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Trade and environmental protection within the World Trade Organization framework Zhu, Yun 2002

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TRADE AND ENVIRONMENTAL PROTECTION WITHIN THE WORLD TRADE ORGANIZATION FRAMEWORK by YUN ZHU L L . B . , Fu Dan University, 1997 A T H E S I S S U B M I T T E D IN P A R T I A L F U L T I L M E N T OF T H E  REQUIREMENTS  FOR T H E D E G R E E OF T H E MASTER  OF L A W S in  T H E F A C U L T Y OF G R A D U A T E STUDIES F a c u l t y of  Law  We accept this thesis as conforming to the required standard  T H E U N I V E R S I T Y OF B R I T I S H C O L U M B I A March 2002 © Y U N Z H U , 2002  In  presenting  degree freely  at  this  the  available  copying  of  department publication  of  in  partial  fulfilment  University  of  British  Columbia,  for  this or  thesis  reference  thesis by  this  for  his thesis  and  scholarly  or for  her  The University of British Columbia Vancouver, Canada  (2/88)  I  I further  purposes  gain  the  shall  requirements  agree  that  agree  may  representatives.  financial  permission.  DE-6  study.  of  be  It not  is be  that  the  for  Library  an shall  permission for  granted  by  understood allowed  the  advanced make  extensive  head  that  without  it  of  copying my  my or  written  11  Abstract  The issue of tensions between market access and environmental protection is relatively new focus in the domain of international trade. This article suggests solutions to this conflict within the WTO framework so that while pursuing the goals of free trade and promoting development of economy the objective of 'sustainable development' can be achieved at the same time. This article includes an introduction, the main body (three chapters) and conclusion. j The Introduction starts by describing the development of the regimes of market access and environmental protection; it goes on to analyze the causes of the tension between the two and finally emphasizes the importance of resolving this tension within the World Trade Organization (WTO) framework. Chapter One elaborates on the existing principles, regulations and exception in the WTO framework and states that these regulations cannot live up to expectations of the developed countries and environmentalists. The conclusion is that it is impractical for the developing countries to avoid this issue. Chapter Two starts with an inquiry into the crux of tensions between free trade and environmental protection. It goes on to enlist different proposals by academic scholars and compare these principles' application in European Community Treaty (EC) and North American Free Trade Agreement (NAFTA), hoping to resolve the tensions between market access and environmental protection. Chapter Three summarizes academic proposals and experiences of EC and NAFTA and discusses possible practical resolutions within WTO including both short-term measures and long-term ones. This chapter concludes by suggesting possible courses of action for China that could allow it to sustain the 'green challenge.' The Conclusion discusses the objectivity and unavoidability of the tensions between the free trade and the environment protection and reinforces the importance of resolving the problem within the WTO framework as well as the necessity of amending related regulations and harmonizing environmental standards of the WTO members.  iii  TABLE OF CONTENTS  ABSTRACT  1i  ACKNOWLEDGEMENT CHAPTER ONE  ,  iv  INTRODUCTION, M E T H O D O L O G Y AND L I T E R A T U R E  REVIEW  1  I.  INTRODUCTION  1  II.  G L O B A L I Z A T I O N — T H E C O N T E X T OF T H E CONFLICTS.;...  6  III.  M E T H O D O L O G Y — ' L A W A N D ECONOMICS'  IV.  LITERATURE R E V I E W  8 16  CHAPTER TWO REGULATIONS ON M A R K E T ACCESS AND ENVIRONMENTAL PROTECTION WITHIN T H E F R A M E W O R K O F W T O AGREEMENT I.  24  BASIC G A T T PRINCIPLES R E L A T I N G TO M A R K E T ACCESS A N D E N V I R O N M E N T A L  PROTECTION II.  25  G A T T EXCEPTIONS R E L A T I N G TO T H E ISSUE OF M A R K E T A C C E S S A N D  E N V I R O N M E N T A L PROTECTION III.  31  W T O — A S S O C I A T E D A G R E E M E N T S A P P L I C A B L E TO T H E ISSUE OF M A R K E T  A C C E S S A N D E N V I R O N M E N T A L PROTECTION IV.  43  T H E E V A L U A T I O N OF R E L A T E D R E G U L A T I O N S ON M A R K E T A C C E S S A N D  E N V I R O N M E N T A L PROTECTION WITHIN T H E W T O F R A M E W O R K  53  C H A P T E R T H R E E T H E ESSENCE O F TENSIONS B E T W E E N M A R K E T ACCESS AND ENVIRONMENTAL PROTECTION, AND DIFFERENT PROPOSALS FOR T H E M I.  59  T H E E S S E N C E OF THE TENSIONS BETWEEN M A R K E T ACCESS A N D E N V I R O N M E N T A L  PROTECTION II.  59  DIFFERENT RESPONSES TO B A L A N C I N G M A R K E T ACCESS A N D E N V I R O N M E N T A L  PROTECTION  68  C H A P T E R FOUR SUGGESTIONS FOR RESOLVING T H E TENSIONS B E T W E E N M A R K E T ACCESS AND ENVIRONMENTAL PROTECTION; IMPLICATIONS FOR CHINA I.  92  R E S O L V I N G , STEP B Y STEP, T H E TENSIONS BETWEEN M A R K E T A C C E S S A N D  E N V I R O N M E N T A L PROTECTION II.  92  C H I N A ' S C U R R E N T CIRCUMSTANCES OF M A R K E T ACCESS A N D E N V I R O N M E N T A L  PROTECTION A N D ITS L E G A L STRATEGIES C H A P T E R FIVE CONCLUSION BIBLIOGRAPHY  109 120 122  iv  Acknowledgement  I am greatly indebted to Professor Pitman B. Potter, an employer and supervisor. Without his constant support, encouragement, and supervision this thesis would not have been possible. I would also like to thank my second reader, Professor Bob Paterson, whose suggestions helped shape this thesis into its being.  The contribution made by my family is immeasurable. My father, mother and sister, who by word and deed, gave me inspiration and encouragement during the many long months of research and writing. Now that this thesis is finished, it is theirs as much as it is mine.  1  Chapter One  Introduction, Methodology and Literature Review  I. Introduction  Free trade supporters believe that international trade produces numerous mutually beneficial results. Free international trade increases consumer choices and results in less 1  expensive manufacturing inputs and consumer goods, as well as potentially higher economic returns on investments for the manufacturers of goods and services. Open markets also increase social advancement, since different cultures' concepts and policies are exchanged and information on technological advances is spread more rapidly. Such *  3  *  change allows societies to share common developments and experiences. By increasing contact and communication among members of diverse culture groups and establishing increased wealth based on this new 'interdependence' trade can also facilitate inter-social peace and harmony. Triggered by the international problems of the 1930s and World War II, the considerations of free trade and inter-social peace paved the way for the "modern  Daniel C. Esty, " Environmental Governance at the WTO: Outreach for the Civil Society" in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 97 at 97 [hereafter Esty, Environmental Governance at the WTO]. Jackson, John Howard, World Trade and the Law of GATT, (Indianapolis, Bobbs-Merill 1969) at 9-10. Ibid. 1  2  3  2  international trade regime." The General Agreement on Trade and Tariff (GATT) 4  structure was to become the basis for international corporations' pursuit of trade liberalization.  Over the last several decades, people have been attaching increasing importance to the protection of human living conditions and natural resources. Many nations have developed extensive programs to protect the environment. These include: 5  Environmental product standards, especially those which formulate environmental characteristics that products sold in the domestic market must meet; Regulations laying down process and polluting standards as well as the production methods to which products must conform; Import and export embargoes on hazardous or harmful products that have negative effects on public health; Export restrictions that are imposed on imports to preserve the natural resources and that adhere to the policy goal of sustainable development; and Packaging and eco-labeling requirements that stipulate environmental feature to which the product sold in the domestic market must match up.  6  At the same time, as nations all over the world are increasingly realizing the transboundary nature of environmental problems, international corporations are being  General Agreement on Tariffs and Trade, Oct.30, 1947, 55. U.N.T.S. 188. The GATT, which embodies the result at the Uruguay Round global trade negotiations was recently subsumed by the World Trade Organization [hereafter GATT Agreement]. See Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Apr. 15, 1994, 33 I.L.M. 1125. GATT 1994 is another agreement established at the Uruguay Round. GATT in this article refers to GATT 1994 unless otherwise mentioned. Daniel Esty and Demien Geradin, "Market Access, Competitiveness, and Harmonization: Environmental Protection in Regional Trade Agreements" (1997) 21 Harvard Environmental L. Rev. pp.265-266 [hereafter Esty and Geradin, Environmental Protection in Regional Trade Agreement] Vinod Rege, "GATT law and Environment-Related Issues Affecting the Trade of Developing Countries" (1994) 3 Journal of World Trade No.3 95 [hereafter Rege, GATT law and Environment-Related Issues]. 4  5  6  3 strengthened. This can be attested to by numerous multilateral environmental 7  agreements reached in the recent decades. These multilateral environmental agreements include treaties that were established for the purpose of restricting the emission of chlorofluorocarbons (CFCs) and other ozone-depleting substances (ODS) that might damage the ozone layer; treaties that aims at controlling wastes' transboundary transportation and disposal; treaties that has the purpose of protecting endangered 9  species of wild fauna and flora. Overall, domestic or multilateral measures range in 10  purpose from regulating industrial production processes to disposal measures for waste and regulations for the environmental quality of consumer and industrial products.  For most of the past five decades free trade developments and environmental protection initiatives have evolved separately. Currently, however, their developmental routes 11  increasingly collide. The first of such disputes was between Mexico and the U.S. concerning the meaning of terminology applied to the US Marine Mammal Protection Act. The Act permitted the U.S. to impose trade sanctions on imported tuna unilaterally 12  to protect dolphins threatened by foreign fishing practices. Under the Act, countries Arthur E. Appleton, "Environmental Labeling Schemes," in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 195 at 203[hereafter Appleton, Environmental Labeling Schemes]. Montreal Protocol on Substances that Deplete the Ozone Layer, Sept. 16, 1987, 26 I.L.M. 1550 (entered into force on Jan.l, 1989)[hereafter the Montreal Protocol]. Also see Magda Shahin, "Trade and Environment: How Real is the Debate?" in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 35 at 56 [hereafter Shahin, How Real is the Debate?] Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposals, 22 March 1989, 28 I.L.M. 657 (entered into force on May, 1992) [hereafter the Basel Convention]. United Nations Convention on International Trade in Endangered Species of Wild Fauna and Flora, Mar. 3, 1973, 12 I.L.M. 1085 [hereafter the CITES]. " Esty and Geradin, Environmental Protection in Regional Trade Agreement, supra note 5 at 266. See 16 U.S.C. SEC 1361 (1994) At first, the MMPA was enacted to reduce the number of dolphins killed by the United States tuna fleet in the eastern tropical Pacific Ocean. In that area, yellow tuna swim beneath schools of dolphins. As a result, fishing vessels frequently set their purse seine nets on the dolphins in order to catch tuna. See 134 Cong. Rec. 31, 093, 31, 101-03 (1988). 7  8  9  10  12  4 seeking to export tuna to the U.S. had to show that they had a tuna fishing regulatory program comparable to that of the U.S. and that the rate of dolphins incidentally picked up by their tunafishingboats was not over 1.25 times that of the US. A 1991 GATT dispute resolution panel decision (known as the Tuna/Dolphin I case) declared the Act to be in violation of GATT. The panel found that the measures in the Act were not 13  'necessary' for the protection of animal life within the reservation of Article XX (b).  14  The decision infuriated American environmentalists and put GATT on the front lines of environmental battlefield. In the following years, there occurred such disputes as the "Tuna Disputes II European Union - the United States," the "Clear Air Act Dispute Venezuela and Brazil - the United States" and the "Shrimp and Turtle Disputes Malaysia and other four countries - the United States."  From the free trade supporters' point of view, the continuing reduction of the tariff levels left nations no other choice but to resort to non-tariff trade barriers in order to protect internal industries and markets. Because of this, free trade supporters feel anxious that trade protectionists who attempt to establish 'green barriers' to the free flow of goods may utilize environmental regulations and standards, thus preventing developing countries from deriving greater benefits from multilateral trade negotiations. Free trade supporters are also concerned that the increased use of restrictive trade measures related to environmental protection by the Multilateral Environmental Agreements (MEA) would conflict with the free trade obligations established by WTO and imposed on its members, thus nullifying the free trade objective. In contrast, environmentalists are concerned that See Daniel C. Esty, Greening the GATT: Trade, Environment, and the Future (Washington DC: Institute for International Economics, 1994) pp.268-269 [hereafter Esty, Greening the GATT]. See Chapter II for further discussion of this Article. 13  14  5  some legal environmental measures aiming at the protection the human living environment may be denounced and their enforcement banned as trade barriers by GATT. They agree that conditions set by GATT for enforcing legal environmental standards are too harsh. They criticize that the WTO's promotion of 'sustainable development' is insufficient after the Uruguay Round. These environmental groups are more frequently found in developed countries and their pressure on policy and decision-making is beyond anyone's assessment. For example, United States and the European Community have 15  proposed that environmental protection be one of the issues of the Millennium Round Negotiation of WTO. The United States government declared that, if no environmental 16  protection agreements were reached in the new negotiation round, it would be prepared to take unilateral action at any cost. It is thus impossible for WTO to avoid addressing this 17  issue. And it can be safely predicted that, if WTO do not take action in response to this 18  issue, its standing as an international economic administrator would be jeopardized.  1 9  Veena Jha and Rene Vossenaar, " Breaking the Deadlock: A Positive Agenda on Trade, Environment and Development?" in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 65 at 71 [hereafter Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development]. Zhang, Xiangchen, "Uruguay Round and the New Multilateral Trade Negotiation" (Sept. 24, 1999) International Business. Also see Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at pp.71-72. Alan Charles and Paul E. Hagen, "The Convergence of Trade and Environmental Law" (1995) 3 8-Fall Natural Resources & Law at 1. See Shahin, How Real is the Debate? supra note 8, at 60. Also see Gary P. Samposon and W. Bradnee Chambers, " Introduction and Overview" in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 1 at 1 [hereafter Samposon Chambers, Introduction and Overview]. Rubens Ricupero, "Trade and Environment: Strengthening Complementarities and Reducing Conflicts" in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 23 at 28 [hereafter Ricupero, Strengthening Complementarities and Reducing Conflicts]. Esty, Environmental Governance at the WTO, supra note 1, at pp.113-114. Also see David K. Schorr, "Fishery Subsidies and the WTO" in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 143 at 159 [hereafter Schorr, Fishery Subsidies and the WTO]. 15  16  17  18  19  6 Based on above considerations, this paper discusses regulations on environmental protection and free trade within the WTO framework and exposes the tensions between market access and environmental protection.  II. Globalization—the Context of the Conflicts  Tensions between international trade and the environment occur in the context where economic globalization prevails. The process of globalization intensifies the conflicts between market access and the environment by bringing them into a wider and deeper conflict. This, on one hand, may intensify the conflicts between market access and the environment and, on the other, may provide the solution to this problem, since it is in this context that policies for sustainable development are designed and implemented.  20  Economic globalization is an undeniable phenomenon in the modern economy. Economic globalization is defined by the IMF as,  the growing economic interdependence of countries world-wide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology. 21  Chris Chung and Brendan Gillespie, "Globalization and the Environment: New Challenges for the Public and Private Sectors" in OECD ed., Globalization and the Environment: Perspectives from OECD and Dynamic Non-member Economics (OECD 1997) 7 at 8. Tom Jones, "Economic Globalization and the Environment: an Overview of the Linkages" in OECD ed., Globalization and the Environment: Perspectives from OECD and Dynamic Non-member Economics (OECD 1997) 17 at 17. 21  7 Economic globalization encompasses more than trade, investment and other types of capital flow. As the process of globalization expands, most components of social economic activities become involved. As a result, a context is created in which all economic and social components reinforce, cripple, intersect and interfere with one another. It is in this process that trade and the environment are brought together. Economic globalization is triggered by several types of liberalizations, which include trade liberalization, investment liberalization and capital flow liberalization and among which trade liberalization plays the primary role. This phenomenon enhances the economic efficiency and allows the world's output to expand, in the form of economic growth, increasing more industrial pollution and the consumption of natural resources.  Economic globalization also makes possible greater communication between different countries, thus facilitating the proliferation of new types of international trade. Some of these types of trade could potentially impose a heavy burden on the environment.  Yet, economic globalization itself may provide solutions to help solve the conflict between trade and the environment. For example, economic globalization may lead to an increasing emphasis on new types of technology that might be either directly intended for pollution problem-solving or for environmentally-friendly production processes. There is empirical evidence in the OECD countries that businessfirmsare realizing more the economic and environmental benefits of employing environmentally friendly technology. These examples show that globalization also increases a preference for environmentally friendly production and process technologies.  8  There is also some indication that as the economic globalization becomes increasingly more intensive and environmental norms expand, more people are beginning to accept the fact that international environment is degrading. With this, eventually will come the tendency towards a gradual improvement of environmental consciousness.  III. Methodology—'Law and Economics'  1. What is 'law and economies'?  'Law and economics' is a method for studying law that is differentfromthe economic 23  analysis of law.  Instead, 'law and economics' examine "alternative social arrangements  while exploring the consequences that such alternatives have on the law and economics.  •,,24  The 'law and economics' methodology compares and contrasts different social arrangements across political and economic spectra. It not only analyzes the efficiency of having numerous legal rules in a given society, but also investigates how changing a society's current social, political and social arrangements will affect certain of its legal and social values and principles.  The economic analysis of law, as defined by Robin Paul Malloy is to evaluate the descriptive consequences of a legal rule and to discuss whether it is desirable to have that rule or a change within a given social framework. See Robin Paul Malloy, Law and Economics: A Comparative Approach to Theory and Practices. 2 3  9  The 'law and economics' methodology belongs to a comparative study that compares alternative legal arrangements, while its political ideology can be summarized as "where we are going with the evolution of our law and our society". In other words, the salient 25  function of 'law and economics' is that it can help us to find out what our core values should be when considering different combination of arrangements. The reason for this is that it tests not only legal rules and their economic efficiency, but also the political, economic and historical context of the legal arrangements. This aim of 'law and economics' cannot be attained by the economic analysis of law. As discussed above, what the economic analysis of legal arrangement can do is to make an evaluation of the efficiency of certain legal arrangements within a given social and political context. Such a methodology is too restrictive for ascertaining the truth concerning the connections and conflicts between trade and the environment.  In his book The Economics of Welfare, Pigou concludes that when there is a divergence between the private and social products of a factory, the factory should then be liable for the damage caused to those injured by pollution produced by it. The factory should either be imposed a pollution tax that is equivalent in monetary terms to the damage it caused, or even be excluded from residential districts.  26  Ibid. R.H. Coase, "The Problem of Social Cost" (1960) Volume III October The Journal of Law and Economics 1 at 1. In this page, Coase briefly sums up Pigou's ideas and conclusions in The Economics of We//a/-e[hereafter Coase, The Problem of Social Cost].  