Categories: Biodiversity Article 3

International Biodiversity and the World Trade Organization: Relationship and Potential for Mutual Supportiveness

Bondi Ogolla, Markus A. Lehmann, and Xueman Wang*
Convention on Biological Diversity, Montreal, Canada
*Corresponding author; contact: xueman.wang@biodiv.org

EPL, Vol.33, Iss.3-4, pp.117-132, 2003

 

Introduction

There has been an increasing international preoccupation with trade and environment issues since the mid-1980s. This development arises out of a growing recognition of important links between international trade and environmental issues. From the perspective of multilateral environmental treaties, there are two basic concerns. First, since the entry into force of the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES), in 1975, multilateral environmental treaty-making has increasingly resorted to trade measures as incentives (or sanctions) for securing international cooperation essential for dealing with transboundary and global environmental problems. Trade-related provisions have thus become important elements in multilateral environmental agreements. The issue of the relationship of such provisions with the existing rules governing international trade embodied in the WTO regime has naturally arisen. Second, there is increasing concern that the effective implementation of the provisions of some multilateral environmental agreements and the realization of their objectives might be compromised by the rules of the multilateral trade regime. In both instances, the international community has, since the United Nations Committee on Economic Development (UNCED), expressed the need to ensure mutual supportiveness and to create synergies between multilateral environmental agreements and the WTO regime.

In this regard, the fourth World Trade Organization Ministerial Declaration adopted in Doha represents a significant step forward in the trade and environment debate. After seven years of discussion in the WTO Committee on Trade and Environment (CTE), WTO Members finally agreed to address the relationship between MEAs and WTO rules. Specifically, in paragraph 31 (i) of the Doha Ministerial Declaration, trade ministers agreed “to negotiations, without prejudging their outcome, on the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs).” Although the negotiation mandate set out in this paragraph is constrained by excluding Party/NonParty issues, it nevertheless represents an acknowledgement that the globalization of trade and the reduction of trade barriers must take environmental issues into consideration. This mandate is now addressed in the Special (Negotiating) Session of the WTO Committee on Trade and Environment (CTE). An important focus of the discussions in this committee was how to further define and operationalize the new term “specific trade obligations” coined by trade ministers.

The purpose of this article is twofold. First, it provides an overview of the relationship between WTO rules and an important element of international environmental law, the international biodiversity regime. In this regard, it seeks to answer the following questions:
• Which WTO Agreements are relevant to the Convention on Biological Diversity and its Cartagena Protocol on Biosafety, and why?
• Which provisions of the CBD and the Protocol are of relevance to trade, trade policies and, subsequently, to the WTO regime?

Second, the paper presents a set of alternative, increasingly narrow definitions of “specific trade obligations”. This set is then applied to the international biodiversity regime in order to identify the provisions of the CBD and the Protocol that would qualify as “specific trade obligations” under alternative definitions of this term, and to analyse the potential for mutual supportiveness between these provisions and relevant WTO Agreements. Two general lessons are to be drawn from this analysis:
• First, we argue that, because of the subject matter addressed by environmental provisions, specific trade measures may sometimes be implicitly required to implement a specific provision even while it is silent as to the use of trade tools. A definition of “specific trade obligations” that excludes this important aspect would therefore impede a comprehensive analysis of the relationship between WTO rules and multilateral environmental agreements.
• Second, it is imperative to take into consideration specific decisions of the Conference of the Parties (COP) to an MEA in order to fully understand the meaning and thrust of MEA provisions. Even while not legally binding, COP decisions offer important insights regarding the understanding of the Parties to the MEA with respect to specific MEA provisions and the means available for their implementation. Such an approach is consistent with Article 31 of the Vienna Convention on the Law of Treaties which establishes the general rule of interpretation of treaties and requires that any subsequent agreement between the parties regarding the interpretation of a treaty or the application of its provisions be taken into account. It is particularly important for identifying “specific trade obligations” implicitly arising under MEA provisions.

The article is divided into four sections. Section II presents and analyses WTO agreements of relevance for CBD and its Biosafety Protocol. Reference to relevant provisions of the Doha Declaration is also made. Section III identifies provisions of the Convention and the Protocol that are of relevance to trade and analyses their relationship with relevant WTO Agreements. It examines whether the term “specific trade obligation” is appropriate in the context of the Convention and the Protocol, and identifies the provisions of the Convention and the Protocol that would fall under a broad or narrow definition of provisions, with trade implications. It further examines the degree to which mutual supportiveness seems to be ensured between such provisions and the WTO regime. Section IV provides a conclusion.

The WTO Framework: Agreements of Relevance to the Convention on Biological Diversity and its Biosafety Protocol

The WTO framework is a constantly evolving body of international trade rules. The last round of trade negotiations (“The Uruguay Round”; 1986–1994) contains a list of over 60 agreements, annexes, decisions and understandings. The agreements cover goods, services, intellectual property and the settlement of trade disputes. The basic and oldest regime is provided by the General Agreement on Tariffs and Trade (GATT) which was adopted in 1947. This agreement was updated during the Uruguay Round and, together with various protocols and understandings, is now known as GATT 1994. Other significant agreements from the Uruguay Round of relevance to the international biodiversity regime are the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); the Agreement on Sanitary and Phytosanitary Measures (SPS); the Agreement on Technical Barriers to Trade (TBT); the Agreement on Agriculture; and the Agreement on Subsidies and Countervailing Measures.

