Environmental trade barriers and the rising threat to prosperity through trade
A new research report reveals that over the last decade more than forty environmental restrictions on international trade have been introduced which appear to disregard the rights of members of the World Trade Organization (WTO) not to be subject to trade coercion. At least twenty more measures are in prospect.
Most of the measures have been introduced by the European Union (EU). It appears that despite the fact other members of the WTO do not agree with EU proposals to amend the WTO to enable trade leverage to be used to force other countries to change environmental standards, the EU is acting unilaterally to do so.
Access the full report here [515k PDF] or, alternatively, download each section:
- 1. Introduction and Key Results [60k PDF]
- 2. Methodology [30k PDF]
- 3. Synopsis of Environmental Trade Barriers [80k PDF]
- 4. Barriers and Related Measures [200k PDF]
- 5. Bibliography of Official Documents [35k PDF]
The trade and environment debate---trade coercion or international collaboration by consent?
A constant criticism of the WTO by Green Non-Governmental Organizations (NGOs), particularly Greenpeace and the World Wide Fund for Nature, is that it does not permit trade restrictions to be used to protect the environment.
This position is broadly shared by the European Union. It wants WTO rules changed so that it can restrict imports if the way they are made does not meet domestic EU environmental standards and so that trade sanctions in Multilateral Environmental Agreements (MEAs) cannot be challenged in the WTO.
There is a very good reason the WTO does not allow use of trade restrictions in this way. Basically, it is to protect the right recognized in its Agreements that every country should have the capacity to utilize its comparative advantage to prosper in the global economy through international trade. In plain terms, the WTO prevents countries from playing politics and restricting trade because of disagreement over policies in other areas.
The WTO prevents trade coercion and requires members not to discriminate among trading partners. The WTO respects the principle of national sovereignty. When one member of the WTO imposes trade restrictions on another unless the latter changes its environmental policies, then the first country is coercing the second and transgressing its national sovereignty.
The WTO gives members significant latitude to restrict trade where it endangers the environment. WTO rules allow countries to use quarantine measures to restrict imports. But the WTO limits that right. Members can only so act if the health and safety of people or plants or animals is at risk. Measures must also reflect recognized standards or be scientifically based. Members can also impose technical standards which restrict imports to protect the environment. That right is also limited. The standards may not create unnecessary obstacles to trade or be more restrictive than necessary.
What NGOs do not like is that the WTO does not allow trade to be restricted at whim or on the basis of political rather than scientific judgments. Most Green environmental groups want environmental officials to have broad rights to act to protect the environment.
There is nothing to stop countries deciding to create such rights in international law. It is done all the time through international treaties. If enough countries think such a course of action is desirable, they come together, draft a convention which sets out measures to achieve its objectives, sign the treaty and then enact measures in national law which oblige citizens to act in certain ways. It is the traditional way of making international law. Common goals are achieved by enacting domestic measures.
Green organizations evidently prefer that powerful countries should instead force other countries to change domestic environmental policies under threat of trade coercion. That is why they want WTO rules changed. There is widespread opposition to this in the WTO. Only the EU and Switzerland support the sort of changes to the WTO proposed by NGOs.
The rise of environmental trade coercion
While members of the WTO remain unconvinced of the case for environmental trade coercion, there has been a steady rise in the introduction of such measures which seem to disregard the principles of avoiding coercion and respecting national sovereignty.
As part of a joint Australian, Thai and Chinese research project on the trade and environment priorities of developing economy members of the organization for Asian and Pacific Economic Cooperation (APEC) which was started in 2003, research was undertaken on the incidence of environmental trade barriers.
This report sets out the results of that research. In the past decade, over forty new international barriers to trade based on environmental grounds have been introduced. Over twenty more are in prospect. There may be more. No official body is monitoring the incidence of these measures.
The threat to prosperity through trade
These measures are being introduced without regard to their impact on trade or the undesirability of using trade coercion to enforce non-trade goals. No consideration is being given to pursuing these environmental goals in a less confrontational manner. Trade from developing countries is being restricted. This study addresses the impact on economies in the Asian and Pacific region. Evidently the same barriers restrict trade from other regions of the world.
Most of the barriers are being erected by the European Union. Green NGOs call regularly for assessment of the environmental impact of trade agreements. They never propose that the trade effects of environmental measures should be assessed before they are imposed.
New WTO obligations required
WTO rules need to be strengthened to oblige members to assess the economic and trade impact of environmental trade barriers before they are enacted. Obligations to consult members on such measures need to be strengthened and penalties for non-compliance increased.
Action in the United Nations Environment Program (UNEP)
The only effective way to take international action to improve the environment and respect the national sovereignty of countries is to negotiate international environmental treaties which do not have provisions that impose trade sanctions. Members of the WTO should adopt a principle that before members enact coercive trade measures to protect the environment, they also raise the issues of concern in UNEP to consider collaborative and consensual options for international action and to consult with the WTO to ensure that trade coercion is averted and that measures do not undermine fundamental precepts of the WTO.