25  2 6  10  Coase bitterly criticizes this methodology. He clearly demonstrates that this traditional approach will "obscure the nature of the choice that has to be made." Coase further states that  The question is commonly thought of as one in which A inflicts harm on B and what has to be decided is: how should we restrain A? But this is wrong. We are dealing with a problem of a reciprocal nature. To avoid the harm to B would inflict harm on A. The real question that has to be decided is: should A be allowed to harm B or should B be allowed to harm A? The Problem is to avoid the most serious harm. 28  What Coase asks is to compare the value of different legal arrangements. Only when one can decide that the margin of the re-arrangement is greater than the original arrangement, can we change the former. As he sums up in this article,  The problem which we face in dealing with actions which have harmful effects is not simply one of restraining those responsible for them. That has to be decided is whether the gain from preventing the harm is greater than the loss which would be suffered elsewhere as a result of stopping the action which produces the harm. 29  Based on this and other arguments in his article, Coase recommends economists to:  Cease the analysis of divergences between private and social products. He suggests that they compare the total product yielded by using alterative social arrangements. On one hand, he clearly suggests that" [t]he world must have factories, smelters, oil refineries, noisy machinery and blasting, even at the expenses of some inconvenience to those in the  27  28  29  Ibid, at 2. Ibid. Ibid, at 27.  11 vicinity and the plaintiff may be required to accept some not unreasonable discomfort for the general good." On the other hand, he reminds the reader that, " the choice between different social arrangements for the solution of economic problems should be carried out in broader terms than this and that the total effect of these arrangements in all spheres of life should be taken into account."  37  Cease the analysis in terms of a comparison between a state of laissez faire and an ideal world. He calls for economists to concentrate on analyzing the situation that actually exists, on examining the effects of a proposed policy change and attempting to decide whether the new situation would be, in total, better or worse than the original one.  32  Thinking about the 'factors of production', according to Coase, should be as of the right to perform certain actions rather than physical entities that businesspeople acquire for their use.  3 3  Coase's theorem is critical to this thesis in that he considers the pollution problem a reciprocal one. That is, he proposes not to restrain the polluter itself but to consider the value of alternatives to manufacturing arrangements. Secondly, he continuously reminds the economist that production is important. In fact, what Coase means here is that 34  economic growth is important because it relates to human living standards. He does not neglect certain essential social costs, however. This is why he asks economists to take 30  31  32  33  Ibid., at 27, 28. /&</., at 43. Ibid. Ibid., at 44. Coase's article aims at economists but this point may have much meaning to environmentalists.  3 4  12  into account alternative arrangements from a broader ethical perspective. It is here that he reminds them not to omit taking vital social welfare aspects into consideration when considering alternative approaches. Potter's explanation of Warner's ideas, as expressed in his article, clarifies how such social costs relate to efficiency. Time frame is 35  important as well. For example, one might incur higher costs in the future if one excessively harms the environment now.  36  2. Why use the 'law and economics' approach?  The conflict between the market access, or free trade and the environment is actually a problem of conflict between economic efficiency and social costs. The following 37  paragraphs will illustrate that efficiency is the cornerstone of international trade and economic growth.  It was Torrens whofirsthit upon the principle of comparative advantage. Ricardo 35  presented a complete exposition of the comparative cost principle. The soul of this 39  theory is as follows: "[I]f a foreign country supply us with a commodity cheaper than we ourselves can make it," it would be more advantageous to purchase this item than to 40  Pitman B. Potter, "Property: Questioning Efficiency, Liberty and Imperialism," in Nicholas Mercuro and Warren J. Samuels eds., The Fundamental Interrelationship between Government and Property (Stanford, Conn: JAI Press, 1999) 191 at 199 [hereafter Potter, Property: Questioning Efficiency, Liberty and Imperialism]. 1 will detail this argument in the latter part of this chapter. Economic efficiency is the key to economic growth. J. Borkakoti, International Trade: Causes and Consequences An Empirical and Theoretical Text (Hongkong: Macmillan Business, 1996) at 35. Ibid. Ibid. At 36, Borkakoti recited Ricardo's study on the comparative advantage. 3 5  36  3 7  3 8  39  40  13 manufacture it internally. To put it more simply, international trade is economically efficient.  Brown and Hogendorn propose, from another perspective, that international trade is essential to economic growth/ They note the fact that international trade brings about 7  specialization, which in turn brings about scaling, industrial concentration, experience and product specification. As a result, the average product cost declines/ They also 2  devise an equation to show that if international trade is prevented by tariffs or other nontariff barriers, the average cost of products rises immediately.  One can hereby conclude that economic efficiency is not only the source of international trade but also the dynamics behind its expansion. Tariff barriers, quotas and other types of non-tariff barriers slow the advancement towards efficiency and eventually hinder economic growth, which is not a desirable result for most countries. This can explain the collapse of the world's economy in the 1930s: when severe restrictions prevailed, the prospects of the world's economy turned very gloomy/ Thus, even while the Great War 5  was still in progress, governments realized that strenuous efforts to reduce trade barriers would be needed to ensure the proper functioning of the international economy in the Post-war years/* The GATT regime is the result of governmental negotiations to ensure  Wilson B. Brown and Jan S. Hogendorn, International Economics in the Age of Gblobalization (Canada Broadview Press 1985) at 153. Ibid. A.G. Kenwood And A.L. Lougheed, The Growth of the International Economy 1820-2000: An Introduction Text at 237  4 1  42  4 3  14 that the transfer of goodsfromone country to another could take place largely unaffected by restrictions on trade.  Now one must consider how the environment relates to the concept of 'social cost'. Coase does not explicitly define social cost in his article, The Problem of Social Cost. He provides an example: if a property owner harms his/her neighboring properties, then he/she may incur social costs/ Potter abstracts Coase's example further and describes 5  'social cost' as a general harm to community's interests. Such harm could be intangible and could occur at some time in the future of the original cause of harm, in other word, such harm could have negative effect at a point not immediately at the time the damage 46  occurs.  The following example provides a clear illustration of the concept of 'social cost':  You buy something in the production of which air is polluted. The producer does not pay for that. It is not part of his cost; so neither is it part of the price you pay. The cost of pollution is a cost to society in general. It is a social cost. 4  Moreover, as we have previously indicated before, Potter's 'time frame' concept is quite useful/ If without this concept, international trade would become a public good rather 5  than a possible cause of social cost/  9  See Coase, The Problem of Social Cost, supra note 26, atl. See Potter, Property: Questioning Efficiency, Liberty and Imperialism, supra note 35, at 199. Bert Hamminga, "Social Cost", online: <http://www.mindphiles.com/floor/teaching/socicost.html> (date accessed 28 July 2001). See Potter, Property: Questioning Efficiency, Liberty and Imperialism, supra note 35, at 199. The concept of "time frame is also discussed by Tom Jones. See also Tom Jones, "Economic Globalization and 4 6  4 7  4 8  15  As defined by Sibert, environmental sources can be divided into two categories. The first type concerns public good, and is shared the public. For example, clean environment benefits all equally. Individuals cannot be excluded from benefiting from it. Activities 50  5/  that harm environmental quality will certainly result in social costs. For instance, overuse of refrigerators and air-conditioners will generate excess CFC and CO2, which will damage the atmosphere and eventually lead to the 'excessive warming' of the Earth. As a result of global warming, an increased incidence of floods, droughts and other environmental problems will occur.  The second type of environment, relating to property, can also be harmed by certain 52  activities bringing about social costs. This will affect not only property but also society in general. Since a 'timeframe'is involved, such harms belong to the environmental resources discussed above. This is because property is shared by continuous future generations. If the current generation emits and accumulates more pollutants than can 53  be broken down in the environment within a short period of time, the quality of the environment inherited by the future generations will be negatively affected. Thus, 54  the Environment: an Overview of the Linkages" in OECD ed., Globalization and the Environment: Perspectives from OECD and Dynamic Non-member Economics (OECD 1997) 17 at 17. Djamester Simarmata, "Free Trade and the Global Environment as International Public Goods", in OECD ed., Globalization and the Environment: Perspectives from OECD and Dynamic Non-member Economics (OECD 1997) 17 at 17. Horst Siebert, Economics of the Environment Theory and Policy Fifth, Revised Edition (Germany: Springer 1998) Chapter 5 at 59. Ibid Ibid., at 62. The environment was used as common property and is now used as property, as defined by Sibert, " If the environment is used as a common-property resource (receptacle of waste, provider of natural recourses such as water and fish) and if this resource becomes scarce, the characteristic of the common property resource has to be changed by introducing scarcity prices or other allocation mechanisms." Ibid., Chapter 15 at 239. Ibid. 4 9  5 0  51  52  h  54  16 activities harming either the quality of the environment or natural resources will incur social cost.  In recent years, the U.S. has seen an increased shift from free trade to fair trade. As this 55  tendency becomes more prevailing, international trade law attracts increased attention from 'law and economic' scholars, who focus their research on the field of remedial international trade laws, such as the safeguard law.  5 6  Another reason for resorting to the  'law and economics' approach is that WTO is unable to settle disputes relating to the issue of free trade and environmental protection in a satisfactory way.  57  IV. Literature Review  Recent increased concerns for sustainable development have generated many questions about the relationship between market access and the environment. Most of these questions relate to the impact of environmental regulations on free trade and their compatibility with GATT regulations. As the result, the current GATT policy becomes an issue of debate. The question of whether the present GATT rules efficient enough to regulate the conflicts betweenfreetrade and environmental protection inevitably arises. Other questions include: How can GATT properly pursue the sustainable development goal while ensuring environmental objectives are not merely guises for trade barriers?  Michael J. Trebilock, "Law and Economics" (1993) Dalhousie L. J. 16 No.2 360 at 360. Ibid., at 361. This is one of the main arguments of this thesis, and I will discuss it thoroughly in Chapter One.  17 What should the GATT do to balance the two fundamental values? What should developing countries do once the GATT has changed its current rules?  The following of this paper surveys current literature on these major subjects of debate.  1. Present GATT rules relating to environmental protection  Most earlier studies of market access and environmental protection focuses on GATT Article XI. Since during this period of time— the late 80s and early 90s of the last century—most environmental protection trade restrictive measures were in the form of quantitative restrictions. McDorman (1991), for example, reviews several disputes between the U.S. and other countries and concludes that the U.S. is precluded by the GATT Article XI from import prohibitions on fish unless the prohibition fits a recognized eg  exception.  Baker (1992) also examined several disputes between the U.S. and Canada,  as well as those between Mexico and Thailand on import restrictions that are illegal under GATT Article X I .  59  Almost all published research on the subject of free trade and the environment refers to Article XX of the GATT as a general exception that might be used by members to legitimate their imposition onfishimports, (see, for example, Charnovitz (1991), Caldwell (1994), Steinberg (1997), Schoebaum (1997), Nissen (1997) and McCrory  Ted L. McDorman, "The GATT Consistency of U.S. Fish Import Embargoes to Stop Driftnet Fishing and Save Whales, Dolphins and Turtles" (1991) Geo. Wash. J. Int'l L. & Econ. 24 at 24. Besty Baker, "Protection, Not Protectionism: Multilateral Environmental Agreements and the GATT" (1993) 26 Vanderbilt Journal of Transitional Law 437 at 453-467. 5 8  5 9  18 (2000)). Among them, the Charnovitz's study of GATT Article XX exception is the most complete. He analyzes each subsection of this article, their drafting history, their meaning and cases relating to them. In hisfinalstatement, he comes to the conclusion that Article XX was designed to encompass environmental measures. However, the GATT dispute settlement body tends to interpret this article too narrowly. Charnovitz is thus cautious of the idea of 'greening the GATT' and opposed to sacrificing some economic benefits for ecological imperatives. The best way to act, he suggests, is to judge the legitimacy of non-tariff barriers under the banner of environmental issues.  OECD studies (1994) have analyzed the theoretical framework of the GATT and have 60  come to the conclusion that all of GATT's basic principles are applicable to interaction between free trade and environmental protection. These principles include the Most Favored Nation Principle, the National Treatment Principle, etc. Some studies include these basic principles in their analysis of current environmental protection related GATT regulations.  61  2. How can using environmental regulations as a guise for protectionism be avoided?  Pestieau and Henry (1974) define non-tariff barriers as, "commercial measures designed primarily to protect import-competing suppliers from foreign competition" and,  "Trade Principles and Concepts," Organization for Economic Co-operation and Development, Paris, 1995, online: OECD Homepage <http://www.oecd.org/oecd/pages/home/dislaygeneral/0,3380, EN-documents24-nondirectorate-no-10-24, FF.html> [hereafter Trade Principles and Concepts]. For example, Steve Charnovitz, "Exploring the Environmental Exceptions in GATT Article XX" (1997) J. World T. and Richard H. Steinberg, "Trade—Environmental Negotiations in the EU, NAFTA and WTO: Regional Trajectories of Rule Development" (1997) 91 A. J. I. L. 60  61  19 "measures designed to deal with problems not directly related to commercial-policy questions but which are from time to time employed fro trade restrictive ends."  6 2  Pearson  (1982) goes further to suggest that there are some circumstances under which environmental standards may intentionally or unintentionally become non-tariff barriers. These circumstances are a) when the regulations are designed as barriers; and b) when the differences in regulations between countries become barriers.  Most free trade supporters see recent demands that trade regulations comply with environmental standards as motivated by the desire to protect job security at home from increased competition from the Third World. See, for example, Howse and Trebilock , 63  Deardroff(1994) and Hoda(1994). 64  Whether environmental regulations are used by the advanced countries as non-tariff barriers is a source of debate between the South (developing countries) and the North (developed countries). Runnalls (1998) called for the Northern countries to "dance" properly and to engage the southern countries in the 'greening revolution'. Markandya (1999) finds that pressures coming from upgrading environmental regulations by the developed countries are hurting exports of the developing countries and, in some situations, significantly so. Vossenaar and Jha (1999) examine exports by several Southern countries carefully to uncover persuasive evidence of this. Some scholars and  Caroline Pestieau and Jacques Henry, Non—Tariff Trade Barriers as a Problem in International Development (Montreal: Canadian Economic Policy Committee, 1972). Robert Howse and Michael J. Trebilock, "The Free Trade - Fair Trade Debate: Trade, Labor and the Environment", in Jagdeep S. Bhandari and Alan O. Sykes ed., Economic Dimensions in International Law: Comparative and Empirical Perspectives, at Chapter 5. Alan V. Deardorff, Market Access, in The New World Trading System, (OECD: Paris 1995).  6 3  6 4  20  regional organizations, most of them environmentalists and citizens of developed countries, argue that little evidence is found to support the claims of free traders and the developing countries (see, for example, Esty (1994)).  3. What should the World Trade Organization do to balance trade with the environmental protection?  Different scholars have suggested varied solutions to this potential conflict, all of them advocating for sustainable development and putting forward academic suggestions under its banner. While Charnovitz (1991) examines, albeit unspecifically, Article XX of the GATT, he actually prefers to use the dispute settlement system to balance benefits between trade and environmental protection imperatives. He thinks GATT Article XX was designed to encompass environmental protection as one of the legal exceptions to free trade obligations of members and that the dispute settlement body should not interpret this article too narrowly.  Coldwell (1994) suggests solving the conflict within the current WTO framework. He refers to Article XXV of the GATT Waiver, which he insists is an effective way to resolve the current potential of conflicts between environmentally related trade measures and the GATT framework. In the future, he says, this can lead to future reform. However, he realizes that this is not a replacement for meaningful long-term environmental reform to the GATT. He suggests that this reform should include changes in the following areas:  21 more transparent institutions, NGO participation and legal countervailing duties against environmentally unsound imported products.  Nissen (1997) supports a total reform of Article XX of the GATT. She proposes that the GATT add another subsection to Article XX and an annex to this subsection to specify the type of environmentally related trade measures that should be permissible under the GATT. However, she does not suggest any mechanism of specifying how GATT should do to implement those measures that would be concluded after this amendment.  Esty and Geradin (1997) thoroughly examine the conflicts between free trade and environmental protection and divide those conflicts into two categories: the market access conflict (which I consider as a Southern problem), and the competitiveness conflict (which I consider as a Northern problem). They suggest a harmonization and improvement of the GATT dispute settlement process as solutions to this conflict. However, it is obvious from their argument that harmonization is too expensive an approach to implement, especially for the developing countries. As far as the Judicial Bounding approach is concerned, the two scholars are not able to specify clearly an approach that the GATT can follow.  Richards and McCrory (2000), after carefully reviewing relevant GATT dispute history and analyzing the environmentally related trade measures, which are legal under the current GATT framework, vaguely propose that the conflict should be mediated through  22 multilateral negotiation. However, they are not able to put forward a concrete proposal as to how to carry out this multilateral method.  4. What should developing countries do to face the 'green challenge'?  Runnalls (1998) states that developing countries are not opposed to improving their environmental protection levels. However, the governments of these countries face more critical problems, such as poverty and lack of education. Moreover, the South has lost billions in revenue because of tariff and non-tariff barriers in the North. Thus, the South speculates that the motives of the North are those of initiating environmental protection issues after the Uruguay Round.  The tables of the APEC report (1998) clearly demonstrate that environmental protection related to trade measures in the U.S., Japan and the E.U. affects 24 types of exports. Most of these are major export products of the developing countries. This report also concludes that environmental protection related trade measures pose some clear barriers to exports by the developing countries. Although they suggest that developing countries improve environmental standards of their products, this will not be an easy task to complete in a short period of time.  Qin (1999) proposes that China, as a rapidly developing country, faces both the difficulties and the opportunities in the 'green era.' The difficulties include the fact that higher environmental demands bring about fewer export types; it costs a considerable  23  sum of money for the export industry to apply for eco-labels; and potential conflicts might arise between developed countries and China as a result of the existing 'green barriers'. Thus, Q i n suggests that China fully implement Schedule of the 21 ' Centenary s  to improve its citizens' environmental consciousness, that it develop a strategy of 'green industry', and that it become closely allied with the international community on the issue of environmental protection.  Jha, Markandya and Vossenaar (1999) also notice that China is vulnerable to external environmental regulations. This vulnerability is significant because competitiveness of Chinese products derives from their low price, which may have to be raised to meet higher environmental standards. They are also in favor of China's setting up a 'green strategy' to confront these 'green challenges.' They propose that the Chinese government take environmental issues into consideration by encouraging green products and promoting environmentally friendly technology.  "Schedule of the 21 Centenary" The People's Daily (June 1996) A l . st  65  24  Chapter Two Regulations on Market Access and Environmental Protection Within the Framework of WTO Agreement  With the completion of the Uruguay Round, the World Trade Organization came into existence on January 1, 1995. One remarkable achievement of the WTO is to recognize the importance of having a balance between trade and environmental protection. This is reflected in the Preamble of the WTO Agreement, which states that members of WTO recognize  that their relations in the field of trade and economic endeavor should be conducted with a view to raising standards living, ensuring full employment and a large and steady growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development. 66  At the same time the WTO also set up a Committee on Trade and Environment. Thus, 67  one can safely conclude that the WTO channeled environmental protection to fit with their pursuit of economic objectives. In other words, the WTO does not deem these two Marrakesh Agreement Establishing the World Trade Organization [here WTO Agreement], Apr. 15, 1994, Preamble, Legal Instruments - Results of the Uruguay Round of Multilateral Trade Negotiations, 33 I.L.M. 1144 (1994). Also see Shahin, How Real is the Debate? supra note 8, at 41. Decision on Trade and the Environment, Apr. 15 1994, in Results of the Uruguay Round (1994) 33 I.L.M. 1267.  6 7  25  policy objectives as conflicting. Furthermore, the Preamble of the WTO agreement demonstrates a recognition by the WTO that the parties involved have the right to establish corresponding environmental protection levels according to their own needs.  The fundamental objective of the WTO is to eliminate trade restrictions. When domestic environmental protection regulations of members or parties to international environmental agreements aim at restricting imports or exports of certain goods or services, they risk violating GATT laws. The pillars of the GATT framework are the basic principles that govern its operations. These basic principles guarantee the rights of members to trade goods or services to other members' markets. Thus, understanding these basic rules and their interrelationships with the issues of market access and environmental protection is the basis for resolving conflicts between these two concerns.  I. Basic GATT Principles Relating to Market Access and Environmental Protection  Transparency is one of the pillars of GATT laws. Transparency is the form taken by a number of notification requirements contained in the GATT and WTO Agreements.  65  Article X of the GATT is the basic definition of the transparency principle. According 69  to it, domestic or international trade regulations must be published immediately by any of Trade Principles and Concepts, supra note 60. According to Article X of GATT, "laws, regulations, judicial decisions and administrative rulings of general application, made effective by any Contracting Party pertaining to the classification or the valuation of products for custom purpose, or rates of duty, taxes or other charges... shall be published promptly in such a manner as to enable governments and traders to become acquainted with them. Agreements affecting international trade policy which are in force between the government or... shall also be published..." See GATT Agreement, supra note 4, at 222.  6 8  6 9  26 the contracting members so that governments and traders of other contracting groups can have access to them. The TBT Agreement calls for the publication and notification of 70  proposed standards and technical regulations that are likely to have significant effects on the trade of other parties and that are not predominantly based on relevant international standards. The SPS Agreement requires the prompt publication of all adopted sanitary 77  and phytosanitary regulations. Following the Uruguay Round, the transparency 72  principle can not only be extended to trade regulations and administrative decisions concerning trade laws and regulations, but also to trade related rules, including technical standards and their enforcement. The transparency principle also necessitates that pertinent economic information be extended to consumers. Furthermore it also assures equal competitive circumstances for producers from different groups. This principle also ensures the safety and predictability of market entrance. Whether the environmental protection regulations that are challenged as non-tariff barriers are transparent or not, they are always substantial either to the challenging or the challenged party in that environmental defenses are usually criticized as 'non-tariff barriers.  In the 1982 case between United States and Canada involving the prohibition by the U.S. of imports of tuna and tuna products from Canada, the dispute resolution panel (the Panel) refused to consider the U.S. measures disguised because it found that the U.S. restrictions  See Article 2.9-2.11 of the Agreement on Technical Barriers to Trade. Agreement on Technical Barriers to Trade, Apr. 15, 1994, WTO Agreement, Annex 1A, in Results of the Uruguay Round, online: WTO Homepage <http://www.wto.org/english/docs_e/legal_e/17-tbt.wpf>. [hereafter TBT Agreement]. See Article 2.3 of the Agreement on the Application of Sanitary and Phytosanitary Measures. Agreement on the Application of Sanitary and Phytosanitary Measures ,Dec.l5, 1993, WTO Agreement, Annex 1A, in Results of the Uruguay Round, online: WTO Homepage <http://www.wto.org/english/docs_e/legal_e/15sps.wpf> [hereafter SPS Agreement]. 7l  72  27 "were taken as a trade measure and publicly announced as such." In another 1988 case 75  74  where the Panel examined the application of measure instead of the measure itself, it also concluded that there was no disguised restriction. This is because the panel discovered 75  that the order for the particular exclusion had been published in the Federal Register. The order was obviously derived from a valid patent the infringement of which was clearly established.  76  Clearly, such GATT panels often use transparency principle as the deciding factor in determining the reasonableness of particular regulations. Some scholars go as far as to suggest that an obtusely protectionist measure could be permitted through a "disguised restriction" test because of its bluntness. Yet, even the United States, which benefited 77  the most from such testing, did not voice an agreement with it. It commented that "a measure could not be considered to be a non-disguised restriction simply because it had been publicly announced."  Two other basic principles of GATT that ensure market access based non-discriminatory policy include the Most Favored Nation (MFN) Principle and the National Treatment (NT) Principle. MFN requires that "any advantage, favor, privilege or immunity granted by any contracting party to any product originating in or destined for any other country  See Esty, Greening the GATT, supra note 13, at 266. Although the case is unrelated to the subject of this thesis, the conclusions made by the Panel concerning this case, on related issues are worth our attention. The Panel here refers to the Panel under the GATT 1947 dispute resolution provisions. For detailed facts, see Esty, Greening the GATT, supra note 13, at 267. See GATT, BISD 29S/108, at http://www.wto.org. Steve Charnovitz, "Exploring the Environmental Exception in GATT Article XX" (1991) 25 Journal of World Trade 48 [hereafter Charnovitz, Exploring the Environmental Exception]. Ibid. Also see GATT, BISD, 35S/107-108 and Canada's statement in GATT Doc. C/M/155. 73  7 4  7 5  7 6  7 7  78  28  shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties." The GATT MFN clause 79  prohibits discrimination relating to the origin of products, customs concerns, internal taxes and internal sales regulations. Of course, this principle allows some exceptions in certain circumstances, such as regional trade agreements or preferential arrangements for developing countries. Some MEA, such as CITES, Basel Convention and Montreal Protocol regulate some trade restrictive measures against non-party countries. Whereas not all WTO members participate in certain MEAs in question, they might challenge trade restrictive measures placed against them as unjustified under the GATT M F N .  8 0  For example, a non-party of the MEA but a member of WTO could argue that its like products are being unfairly discriminated against by other WTO members producing similar products simply because it has not joined MEA. Such discrimination impairs that entity's rights as authorized by the GATT.  81  Article III. 1 of GATT requires that national measures "should not be applied to imported or domestic products so as to afford protection to domestic production." Article III.4 requires that "products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment to less favorable than that R9  accorded to like products of national origin." Following the Uruguay Round, the WTO expanded the application range of NT from trade in goods and other related economic See Article I of GATT, see GATT Agreement, supra note 4, at 196. Duncan Brack," Environmental Treaties and Trade: Multilateral Environmental Agreements and the Multilateral Trade System", in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 217 at 282 [hereafter Brack, Environmental Treaties and Trade]. Douglas Jake Caldwell, International Environmental Agreement and GATT (1994) 18 No.2 Maryland Journal of International Law and Trade at 183. Article III of GATT, see GATT Agreement, supra note 4, at 204. 7 9  8 0  81  8 2  29  actions to the rule of origin, technical regulations and sanitary and phytosanitary measures. One thing worth mentioning is that the national treatment obligation calls for a distinction between protectionist measures and measures designed for other purposes. It is usually understood that Article III covers both the goals and results of the measures being examined. Thus, the results are assessed based on changes in competitive opportunities for domestic products, and the goals are evaluated based on those changes bringing about the hoped-for results rather than chance results. Nevertheless, 83  Organization for Economic and Cooperative Development (OECD) believes that domestic rules are not usually in place to protect members' internal industries and markets, but to achieve other essential goals such as environmental conservation. This 84  conclusion reveals the attitude of developed countries toward the issue of market access and environmental protection. That is, they insist on achieving high levels of domestic environmental protection and deny the non-proportionality of attaining such high levels by developing countries. The national treatment is potentially in conflict with MEAs as well. Similarly, as in the circumstances of the MFN, a nation could argue that its 85  national treatment right to have its imported like products treated equally with its domestically produced goods under GATT has been violated by the prohibitions placed on its former products by the trade provisions in the MEAs.  86  The third basic principle that guarantees market entrance is that the GATT requires that all members of WTO protect their domestic markets through customs tariffs. This  83 84  8 5 86  Trade Principles and Concepts, supra note 60. Ibid. Brack, Environmental Treaties and Trade, supra note 80, at 282. Ibid.  30  principle aims at eliminating the non-tariff barriers to international trade. G A T T Article X I states that, "[n]o prohibitions or restrictions other than duties, taxes or other charges, whether effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party." That is, G A T T generally does not allow its members to protect their internal markets through measures other than customs tariffs. The three typical M E A s all employ import restrictions that vary in form from bans and embargoes to prohibitions on trade. These restrictions are 87  particularly susceptible to charges that such restrictions are quantitative restrictions under Article XI of GATT, because none of the three exemptions provided in Article X I allow members to impose quantitative restrictions for environmental purposes.  88  Besides these  quantitative restrictions, developed countries may establish certain high environmental standards or packaging standards as 'green barriers' to block the inflow of goods from their developing counterparts into their domestic markets.  Article 4 of the Montreal Protocol, see the Montreal Protocol, supra note 8 at 1550. Article 3, 4, 5, and 10 of the CIES, see the CIES, supra note 10, at 1085. Article 4.2, 6.4, and 4.5 of the Basel Convention, see the Basel Convention, supra note 9 at 657. Also see Brack, Environmental Treaties and Trade, supra note 80, at 282. 8 7  Article XI:2 of GATT provides three exceptions for Contracting Party to take quantitative restriction: 1(a) export restrictions to relieve critical shortages of foodstuffs and other products "essential" to exporting contracting party; (b) import or export restrictions necessary to the application of standards for grading or classifying commodities; and (c) import restrictions on agricultural or fisheries products that are necessary to the enforcement of certain governmental policy measures. These exceptions are narrowly drawn and are not be relevant to environmental measures. See GATT Agreement, supra note 4, at 212. 8 8  31  II.  GATT Exceptions Relating to the Issue of Market Access and Environmental Protection  Scholars generally agree that GATT does not contain any regulations directly addressing the conflict between market access and environmental protection. The term, 89  'environmental protection' first appeared in the 1979 TBT Agreement. In this Agreement, 'environmental protection' is one of the legitimate exceptions that the Contracting Party may resort to in order to avoid employing international standards. Since the 1980s, some GATT Contracting Parties began to use 'environmental protection' as a shield to imposing trade restrictions on imports. Studies of the GATT history of disputes on 90  market access and environmental protection show that importing countries usually invoke Article XX of the GATT as the legal basis for their defense. Article XX of GATT states that  Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoptions or enforcement by any contracting party of measures:  Jill Lynn Nissen, "Achieving a Balance between Trade and the Environment: The Need to Amend the WTO/ GATT to Include Multilateral Environmental Agreements" (1997) 28 Law & Policy of International Business, pp.902 and 905 [hereafter Nissen, Achieving a Balance between Trade and Environment]. In the first 30 years after GATT 1947, no disputes has happened under Article XX (b) and (g), even though the Contracting Parties had started taking environment related trade measures to protect ' environment.  32 (b) necessary to protect human, animal or plant life or health; ... (g) relating to the conservation of exhaustible natural resource if such measures are made effective in conjunction with restrictions on domestic production or consuming; 91  It is evident that GATT Article XX does not explicitly list 'environmental protection' as one of the conditions capable of exempting Contracting Parties from GATT obligations. Nevertheless, these two subsections are still deemed to be the most environmentally protective clauses. WTO associated agreements echo Article XX as well.  Paragraph 6 of the TBT Agreement Preamble states that  [r]ecognizing that no country should be prevented from taking measures necessary to ensure the quality of its exports, or for the protection of human, animal or plant life or health, of the environment, or for the prevention of deceptive practices, at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or disguised restriction on international trade, and are otherwise in accordance with the provision of this Agreement.  Article 2.2 of the SPS Agreement also rules that  [mjembers shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence, except as provided for in paragraph 7 of Article 5.  91  Article XX of GATT, see GATT Agreement, supra note 4, at 262.  33 Under these provisions, members may be exempted from GATT obligations in some circumstances for the purpose of pursing Article XX policy goals.  At the same time GATT imposes some conditions on the revocation of Article XX to avoid abuse by members. These conditions are meant to prevent members from constituting disguised barriers to international trade. These conditions include:  1. Members should equitably apply trade restrictive measures  In order to gain qualified exemptions from GATT violations members should promise that national measures will not involve "arbitrary or unjustifiable discriminations between countries where the same conditions prevail." So far, only two measures were found in 92  breach of this condition. One is the Reformulated Gasoline case that took place in 1994 between Venezuela and the United States. In this case, although the Panel 93  acknowledged that the environmental protection standards established by the United States are legitimate and justified under Section (b) of Article XX, it denied that it was appropriate for the U.S. to revoke Article XX. The reason for this judgment was that this measure violated the Preamble of Article XX. That is, this measure failed to grant the same treatment to the foreign producers as it would grant to domestic producers. Thus, 94  it was discriminatory to foreign GATT different members while in favor of domestic  GATT, BISD 29S/108 & 30S/55, at http://www.wto.org. See Esty, Greening the GATT, supra note 13, at 270. Ibid.  34 producers. Another case was in 1998, between the United States and four other 95  countries on restrictions on shrimp imports. The Appellate Panel of WTO found that the 96  measures taken by the United States was discriminatory to products from different WTO members as well.  2. Measures taken by members should not constitute disguised barriers to international trade  The Preamble of Article XX also requires that members' domestic measures not constitute disguised restrictions on trade. Even as early as the 1945 London Session for drawing up the ITO Charter some delegates wanted to prevent 'indirect protection' by placing restrictions on exceptions. British delegates proposed that trade measures could 97  not be " applied in such a manner as to constitute a means of arbitrary discrimination between countries where the same conditions prevail, or disguised restriction on QO  international trade." The point in this limitation is to prevent importing countries from adopting, maintaining or applying protectionist measures in the name of environmental protection. However, researching the dispute settlement practices of GATT reveals that GATT does not interpret 'disguised restrictions' strictly. As it is mentioned in the discussion about the transparency principle, GATT dispute resolution panels sometimes use 'publicly known' as a test to judge whether the measure in question constitutes a disguised restriction or not. Then, it considers how to interpret this limitation so as to This case did not formally occur before GATT's final proceedings. The Clinton administration attempted to avoid the GATT dispute proceedings. In a response, Venezuela dropped its GATT challenge. India, Malaysia, Pakistan and Thailand. UN Docs. E/PC/T/C. 11/32 at 11 and E/PC/T/C/. 11/50 at 3-7. lbid. 9 5  96  9 7 9t  35 prevent Article X X from being abused. However, it is not an easy task to determine whether a trade restrictive measure is a protectionist measure or not. GATT dispute resolution panels tend to intentionally avoid commenting on this issue." However, judging from GATT dispute settlement history if an environmentally related trade measure is unnecessary for protecting human, animal or plant life and health or is not connected to preserving exhaustible natural resources, it could be deemed a 'disguised restriction'.  3. Measures taken by members should be necessary for protecting human, animal or plant life or health  Paragraph (b) of Article XX requires that measures taken to protect human, animal and plant life or health should be "necessary". As to what 'necessary' is the earliest 100  interpretation appears in the GATT Panel Report of 1989 regarding Section 337 of the Tariff Act of 1930. In this case, the United States cites Article XX (d) to defend its enforcement of patent laws.  101  The GATT constructed a test to help decide what  measures should be considered as 'necessary'. The panel states in its report that according to Article XX (d), if alternative approaches are possible which do not conflict with other GATT provisions and which a Contracting Party can be expected, within  Charnovitz, Exploring the environmental exception, supra note 77, at 47. Brack, Environmental Treaties and Trade, supra note 80, at 284. Article XX (d) regulates that it is " necessary to secure compliance with laws and regulations which are not inconsistent with the provisions of this Agreement, including those relating to... the protection of patents, trade marks and copyrights, and the prevention of deceptive practices." Although this regulation has nothing to do with the subject of market access and environmental protection, its interpretation of 'necessary' is significant for later disputes. See Article XX (b) of the GATT Agreement, supra note 4, at y v  1 0 0  101  36 reason, to use,  then the measure in question is unnecessary. On the contrary, if no  measure is available that fulfills GATT requirements, the Contracting Party must employ an approach bearing the least conflict with other GATT stipulations. Not only did the 103  panel not ask the U.S. to change its substantive patent law or its desirable patent level,  104  but also the panel failed to spell out the types of modifications the U.S. are required to do to make its chosen measures 'necessary.'  A focal problem in the case involving Thailand's 1990 restrictions concerning the importation of and internal taxes on cigarettes was Article XX (b). The panel carried on the same interpretation as the one that emerged in Section 337 of the 1930 Patent Law case and found that Thailand's measure permitting the sales of domestic cigarettes while prohibiting the importation of foreign cigarettes was not 'necessary' within the definition of Article XX (b). The panel formulated such a conclusion because they thought that there are other measures that could be employed by Thailand to restrict the number and quality of cigarettes consumed.  1 0 5  No doubt the Panel for this dispute tried to interpret  "necessary," but the interpretation it made is abstract and subjective.  106  In another case relating to Article XX (b), which occurred in 1990 between the United States and Mexico on an embargo of tuna imported from the latter, the U.S. defended its trade measures prescribed by the Marine Mammal Protection Act as justified under  See GATT, BISD, 36S/392-393. Ibid. ™Ibid. For the Panel report, see GATT, Doc. DSlO/r. For details on this case, see Esty, Greening the GATT, supra note 13, at pp.268-269. Charnovitz, Exploring the environment exception, supra note 77, at pp.48, 49. 102  103  105  106  37 Article XX (b). However, the dispute panel in this case did not voice an agreement with the U.S. defense because it found that the United States did not prove in a satisfactory manner that it had exhausted all possible alternative measures, such as international negotiations to protect dolphins consistent with GATT. This is especially significant since dolphins travel freely across political boundaries and in the open ocean.  