TH E WORL D TRAD E ORGANISATION : TH E NE W WORL D CONSTITUTIO N LAI D BAR E
A N ACTIVIST'S GUIDE TO THE KEY AGREEMENTS OF THE WTO The WTO is comprised of more than a dozen distinct trade agreements.7 Among these, and forming the essential platform upon which the others are established, is the original General Agreement on Tariffs and Trade - the GATT - which was first negotiated in 1947 as part of the Bretton Woods agreements that also established the International Monetary Fund and World Bank. Other agreements of critical importance from an environmental perspective include:
2. The Agreement on Technical Barriers to Trade (TBT) 3. The Agreement on Sanitary and Phytosanitary Standards (SPS) 4. The Agreement on Trade Related Intellectual Property Rights
(TRIPS) 5. The Agreement on Trade Related Investment Measures
(TRIMS) 6. The Agreement on Agriculture 7. The Agreement on Dispute Resolution
The following offers a brief description of these key elements of the WTO regime.
GATT 1994 The fundamental infrastructure of the WTO can be found in the GATT which has now been incorporated into the WTO, where i t is described as GATT 1994 (throughout this text, simply as GATT). For present purposes, the most important provisions of this core trade agreement can be found in three Articles.
Article 1 - Most-Favoured Nation Treatment (MFN) The MFN rule requires WTO member countries to treat "like" products from a WTO member as favourably as it does from any other member. In other words, discriminating against foreign producers is prohibited, This rule raises serious doubts about the validity of international environmental agreements, which actually require that less favourable treatment be accorded to countries if, for example, they are not living up to their obligations under these environmental conventions. As a recent WTO case involving banana trade between several Caribbean islands and Europe illustrates, the MFN rule also prohibits the use of special trading relationships to support development assistance programmes to poorer nations.
Article II I - National Treatment The NT rule requires all trading parties to treat "like" products of member nations as favourably as i t treats its own domestic products. Thus, under the WTO i t is unlawful for governments to discriminate against goods because of concerns about the destructive or unethical processes that may have been used to produce or harvest them. By the same measure, i t is unlawful under these rules for governments to favour goods on the grounds that they are the product of more sustainable or humane systems of production.
Also, when the principle of National Treatment or Most Favoured Nation status is applied to foreign investors - read corporations - the result spells disaster for efforts to foster domestic economic development. Often multinationals are given more rights in deciding exactly how a nation should 'develop' than that nation's government. Moreover, these rules abdicate to international market forces the critical role of allocating precious and often non-renewable natural resources.
Article X I - Elimination of Quantitative Restrictions Under Article XI , WTO members cannot limit or impose quantitative controls on exports or imports through quotas or bans. But duties, tariffs and other charges are allowed. This is also problematic from an environmental perspective. Consider the implications
of such a rule when applied to such measures as an export ban on unprocessed resources such as raw logs, or as an embargo against the export of agricultural commodities from a country suffering food shortages, or as a prohibition against trade in endangered species, or to ban the export of hazardous wastes to undeveloped countries entirely ill-equipped to manage them safely.
The Agreement on Technical Barriers to Trade (TBT) It is telling that, in the jargon of international trade law, all environmental standards and regulations are, prima facie, considered technical barriers to trade. The actual provisions of the TBT agreement are detailed and complex, but reduced to bare bones, i t establishes:
• An international regime for harmonising environmental
standards that effectively creates a ceiling - but no floor - for environmental regulation • A detailed procedural code for environmental law-making, and
regulatory initiatives that would be difficult for even the wealthiest nations to meet.
When nations fail to observe these new and pervasive constraints on their law-making authority, they are vulnerable to international trade complaints and sanctions. I t isn't surprising, then, that TBT rules have emerged as important new weapons for challenging government regulatory initiatives. Canada has recently relied upon TBT rules to challenge asbestos regulations in France.
The Agreement on Sanitary and Phytosanitary Standards (SPS) The provisions of the oddly-named SPS are very similar to those found in the TBT, but deal with laws and regulations that concern food and food safety, including pesticide regulation and biotechnology. As with TBT rules, the SPS has proven a useful device for undoing government regulatory initiatives that are unpopular with large corporations. As interpreted by the WTO, the SPS also precludes the 'precautionary principle' as a justifiable basis upon which to establish regulatory controls when the risks warrant action, even in the face of scientific uncertainty about the extent and nature of potential impacts.
One casualty of this particular WTO Agreement has been efforts to negotiate a "Biosafety Protocol" to the Biodiversity Convention, with various countries, mainly the US, threatening WTO trade action should the Protocol require that host countries first consent to transborder shipments of genetically modified organisms. Yet another important feature of this WTO agreement seeks to remove decisions about health, food and safety from
"Lets face it gentlemen, we're out to
own the Earth, not to save it. "
The Ecologist, Vol. 29, No 4, July 1999 TH E WORL D TRAD E ORGANISATION : TH E NE W WORL D CONSTITUTIO N LAI D BAR E
national governments by delegating them to international standard-setting bodies such as the Codex Alemantarius - an elite club of scientists based in Geneva. Because of its location and composition, Codex is an institution that is singularly inaccessible to all but a handful of international corporations and business associations that are capable of maintaining delegations in Geneva. Not surprisingly, Codex standards often fall substantially short of those established by jurisdictions closer and more responsive to the interests and views of consumers and health advocates.
