Trade and the environment: Defining a role for the World Trade Organization

The purpose of this study is to define a role for the World Trade Organization (WTO) in protecting the environment. It is argued here that the WTO has a role to play in advancing environmental protection while still serving its foremost function as an institution committed to liberalizing trade: this role is to continue trade liberalization targeted at those market sectors where liberalization will be beneficial to the environment, to establish institutional mechanisms for managing both positive and negative effects of trade, and to reduce doctrinal barriers to environmental regulation. The role of the WTO in safeguarding the environment is defined by the relationship between trade and the environment. This relationship is defined in turn, for the purpose of formulating the WTO's role in environmental protection, by four elements: the economic theory of international trade, the environmental response to international trade and trade institutions, GATT and WTO jurisprudence on conflicts between trade and environmental policies, and the discussions of GATT and WTO working parties on trade and environment issues. These elements are formative in defining a role for the WTO in safeguarding the environment. Chapter 1 begins the examination of the relationship between trade and the environment by presenting the economic case for free trade and the environmental benefits of trade. Chapter 2 presents the environmental response to free trade, which focuses on the environmental hazards harboured in the economic case for free trade, in trade as an economic activity, and in the barriers that the WTO creates to environmental regulation. Chapter 3 analyses the GATT and WTO jurisprudence in the light of the concerns that environmentalists have with the multilateral trading system to determine how these concerns have been treated under GATT and WTO law. Chapter 4 examines the discussions of the WTO Committee on Trade and Environment on issues that fall into two themes: the tension between market access and trade-restricting environmental measures and the linkages between multilateral environment and trade agendas. Chapter 5 provides recommendations for defining a role for the WTO in preserving high level domestic environmental policies and in protecting global resources.