107  However, if an environmentally—related trade measure is actually designed for protecting human, animal and plant life or health, it may be accepted by the dispute panels of GATT/WTO.  4. Measures taken by members should be relative to protecting exhaustible natural resources  Paragraph (g) of Article XX requires that measures adopted, maintained or applied by members should relate to the conservation of exhaustible natural resources. In hearing 108  the disputes about Canada's measures affecting the export of unprocessed herring and salmon, the GATT interpreted the meaning of "relating." It declared that "relating to the conservation of exhaustible resources" implies that the target measures' primary aims are for such conservation. An additional restriction stipulated in this paragraph is that 109  measures to be confirmed by Article XX (g) should involve restrictions on domestic production or consumption of products. In the first case between the U.S. and Canada, the See United States - Restrictions on Imports of Tuna, Report of the GATT Panel, Aug. 16 1991, reprinted in 30 I.L.M. 1594 (1991). For details of this case, see Esty, Greening the GATT, supra note 13, pp.267-268. [hereafter the MMPA report]. Brack, Environmental Treaties and Trade, supra note 80, at 284. See GATT, BISD, 35S/114 (1988). 107  108  109  38 panel ruled against the U.S. solely because the U.S. did not restrict the domestic consumption of tuna and "its restriction on production did not extend to every kind of tuna being barred from Canada." In a second case, also between the U.S. and Canada, the panel went further to interpret that this paragraph implies that a trade measure had to be "primarily aimed at rendering effective" domestic restrictions. In other words, trade 110  regulations concerning environmental conservation should come second to internal restrictions. This interpretation decreases the possibility for members to cite this article when defending trade restrictions. In fact, it is almost impossible to utilize this 111  exception if there are no domestic restrictions. However, in a case that occurred in 1998, thefirstcase heard by the dispute resolution panel of WTO, the panel made a judgment in favor of trade restrictions imposed on four countries by the U.S. according to Public Law 101-162, Title VI, section 609 (Section 609 hereafter). The Panel concluded that the 112  trade measures in this case were relative to protecting exhaustible resources based on a three-step analysis. First of all, sea turtles are an exhaustible natural resource. Second, 113  Section 609 primarily aims at the conservation of sea turtles." Finally, this measure is in 4  conjunction with domestic restrictions that will not be as effective without this measure.  115  Generally speaking, the importing party may consider the following three factors when formulating respective trade measures to prevent these measures from becoming  '  Charnovitz, Exploring the environment exception, supra note 77, at 50. Ibid., at 50-51. Appellate Body, United States - Import Prohibition on Certain Shrimp and Shrimp Products, Oct. 12, 1998, 38 I.L.M. 118, 174 (1999) [hereafter: Appellate report on the import prohibition of shrimp]. Ibid. Ibid. Ibid. 10  111  1 1 2  113 U4 U5  39 disguised restrictions. The first is to determine the necessity on the basis of correlated concepts, which means there should be no other GATT-consistent measure or a less GATT-violating measure reasonably available for members to employ." This condition 6  derives from the GATT panel's interpretation of the word 'necessary' in Article XX (b) and is consistent with the spirit of the WTO. Provisions in the TBT Agreement and the SPS Agreement can illustrate this point. According to Article 2.2 of the TBT Agreement, "[m]embers shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfill a legitimate objective, taking account of the risks non-fulfillment would create..." Article 2.3 of TBT Agreement regulates that, "[tjechnical regulations shall not be maintained if the circumstances or objectives giving rise to their adoption no longer exist or if the changed circumstances or objectives can be addressed in a less traderestrictive manner." There is a similar regulation in the SPS Agreement. Second, the measure must be proportional to the problem at hand. The OECD report concludes that 'proportionality' means that the trade costs of a measure must be compared with its benefits in other policy areas. The only useful trade measures would be those in which possible trade benefits equal to the goals being sought." Finally, environmental trade 7  restrictions should be complementary only. As mentioned above, trade measures should not be considered the only means of attaining policy objectives of Article XX. For instance, the GATT panels in the tuna dispute felt the U.S. should attempt bilateral negotiation to solve disputes. The GATT panel of the reformulated gasoline dispute also  Trade Principles and Concepts, supra note 60. Ibid.  116  U7  40 suggested that the U.S. should mediate with Venezuela before directly adopting trade restrictive measures.  118  5. The various legal aspects of violating the Preamble of Article XX or the (b) or (g) section of the Article XX  As to the application of the Article XX Exception, different legal effects result from violating the Preamble of Article XX and subsections of Article X X .  119  In the shrimp  case that took place between the U.S. and four other countries, the Appellate Panel rejected the decision of the first panel, considering that the latter did not clearly differentiate between the discrepancies of these two legal effects. The chapeau of Article XX was designed to prevent nations from using Article XX exceptions to nullify their legal obligations. This would require that measures such as section 609 be employed within reason, while paying proper attention to both the legal responsibilities of members claiming the exception and the legal rights of other members of the disputes.  120  As stated  above, the focal problem in the first Panel's analysis arose from its erroneous decision to determine whether it was covered by Article XX (b) or (g).  121  The Appellate Panel for  this case did not deny the justifiability of this measure. However, it also required that in order to be justifiable under Article XX (g), Section 609 should be consistent with the  Eric L. Richards and Martin A. McCrory, "The Sea Turtle Dispute: Implications for Sovereignty, the Environment, and International Trade Law" (2000) 71 Colorado Law Review, at pp.328-330 [hereafter Richards and McCrory, The Sea Turtle Disputes]. " Brack, Environmental Treaties and Trade, supra note 80, at 284. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development? supra note 15, at 78. See Appellate report on import prohibitions of the shrimp, supra note 112. Ibid 118  9  1 2 0 121  41 chapeau.  122  The measure taken by the U.S. is unlawful precisely because the U.S.  arbitrarily or unjustifiably discriminates between members when applying this measure. When the measure in question is not consistent with subsections of Article XX, the panel usually suggests that importing members change their substantive laws.  123  For instance,  the panel report of the 1991 tuna disputes proposed that the U.S. revise its M M P A .  124  When the measure is consistent with subsections of Article XX but is applied inappropriately, there is no need for the importing member to revise its substantive laws. It will generally be asked by the panel to improve its means of application.  125  6. The foreign application of members' domestic laws  Another practical application issue concerns the location of the geographic range over which the importing member has the right to protect humans, animal and plant life or health. The GATT Panel tends to advocate the argument that the Contracting Party has the right to protect only natural resources within its own jurisdiction and that it can not require other members to protect their natural resources to any extent. In the 1991 tuna dispute, the GATT panel did not agree that one member had the right to impose its environmental protection level on another member. The panel reasoned that if the 126  extraterritorial application espoused by the United States were accepted, then each member would be able to impose without exception the conservation of its regulations on  See MMPA report, supra note 107. Similar analysis can also be found in Brack, Environmental Treaties and Trade, supra note 80, at pp. 283-286. See Appellate report on the import prohibition of shrimp, supra note 112. See MMPA report, supra note 107. 125  126  42  other contracting members and would still not infringe upon their rights in the General Agreement. In another tuna dispute between the U.S. and the European Union, the 127  GATT panel recognized the importance of 'sustainable development' when pursuing efforts of environmental preservation. Yet, while representing the validity of the environmental objectives of the U.S.'s efforts to protect dolphins in its concluding remark, the panel still held that no nation should impose trade embargoes to change regulations adhered to by other members within their own judicial boundaries. It ruled that 128  permitting the United States to take such actions would cause other member to alter their policies within their jurisdiction. This would involve changing their conservation regulations, and would grossing compromise the proportioning of contracting members' 'rights and obligations', especially their marketing privileges.  7. The objects of the Article XX Exception  The last practical issue involved in applying Article XX is whether the measures regulated in Article XX aim at final products or include production and processing as well. Studying the dispute history of the GATT, we can find that the GATT panels do not advocate the view that a Contracting Party may establish standards for how products should be processed or manufactured, and then prohibit imports of 'like products' not meeting those standards.  However, environmentalists are unsatisfied with this  tendency and point out that environmental harm is seldom brought about by final  127  Ibid. GATT. Doc. DS29/R (1992). Ibid. Richards and McCrory, The Sea Turtle Dispute, supra note 118, at 330.  1 2 8  129  1 3 0  43 products, but it is that their manufacturing and processing procedures that cause environmental harm. They further state that this kind of environmental harm is objective and increasingly transboundary. Besides, the non-environmentally friendly production and processing procedures influence some characteristics of final products. The Uruguay Round began to echo this point of view, and some explicit regulations can now be seen in both the TBT Agreement and the SPS Agreement.  III. WTO—Associated Agreements Applicable to the Issue of Market Access and Environmental Protection  Both TBT and SPS Agreements that govern national laws on the environment are praised by some scholars for being the 'green elements' of the Uruguay Round.  131  The new  regulations in both Agreements are remarkable achievements of the WTO. Due to them, members of WTO can use trade embargoes or restrictions against importing products deemed detrimental to humans within their organization.  1. Limitations on environmental product standards  Both the TBT and SPS Agreements are applicable to products' environmental standards. The TBT Agreement contains international trade rules governing acceptable requirements for products: " Such standards lay down specifications regarding the characteristics of a product, such as quality, performance, safety or dimensions as well as requirements l3,  Nissen, Achieving the Balance between Trade and Environment, supra note 89, at 907.  44 providing how it should be packaged or labeled."  The Agreement differentiates  between standards for which compliance is mandatory and those for which such compliance is voluntary. 'Technical regulation' is the term denoting mandatory 133  standards whereas 'standard' is the term used for voluntary standards: "Technical 134  regulations and standards adopted for environmental purposes could range from those laying down requirements relating to toxins or other residues or prohibition of the use of certain bleaching materials in the dyeing of textiles to standards relating to emission of 135  gases by cars."  The SPS Agreement is more directly related to environmental  protection since it specifically deals with sanitary and phytosanitary regulations that most countries have adopted to protect their domestic agriculture production and animal life from pests and disease that might be introduced into the country by imported products.  136  Regulating the environmental characteristics of products is one of the major means usually employed by a nation to protect its internal environmental resources. Yet, at the same time, environmental standards are deemed by free trade supporters as the easiest method utilized by trade protectionists.  137  Rege, GATT Law and Environment-Related Issues, 28 Journal of World Trade, supra note 6, at 103. Appleton, Environmental Labeling Schemes, supra note 7 at 214. Also see Doaa Abdel Motaal, "The Agreement on Technical Barriers to Trade, the Committee on Trade and Environment, and Eco-labeling," in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 223 at 229 [hereafter Motaal, The Agreement on Technical Barriers to Trade]. Article 2, 3, and 4 of TBT Agreement. See TBT Agreement, supra note 71. Rege, GATT Law and Environment-Related Issues, supra note 6, at 103. Steve Charnovitz, " Improving the Agreement on Sanitary and Phytosanitary Standards", in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 171 at 171, 174 [hereafter Improving the Agreement on Sanitary and Phytosanitary Standards]. Rege, GATT Law and Environment-Related Issues, supra note 6, at 97. 132  1 3 3  134  135  136  1 3 7  45  The TBT Agreement and the SPS Agreement not only incorporate GATT's basic principles but also develop a set of exceptions and rules which aim at protecting the world's environment and made achievements through multilateral trade agreements.  138  The TBT Agreement and the SPS agreement first follow the GATT by requiring its member countries to base their domestic regulations that provide for product standards on an MFN basis. This means that imported products will not be granted treatment which is less favorable than that accorded to like products of other national origins. The SPS 139  Agreement is more flexible than the TBT Agreement in this regard. Although it accepts non-discrimination as its basic principle, it does permit measures to be applied on a discriminatory basis provided that they "do not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail." The rationale for this 140  regulation is based on differences in climate, pests, diseases and food safety conditions between different countries.  Both the TBT Agreement and the SPS Agreement establish the obligation to base standards on scientific information and evidence. The TBT Agreement attempts to accomplish this goal by having countries employ international standards as a basis. The SPS Agreement, in addition, suggests that members refer to scientific information and  Charnovitz, Improving the Agreement on Sanitary and Phytosanitary Standards, supra note 136 at 171, 174. Article 2.1 of TBT Agreement, see TBT Agreement, supra note 71. Appleton, Environmental Labeling Schemes'. WTO Law and Developing Country , supra note 7, at 214. Also see Motaal, The Agreement on Technical Barriers to Trade, supra note 133, at 225. Article 2.7, and Article 6 of SPS Agreement, see SPS Agreement, supra note 72. Charnovitz, Improving the Agreement on Sanitary and Phytosanitary Standards, supra note 136, at 176. 138  1 3 9  1 4 0  46  evidence but introduce a precautionary principle 'as an exception.'  141  In cases where  " relevant scientific evidence is insufficient," members are allowed to adopt SPS measures on a provisional basis by taking into account "pertinent information" that may be available from those countries orfromrelevant international organizations.  142  Finally, the TBT Agreement and the SPS Agreement encourage members to use international standards as much as possible.  143  TBT Agreement imposes an obligation on  countries to ensure that such product standards are not designed or applied with the purpose of establishing needless hindrances to trade. One of the ways to ensure that the 144  standards adopted do not constitute barriers to trade is to base them on international standards. The emphasis that the Agreement puts on the use of international standards is also reflected in the provision that calls on countries to "play a full part" in the international standardization activities for which they propose to adopt product standards, and in the provision which states that where the national product standard is based on an international standard it should be absolutely proven not to establish a needless hindrance to trade.  145  However, countries are permitted to deviate from international standards  where they consider them be "ineffective or inappropriate"  1 4 6  to adopt them, taking into  account basic barriers in climate, geography or technological difficulties.  147  However, the  Article 14.3 of TBT Agreement, see TBT Agreement, supra note 71. Also see Motaal, The Agreement on Technical Barriers to Trade, supra note 132, at 226. Article 3.1 and 3.4 of SPS Agreement, see SPS Agreement, supra note 72. Charnovitz, Improving the Agreement on Sanitary and Phytosanitary Standards, supra note 136, at 176. Appleton, Environmental Labeling Schemes, supra note 7, at 214. Also see Charnovitz, Improving the Agreement on Sanitary and Phytosanitary Standards, supra note 136, at 182. Article 2.2 of TBT Agreement, see TBT Agreement, supra note 71. Also see Appleton, Environmental Labeling Schemes, supra note 7, at 214. Article 2.4, 2.5, and 2.6 of TBT Agreement, see TBT Agreement, supra note 71. Article 2.4 of TBT Agreement, see TBT Agreement, supra note 71. 141  1 4 2  143  1 4 4  1 4 5  1 4 6  147  Ibid.  47  TBT Agreement also sets up certain procedural rules with which countries must comply when they adopt product standards that are not based on international standards or where international standards do not exist. Members should ensure that respective standards do not cause "unnecessary obstacles" to international trade. In this regard, the TBT 148  Agreement considers the objective of members as a test. Namely, if a member adopts, maintains or applies a trade restriction with the following objectives, the measure in question is legitimate. These objectives include: national security requirements, prevention of deceptive practices, protection of human health or safety, protection of animal or plant life or health and the environment. Of course, these technical regulations should comply with GATT rules. In order to ensure that trade is not affected by the differences in standards, the Agreement introduces a Mutual Recognition system that calls on countries to accept as equivalent technical regulations, even if such regulations differ from their own, provided that they are satisfied that they fulfill the objectives of their own regulations. This method originates from the use of international standards 149  and is more flexible than the international standard. Compared with the TBT Agreement, the SPS Agreement provides a greater degree of flexibility for countries to deviate from international standards than is permitted under the TBT Agreement. According to the 150  TBT Agreement, any member should have sufficient scientific or technical bases before employing measures either higher or lower than international standards. Under the SPS Agreement, a country may deviate from international standards if, due to "fundamental climatic, geographical factors or fundamental technological problems," it considers that  See Article 2.4 and 2.10 of TBT Agreement, see TBT Agreement, supra note 71. See Article 2 and 14 of TBT Agreement, see TBT Agreement, supra note 71. Charnovitz, Improving the Agreement on Sanitary and Phytosanitary Standards, supra note 136, at pp. 182-183. 1 4 8  1 4 9  1 5 0  48  they would be ineffective or inappropriate for the attainment of the legitimate objectives.  151  In particular, the SPS Agreement states that in determining the appropriate  level of protection that would be needed in such cases, the country should take into account: (1) scientific evidence and economic factors such as potential damage in terms of the loss of production or sales in the event of the entry, establishment or spread of pests or disease; the costs of control or eradication in the importing member country; and (2) the objective of minimizing negative trade effects.  152  2. Limitations on packaging materials  Besides regulating the environmental characteristics of products, the TBT Agreement also establishes a set of packaging requirements. There are two significant objectives to the packaging rules' employment. These include the concern that the amount of packages that enter the waste system be reduced, notably for final disposal through incineration or landfill. The other objectivefromthe perspective offreetrade is to prevent members' utilizing environmental packaging rules to set up 'green barriers' and to shield themselves from free trade obligations.  As noted above, the provisions of the TBT Agreement apply primarily to product standards. The Agreement defines product standards as technical regulations that lay down product characteristics or their related process and production method. These 153  Article 5.7 of SPS Agreement, supra note 72. Ibid. Also see Charnovitz, Improving the Agreement on Sanitary and Phytosanitary Standards, supra note 136, at pp. 183. See Rege, GATT law and Environment-related Issues, supra note 6, at 131. 151  152  153  49  characteristics include packaging requirements for products, producers, or methods of manufacture.  154  First of all, the Agreement requires that in formulating or adopting product standards members ensure that they do not cause unnecessary obstacles to trade. The regulations adopted should also be applied on a non-discriminatory basis to importsfromall sources and to domestic and imported products. By definition, the TBT Agreement could allow a nation to ban, for example, packing materials containing lead or to necessitate the use of recycled materials for packing certain products. However, it appears from the definition that only regulations that ban or restrict certain packaging material from use are covered by the Agreement.  155  3.  Limitations on eco-labeling  Eco-labels serve two main purposes. One is to highlight environmental attributes or features of products or packages.  156  Recent years have seen a marked increase in the use  of these labels. The other purpose is to warn consumers against the hazardous environmental qualities of products. This variety of eco-labels is usually enforced by 157  mandatory regulations.  