GATT 1994

The GATT comprises several fundamental principles calculated to guarantee an open, equitable, secure, nondiscriminatory and predictable trading system. The most central of these is the principle of non-discrimination. Under the GATT, countries cannot discriminate between their trading partners or between domestic and foreign products. The former, known as the “most-favoured nation” treatment (MFN) clause, is embodied in Article I of the GATT and requires that where any trade advantage is conferred by a Member on another with regard to customs charges, duties and formalities, it shall be immediately and unconditionally extended to all other Members. The latter, known as the “national treatment” clause, is contained in Article III, which provides that internal taxes, laws and regulations should be applied to imported and domestic products in an equal manner, so as not to afford domestic production undue protection. National treatment only applies once a product has entered the domestic market and therefore charging customs duty on an import is not a violation of the national treatment requirement. Thus, any protection to domestic production can only be effected through customs tariffs and not through quantitative restrictions or other measures (Articles XI–XV). In addition, tariffs are required to be reduced through multilateral negotiations.

However, Article XX of the GATT establishes important exceptions to these rules and principles. These exceptions create a significant latitude for countries to implement national environmental protection measures. Generally speaking, existing rules under the GATT impose no constraints on the ability of a Member to protect its own national environment. It is at liberty to implement and enforce environmental policies and laws designed to either regulate domestic production processes or prevent adverse environmental impact arising from the consumption of domestic or imported products. As long as national environmental policies and laws are implemented in a non-discriminatory manner in relation to foreign products, they will generally be consistent with the GATT rules. Certainly, international concern over technical and other regulatory barriers to trade have, as we shall see, resulted in a number of multilateral disciplines under the WTO regime but these contain some exceptions relating to environmental protection.

The range of measures a Member can institute to protect its environment without infringing the GATT may conceivably include taxes on polluting products, tax rebates on environmentally friendly technologies and products, and the regulation of domestic production and consumption of certain products – even to the extent of prohibiting the production and sale of such products. In this latter respect, the ban on domestic sale can also be enforced at the point of importation or exportation so long as it applies regardless of the origin or destination of the product. In effect, a Member can regulate its production processes in any way it deems fit; it can also treat its imports and exports the same way it deals with its own products. What the GATT objects to is an attempt by a country to impose its own environmental policies on the processes and production methods (PPM) of other countries, or to discriminate in its regulatory measures against imports or sources of imports.

Article XX contains certain exceptions to its rules that have implications for environmental protection. In effect, environmental protection measures that would otherwise violate WTO obligations may be permitted under Article XX. It provides that nothing contained in the Agreement shall be construed to prevent the adoption and enforcement by a Member of measures (b) “necessary to protect human, animal or plant life or health” and (g) “relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production and consumption.” Although Article XX (b) is largely focused on the use of sanitary and phytosanitary measures to safeguard the life and health of humans, animals and plants, the wording of the provision is broad enough to encompass, inter alia, hazardous products, hazardous waste and the introduction of alien species that could endanger indigenous genetic resources. On the other hand, Article XX (g) may facilitate the conservation of natural resources through restrictions on exports, for example, of animal and plant species or of their specimens and trophies. Recent dispute resolution panels and appellate bodies have adopted a definition of exhaustible natural resources that includes not only mineral or other non-living resources, but also renewable resources such as air, fish or turtles. The latitude conferred by Article XX is, however, circumscribed in two significant respects. It is subject to the requirement that such measures (1) are not applied in a manner which would constitute a means of arbitrary or opportunity of specific policies for environmental protection.

The Agreement on Agriculture

GATT 1947 did not apply to agricultural trade. In this respect, it was considered by trade liberalization proponents as containing trade distorting loopholes, since it allowed countries to use non-tariff measures such as import quotas and to grant export subsidies to domestic agricultural producers. 

The Agreement on Agriculture, negotiated during the Uruguay Round, sought to remove such distortions, bring “order and fair competition” into the agricultural trade sector, and initiate negotiations for continuing the reform process. Member countries undertook commitments to reduce tariffs (corresponding to improvements in market access), in export subsidies and in trade-distorting domestic support for agricultural products. The Agreement does allow developing countries to support their rural economies, but preferably through policies that cause less distortion to trade. Under the so-called green box, countries can also have recourse to measures with no or minimal impact on trade. They need to be “decoupled” from current production levels or prices. Such measures include government services such as research, disease control, infrastructure and food security. They also include payments made directly to farmers that do not stimulate production, such as certain forms of direct income support, assistance to help farmers restructure agriculture, and direct payments under environmental and regional assistance programmes. Furthermore, payments are allowed that, while being directly linked to acreage or livestock numbers (and, hence, are not decoupled), take place under schemes that limit production by imposing quotas or requiring farmers to set aside part of their land (the so-called blue box).

There are important links between the regime of the Agreement on Agriculture and the CBD regime. Generally, there are fears that trade liberalization in agricultural commodities is likely to lead to increases in world prices, which in turn will engender intensification of production with such negative impacts as conversion of natural habitats, loss of species, and greater genetic vulnerability as more homogenous plant varieties are used. The growth in exports may also lead to the spread of alien invasive species for agricultural products. Careful assessments at country and sectoral levels are necessary in order to substantiate these fears on a case-by-case basis and in order to identify adequate policy responses. Furthermore, the thrust of the Agreement and its “built-in” negotiations to reduce trade-distorting domestic support has important implications for CBD’s work on incentive measures pursuant to Article 11 of the CBD.

EPL Biodiversity Article 3

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