World Trade Organization - Harvard Model United Nations

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World Trade Organization the process of capturing tuna was at the center of the trade debate. According to the US Marine Mammal Protection Act, the US government must embargo all tuna from a certain country if that country can’t prove that it meets dolphin protection standards set by US law. The country in question was Mexico. The US banned imports of Mexican tuna to discourage the harming of dolphins during the process of tuna fishing. The GATT panel ruled against the US, saying it could not ban Mexican tuna simply because of the way it was produced. Another important conclusion of the panel was that no country is allowed to use trade measures to enforce its own domestic laws in foreign countries. Although this was a disappointment to environmental advocates, the opposite ruling would have set a dangerous precedence. Any country would be able to say that a foreign country was violating its own domestic environmental laws and the country would be able to enact trade penalties in “retaliation.” 62 Subsidies Legal complications with environmental policies illustrated by national treatment and process-product problem also extend to subsidies in international trade policy. Before explaining how subsidies can often conflict with environmental protection, it is important to first elaborate on the nuances regarding subsidies. 63 There are traditionally two types of subsidies: export subsidies (which are applied to only exports) and general subsidies (which are applied to all goods produced in the country, whether exported or consumed domestically). Historically, international trade agreements have placed more restraint on export subsidies. 64 Subsidies can have a few different types of impacts on international trade. The first impact is on the importing country. Because the goods coming into the importing country are often cheaper due to the subsidies, the importing country’s own goods are at a disadvantage. International rules often allow the importing country to impose a “countervailing duty” to offset this effect. In essence, it is allowed to put a tariff on the subsidized goods. Another impact of subsidies is inhibiting imports into a subsidizing country. The importing country can subsidize domestic producers, which allows domestic producers to lower prices and beat out imports. 65 Now how do these concepts apply in the environmental debate? The definition of subsidy has not been very well established. While subsidies could come in the traditional sense of monetary aid or tax incentives, they can also come in other forms. For example, suppose an exporting country lacks strong environmental regulation and exports goods to a country with strict regulations. Can the importing country argue that the lack of strong environmental regulation is a “subsidy” that the exporting country provides, resulting in unfair competition? This issue has come up in various conflicts between Mexico and American/Canadian producers in regards to the NAFTA treaty. Similarly, suppose an exporting country gives domestic manufactures tax breaks for setting up plants that are more environmentally friendly. When those goods are exported, the importing country could justifiably impose countervailing duties due to the subsidized nature of those goods. 66 Exports and Competitiveness Supporters of trade liberalization often argue that a country’s competiveness is compromised by environmental rules and standards. If an exporting country has strict environmental standards and rules that producers must meet, then those producers must factor those costs into their price structures. The prices they charge will consequently be higher, placing them at a disadvantage when competing with another exporting country that does not have strict environmental regulations. In the minds of the environmentalist country, it is unfair for them because they have to bear a financial and economic cost for contributing to environmental compliance. 67 In some ways, the conflict between environmental policies and trade liberalization is similar to other problems resulting from differences in society. For example, countries with lax worker safety laws and lower minimum wages could also be said to have an unfair competitive edge in exports. These kinds of differences will also be present from society to society. Thus, one issue that needs to be addressed is whether environmental policies are substantially different from other policies regulating minimum wages, worker safety, and others. If environmental policies are, then they must be considered in a special manner within the world trading system. 68 Relationship between MEAs and the WTO Multilateral Environmental Agreements (MEAs) have historically been the best solution to resolving potential trade and environment conflicts. However, these agreements often come in conflict with the international system of trade rules established by the WTO. These conflicts result due to the trade-related provisions in MEAs that help countries achieve their 18 Specialized General Assembly Agencies
environmental goals. These measures, as explained below, are primarily used to control trade, where trade is perceived to contribute directly to environmental damage, and to add incentive to adhere to the MEA by imposing trade penalties. Because WTO members must observe the most-favored nation and national treatment principles and eliminate “quantitative restrictions,” they are put in a difficult situation when faced with an environmental agreement that says parties can use trade restrictions against some countries (non-parties) but not against others (parties). According to environmental principles, they should follow the MEAs and penalize non-parties should they act in a manner harmful to the environment. According to trade principles, they are not following international trade rules outlined by the WTO. One example of this is the previously mentioned US-Mexico tuna dolphin example. The GATT panel ruled strictly based on the conditions of the trade treaties, without acknowledging or referencing MEAs. 69 In recent years, steps have been taken to resolve WTO and MEA conflicts in other ways. Negotiators and new agreements now stress “mutual supportiveness” between WTO rules and MEAs rather than the old principle of supremacy of one principle. One such example is the Cartagena Protocol on Biosafety. In the preamble to the Protocol, there are three paragraphs that state the principle that “neither trade law nor the Protocol has a hierarchical position above the other, and, where there is overlap, the interpretation of each should be done in a manner striving to find consistency between both.” Another approach to promote mutual supportiveness is to implement MEAs in trade laws. In NAFTA, for example, there is a provision specifying under which conditions certain MEAs will prevail over NAFTA trade rules. 70 Trade-related provisions One concern nations often have is how to balance trade law obligations (determined by WTO laws) with environmental obligations in MEAs. A way to reconcile the two is through trade-related provisions in MEAs. Although they are uncommon in MEAs, they have important effects on trade flows. Firstly, trade-related provisions in MEAs provide fairer regulatory frameworks. Participants in a market must be confident that all comparable parties are following the same regulatory constraints. Some constraints reflect economic and social choices of consumers while others reflect urgent environmental imperatives that must be respected above all else. Trade-related provisions allow General Assembly World Trade Organization participants to see under which cases which constraints are mandatory for all members and which are viewed as optional. 71 Another reason why such provisions are necessary is their ability to control markets. Some goods have high demand but meeting that demand could deplete the resources from which they’re made. The environmental opportunity cost of these goods may not be reflected in the market prices of those goods and thus market forces can’t prevent the resources from being depleted. In these circumstances, only an international structure of market control can promote conservation and protection. A key example of this is CITES, which protects certain species from the market forces and trade. 72 While trade-related provisions help promote fairer competition and better protection of the environment, they also ensure compliance to environmental agreements. For example, the Montreal Protocol bans trade with non-parties in ozone-depleting substance. Because parties under the Protocol are limited in their production of ozone-depleting substances, they might try to take advantage by importing these substances The Montreal Protocol is an international treaty designed to protect the ozone layer by phasing out the production of numerous substances believed to be responsible for ozone depletion. Pictured above is the largest Antarctic ozone hole recorded as of September 2006. from countries not under the Protocol (non-parties). This trade-related provision in the Montreal Protocol ensures that the effectiveness and original purpose of the 19
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