154  ibid.  Article 3 of TBT Agreement, see TBT Agreement, supra note 71. Appleton, Environmental Labeling Schemes: WTO Law and Developing Country, supra note 7, at 195. Also see Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at 75. Appleton, Environmental Labeling Schemes: WTO Law and Developing Country, supra note 7, at 203. 1 5 5  1 5 6  157  50 The first type of eco-labeling is used on a self-claiming basis and therefore falls outside the jurisdiction of the GATT and TBT Agreement. Article 2 of the TBT Agreement 158  governs the second type of eco-labeling and requires for labeling requirements that are mandatory and are intended to warn consumers against the hazardous quality of products to conform with this Article's specifications. Again, the related provisions ask members to apply these requirements on a non-discriminatory basis to both domestic and foreign products and not to cause unnecessary obstacles to international trade.  Articles 5 to 8 of the TBT Agreement establish a scheme relating to a "conformity assessment" with which producers or suppliers wishing to be awarded an eco-label by an eco-labeling agency must be consistent. These provisions impose two sets of obligations. The first relates to the principles to be followed in the preparation and adoption of the conformity assessment procedures. The second relates to the procedures that should be followed in awarding certification stating that the product conforms to technical regulations or standards. Another thing worth noting is that the Agreement imposes different levels of obligation depending on whether the body responsible for the administration and implementation of the procedures is a central government, a local government or a non-governmental body. In the case of a central government, the obligations imposed are binding, while in the other two cases they are less so. The member countries are required to take such reasonable measures as may be available to them to ensure that local government and non-governmental body abide by the  See Doaa Abdel Motaal, "The Agreement on Technical Barriers to Trade, the Committee on Trade and Environment, and Eco-labeling", in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 223 at 229. Article 2, 3, and 4 of TBT Agreement, see TBT Agreement, supra note 71. 1 5 8  51 obligations which the Agreement imposes in relation to procedures adopted under the conformity assessment system.  4. Limitations on production and process methods  As mentioned above, GATT respects the sovereign right of each of its party by requiring that imported products meet the product standards that they apply to products manufactured by domestic industries with a view to protecting the health and safety of their nationals. However, in applying such standards to imported products, countries must ensure that these standards are not applied in a way that will become disguised restrictions on international trade.  One should always keep in mind that under GATT laws members do not have the right to require that imported products be produced according to the PPM standards that they impose on their own industries. The 1979 TBT Agreement specifically excluded PPMs from its scope because it would not allow a nation to restrict the import of a product merely because it was manufactured in a plant following its national regulations concerning water or air pollution. This especially applies when the PPM employed does not change characteristics or the quality of the imported product. Any such stipulation would imply that the exporting country must adhere to the process or production standards of the importing country, "which it may have a good reason not to follow the process or production standards of the importing country, taking into account the  52  environment and ecological conditions in its own country."  1 5 9  However, the Uruguay  Round made a far-reaching improvement in policy in this regard. It expanded the definition of "technical regulation" to "document which lays down product characteristics or their related process and production methods." Thus, production 160  methods that will have an effect on the product's characteristics are covered by the TBT Agreement, while other unrelated production methods that will not affect the quality or performance of the product are not covered. Compared with the stipulations of the TBT Agreement, those provided by the SPS Agreement are more flexible. Under the SPS Agreement, the imposition of such restrictions could be satisfied only where compliance with the prescribed PPMs is considered necessary to protect human, animal and plant life or health within the territory of the importing country. Under either Agreement, members are obliged to ensure that the restrictions they adopt on PPMs should not constitute unnecessary obstacles to international trade by GATT laws.  Rege, GATT law and Environment-related Issues,, supra note 6, at 110. Article 2 of the TBT Agreement, online: WTO website <http://www.wto.org/english/doc_e/legal_e/17tbt.pdf>. 160  53  IV. The Evaluation of Related Regulations on Market Access and Environmental Protection within the WTO Framework  Although the WTO Agreement reached at the Uruguay Round tried to include the issue of market access and environmental protection in the international trade regime, the results prove disappointing to the environmentalists. However, from the free trade supporters' points of view, the WTO regulations on market access and environmental protection still provide a fair and reasonable solution to this tension.  1. Evaluation by environmentalists  From the perspective of environmentalists, the tensions between market access and environmental protection are real. The ultimate cause for these tensions is that most of 767  the GATT laws and rules have been in existence before environmental protection became a serious problem. Therefore, these rules are nearly outdated in that they excessively reflect the economic interests of trade liberalization. Thus, the current task of the WTO is to revise its related regulations for environmental protection purposes.  162  Environmentalists criticize environmental rules in the WTO as being biased in favor of trade liberalization. First of all, they note that while the WTO broadly lays down the 765  161  162  Sampson and Chambers, Introduction and Overview, supra note 18, at 3.  Ibid  Steve Charnovitz, The World Trade Organization and Environmental Supervision (1994) 17 International Environment Report (BNA), at 89. 163  54  scope offreetrade, it narrowly defines environmental exceptions to it. All GATT/WTO disputes related to tensions between market access and environmental protection reflect one basic attitude of WTO, namely, that either public health or environmental standards are deemed as appropriate by the dispute resolution panel, or they are not allowed to stand. Because of this attitude, environmentalists often comment that the WTO discriminates between market access and environmental protection. Second, environmentalists also complain that there is no mechanism provided by the WTO to allow members to take some trade measures against other members' low environmental protection levels, pollution expansion and actions that cause global environmental degradation/ For instance, the WTO failed to provide members with a link to 64  multilateral environmental agreements for their controlingl the import of hazardous goods. The final criticism is that the WTO tests for determining whether one party's environmental regulations will constitute trade barriers to other members favor free trade while doing nothing to ease environmental concerns.  Environmentalists also criticize dispute resolution mechanisms of the WTO. They are unsatisfied with their inclination towards trade liberalization/ They comment that the 65  WTO neglects to provide international economies intersection with an appropriate, open, democratic, fair and technically capable forum and an opportunity to resolve the tensions between market access and environmental protection/ Furthermore, the GATT resolves 66  Daniel C. Esty, Greening the GATT, supra note 13, at 107. 165 "GATT" j j paragraph refers to GATT 1947. Most environmentalists criticize WTO as not making any effort to improve indifference towards the environmental protection of the GATT. See Sampson and Chambers, Introduction and Overview, supra note 18, at pp. 1-2. William J. Davey, "The WTO Dispute Settlement", in Gary P. Sampson and W. Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 119 at pp. 134-135 [hereafter Davey j The WTO Dispute Settlement]. 164  nt n  166  s  55  disputes within its framework by way of expert panel review.' The dispute panel of 67  GATT is composed of trade experts who lack neutrality and expertise necessary to balance the tensions between market access and environmental protection. These trade ;6S  experts do not even consider broadly accepted environmental ethics and guidelines in their analysis. Besides, in the process of resolution, this body assesses by itself, the legality of environmentally—related trade measures without the participation of environmental groups, not to mention public supervision. With the improvement of the WTO dispute resolution mechanisms, the report of the dispute settlement panel will be more binding than before. Thus, if the panels continue to be conservative, it will /69  become impossible to mediate tensions and reinforce environmental protection or eliminate unreasonable trade barriers between market access and environmental protection.  What frustrates the environmentalists the most is that although the WTO includes 'sustainable development' as one of its goals for this century, WTO officials do not endeavor to make any headway towards this objective. Thus, there is a danger that the WTO will lose the political support of environmental groups, and even the support of some of the northern countries.  / 70  Davey, The WTO Dispute Settlement, supra note 166, at pp. 121-130. Esty, Environmental Governance at the WTO, supra note 1, at 103. Esty, Environmental Governance at the WTO, supra note 1, at 111. Also see Davey, The WTO Dispute Settlement, supra note 166, at 133. Esty and Geradin, Environmental Protection in Regional Trade Agreements, supra note 5, at pp.328-329 and Esty, Greening the GATT, supra note 13, at 33-59. 168  1 6 9  170  56  2. Evaluation by the free trade supporters  Free trade supporters are concerned that environmental protection will be utilized by trade protectionists to block the international free flow of goods.  There are several concerns. First, environmental standards are mainly created to aid domestic producers rather than protect domestic human, animal and plant life or health or / 72  the environment.  In February 1994, France requested an inspection of imported fish.  The process of this inspection took so long that thefishrotted. Thus, free trade supporters claimed that this inspection regulation was unrelated to human health or the environment but rather employed to pacify localfishermen'sfrustration concerning low priced imported goods. Second, even if there is a genuine environmental purpose for environmentally related trade embargoes, nations that apply them may choose an inappropriate way to do so and consequently unfairly affect foreign producers' trading goods into the domestic market. As we have discussed, the GATT panel in the shrimp dispute concluded that although Section 609 has legitimate environmental objectives, the U.S. did not apply this measure appropriately. The Panel suggested that the U.S. carry on multilateral negotiations, grant a transitional period to developing countries and make related measures more transparent. In another case between the E.U. and the U.S., the GATT panel similarly did not  Sampson and Chambers, Introduction and Overview, supra note 18, at 2. Ricupero, Strengthening Complementarities and Reducing Conflicts, supra note 19, at 25. Sampson and Chambers, Introduction and Overview, Ibid, at 3. 17l  172  57  challenge the object of a U.S. trade measure but its application. The GATT panel believed that the U.S. Congress could have selected other less trade-distorting mechanisms for improving fuel efficiency, but the Congress intentionally selected the CAFE  773  mechanism to protect jobs in the U.S. auto industry and its automobile market  share.  Thus, free trade supporters think that the possibility for the environmental regulatory process's being captured by protectionist interests is not merely a hypothesis.  174  Furthermore, the tendency of recent decades to attack environmental protection measures or goals would make environmental protection a useful means of protecting nations' trade position. It would also allow the extraction of 'monopoly rent' or higher profits by those in power once foreign competitors have been removed. Considering this, most free trade supporters comment that WTO is too cautious in assessing environmentally—related cases. For instance, one scholar has even stated that decisions made by GATT/WTO 775  panels on market access and environmental protection made no errors in balancing environmentally related international trade disputes.  This environmental protection  issue, however, may threaten the improved world trade regime.  i  77  A gasoline standard imposed by the U.S. Congress. Shahin, How Real is the Debate? supra note 8, at pp.44-45. Esty, Greening the GATT, supra note 13, at 33-59. Shahin, How Real is the Debate? supra note 8, at 49. Nissen, Achieving the Balance between Trade and Environment, supra note 89, at 923.  58  As it is obviousfromissues discussed above, there are great differences that must be resolved between environmentalists andfreetrade supporters before disputes between free traders and environmental protectionists.  Shahin, How Real is the Debate? supra note 8, at 39.  59  Chapter Three The Essence of Tensions between Market Access and Environmental Protection, and Different Proposals for Them  Chapter I clearly illustrates that the tensions concerning free trade are very real. This chapter will explore the essence of these tensions and different academic and practical responses to them.  I. The Essence of the Tensions between Market Access and Environmental Protection  The degradation of the environment and the awareness of environmental protection result in many nations' developing extensive programs to protect the environment. Transboundary environmental harm promotes greater utilization of environmental protection and trade measures in multilateral environmental protection agreements by international corporations. However, a 1994 study by the Organization for Economic Corporation and Development (OECD) on the impact of trade on the environment discovered that the direct effects of trade on the environment are generally minimal because only a limited share of ecologically sensitive goods enter into the market and *  because trade is only one of many factors affecting the environment.  179  Thomas J.  The report states that: generally, trade is not the root cause of environmental problems, which are due to market and intervention failures. Market failures occur when markets do not reflect environmental values. 1 7 9  60  Schoenbaum also warned that one not overemphasize the incompatibility between environment and trade.  180  The conflicts between environmental protection and market access are nevertheless complex,  181  and may be positive, negative or neutral. This depends on the economic  sector and the particular situation.  Regardless of this fact, trade measures are one of the most effective ways to control the 1 89 degradation of the environment and the expansion of environmental harm.  Because of  this, these measures are also the easiest to utilize as non-tariff barriers to protect internal markets by trade protectionists of the developed countries. After several GATT negotiations, the tariff level was dramatically lowered; this made it easier than ever for productsfromdeveloping countries to enter the markets of developed countries. This also *  *  183  triggered dissatisfactory feelings of many industries in the industrialized countries. Internal pressures on the governments of these countries forceed them to use non-tariff trade barriers to protect internal industrial sectors. Thus arose the tendency of protectionism's change from tariff to non-tariff protection.  Intervention failures occur when public policies do not correct for, create or exacerbate market failures. Such failures can distort the incentives for protecting the environment and can drive a wedge between the private and socially optimum rates and modes of production and consumption... International trade can help correct market and intervention failures through providing increased funds and incentives for environmental protection and promoting efficient resource use. But, at times, international trade may exacerbate the environmental problems in the presence of market and intervention failures. See OECD, The Environment Effects of Trade 8-12 (1994), online: OECD Homepage <http://www.oecd.org>. Also see Ricupero, Strengthening Complementarities and Reducing Conflicts, supra note 19, at 29. Thomas J. Schoebaum, "International Trade and Protection of the Environment: the Continuing Search for Reconciliation" (1997) 91 The American Journal of International Law 2, at 271 [hereafter: Schoebaum, The Continuing Search for Reconciliation]. Shahin, Trade and Environment: How Real is the Debate? supra note 8, at 35. Brack, Environmental Treaties and Trade, supra note 80, at 281. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development? supra note 15, at 75. Shahin, How Real is the Debate? supra note 18, at 56. 1 8 0  181  182  183  61  Non-tariff protection is more difficult to define due to its diverse varieties  and legal  appearance. Non-tariff trade barriers lack transparency and usually aim at the developing 185  countries.  One achievement of the Uruguay Round is to further lower tariff barriers  and the other is to regulate non-tariff barriers more strictly. This improved the competitive ability of productsfromthe developing countries in the international market. On the other hand, the environmental cost of products from the developing countries is much lower than that of the developed countries. This further raises the concern of developed countries about the competitiveness of their products. This economic 186  interest concern cannot be avoided when discussing the attitudes of the Western countries that strongly support regulating environmental protection within the free trade regime.  187  However, previously unfulfilled trade promise cause developing countries to fear that many commitments made in the Uruguay Round will be circumvented by the protecting interests,  and that discussing environmental protection issues in the WTO framework is  also for protecting these interests. For instance, although the developed countries promised and lowered tariff levels several times, the positive effects resulting from this were always offset by some 'gray area' measures. What the developing countries are 189  Caroline Pestieau and Jacques Henry, Non-tariff Barriers as a Problem in International Development: A Study in Two Parts (Canadian Economic Policy Committee, 1975) at vii and pp.57-58 [hereafter Pestieau and Henry, Non-tariff Barriers as a Problem in International Development]. Pestieau and Henry, Non-tariff Barriers as a Problem in International Development, supra note 184, at pp.62-63. Shahin, How Real is the Debate? supra note 18, at 40. Shahin, How Real is the Debate? Ibid, at 38. Ricupero, Strengthening Complementarities and Reducing Conflicts, supra note 19, at 25. Pestieau and Henry, Non-tariff Barriers as a Problem in International Development, supra note 184, at pp.57-58. In this book, the authors concludes that after the Kennedy Round, the fall of tariff level result in greater importance being attached to "other obstacles". 1 8 4  185  186  187  1 8 8  1 8 9  62  concerned about is that the developed countries are aiming at establishing legal 'green trade barriers' to circumvent their promises of the Uruguay Round.  190  The major forms of regulations that might be utilized by the developed countries as 'green barriers' are:  1. Mandatory regulations or harsh compulsory standards  191  For example, European Union and its individual member countries have recently experienced a tide of environmental legislation, especially those that stipulate environmental characteristics of products, product processing and production methods. This caused the speculationsfromdeveloping countries that those regulations are structured either to promote European industry or to make it more difficult for their own exports to reach European markets. The European countries defended themselves by saying that a regulation or an environmental standard is developed and evolves through contact with a complex political machine. Thus, those who might benefit from the legislation find it easily to change it to their advantage. However, they ignore the obvious fact that the support for the environment and green parties or groups is felt is each area of the political process. The pressuresfromthese groups and from the European industries to protect their domestic market share have permeated into each sector of the political  Further references to the attitudes of the developing countries towards market access and environmental protection is also available in the article by Peter F. Cowhey & Jonathan D. Aronson, Globalizing Free Trade (1996) 72 Foreign Affairs, May/ June, at 183-185. Detailed discussions on forms of'green barriers' may refer to David Runnalls, Shall We Dance? What the North Needs to do to Fully Engage the South in the Trade and Sustainable Development Debate? Online: USD Homepage <http://iisd.ca> [hereafter Runnalls, Shall We Dance?]. 191  63  process, too. For instance, German packaging regulations made the sale of products from foreign small and medium sized enterprises in the German market almost negligible. The International Institute for Environment and Development recently conducted a study that indicated that EU regulations on the recycled content of paper will make it almost impossible for the Brazilian forest products industry to sell pulp in Western Europe.  1 9 2  This example provided by the International Institute for Environment and Development is that Brazilian enterprises complained that the EU regulation on the virgin pulp made them more difficult to export their products into the EU market. The EU regulation, as pointed out by Brazil, was designed to promote recycled paper at the expense of virgin pulp, ostensibly to reduce waste disposal and conserve old growth forest.  