The WTO, science, and the environment: Moving towards consistency

Journal of International Economic Law

Volumn 10, Issue 2, 2007, Pages 285-316

  Green, Andrew ^a   Epps, Tracey ^b  

^a UNIVERSITY OF TORONTO   (Canada)

^b UNIVERSITY OF OTAGO   (New Zealand)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 34548436555     PISSN: 13693034     EISSN: 14643758     Source Type: Journal    
DOI: 10.1093/jiel/jgm007     Document Type: Review

References (135)

1. United Nations Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science Basis (Summary for Policymakers) (February 2007), http://www.ipcc.ch/SPM2feb07.pdf (visited 5 February 2007), 4, 8.
2. Douglas Kysar, 'Climate Change, Cultural Transformation and Comprehensive Rationality', 31(3) Boston College Environmental Affairs Law Review (2004)1, (noting that 'uncertainty pervades, we might even say defines, the climate change problem').
3. See also generally, Richard A. Posner, Catastrophe: Risk and Response (Oxford: Oxford University Press, 2004)
4. and Andrew Green, 'Climate Change, Regulatory Policy and the WTO - How Constraining Are Trade Rules?', 8(1) JIEL (2005) 143.
5. OECD, The Political Economy of Environmentally Related Taxes (Paris: OECD, 2006).
6. Nicholas Stern, The Economics of Climate Change (Cabinet Office: HM Treasury 'visited 20 February 2007'), http://www.hm-treasury.gov.uk/ independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm and Posner, above n 2. Some countries are currently using taxes to address climate change. For example, the UK has enacted a Climate Change Levy which is a tax on business energy consumption. OECD, above n 3.
7. See, for example, D. Duff, 'Tax Policy and Global Warming', 51(6) Canadian Tax Journal (2003) 2063, for a discussion of some of the rationales underlying the use of taxes to address environmental issues.
8. But see Andrew Green, 'You Can't Pay Them Enough: Subsidies, Environmental Law and Social Norms', 30 Harvard Environmental Law Review (2006) 407.
9. Katrin Bennhold, 'France Tells US to Sign Climate Pacts or Face Tax' The New York Times, 1 February, 2007 (noting that French President Jacques Chirac 'warned that if the U.S. did not sign [the Kyoto Protocol and future agreements], a carbon tax across Europe on imports from nations that have not signed the Kyoto treaty could be imposed to try to force compliance').
10. See generally Robert Howse, 98(7) 'Democracy, Science and Free Trade: Risk Regulation on Trial at the World Trade Organization', University of Michigan Law Review. (2000) 2329.
11. See, generally, Michael J. Trebilcock and Robert Howse, The Regulation of International Trade, (3rd edn, London: Routledge, 2005)
12. and Alan O. Sykes, 'Comparative Advantage and the Normative Economics of International Trade Policy', 1 JIEL (1998) 49.
13. There are many sources discussing this purpose of WTO review. See, for example, Alan Sykes, 'Domestic Regulation, Sovereignty, and Scientific Evidence Requirements: A Pessimistic View', 3(2) Chinese Journal of International Law (2002) 353,
14. Andrew Guzman, 'Food Fears: Health and Safety at the WTO', 45 Virgina Journal of International Law. 1 (2004)
15. and Andrew Green, 'Trade Rules and Climate Change Subsidies', 5(3) World Trade Review (2006) 1.
16. Robert Howse and Elizabeth Tuerk, 'The WTO Impact on Internal Regulation - A Case Study of Canada - EC Asbestos Dispute' in G. de Burca and J. Scott, (eds), The EU and the WTO: Legal and Constitutional Issues (Oxford: Hart Publishing, 2001), Green, above n 2, Trebilcock and Howse, above n 8, and Sykes, above n 9.
17. Organization for Economic Co-operation and Development, Environmentally Related Taxes in OECD Countries: Issues and Strategies (Paris: OECD, 2001).
18. Ibid, at 62.
19. See, for example, N. Keohane, R. Revesz and R. Stavins, 8(1) 'The Choice of Regulatory Instruments in Environmental Law', 22 Harvard Environmental L.R. (1998) 313,
20. Alan O. Sykes, 'The Economics of International Law' (University of Chicago Law School, Olin Law and Economics Working Paper No. 216, 2004)
21. and Steven Croley, 'Theories of Regulation: Incorporating the Administrative Process' Columbia L.R. (1998) 1.
22. Article XX(b) and XX(g).
23. GATT, Article III.2, first sentence.
24. GATT, Article III.2, second sentence.