The Agreement on Trade Related Intellectual Property Rights (TRIPS) By employing the convenient device of simply attaching the prefix "trade related" this WTO agreement transforms an entire domain of domestic policy and law into one that is the fitting subject for WTO regulation. The essential thrust of the TRIPS agreement is to compel all WTO member nations to adopt and implement US-style patent-protection regimes. The effect of these rules is to virtually provide US and European multinationals with global patent rights which can now be enforced by retaliatory trade sanctions. At the same time, the rights of indigenous communities to genetic and biological resources that are held in common are ignored. The result is to facilitate the appropriation of the genetic commons by corporate interests which can then demand user rents from the very communities that should be considered the proper 'owners' of the genetic resource.
The Agreement on Trade Related Investment Measures (TRIMS) While this investor-rights agenda is constructed on the same platform of National Treatment and Most Favoured Nation treatment that is common to all WTO Agreements, it goes much further in two critical ways. The first is to allow individual investors virtually unqualified access to international enforcement mechanisms that may be invoked by them directly against nation states. It would be difficult to overstate the implications of this radical departure from the norms of international treaty law which, with the exception of international human rights, has never created rights even for the benefit of individuals, let alone multinational corporations.
In other words, under NAFTA and MA I prototypes, for the purposes of enforcement, foreign investors are accorded the same status as nation-states. The other critical departure of this proposed investment regime from the norms of international trade law is to be found under the heading Performance Requirements, which actually constrain the implementation of domestic investment regulation, even when applied only to domestic investors.
The Agreement on Agriculture The free-trade vision expressed by the WTO Agreement on Agriculture is of an integrated global agricultural economy in which all countries produce specialised agricultural commodities, and supply their food needs by shopping in the global marketplace. Food is grown, not by farmers for local consumers, but by corporations for global markets. The consequence of this global model is a disaster for the food security of poor countries, as subsistence farms are lost to export producers, but are also extremely problematic for environmental and food safety reasons.
Consider, for example, that the globalisation of food production and trade necessarily requires that agricultural commodities be transported long distances, and be processed and packaged to survive the journey. In addition to sacrificing quality and variety for durability, this system of agricultural trade requires enormous inputs of energy. In fact, when account is taken of all energy inputs, global food production and trade probably consume more fossil fuel than any other industrial sector. That is why international agricultural trade policies are likely to substantially increase
greenhouse gas emissions and make climate objectives much harder to achieve.
Other important aspects of the WTO agenda for agriculture can be found in other WTO agreements dealing with food safety standards and biodiversity (Sanitary and Phytosanitary Standards and TRIPS). When taken together, these agreements set the stage for the next 'Green Revolution' - the one that spreads biotechnology, in the form of genetically modified foods, across the world.
The Agreement on Dispute Resolution Prior to the WTO, trade dispute resolution was a matter for negotiation and compromise. While trade panels could pass judgement on whether countries were in breach of their obligations, compliance ultimately depended upon the willingness of each memberstate to accept the rulings of trade panels. This was the case because, under GATT rules, retaliatory trade sanctions could only be imposed against an offending nation with its consent. With the creation of the WTO, the requirement for that consent has been removed and trade panel rulings are legally enforceable virtually as soon as they are rendered.
It is also important here to stress that enforcement under the WTO means recourse to the most potent remedies that exist under international law - retaliatory trade sanctions. Moreover, by the norms of conventional legal processes, WTO dispute resolution takes place with blinding speed. Cases are routinely heard, decided, appealed and resolved within a year of being brought. Indeed, i t would be impossible to find, in any other legal regime, either criminal or civil, sanctions as quick and effective as those provided by the WTO. It is the effectiveness of its enforcement regime that ultimately accounts for the enormous influence that trade rules wil l now exert over the decisions of governments.
However confused the reasoning, a review of WTO rulings on environmental or conservation measures reveals two consistent and common themes. The first is the expansive reading given to rules that limit government options that might, even indirectly, interfere with trade. The second is the exceedingly narrow interpretation given to trade provisions that might create space for environmental exceptions to the free-trade orthodoxy. This double whammy has spelled disaster for every environmental or conservation regulation that has found itself in the cross hairs of a trade dispute panel. In fact, none has survived the encounter and, in every case, trade panels have found several grounds on which to rule against the environmental regulation. •
Steven Shrybman is Executive Director of West Coast Environmental Law. This article is condensed from the first two chapters of a longer guide to the WTO. For copies, contact West Coast Environmental Law, 1001-207 West Hastings Street, Vancouver, BC V6B 1H7, Canada. Tel: +1 (604) 684 7378; fax: +1 (604) 684 1312; email:
References: 1. See The Results of the Uruguay Round of Multilateral Trade Negotiations: The
Legal Texts, Reprinted by the WTO in 1995 - ISBN 92-870-1124-4. 2. Among the various trade agreements for which the WTO has responsibility is the
original General Agreement on Tariffs and Trade (GATT) as that agreement has been amended, and a number of other agreements that are specific to various aspects of international trade such as agriculture, technical regulation, investment, services and intellectual property. 3. See for example, Robert Reich, The Work of Nations: Preparing Ourselves for the
21st Century Capitalism 113 (1992). 4. The Federal Minister for International Trade in response to a question posed on the
House of Commons Order Paper, see Frank Tester, "Free Trading the Environment", in Duncan Cameron, ed., The Free Trade Deal, Toronto: Lorimer and Company, 1988. 5. With the exceptions of Friends of the Earth, the Sierra Club and Greenpeace, other
major US environmental groups were willing to support the first major initiative of a newly-elected President in consideration of these marginal reforms. In Canada, environmental groups were almost unanimous in their opposition. 6. See Lalumiere and Landau, "Report on the Multilateral Agreement on Investment
(MAI)"; published by France's Ministry of the Economy, Finance and Industry, 1999. 7. Op.cit. 1
The Ecologist, Vol. 29, No 4, July 1999