193  Brazil argued  that their production of virgin pulp conformed to sustainable development standards. First, their virgin pulp is mainly derived from second growth forests, often grown on marginal lands; they further convincingly demonstrated that the management of these forests is well—organized and sustainable. Thus, Brazil case illustrates a problem with 'green 194  regulations'. From this, we may be able to draw the inference that other 'green regulations', such as those that are designed to limit pesticide residues on foods, could also unfairly restrict the sales of tropical products in Northern markets. This is why the SPS standards have long been controversial issues. Although these standards were said to  Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at 84. Rene Vossenaar and Veena Jha, "Environmental Policy, Market Access and Competitiveness: the Experience of Developing Countries", in Veena Jha, Ail Markandya and Rene Vossenaar, ed., Reconciling Trade and the Environment (United Kingdom: Edward Elgar Publishing Limited 1999) at 42 [hereafter Vossenaar and Jha, The Experience of Developing Countries]. Vossenaar and Jha, The Experience of Developing Countries, supra note 193, at 56. 193  1 9 4  64  have been created based on 'good science,' scientists conflict significantly in their interpretations of the same evidence.  195  Two United Nations organizations—United Nations Environment Program (UNDP) and United Nations Conference on Trade and Development (UNCTAD) initiated a study to investigate the influences of mandatory standards imposed by developed countries. The results of the study reflect the above discussions. The organization examined nearly twenty developing countries and learned that while large companies could easily follow regulations from the North, small and medium sized companies had trouble even receiving information about these standards, let alone follow them. The new WTO 196  Agreement was created to facilitate communication on standards by having nations 197  inform the WTO Secretariat about new domestic regulations and standards.  This  mechanism has not succeeded, since for example, in 1995 Germany, only informed the WTO of two of its new regulations. 2. Voluntary standards  Eco-labeling is, typically a voluntary standard.  It does not pose a problem under the  WTO, as long as it remains voluntary. Eco-labels mostly relate to product processing and production methods. More than thirty countries now have some form of voluntary ecolabeling scheme. Almost all of these systems have different product requirements. Charnovitz, Improving the Agreement on Sanitary and Phytosanitary Standards, supra note 136, at 173. Shahin, How Real is the Debate? supra note 8, at 57. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at 85. The authors discusses that many scholars call for 'a need to design and implement concrete mechanisms for enhancing transparency.' Appleton, Environmental Labeling Schemes, supra note 7, at 197. 1 9 5  1 9 6  1 9 7  1 9 8  65  Recently, western companies and governments have been increasingly environmentally conscious and basing their procurement policies more and more on eco-labels. This 199  tendency of the companies and governments has profound influences on the western consumers, who are also basing their choices on these eco-labels to an increasing extent. As eco-labels are set up on the basis of various environmental, social and 200  cultural requirements in the implementing country, developing countries may find it impossible to live up to each eco-label.  201  ISO 14000 is a typical voluntary standard that might hinder the export of developing countries. Although developed countries insist that the stipulation process of ISO 14000 is open to countries all over the world, it has been proven to be dominated by European and American industries. The reason for this is that developing countries do not have the financial ability to attend all of the consultation meetings because of human and monetary costs involved. Besides, the cost of implementing ISO 14000 is another problem for developing countries that have too many high-polluting sectors and lack sufficient funds to improve them all. Finally, many developing countries do not have the technical capacity to participate in this process actively, in any event.  Even though developing countries have great doubts about the intentions of developed countries that raise the issues of environmental protection within the WTO framework,  202  many of them, if not most of them, are very concerned with their domestic environmental  1 9 9  2 0 0  2 0 1  Appleton, Environmental Labeling Schemes, supra note 7, at 196 and 201. Shahin, How Real is the Debate? supra note 8, at 46. Appleton, Environmental Labeling Schemes, supra note 7, at 196. Also see Shahin, How Real is the  Debate?" supra note 7, at 53 and 54. 2 0 2  Ricupero, Strengthening Complementarities and Reducing Conflicts, supra note 19, at 23.  66 degradation. As indicated by the preparatory research of Rio Agenda 21 and its two 203  conventions, developing countries will continue to suffer the more from biodiversity loss, climatic changes and environmental pollution than their developed counterparts.  204  Leaders of the southern states deal with more serious internal problems that lead to 25,000 deaths daily. The causes of these problems are waterborne diseases, widespread poverty and huge national social deficits in housing, education and health.  The  northern countries do not experience such social problems. This makes them have more resources to deal with climate change, biodiversity, forest loss and fishing issues. Government of the northern countries and the southern countries are faced with different problems. Thus, it can be said that they are dealing with a different agenda, but have the same responsibilities as the developing countries.  206  It is not rational for the southern countries to resist including environmental protection issues in the WTO framework. On one hand, the northern countries are in the dominant 207  position in the WTO. On the other hand, the influences from the industrial sectors in these countries are fundamental. Considering this, it would become more disadvantageous for the developing countries if their resistances to environmental protectionism became so strong that the developed countries would be forced to give up the WTO mechanism for mediating environmental and market access disputes. Also, Ricupero, Strengthening Complementarities and Reducing Conflicts, supra note 19, at 23. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at 65. Appleton, Environmental Labeling Schemes, supra note 7, at 203 and 217. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, Ibid., at 65. Appleton, Environmental Labeling Schemes, supra note 7, at 203 and 218. See USD Homepage <http://iisd.ca> for further reference to USD Rio negotiation (Date accessed July 1999). Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at 65. 2 0 3  2 0 4  2 0 5  2 0 6  207  67  since the environmental awareness of consumers in the developed countries is at a high level, one cannot exclude the possibility that they might resist products from developing countries that are tagged by domestic environmental protection groups as being nonenvironmental. Besides, each country has the sovereignty to decide on its own environmental protection level and corresponding legal regime. As pointed out by the 1998 APEC report, " [T]he cause for such dispute lies in that different economics have based their environmental measures, like environmental standards and eco-labeling on industries, standards, and classifications solely out of their own respective advantages and interests." Objectively, this has placed foreign suppliers in an unfavorable position.  208  Within the existing WTO legal framework, to balance the interrelationship between the environmental protection and market access means introducing more regulations and exceptions to the existing environmental protection regulations; in other words, to expand the application range of GATT environmental exceptions and to elaborate environmental protection regulations and standards.  "Survey on Trade-related Environmental Measures and Environment-related Trade Measures in APEC" (December 1998) Prepare for Economic Committee, Asia-Pacific Economic Co-operation, online: APEC Homepage <http://www.apecsec.org.sg> [hereafter APEC Report].  68  II. Different Responses to Balancing Market Access and Environmental Protection  1. Treaty obligations  Some scholars call this method Judicial Bounding. Treaty obligation is composed of two sets of regulations. The first set is provisions generally contained in a regional trade agreement that not only include permission for the selective invalidation of selective trade restrictive environmental regulations, but also limitations on this invalidation.  209  That is the textual basis for this method. The other set is the enforcement provisions that give a judicial or quasi-judicial body the power to strike down protectionist 'environmental' measures and, in some cases, those measures that unacceptably disrupt trade lacking in protectionist intent. These regulations make up the enforcement 210  mechanism.  See Chapter 7A and 9 of the North American Free Trade Agreement. North American Free Trade Agreement, 8 Dec. 1992, Canada-Mexico-U.S., 32 I. L. M. 289 [hereafter NAFTA]. Article 30 of Treaty Establishing the European Community, 7 Feb., 1992, O.J. (C224) 1 (1992), I.C.M.L.R.573 [hereafter EC Treaty].  69  A. North American Free Trade Agreement practices  a. Textual basis for treaty obligations in NAFTA  Treaty obligations are the crux of NAFTA's goal of preventing product standard from unnecessarily hampering market access. Two different NAFTA, Chapter 7B and Chapter 9 of regulate market access. They form the textual basis of this strategy. These chapters attempt to facilitate free trade between Mexico, the United States and Canada. NAFTA guarantees each party the right to set and maintain environmental health and safety standards consistent with the levels of protection it alone deems appropriate, but the agreement mandates that such measures be based on scientific principles. NAFTA's market access regulations represent its attempt to reconcile trade liberalization with environmental opposition to any circumvention of environmental standards.  Chapter 7B recognizes that each party has the basic right to "establish its appropriate 211  levels of protection."  It imposes four restrictive conditions on the types of standards  that may be adopted in order to prevent protectionists from using these measures to close markets. First, sanitary and phytosanitary standards must be "based on scientific principles and a risk assessment" and must not be "maintained where there is no longer a scientific basis for [them]."  212  211 2 1 2  See NAFTA, supra note 209, at Article 712.2. See Ibid., at Article 712.3.  70  Second, NAFTA requires that "where identical or similar conditions prevail," each 213  party ensure that a sanitary or phytosanitary measure must not "arbitrarily or unjustifiably discriminate" between domestic and imported products or among imported products. In 214  this regard, NAFTA echoes the restrictive language of GATT Article X X .  215  Third, NAFTA requires that each party ensure that sanitary and phytosanitary standards do not constitute an "unnecessary obstacle to international trade." This means that the 216  standards in question must be "necessary for the protection of human, animal or plant life or health" and could be applied only to the extent 'necessary' to achieve the party's 217  chosen level of protection.  This language also derives from GATT Article XX  limitations on environmental exception. Finally, the standards must not create a "disguised restriction on trade between the Parties."  These requirements establish the textual framework for Judicial Bounding  under NAFTA. Where environmental regulations run afoul of these disciplines, they may be challenged as inconsistent with the market access obligations undertaken by NAFTA parties.  Where one NAFTA party believes another has promulgated regulations that  constitute a NAFTA-prohibited barrier to trade, it may call for the formation of a dispute settlement panel to hear its complaint.  Ibid., at Article 712.4. Ibid., at Article 712.4. Ibid., at Article 712.4. Ibid., at Article 712.5. Ibid., at Article 712.5 Ibid., at Article 712.6. Ibid., at Article 723.  1Vi  2 H  215  2 , 6  2 1 1  2n  219  71 Similarly, Chapter 9 recognizes that each party is free to "establish the levels of 990  protection that it considers appropriate."  However, this right is subject to two .  restrictive conditions imposed by this Chapter on the types of standards that may be adopted. First of all, Chapter 9 provides that parties should apply standards nationally and 991  *  from the most favored nation basis.  It also provides that parties may not "prepare,  adopt, maintain, or apply" standards "with a view to or with the effect of creating an 999  unnecessary obstacle to trade."  b. Enforcement mechanism  NAFTA's dispute resolution process includes two features intended to relax tensions between free trade and environmental protection. First, NAFTA seeks to provide the dispute panel with a greater access to expert technical opinions. Either one of the parties or the panel itself may convene a panel of technical experts to render advisory opinions on scientific issues involved in the dispute. This ensures that the panel can at least consider objective scientific opinions in its evaluation of environmental costs and benefits.  223  In addition, the dispute settlement process of NAFTA explicitly provides that the NAFTA party challenging another member of NAFTA bears the burden of proving that the regulation violates NAFTA disciplines in the dispute. Placing the burden on the  "Ibid., at Article 904.2. Ibid., at Article 904.3. Ibid., at Article 904.4. Ibid., at Article 723.3. l  2 3  72  challenging party effectively creates a presumption that the environmental regulation is valid.  224  c. Practices of NAFTA dispute resolution  The only dispute case that occurred under NAFTA was between the United States and Canada in 1996.  In this case, the U.S. challenged trade restrictions imposed on the  importation of dairy poultry from Canada. The U.S. criticized Canadian trade measures for being discriminatory. The NAFTA panel, however, refused to accept U.S. claims and considered the measures as necessary for Canada to maintain its environmental protection level.  B. European Community practices  a. Textual basis of the EC treaty  In the EC, as in otherfreetrade agreements, market access is the central focus. The textualframeworkof this strategy includes Article 30 and Article 36 of the EC treaty.  226  Article 30 of the Treaty Establishing the European Community prohibits "quantitative restrictions on imports and all measures having equivalent effect."  This regulation  Ibid., at Article 723.6. Also see generally Daniel C. Esty, "Making Trade and Environment Policies Work Together: LessonsfromNAFTA" in Damien Geradin ed. (London: Cameron-May, 1995). "NAFTA Panel Mulls New U.S. Charges in Diary- Poultry Case" (6 Sept.1996) Inside U.S. Trade. Article 30 of EC Treaty, supra note 209.  2 2 5  2 2 6  73 generally prohibits restrictions to the free exchange of products within the EC.  Article  36 modifies this regulation by stating that, "the provisions of Article 30 to 34 shall not preclude prohibiting or restrictions on imports, exports or goods in transit justified on ... 770  the protection of health and life of human, animal or plants ..."  Even though the  regulations of the European Economic Community (EEC) treaty on market access and environmental protection seem self-evident, they were mainly developed through cases heard by the EC court. b. Practices of the European Court of Justice  In Europe, the European Court is a significant mediator of conflicts between market access and environmental protection, since it exerts its right to modify free trade legislation to support verifiable environmental values.  7 30  In the Dassonville case,  the Court of Justice interprets the phrase " measures having  equivalent effect" in Article 30 of EEC as being " all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra231  Community trade."  As defined in this case, environmentally—related trade restrictive  Toni R.F. Sexton, "Enacting National Environmental Laws More Stringent than Other States' Laws in the European Community" (1991) 24 Cornell Int'l L. J. 563 [hereafter Sexton, Enacting National Environmental Laws More Stringent than Other States' Laws in the European Community]. See Article 36 of EC Treaty, supra note 209. Case 8/74, Procureur du Roi v. Dassonville et al., 1974 E.C.R. 837. 2 2 9  2 3 0  74  measures would be prevented by this article no matter what their purposes or how they are applied.  232  However, the Court of Justice refined Article 30 through a case called Cassis de Dijon.  233  In this case, the Court of Justice set up the 'rule of reason' principle and the conditions for revoking it.  234  The 'rule of reason' permits Member States to employ measures that  have trade-restrictive effects to protect the health and the environment, so long as they are applied on a non-discriminatory basis. Just as Article 36 of EEC, this ruling exempts measures of social issues from the inflexible control of free trade rules. To be eligible for such exemption and the Article 36 exception, Member States must verify that the measures they employ are 'proportional' to the problem at hand. The Court of Justice 235  further defined this test as: (1) the measures Member States employed must be directly related to the objective they pursued, so that a causal relationship can be demonstrated between the measures and the planned end;  and (2) no other less trade restrictive  alternative is available for the use of the Member States.  237  See Esty and Geradin, Environmental Protection in Regional Trade Agreement, supra note 5, at pp.297298. Also see generally Josephine Steiner, "Drawing the Line: Uses and Abuses of Article 30 EC Treaty" (1992) 29 Common Market Law Review 749 and Eric L. White, "In search of the Limits to Article 30 of the EEC Treaty" (1989) 26 Common Market Law Review 235. These articles criticize that the formula set by this case is too broad. A. Mattera conducted a survey of measures that might fall within the scope of Article 30 EC Treaty, see A. Mattera, "Protectionism Inside the European Community" (1984) Journal of World Trade Law 283. Case 120/78, Rewe-Zentrale AG v. Bundesmonopolverwaltung fur Branntwein, 1979 E.C.R. 649. 2 3 2  2 3 3  234  Ibid.  This test was later developed by two other cases within EEC. One is Case 788/79, Criminal Proceedings against Herbert Gilli and Paul Andres, 1980 E.C.R. 2071 and Case 124/81 Commission v. United Kingdom, 1983 E.C.R. 203,206. The Court ruled that Italian ban on the sale of vinegar other than wine vinegar was disproportionate because there was no causal connection between the ban and the objectives it attempted to promote in the Criminal Proceedings against Herbert Gilli and Paul Andres. See the Judgment of Case 124/81 Commission v. United Kingdom that states, " Whilst the protection of the health of animals is one of the matters justifying the application of Article 36, it must none the less be ascertain whether the machinery employed in the present case by the United Kingdom constitutes a measure which is disproportionate in relation to the objective pursued, on the ground that the same result 2 3 5  2 3 6  2 3 7  75  The Danish Bottles case, another famous case heard by the Court of Justice, is generally recognized as a good illustration of the Court's rationale in balancing market access and environmental disputes.  In 1981, Denmark enacted Order 397 requiring beer and soft drinks to be marketed only in reusable containers. The container had to be approved by the Danish National Agency for the Protection of the Environment (NAPE) which could refuse approval if (1) the containers was not technically suitable for a system for the container's return and reuse; (2) the return system did not ensure that a large percentage of the containers would be reused; and (3) a container of equal capacity, which was both available and suitable for the same use, had already been approved. The Commission thought that Danish law restricted trade in the European Community and urged Denmark to change it. In 1984 Denmark added an amendment to this order that allowed producers to use non-approved, non-metal containers to market a minimum of 3,000 hectoliters of beer and soft drinks per year, provided a deposit-and-return system was established. The Commission challenged this Danish law before the Court of Justice as contrary to thefreetrade obligation of Denmark imposed by the E E C .  239  may be achieved by means of less restrictive measures or whether, on the hand, ... such a system is necessary and hence justified under Article 36." See EC Treaty, supra note 209. Case 302/ 86, Commission of the European Community v. Kingdom of Denmark (1989) 54 C.M.L.R. 619. Also see Sexton, Enacting National Environmental Laws More Stringent than Other States' Laws in European Community, supra note 224, at 565. See also Bradly J. Condon, Reconciling Trade and Environment: A Legal Analysis of European and North American Approaches (2000) 8 Cardozo Journal of International & Comparative Law 1. 2 3 8  76 The Court of Justice first considered the issue of whether measures provided by Danish law had a trade restrictive effect. The Court declared that Denmark's measures amount to "measures having equivalent effect" to quantitative restrictions. It held that Denmark's 240  regulations restricted or potentially impeded utilization of beer and soft drink containers that were lawfully marketed in Member States. Also, its stipulation concerning deposit, collection and reutilization could be equally capable of curbing trade free flow with the European Community. After this analysis, it concluded that this measure be prohibited 241  according to Article 30 of E E C .  242  The Court then proceeded to examine whether Denmark's measure was justified under the 'rule of reasons,'  245  i.e. whether environmental protection can be a mandatory  requirement to limit Article 30's application. In doing so, the Court of Justice first decided whether to add 'environmental protection' to the Article 36 list. After making a survey of various European Community directives aimed at protecting the environment, the Court concluded that the European Community had recognized the importance of environmental protection polices. Moreover, the Court mentioned that the Single European Act expressedly adds environmental protection to the European Community objectives. Therefore, environmental protection can be one exception to Article 30's free trade obligations.  244  Article 30 EC Treaty, see EC Treaty, supra note 209. Case 302/ 86, Commission of the European Community v. Kingdom of Denmark (1989) 54 C.M.L.R. 619. See the judgment of this case, supra note 238. Ibid. See the case of "Cassie de Dijion", supra note 230. See the judgment of this case, supra note 230.  2 4 0  2 4 1  242  2 4 3  2 4 4  77 However, the Court did not stop here. It continued to examine what Cassie de Dijon had said about the Member State's right to enact environmental protection and found that this case did not give permission to do this to Member States. On the contrary, there are two restrictions imposed on this exception. 