25. For a discussion of the likeness test under Article III, see Michael Trebilcock and Shiva K. Giri, The National Treatment Principle in International Trade Law (University of Toronto, Faculty of Law, Law and Economics Working Paper, 2003).
26. Gavin Goh, 'The World Trade Organization, Kyoto and Energy Tax Adjustments at the Border', 38(3) Journal of World Trade (2004) 395 at 408.
27. In the context of regulatory (not tax) measures, the AB in EC-Asbestos found that asbestos containing materials differed from non-asbestos containing materials used for similar purposes in part because of differences in the health effects of the two different products and the impact such differences would have on consumers in an ideal market. Howse and Tuerk, above n 10.
28. GATT Working Party Report on Border Tax Adjustments, BSID 18S/97, GATT, 1970.
29. Bennhold, above n 6.
30. Annex I, Subsidies and Countervailing Measures (SCM) Agreement.
31. UNCTAD, Domestic Climate Policies and the WTO, UNCTAD Discussion Paper Series (Geneva: UNCTAD, 2002) at 13.
32. GATT Article XVI; SCM Agreement Article I.1(ii).
33. R. Ismer and K. Neuhoff, Border Tax Adjustments: A Feasible Way to Address Nonparticipation in Emissions Trading, Cambridge Working Papers in Economics No. CWPE 0409 (Cambridge, MA, 2003). Article II.2(a) of the GATTallows any member to impose BTAs on imports so long as they are imposed in accordance with the Article III national treatment provision.
34. Paul Demaret and Raoul Stewardson, 'Border Tax Adjustments Under GATT and EC Law and General Implications for Environmental Taxes', 28(4) Journal of World Trade (1994) 5 at 18. Demaret and Stewardson make reference to the records of discussions held in drawing up the US Draft Havana Charter which suggest that this was the intent of the drafters of that document.
35. Lucas Assuncao and Zhong Xiang Zhang, UNCTAD, Domestic Climate Policies and the WTO, UNCTAD Discussion Paper Series (Geneva: UNCTAD, 2002).
36. GATT Panel Report, United States-Taxes on Petroleum and Certain Imported Substances, L/6175, adopted 17 June 1987, BISD 34S/136.
37. Panel Report, Argentina - Measures Affecting the Export of Bovine Hides and Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16 February 2001, DSR 2001:V, 1779.
38. Annex II, fn 61.
39. SCM Agreement, Annex II, fn 61.
40. Panel Report, United States-Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20 May 1996 at 22.
41. Green, above n 2 at 170.
42. Appellate Body Report, United States-Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, 2755.
43. Ibid, at para 129.
44. GATT Panel Report, Canada-Measures Affecting Exports of Unprocessed Herring and Salmon, L/6268, adopted 22 March 1988, BISD 35S/98;
45. GATT Panel Report, United States-Prohibition of Imports of Tuna and Tuna Products from Canada, L/5198, adopted 22 February 1982, BISD 29S/91.
46. GATT Panel Report, United States-Taxes on Automobiles, DS31/R, 11 October 1994, unadopted at 109;
47. Panel Report, United States-Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20 May 1996.
48. Appellate Body Report, European Communities-Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, 3243;
49. Panel Report, European Communities - Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/R and Add.1, adopted 5 April 2001, modified by Appellate Body Report, WT/DS135/AB/R, DSR 2001:VIII, 3305.
50. EC-Asbestos Panel Report, at para. 8.179.
51. Ibid, at paras 8.188 and 8.180. The Panel noted that in EC-Hormones, the Appellate Body had not sought to extend the principles of the SPS Agreement to an examination of the measures for which Article XX(b) had been invoked or even to base itself on them.
52. Ibid, at para 8.181.
53. Ibid, at para 8.182.
54. EC-Asbestos AB Report, at para 167 above n 38.
55. Ibid, at para 178.
56. Appellate Body Report, United States-Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3 at 18.
57. GATT Panel Report, United States-Prohibition of Imports of Tuna and Tuna Products from Canada, L/5198, adopted 22 February 1982,
58. BISD 29S/91 and GATT Panel Report, United States-Taxes on Automobiles, DS31/R, 11 October 1994, unadopted.
59. GATT Panel Report, Canada-Measures Affecting Exports of Unprocessed Herring and Salmon, L/6268, adopted 22 March 1988, BISD 35S/98.
60. US-Reformulated Gasoline AB Report, ibid, at 22.
