fuel efficiency. Japan set new fuel efficiency standards for all cars, particularly cars in the medium weight category, where the standards were less rigorous when compared to those applied to smaller and larger cars.

When Japan attempted to implement its Kyoto objectives, the United States and the EU accused Tokyo of violating WTO rules and began pressuring the Japanese to loosen the new emissions standards.

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