'Proportional and necessary' is the first one. Second, the measure must be distinctly available in form and substance to domestic producers and to producers in other Member States. Based on the theory from the Cassie de Dijon, the Court found that the obligation to create a deposit-and-return system for empty containers constituted an essential element aiming to secure the re-use of containers. Therefore, the system was proportional to the environmental objectives 245  Denmark was pursuing. As to the NAPE system, the Court found it would compel the foreign producers to make or purchase containers that were already approved and this would entail extra costs and prove very burdensome for foreign producers. They decided that they could not rule for the approval of this system.  246  Thus, some scholars commenting on the implications of the Danish Bottles case are uncertain of the best code of conduct. They observe that in one sense, through 247  supporting the Danish system for deposits and returns, the Court seems to allow Member States to promote internal environmental protection schemes that they deem necessary for domestic environmental protection goals in preference to their own markets. Conversely, the second section of the ruling concerning the NAPE system seems to indicate that the  See the judgment of this case, supra note 230. Ibid. "The Freedom to be Cleaner than the Rest" (Oct. 14, 1989) Economist at 21. Lawrence Gormley, Recent Case Law on the Free Movement of Goods: Some Hot Potatoes, 27 Common Market Law Review, at 825, 846. Also see generally Esty and Geradin, Environmental Protection in Regional Trade Agreements, which summarizes these scholars' point of views, supra note 5.  2 4 5  246  247  78  Court would screen trade hampering environmental regulations, prohibiting those that do not realistically support the goals achieved. However, in my view, the attitudes of the 248  Court of Justice towards the issue of market access and environmental protection are clear. The Court of Justice tried to find a neutral way by which to balance free trade and environmental protection so that optimal social welfare could be attained. It implies, in this case, that the measures Member States wish to take to fulfill their environmental protection objectives be taken in good will and the design of the measures cause as little inconvenience as possible to other Member States. Thus, this may be a good way for Member States to communicate with other Member States and the Commission on any possible adopted trade measures.  Furthermore, we can see from the practices of both NAFTA and the EC that the method of treaty obligation is quite flexible and that judges or panelists do not have to apply trade rules strictly: they can always weigh trade liberalization objectives against environmental protection according the development of social needs. However, this method has its 249  shortcomings, too. Treaty obligation has no precautionary effect, but only a corrective effect.  250  It can only eliminate specific obstacles to trade but is incapable of preventing  new obstaclesfromarising. This is a significant shortcoming in the area of product standards. Since consumers are increasingly expecting more environmentally friendly Esty and Geradin, Environmental Protection in Regional Trade Agreements, supra note 5, at 299. Damien Geradin, Trade and the Environment: A comparative Study of EC and US Law (Cambridge: Cambridge University Press Sept 1997) [hereafter Geradin, Trade and the environment study]. Esty and Geradin, Environmental Protection in Regional Trade Agreements, supra note 5 at 280 the accompanying endnotes No.68: Cass Sunstein, Protectionism, the American Supreme Court, and the Integrated Markets, in 1992: One European Market 127, 141. Also, James Cameron made remarks at the Leige Conference on Regional Trade Agreement" courts are passive; they do not initiate the lawsuits they decide. By contrast, legislatures can stem a problem before it starts. If interferences with free trade... are widespread, this distinction may assume great importance. Of course, the accumulation of precedent has an instructive dimension, framing exceptions and behavior for the future."  2 4 8  2 4 9  250  79  products, governments are enacting an increasing number of regulations governing products' environmental compatibilities, such as requirements concerning the degree of recyclability or biodegradability of a product, the allowable environmental effect of its components, and the size, weight, and content of its packaging. Such stipulations potentially form major impediments for foreign manufacturers, who might have to spend up to several years and sustain enormous legal expenses on challenging that such rules be crafted to benefit domestic manufacturers. From a long-term perspective, collective action in the form of unification of products' environmental standards will have smoother 9 S1  and surer results than individual defenses against environmental regulations. Moreover, treaty obligation requires assessing environmental trade measures on a caseby-case basis. This method makes some environmentalists and their supporters particularly uncomfortable. They feel that by this means, international trade law triumphs over national environmental protection. They argue that this violates the "sustainable development" objectives. Professor Daniel C. Esty gave an example to illustrate such uncomfortable feelings among environmentalists, since although domestic challenges to the U.S. Supreme Court impeding U.S. national environmental laws for obstructing trade 9S9  are minor, they are much stronger against similar NAFTA or WTO rulings.  As can be inferred from the above discussions, the European Community Treaty and NAFTA have relied heavily on the treaty obligation method to balance tensions between trade liberalization and environmental protection. Both of these two systems start by Patti Goldman, "Resolving the Trade and Environment Debate: In search of Neutral Forum and Neutral Principles" (1992) 49 Washington & Lee Law Review at pp. 1283-1289. See also Esty and Geradin, Environmental Protection in Regional Trade Agreements, supra note 5 at 282. Esty, Greening the GATT, supra note 13, at 34-35. Esty discusses the environmental reactions to the GATT tuna/ dolphin decision. 251  252  80 recognizing the importance of' liberalized trade' by limiting the undue use of trade measures. Article 30 of the EC Treaty intentionally includes environmental measures that might have equivalent effects as quantitative restrictions in prohibiting trade measures. Chapter 7B and Chapter 9 of the NAFTA also establish a set of stipulations aimed at regulating trade restrictive measures, particularly environmental trade measures. Both systems echo GATT's fundamental concepts, such as non-discrimination obligations and minimal distortion offreetrade, thus also showing their positive attitude towards trade liberalization.  However, neither systems holds the position that economic benefits brought about by liberalization are priori, or that good environment should sacrifice on the altar of economic benefits, even though they employ different measures to ensure the attainment of the goal of environmental protection. For instance, the European Union uses Article 36 of the EC Treaty and several principles established by the European Court to temper the regulations of Article 30. As stated above, Article 36 allows Member States to adopt trade restrictive measures to protect human, animal and plant life. Measures that are thus adopted by members to prohibit the import of hazardous products are justified under the EC Treaty. Besides, the 'rule of reason,' although it is a typical and comparable concept, established during the Danish Bottle case, also legalizes some trade restrictive measures, as long as they are deemed by the European Court as 'proportionate.'  While environmentalists are still unsatisfied with the method of pursuing ethics of environmental protection adopted by the, they applaud NAFTA and have even praised it  81  as the 'greenest' trade agreement ever drafted. Unlike EC, which cautiously balances trade liberalization with environmental protection, NAFTA has specified environmental protection as its primary policy goal. First, it respects the Member States' right to select their own environmental protection levels to protect their public health and ecological sphere, whether they are stricter than the international standard or not. Second, trade rule designers should bear in mind that the rules they prescribe do not affect the environmental protection level. If a country thinks that environmental regulations of another Member State violate NAFTA, the accuser bears the burden of proving it. The accusing member has to prove that specific trade measures employed by the offending member are not justified under any established environmental exceptions. Third, if the intent of a trade measure is deemed as necessary to preserve the environment, and if it is a needed measure for the environment protection level of that country, the measure is not considered to be an obstacle to international trade. Finally, NAFTA does not follow European Court to utilize the 'proportionality' concept to judge whether a trade measure is appropriate for the environmental problem concerned. Instead, it allows governments to pursue environmental policy goals using the most effective means available, regardless of the level of protection required by the relevant environmental policy. It is NAFTA's efforts to focus on sustainable development that wins the praise of many environmentalists. However, this method is dangerous, too. It might have a negative 253  influence on internationalfreetrade and might result in a decrease of social welfare programs.  For example, former EPA Administrator William Reilly called NAFTA the 'greenest' trade agreement that ever drafted. Professor Daniel C. Esty has a positive attitude toward NAFTA environmental related regulations too.  82 2. Harmonization  Harmonization can be defined as the standardization of any number of trade criteria in order to eliminate barriers to free trade.  A. Pure harmonization  For the purpose of the discussion, I have included total harmonization, international standards, and mutual recognition in my pure harmonization category. I define pure harmonization as those elements which can be harmonized as part of the environmental requirement itself.  B. Total harmonization  Standards can be unified when regulations are completely controlled. In a total harmonization scheme, standards are absolutely identical and no higher or lower standards are permitted. There are numerous advantages to such a system. First, 254  complete harmonization prevents market discrepancies and fragmentation and gives producers acquitted standards to realize their economic scale.  255  Second, total uniformity  prevents confusion with respect to which rules are applicable. When each country relies on its own individual standards for production, confusion about what products are acceptable for importation often arise. Yet, under a uniform scheme everyone is held to  James Krier, "The Irrational National Air Quality Control Standards: Macro- and Micro- Mistakes" (1974) 22 UCLA Law Review at pp.323-325. Geradin, Trade and the environment study, supra note 249. 2 5 4  2 5 5  83  an identical standard.  Third, uniformity facilitates regulatory economies of scale by  allowing officials to share data, policy strategies, and enforcement techniques. Finally, 257  participating parties incur administrative gains from 'network effects.' Adherence to a common standard allows efficiency in technological advances in developing "control technology, training programs, [and] legal systems...."  However, total harmonization is  very inflexible and replete with problems. Its rigidity precludes methods to solve unique, individual problems. Additionally, just as in a deregulated system, efficiency becomes something of a driving force, in this case, trumping environmental considerations.  259  For  example, the EC adopted total harmonization schemes for vehicle emission standards, chemical substances, pesticides and batteries.  260  C. International standards  Implementation of international standards is a good way to improve market access. The most common international standards are the International Standard Organization (ISO) standards and the Codex Alimentarius. International standards may be adopted in two basic ways: the parties entering into the agreement can identify the standards as necessary  Esty, Greening the GATT, supra note 13, at 173-174. Esty explains how total harmonization does to support both environmental protection and trade liberalization. Ibid. Daniel C. Esty, Revitalizing Environmental Federalism (1996) 95 Mich. L. Rev., at 619-620 [hereafter Esty, Revitalizing Environmental Federalism]. Esty, Revitalizing Environmental Federalism, supra note 258, at 619-620. Also see Robert Mendelsohn, Regulating Heterogeneous Emission (1986) 13 Journal of Environment Economy and Management 301. See Council Directive 94/12 Amending Directive 70/220 on the Measures to Be Taken Against Air Pollution by Gases from Positive-Ignition Engines of Motor Vehicles, 1994 O.J. (1 00) 42. Council Directive 76/679 on the Restrictions on the Marketing and Use of Certain Dangerous Substances and Preparations, 1976 O.J. (L262) 201. Council Directive 94/414 Concerning the Placing of Plant Protection Products on the Market, 19910.J. (L230) 1; Council Directive 78/361 on the Classification, Packaging and Labeling of Dangerous Preparations (Pesticides), 1978 O.J. (L206) 13. And Council Directive 91/157 on Batteries and Accumulators Containing Certain Dangerous Substance, 1991 O.J. (L105).  2 5 6  1 5 1  2 5 8  2 5 9  2 6 0  84  for trade, or the standards may be adopted as a rebuttable presumption.  Either way, the  adoption of international standards has certain advantages arising from overall system uniformity. In addition to being easy to enforce, international standards are also time and cost efficient because they are already outlined by trade industries or supranational organizations. Furthermore, international standards ease problems commonly 262  associated with reciprocity and help build a common set of quality standards. International standards strive to give unbiased guidelines and thus the adoption of a set of quality controls effectively facilitates trade that is more faire and free.  The  disadvantages of international standards often relate to their formulaic nature. These standards are often drafted without proper public input and fail to reflect public interests. Furthermore, the drafters often adopt the 'lowest common denominator' 264  approach because it is difficult to satisfy a wide array of public interests. Thus, the regulations simply reflect what the country with the lowest standards is already doing  2 6 5  Additionally, many governments view most of these regulations as voluntary, and therefore they are not enforced.  Chapters 7B and 9 of NAFTA require that NAFTA parties use international standards, such as those adopted by the Codex Alimentarius Commission, the World Health Organization (WHO), or the International Standard Organization (ISO), as a guide in setting sanitary and phytosanitary rules, as well as more general environmental  See generally Patti Goldman & Richard Wiles, Trading Away U.S. Food Safety (Washington D C: Public Citizen and the Environment Group, 1994). Lewis Rosman, "Public Participation in International Pesticide Regulation: When the Codes Commission Decides, Who will Listen?" (1993) 12 Va. Envt'l L. J. 329 at 342. 261  2 6 2  263 2 6 4  265  Ibid. Esty and Geradin, Environmental Protection in Regional Trade Agreement, supra note 5, at 287.  Ibid.  85  requirements. Environmental regulations that conform to these international standards are presumed to be consistent with the market access disciplines imposed in Chapters 7B and 9. In response to the environmentalist critique that international standards may be too low to ensure appropriate levels of environmental protection, Chapters 7B and 9 allow parties to adopt, maintain, or apply standards that are more stringent than international ones.  D. Mutual recognition  As mentioned above, mutual recognition is a flexible form of international standards. As defined, mutual recognition is "the principle that a product that complies with the exporting country's standards should circulate freely within the territory of its trading partners."  2 6 7  This mechanism offers to address market access concerns to some extent.  Compared with the global features of international standards, mutual recognition can only be implemented among nations that have relatively similar standards. This is because importing countries only accept 'foreign' standards when they are convinced that the environmental requirements of the exporting country offer a level of protection close to their own. Although producers do not have to worry about acquiring information concerning other nations' environmental standards and regulations and do not need to adjust to different national standards, they still have to prove that their products satisfy their domestic market standards. This is why the schemes of mutual recognition are insufficient for the task of alleviating environmental policy-derived market concerns. Nevertheless, this mechanism does reduce the burden of manufacturers who only need to  See Chapter 7A and Chapter 9 of NAFTA, supra note 209. Esty and Geradin, Environmental Protection in Regional Trade Agreement, supra note 5, at 287.  86  satisfy one set of standards and hereby allows them to achieve scale economies across multiple jurisdictions. This mechanism is particularly effective among nations that 265  have similar economic development and environmental protection levels. This is 269  exemplified by the fact that it helps to remove trade barrier among the EU nations among that differ insignificantly when it comes to technical standards. Within the EU, pursuant to mutual recognition, manufacturers no longer need to adapt products to satisfy varying standards applied in each of the countries of destination. Instead, they need only display proof that their products satisfy their home market standards. In contrast, when serious disparities among standards exist, as is often the case in the environmentalfield,other tools will be needed to integrate markets. As will be seen in the following sections, such tools may include selective invalidation of trade-restrictive environmental standards and •  770  harmonization of environmental product standards.  E. Technical harmonization  a. Essential requirements harmonization  Essential requirement harmonization is one of the approaches of technical harmonization. Like international standards, this approach avoids developing specific regulations. Essentially, the parties agree on some issues, rather than trying to be all inclusives. Unlike the adoption of international standards, the essential requirements approach is extremely flexible and has a relatively low degree of administration. Furthermore, if Ibid. Alan O. Sykes, Product Standards for Internationally Integrated Goods Market (Washington DC: Brookings Institute, 1995) at 50. Esty and Geradin, Environmental Protection in Regional Trade Agreements, supra note5, at pp.276.  268  2 6 9  2 7 0  87  states with significant economic influence agree on essential requirements, other states are likely to follow. Thus, standards for an entire industry may be outlined. However, this approach may be difficult to structure and takes a long time to develop because of its shallow reach. Also, it focuses only on areas of concern, but defining such areas specifically enough without imposing a very technical regulation is difficult.  In recent years, this 'New Approach' has been increasingly emphasized by the EC in order to harmonize the environmental standards of different Member States. The 271  central characteristic of this approach is to limit the harmonization of the EC level of 'essential requirements' so that thefreemovement of products is ensured. The task of 272  drawing up detailed regulations based on those essential requirements is left to European standardization organizations, such as the Comite Europeen de Normalisation (CEN). If a product meets these specifications, it benefitsfromthe presumption that it satisfies the EC's essential requirements and thus should be allowed to circulatefreelythroughout the EC. The New Approach circumvents the requirement that the Community must have extremely detailed regulatory directives.  It facilitates the decision-making process and  allows the EC to move more quickly toward economic integration.  274  See Council Resolution 136/1 on a New Approach to Technical Harmonization of Standards, 1985 O.J. (C136) 1. Also see Jacques Pelkmans, The New Approach to Technical Harmonization and Standardization (1987) 25 Common MKT. ST. 249 and Esty and Geradin, Environmental Protection in Regional Trade Agreement, supra note 5, at 286 and 301. The mutual recognition discussed in the "Purely Harmonization" part is the basis of "essential requirement". EC required that except essential requirements of products from other Member States are not qualified under domestic environmental regulations, Member State should not prevent the importation of products from other States. Case 120/78, Rewe-Zentrale AG v. Bundesmonopolverwaltung fur Branntwein, 1979 E.C.R. 649. Roszell D. Hunter, "Standardization and the Environment" (10 Mar. 1993) 16 International Environment Report (BNA), at 185 and 189. Esty and Geradin, Environmental Protection in Regional Trade Agreement, supra note 5, at 285 and this article's accompany endnote Number 150, which states that the New Approach having potential environmental implications on trade. And it further listed some Council Directives as examples. These are,  2 7 1  2 7 2  2 7 3  2 7 4  88  b. Pre-standard harmonization  Pre-standard harmonization, in a sense, is one kind of mutual recognition. The difference is that trade partners do not directly recognize each other's environmental standards. Instead, they coordinate their methods of data collection, testing products, scientific methodologies and risk assessments,  2 7 5  thus achieving many benefits of harmonization.  For instance, the OECD chemicals group coordinates the exchange of data and test results on potentially hazardous chemicals, and by doing so facilitates national standard setting. This presents the possibility for one member's technical efforts being available to another. As a result, trade partners improve their domestic environmental protection levels, since one of the impediments to good environmental protection is scarcity of good scientific methods and analytical work on which regulations can be based. For example, a pesticide maker that has met the testing requirements for selling its product in the German market would be able to have regulatory judgments made by French authorities on the basis of the data from Germany. This means that due to such an inter-jurisdictional system of mutual recognition the company does not need to go through additional years of product testing and re-proving, thereby speeding up market entry and reducing the cost of regulatory review. It is no wonder Professor Daniel C. Esty commented that because prestandard harmonization makes sense for both regulators and regulated entities, it offers one of the most promising avenues for responding to market access pressures.  