61. GATT Panel Report, United States-Taxes on Automobiles, DS31/R, 11 October 1994, unadopted at para. 3.198.
62. Ibid, at para 3.201.
63. US-Reformulated Gasoline AB Report, above n 45 at 21.
64. Although note that Article XX(g) must be taken in conjunction with restrictions on domestic consumption or production. See Howse and Tuerk, above n 10 at 325.
65. See Howse and Tuerk, above n 190 at 325.
66. Appellate Body Report, Korea-Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, 5 at para. 164.
67. Korea-Beef AB Report at para. 162.
68. EC-Asbestos AB Report, above n 38, at para 172.
69. Ibid. at para 159.
70. TBT Agreement, Article 1.5.
71. TBT Agreement, Annex 1.
72. Howse and Tuerk, above n 10.
73. TBT Agreement, Article 2.
74. For a complete definition of SPS measures, see Annex I, SPS Agreement.
75. Articles 2.2 and 3.3.
76. Article 5.1.
77. Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135 at para. 193.
78. Ibid. at para 189.
79. Ibid. at 194.
80. Ibid.
81. Ibid. at para 186.
82. Ibid. at para 125.
83. See Guzman, above n 9.
84. EC-Hormones AB Report, above note 63 at para 115.
85. Michael Trebilcock and Julie Soloway, 'International Policy and Domestic Food Safety Regulation: The Case for Substantial Deference by the WTO Dispute Settlement Body under the SPS Agreement' in Daniel Kennedy and James Southwick (eds), The Political Economy of International Trade (Cambridge: Cambridge University Press, 2002) at 564.
86. EC-Hormones AB Report, above note 63 at para 124.
87. European Communities - Measures Affecting the Approval and Marketing of Biotech Products (2006), WTO Doc. WT/DS291/R, WT/DS292/R, WT/DS293/R (Panel Report) at para 7.75.
88. Howse, above n 7; Green, above n 2.
89. Croley, above n 13; Sykes, above n 13.
90. Howse, above n 7.
91. Sykes, above n 9.
92. Tim Josling, Donna Roberts and David Orden, Food Regulation and Trade (Washington DC: Institute for International Economics, 2004).
93. Guzman, above n 9.
94. Sykes, above n 9, at 354.
95. See, for example, Kysar, above n 2; Posner, above n 2; and Green, above n 2.
96. EC-Hormones AB Report above note 63 at para. 194 above n 63.
97. See generally Gregory N. Derry, What Science Is and How It Works (Princeton, New Jersey: Princeton University Press, 1999) at 207.
98. See generally Lawrence Busch, et al., Amicus Curiae Brief Submitted to the Dispute Settlement Panel of the World Trade Organization in the Case of EC: Measures Affecting the Approval and Marketing of Biotech Products (WT/DS291, 292 and 293, 30 April 2004).
99. F. Knight, Risk, Uncertainty and Profit (London: Houghton Mifflin Co, 1921).
100. For a discussion of when uncertainty may arise, see Merrie G. Klapp, Bargaining with Uncertainty (Westport, CT: Auburn House, 1992).
101. Derry, above n 83 at 155.
102. Telephone conversation with Professor William Leiss, 27 February 2006.
103. See, for example, Cass R. Sunstein, Laws of Fear - Beyond the Precautionary Principle (Cambridge: Cambridge University Press, 2005).
104. See also Dan M. Kahan, et al., 'Fear and Democracy: A Cultural Evaluation of Sunstein on Risk', 119 Harvard Law Review (2006) 1071.
105. See generally Cindy G. Jardine, et al., 'Risk Management Frameworks for Human Health and Environmental Issues', Part B:6 Journal of Toxicology and Environmental Health (2003) 569.
106. David Michaels and Celeste Monforton, 'Manufacturing Uncertainty: Contested Science and the Protection of the Public's Health and Environment', 95(S1) American Journal of Public Health (2005) S39 at S43.
107. William A. Kerr, 'Science-based Rules of Trade - A Mantra for Some, An Anathema for Others', 4:2 The Estey Centre Journal of International Law and Trade Policy (2003) 86 at 89.
108. Ibid. at 90.
109. Ibid. at 91.
110. Robert Hudec, 'Science and 'Post-Discriminatory' WTO Law', 26(2) Boston College International and Comparative Law Review. (2003) 185.
111. Guzman, above n 9.
112. Sykes, above n 9, at 355.
113. Sunstein, above n 88; Kahan et al., above n 88; and C. Sunstein, 'On the Divergent American Reactions to Terrorism and Climate Change' (University of Chicago Law School, Olin Law and Economics Working Paper No. 295, 2006).
114. Guzman, above n 9.
115. Christiane Conrad, 'PPMs, the EC-Biotech Dispute and Applicability of the SPS Agreement: Are the Panel's Findings Built on Shaky Ground?' (Hebrew University of Jerusalem Faculty of Law Research Paper No. 8-06, August 2006).
