Legal challenges for WTO Members in the field

Legal challenges for WTO Members in the field of protection of the environment and human health Kaliningrad, 2 November 2013 Wybe Th. Douma Senior Researcher EU Law & International Trade Law at the T. M. C. Asser Institute for International and European Law, The Hague Member of the Board of the Centre of the Law of EU External Relations CLEER w. t. douma@asser. nl © T. M. C. Asser Institute

Outline 1) From GATT 1947 to WTO 2) WTO, GATT and SPS & health, environment 3) Dispute settlement: balancing trade, human health & environment © T. M. C. Asser Institute 6

1) From GATT 1947 to WTO - pre-WTO dispute settlement 'politicised' -> any state can veto Panel Report, including the one loosing the dispute. . - examples: Tuna-Dolphin 1 and 2 (Mexico / EEC v USA) - pre-WTO power based rather than rule based - negotiations Marrakesh Round -> WTO Agreement, GATT 1994 (= GATT 1947 amended), SPS Agreement and new DSU © T. M. C. Asser Institute 6

2) WTO, GATT, SPS and health & environment 2. 1) WTO Agreement, Preamble: - optimal use world's resources in accordance with objective of sustainable development, - protect & preserve environment & enhance means for doing so in manner consistent with respective need and concerns at different levels of economic development © T. M. C. Asser Institute 6

2. 2) General Agreement on Tariffs and Trade 1994 Regulates international trade in goods in general On trade restrictions: - Reduce tariffs; - no quantitative import restrictions; - threat WTO members equally, Most Favourite Nation MFN; - no discrimination between national and imported goods © T. M. C. Asser Institute 6

Basic obligations Art I: MFN the products of one trading partner are not to be treated less favourably than like products of other trading partners where customs duties and charges are concerned Art. III: national treatment obligation GATT members are to treat products imported from other GATT member states completely equal to like products of domestic origin -> only non-discriminatory internal taxes and regulations Art XI: no quantitative restrictions © T. M. C. Asser Institute 6

GATT exception Art XX limited and conditional exceptions from GATT obligations Allowed are measures: b) necessary to protect human, animal or plant life or health g) relating to the conservation of exhaustible natural resources, if made effective in conjunction with restriction on domestic production or consumption 'chapeau' = expression of good faith principle, no abus de droit - not in manner constituting arbitrary or unjustifiable discrimination between countries where same conditions prevail - no disguised restriction on international trade “Two-tiered test”: 1) provisional justified sub b/g, 2) chapeau © T. M. C. Asser Institute 6

2. 3) SPS Agreement Lex specialis for agricultural goods & health. Art 2 SPS 1. SPS measures necessary for protection of human, animal or plant life or health if consistent with SPS 2. Applied only - to extent necessary, - based on scientific principles - sufficient scientific evidence (NB exception 5. 7 SPS) -No arbitrary / unjustifiable discrimination, no disguised trade restriction -If SPS rules followed, presumed to be in accordance with GATT notably XX(b) © T. M. C. Asser Institute 6

5. 1 scientific risk assessment 5. 7 temporary measures in case full risk assessment impossible Dealing with uncertainty, but not easy…. case EC-Beef hormones EC ban on growth hormones in beef 1988 1996 US complaint at WTO, Panel and AB no separate role for Precautionary Principle costing the EU a lot… USA took retaliatory measures in form of extra duties on EU imports worth over 100 million dollars p/yr Only in 2009 a solution was reached: more export of hormones free US beef / getting rid of retaliation measures gradually © T. M. C. Asser Institute 6

3) WTO Dispute settlement: balancing trade, human health & environment -Cases decided by Panels and Appellate Body -Rules based, semi-automatic adoption of decisions - Art 3. 2 DSU regime WTO, making use of rules of interpretation of public international law, so consideration of any relevant rules of international law applicable in the relationship between the parties to the Agreement -> if Precautionary Principle = binding rule of int. customary law it would need to be applied by Panels and AB examples of cases -US-Gasoline: clean air = exhaustible natural resource -GMO (Biotech) - EU moratorium violates WTO duties -Asbestos - cancer causing asbestos can be banned as using © T. M. C. Asser Institute moonsuits no alternative 6

pre-WTO cases Tuna-dolphin 1 Mexico - USA Tuna-dolphin 2 EEC - USA Unadapted Panel reports can provide guidance in reasoning where a WTO Panel or AB finds this relevant (DS 8, 10 and 11) WTO case US-Gasoline Tuna-Dolphin 3 Asbestos Biotech Shrimp-turtle Brazil Retreated Tyres EC-Seals coming up… © T. M. C. Asser Institute 6

DS 58 Shrimp-Turtle - US fishermen obliged to use Turtle Excluder Devices when catching shrimp since 1987, 3 d country's need TED certificate - violation of Art XI quantitative import restriction - turtles are exhaustible natural resources XXg - highly endangered - US measures are 'related to' conservation of exhaustible natural resources as there exists a 'close and genuine relationship of ends and means' - not extraterritorial - turtles highly migratory, also in US waters - but violating 'chapeau' so not allowed under WTO law - chapeau is about balancing green parties rights and exporters - by demanding that the whole world applies essentially the same system as US shrimp trawl vessels, rather than comparable other measures = rigid and unbending standard (para 163) - no negotiations to arrive at bi- or multilateral solution © T. M. C. Asser Institute 6

- after decision by Panel and AB, - negotiated in good faith, no agreement reached though - USA amended its system - not new case but arbitration under art 21. 5 DSU - arbiter: no need to have reached agreement, negotiating in good faith is enough © T. M. C. Asser Institute 6

DS 332 Brazil Retreated Tyres import ban “necessary” within the meaning of Article XX(b), thus provisionally justified under that provision MERCOSUR exemption -> import ban applied in a manner that constitutes arbitrary or unjustifiable discrimination (chapeau of Article XX) import ban thus not justified under Article XX of the GATT 1994 Compare Russian recycling fees… © T. M. C. Asser Institute 6

More info: T. M. C. Asser Institute website: www. asser. nl European Environmental Law website & free EEL News Service: www. eel. nl w. t. douma@asser. nl Thank you for your attention! © T. M. C. Asser Institute 5