116. Sykes, above n 9.
117. D. Roberts, 'Preliminary Assessment of the Effects of the WTO Agreement on Sanitary and Phytosanitary Trade Regulation', 1(3) JIEL (1998) 377.
118. T.E. Josling, S. Tangerman, and T.K. Warley, Agriculture in the GATT (London: Macmillan, 1996).
119. Theofanis Christoforou, 'Settlement of Science-Based Trade Disputes in the WTO: A Critical Review of the Developing Case Law in the Face of Scientific Uncertainty', 8 New York University Environmental Law Journal. (2000) 622 at 625.
120. SPS measures include those designed to protect (i) animal or plant life or health from risks posed by the entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms; (ii) human, animal, or plant life or health from risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages, or feedstuffs; (iii) human life or health from diseases carried by animals, plants, or products thereof, or from the entry, establishment, or spread of pests: Annex I, SPS Agreement.
121. There is a large literature on these issues. See, for example, Lisa Heinzerling and Frank Ackerman, Priceless (New York: The New Press, 2004) (arguing that benefits in terms of the environment and human health cannot be priced) and Posner, above n 2 (discussing the uncertainty that lies behind the choice of a discount rate in the environmental context).
122. Taxes intended to internalize the externality are termed 'Pigouvian' taxes after A.C. Pigou. For a description of some of these concerns, see Duff, above n 5 and Keohane, Revesz, and Stavins, above n 13.
123. See discussion in Duff, above n 5.
124. See, for example, Green, above n 5 for a discussion of the impact of instrument choice (and particular subsidies) on individuals' values.
125. See Alan Sykes, 'Regulatory Protectionism and the Law of International Trade' 66 (1999) University of Chicago L.R. (developing a political economy explanation for the prohibitions on protectionism through regulatory measures, 1).
126. Ibid, at 3.
127. Ibid, at 7-12 (describing the differing welfare of effects of instruments in more detail).
128. Joel Trachtman, 'International Trade as a Vector in Domestic Regulatory Reform: Discrimination, Cost-Benefit Analysis and Negotiations' 24 Fordham International Law Journal (2001) 726, 734-35 (discussing both treaties as incomplete contracts and the application of the rules versus standards debate).
129. Sykes, above n 109, notes that tariffs have this benefit of being more transparent and easier to negotiate. Taxes are somewhat more complicated, as can be seen by the extensive case law on Article III.2 of GATT (non-discrimination in the context of taxes) but may at least be more transparent than may different forms of regulation.
130. Sykes, ibid (arguing that regulatory protectionism is inferior to tariffs, quotas and subsidies in terms of the ability to further the interests of political officials, and that therefore in the context of agreements that set tariff bindings and prohibit quotas and subsidies, officials may be willing to prohibit regulatory action to eliminate cheating on the agreement).
131. Sykes, above n 9.
132. While there are potentially negative impacts of differing scientific requirements, there are also potentially off-setting positive impacts. If stricter requirements were to be introduced with respect to environmental issues and taxes, regulators (especially in developing countries) may be reluctant to impose any measures to protect the environment in cases where scientific uncertainty is overwhelming or scientific evidence is expensive and/or difficult to obtain. However, with the status quo, the lower cost of undertaking tax measures may mean that countries are at least willing to impose controls of some sort. 117 There are no codified rules whereby scientific rationality can be determined, however, there are certain widely accepted practices within the scientific community (such as those relied upon in the peer review process). Douglas Crawford-Brown, Joost Pauwelyn and Kelly Smith, 'Environmental Risk, Precaution, and Scientific Rationality in the Context of WTO/NAFTA Trade Rules', 24(2) Risk Analysis (2004) 461 at 468.
133. Guzman, above n 9. 119 Ibid.
134. See generally Howse, above n 7.
135. Guzman, above n 9.