Council Directive 90/396 on the Approximation of the Laws of the Member States Relating to Appliances Burning Gaseous Fuels, 1990 O.J. ( L 196); Council Directive 89/16 on the Approximation of Laws, Regulations and Administrative Provisions of the Member States Relating to Construction Products, 1989 O.J. ( L 40) 12. Esty, Greening the GATT, supra note 13, at 178. 2 7 5  89  The EC has also attempted to harmonize certain forms of pre-standards. For example, manufacturers and importers of all new chemical substances should use harmonized risk assessment procedures (Directive 93/67). Such common procedures ease market entry for companies by ensuring that they do not have to carry out different tests and protocols for each of the Member States in which they want to market their products. The harmonized risk assessment procedures also guarantee basic levels of public health and ecological protection throughout the EC.  c. Public information harmonization  Public information harmonization is, basically, the implementation of a labeling requirement. It has been adopted in some countries with respect to such environmental standards as the eco-label. The advantages to labeling requirements are that they increase consumer awareness, provide consumers with additional information about the product, and allow consumers to discriminate between products, thus influencing the way in which certain products are developed.  276  The problem with labeling in the absence of  other regulatory measures is that it does little or nothing to improve quality control, unless consumers rely on these labels to select products to purchase. Additionally, if different countries adopt different labeling systems, even when employing the same criteria the credibility and reliability of certain labels may be called into question. Thus,  Elliot B. Staffin, "Trade Barrier or Trade Boon? A Critical Evaluation of Environmental Labeling and its Role in the "Greening" of World Trade" (1996) 21 Columbia Journal of Environmental Law, at 205 and 281.  90  though it may be easy to enforce and administratively efficient, the value of eco-labeling may not worth its expenses.  The EC has also adopted an eco-labeling standard designed to inform consumers about the environmental characteristics of products. A Committee made up of Member 277  States' representatives is responsible for establishing ecological criteria for various products. Then, competent bodies in each Member State assess producer applications and approve the use of the label by the successful applicants once criteria have been set for a specific product.  3. Enforcement commitment  The NAFTA environmental side agreement also introduced an approach that is called Enforcement Commitment. Enforcement commitment calls for rigorous enforcement by parties of their respective national environmental rules through requesting that members make commitments to the trade agreement. However, according to Esty and Geradin, 278  "such an approach does nothing to ensure market access while allowing environmental standards to be tailored to each country's individual circumstances and needs." Also, 279  this approach opens up the possibility for using environmental standards as 'green barriers.'  For example, these schemes include Blue Angel of German, Scandinavian White Swan. Also see Ray V. Hartwell III & Lucas Bergkamp, "Eco-labeling in Europe: New Markets—Related Environmental Risks?" (23 Sep. 1992) 15 International Environment Report (BNA) at 629. For further details, please refer to the North American Agreement on Environmental Co-operation for details. North American Agreement on Environment Co-operation, Sep.14 1993, 32 I.L.M.1480. Esty and Geradin, Environmental Protection in Regional Trade Environment, supra note 5, at 276. 2 7 8  2 7 9  91 There is another approach, Laissez-Faire, which means doing nothing to market access and allowing each jurisdiction to regulate affairs as it sees fit. However, this approach is likely to yield poor results. The Laissez-Faire approach may lead countries to use 280  environmental standards as trade barriers. Or, nations might adopt the lowest environmental standards possible and there might be 'a race toward bottom' among countries. Neither NAFTA nor the E U adopts this method.  281  Esty, Revitalizing Environmental Federalism, supra note 258, at pp.629-631. Kevin C. Kennedy, "Reforming U.S. Trade Policy to Protect the Global Environment: A Multilateral Approach" (1994) 18 Harv. L. Rev. at 185.  2 8 1  92  Chapter Four Suggestions for Resolving the Tensions Between Market Access and Environmental Protection; Implications for China  I. Resolving, step by step, the Tensions Between Market Access and Environmental Protection  In the last forty years, multilateral trade negotiations within the GATT successfully decreased tariff costs to a satisfactory level for both developed countries and developing countries. However, it also caused emergence of non-tariff trade barriers. Environmental regulations and standards are one of these. A number of disputes between WTO 282  members have demonstrated the uneasy relationship between the free movement of goods and environmental regulation in the global context. Such disputes include the EC ban on U.S. beef treated with growth hormones,  the EC challenge to the U.S. fleetwide  Corporate Average Fuel Economy mileage requirements for automobiles, and the Venezuelan GATT case brought against the U.S. reformulated gasoline regulations issued under the 1990 Clean Air Act. In each of these cases, the exporting nation felt that environmental standards had been crafted to the advantage of the domestic producers.  Peter F. Cowhey & Jonathan D. Aronson, Globalizing Free Trade (1996) 72 Foreign Affairs, May/ June, at 183. Allen Dick, "The EC Hormone Ban Dispute and the Application of the Dispute Settlement Provisions of the State Code" (1989) 10 Michigan Journal of International Law 872. Esty, Greening the GATT, supra note 13, at pp.257: Appendix C: Key Trade and Environmental Cases. 2 8 3  2 8 4  93 Based on Chapter I and II, it may be safely concluded that the use of environmental regulations as non-tariff barriers does occur.  However, legitimate environmental protection cannot be neglected. From a theoretical perspective, paying attention to environmental issues will increase the practicability and policy attractiveness of a multilateral trade regime. More importantly, integrating environmental elements into a multilateral trade system will ensure its internal consistency as an international economic administrative organization. From a practical perspective, the higher the level of economy harmonized within a multilateral trade regime, the higher the required level of harmonization of trade and environmental corporation and integration. Without this parallel harmonization, there would arise even more tensions between market access commitments and other policy choices (including •  environmental protection).  285  Furthermore, support from environmental protection  groups would increase the probability of a multilateral trade agreement approval in the northern countries, where political pressures from the environmental protection groups are strong.  286  As to strategies of giving more attention to environmental protection elements in the 987  WTO, many different theories exist.  However, scholars generally agree that an  international organization must coordinate linkages between the international trade  Esty, Revitalizing the environmental federalism, supra note 258, at 613-638. Ibid., at 624-627. Ricupero, Strengthening Complementarities and Reducing Conflicts, supra note 19, at pp.29-30. Schorr, Fishery Subsidies and the WTO, supra note 19, atl63. Also see Brack, Environmental Treaties and Trade, supra note 80, at 287. 286  2 8 7  94 regime and environmental protection in order to avoid eventual market failure.  288  Specifically, this implies that polluters will be required to internalize true environmental costs. Then, trade liberalization can generate economic growth without harming the environment, because goods that cause pollution will no longer be under-priced and overconsumed.  289  However, in view of the present situation, it will be a long time before the WTO re-starts the Millennium Round and comes to further agreements. Thus, it makes sense to 290  categorize legal strategies for resolving the tensions between free trade and environmental protection into the short and long-term.  1. Short-term strategies  Before any new agreements can reached in the near future, the WTO has to appropriately respond to the environmental protection demands of the northern countries to avoid any possible unilateral action by these countries. The most practical and effective way of achieving this is to use the quasi-judicial power of the Dispute Resolution Body of the WTO to balance tensions between market access and environmental protection by focusing on well-recognized environmental values. This way environmental protection would promoted and market access ensured.  Daniel C. Esty, Linkages and Governance: NGO at the World Trade Organization (1998) 19 Pennsylvanian University Journal of International Law at 709 and 714. This was first suggested by Esty and later accepted by many scholars. Jeffrey L. Dunoff, "From Green to Global: Towards the Transformation of International Environment Law" (1995) 19 Harvard Environment Law Review at 241 and 259. Ricupero, Strengthening Complementarities and Reducing Conflicts," supra note 19, at pp.27-28.  2 8 8  2 8 9  2 9 0  95 A. Democratizing the dispute resolution mechanism  GATT and WTO panels have long been scrutinized by environmentalists as undemocratic and inflexible. Therefore, the first step in democratizing the dispute resolution mechanism is changing the dispute resolution process. Making resolution process more transparent and opening up channels of public supervision would be good initial democratization measures.  291  Further measures would include changing the way  trade specialists make judgments on environmental issues and allowing more participation of non-governmental groups (NGOs) in the resolution process. The participation of NGOs in making judgments on environmental issues (including environmental regulations and standards) will make the judgments more neutral and persuasive, because many NGOs have members who are environmental specialists.  In  fact, in the Shrimp - Turtle case, the WTO appellate body took the profound step toward opening up the WTO dispute resolution process to environmental groups. At the initial hearing, the panel rejected briefs submitted by NGOs, concluding that "accepting nonrequested information from non-governmental sources would be ... incompatible with the provisions of the Dispute Settlement Understanding (DSU)." The appellate body, 293  however, overturned this restrictive view, recognizing that" a panel has the discretionary authority ... to accept and consider ... information and advice submitted to it, whether requested by it or not."  2 9 4  Although this development falls short of the full-fledged  access demanded by environmental NGOs, it helps soften the criticism by many of these  1  2  3  Motaal, The Agreement on Technical Barriers to Trade, supra note 133, at 235. Esty, Environmental Governance at the WTO, supra note 1, at pp.99-102 and pp.105-110. Appellate report on import prohibitions on shrimps, supra note 112.  96  organizations that the WTO dispute settlement process is unduly insulated and shortsighted.  295  B. Emphasize sustainable development  Another way to 'green' the dispute resolution mechanism requires panelists to put more emphasis on the objective of 'sustainable development' and to enforce it in any potential dispute. In other words, the panelists should try to balance the disputes between market access and environmental protection within the whole social welfare context. Furthermore, panelists should emphasize the generally recognized environmental protection principles. In this regard, the EC practices may be a good starting point for the WTO. The EC treaty recognizes the importance of the principle of preventive action, the Polluter Pays Principle and the precautionary principle the core policy rules governing European Community action.  296  2. Long-term measures  The basic way to mediate tensions between market access and environmental protection is to improve rules related to the environment in the WTO Agreements. On one hand, the WTO should try to improve and gradually harmonize national environmental regulations and standards. On the other hand, it should revise regulations on environmental  Ibid. See Article 130r(2) of the European Economic Community Treaty, 25 Mar. 1957. European Economic Community Treaty, online: EU Website <http://europa.eu.int/eur-lex/en/treaties/dat/ec-cons-treaty-eu.pdf> [hereafter EEC].  295  2 9 6  97 protection exceptions in order to improve the Judicial Bounding of the WTO. This way, the environmental living circumstances can be perfected while goods are traded freely.  A . Harmonizing related environmental standards within the WTO framework  It is not possible for the WTO to harmonize environmental standards to the same degree as in the E U because members of the WTO are from different economic levels. However, at the same time, efforts that the WTO did make to standardize environmental requirements are not sufficiently. Like Chapters 7B and 9 of N A F T A , the TBT and SPS Agreements merely call on WTO members to adopt international standards as regulatory requirements. However, standards in many areas have not been internationally harmonized, and thus divergent national rules continue to inhibit the free movement of goods.  After observing the successful harmonization of the E U , the United States initiated efforts to develop common environmental standards among its major trade partners for some major import and export products.  297  For example, the U.S. proposed the creation  of an international forum to harmonize U.S.-EC environmental and safety regulations for automobiles.  298  In fact, this proposal extends the coverage of the U N Economic  Commission for Europe (UN/ECE) working party on vehicle construction mandate. The EC Commission responded with a proposal for the convergence of emission standards for  " Car Makers Search for Common Environmental Standards" (April 16 1996) European Environment. Ibid.  1  98 non-road motor vehicles between the EU and the U.S. in order to facilitate a large transAtlantic market in such vehicles.  299  Increased globalization will exert greater pressure on the WTO to harmonize its environmental regulations. However, considering different development levels of the WTO members, adoption of a single standard may not be feasible or even desirable. 300  Looser forms of harmonization drawn from regional trade agreements might be more appropriate for the WTO. Such looser forms of harmonization would be especially appropriate for the technical harmonization strategies. The 'essential requirements' harmonization strategy used in the EC is especially useful for the WTO. As was shown previously, the central characteristic of this approach involves limiting harmonization to the adoption of core standards. The task of developing detailed product specifications is left to European standardization organizations. Other technical standardization methods, such as pre-standard harmonization and public information harmonization, are also of some referring value to the WTO. As in the EU, core regulatory standards for some basic products may be discussed and regulated by officials from member countries for the purpose of facilitating global trade, whereas technical experts from pertinent organizations could ensure that the standards fulfill environmental and other requirements. Pertinent organizations, for example, the UNEP and other famous NGOs should be publicly recognized and accepted. This technical supervision method would satisfy environmentalists, who complained that the work of the WTO and other  "Transatlantic Norms Agreed on for Mobil Machinery Emissions" (3 July 1996) 14 Environment Watch. The difference in economic status of WTO members resembles that of NAFTA members.  99 international standardization groups does not take sufficient account of environmental considerations.  B. Article XX revision"  Although current Article XX (b) and (g) provide a certain legal basis for environmental protection, they do not expressly recognize 'environmental protection' as a legitimate exception under Article X X .  302  Furthermore, as it is mentioned above, the range covered  by these two paragraphs is too narrow. Thus, it is necessary to open up and extend exception coverage, and ultimately to realize the environmental protection objective.  a. Article XXV waiver of GATT  Article IX, Section 3(a) and 4 of GATT1994 reads:  In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements, provided that any such decision shall be taken by three fourths of the Members unless otherwise provided for in this paragraph.  (a) A request for a waiver concerning this Agreement shall be submitted to the Ministerial Conference for consideration pursuant to the practice of decision-making by consensus. The Ministerial Conference shall establish a time-period, which shall not exceed 90 days, to consider the request. If consensus is not reached during the time-period, any decision to grant a waiver shall be taken by three- fourths of the Members.  '"Waiver" discussion can be found in Brack, Environmental Treaties and Trade, supra note 80, at 292. Article XX of GATT, See GATT Agreement, supra note 4.  2  100 A decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms and conditions governing the application of the waiver, and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates. In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify or terminate the waiver. 303  The new waiver procedure seems to be stiffer than prior rules regarding waivers in the GATT. The new waiver procedure adds three limitations on the waiver request. The first is that the new rule asks for three fourth majorities instead of two third majorities. The 304  second is that the waiver has an expiry date.  The third is that the waiver be annually  reviewed. In other words, any waiver that is granted for a period of more than a year 306  must be reviewed by the Ministerial Conference on an annual basis. Some commentators suggested that due to the stiffened three fourth majorities requirement, waivers are harder to secure, making this option less flexible. It would not bring MEAs into the GATT as quickly as it did before.  Contrary to this suggestion, the waiver is still a temporarily effective way to balance conflicts. According to the chart provided by the OECD in 1998, the number of states that belong to both CIES and WTO is 118, while the number of states that belong to  Article IX (3)(4) of the Agreement Establishing the World Trade Organization. Agreement Establishing the World Trade Organization, online: WTO Homepage <http: //www. wto.org/English/docs_e/legal_e/04_wto.pdf> Article XXV of GATT Agreement. GATT Agreement, supra note 4, at 272. See WTO Panel Report, United States - Import Prohibition of Certain Shrimp and Shrimp Products, 37 I.L.M. 832 (1998). Ibid. Nissen, Achieving a Balance between Trade and Environment, supra note 89, at 901 and 906. 3 0 3  3 0 4  3 0 5  306  3 0 7  101 WTO is 134. Thus, 87.4% of the WTO states also belong to CIES. Furthermore, 93.3% of the WTO states also belong to the Montreal Protocol, and 74.6% of the WTO states also belong to the Basel Convention.  Therefore, the three fourth majorities are not as  difficult to attain as the commentator describes. It is still safe to say that the GATT waiver is general and flexible in character. It is general because it allows the members to waive any obligations imposed upon them by the Agreement in exceptional circumstances not provided for in the Agreement. Once a waiver is approved, it will bind all members regardless of how they voted on the waiver. The provision is flexible because members have the right to define "specific categories of exceptional circumstances" and/or "prescribe such criteria as may be necessary for the application of the waiver paragraph." Although these have to be accepted by the majority of members, the statistics show that it is not difficult to get the majority approval. Furthermore, the waiver is not a rule revision and thus requires no formal acceptance formalities, but 309  acts de facto as a substitute for rule revision. Because of these characteristics, most of the apprehension and, arguably, attraction of the waiver provision are due to its potential use as a de facto amendment power to the GATT. Even though it is not a long-term means, such as environmental amendment that has finally been established after the Millennium Round, a waiver is still a useful tool for exempting members from obligations under any new MEA (those concluded after the Millennium Round).  In order to employ the GATT waiver to resolve MEAs' compatibility with GATT is profoundly important for the environmental reform of WTO and the development of See APEC Report Annex, supra note 208. See Esty and Geradin, Environmental Protection in Regional Trade Agreements, supra note 5, at pp.330-331. 3 0 8  3 0 9  102 future MEAs. A waiver has the capability of playing a critical role as the bridge to significant environmental reform in the GATT. The waiver itself is not only an environmental reform, but will be the basis for further reforms. The ultimate cause of tension of trade and environment is misunderstandings between environmentalists and advocators of free trade. A waiver can show that trade and environmental policies can coexist and be supportive to each other. At the same time, a specific trade measure may be important and necessary for the goals of MEA, because its effect on future panel decisions on trade and environment could be profound.  The waiver must be well-structured in order to secure passage by the WTO members and be effective. The following strategies may be included in developing such a waiver:  The waiver should be detailed. At present, the waiver should name no multilateral environmental agreements other than the Montreal Protocol, the CIES and the Basel Convention. By focusing on these three well-established agreements, the risk of 'overwhelming' the members with MEAs that include trade provisions will be minimized. These three MEAs are commonly recognized as having significant effect 310  on trade and are generally accepted by most of the countries in the world. The chances of a waiver's success in satisfying the environmental purposes of these three MEAs are excellent. The major obstacle to the successful grant of a waiver will be objections from non-MEA parties. In the case of CITES and the Montreal Protocol, the number of countries who are parties to both the environmental agreements and GATT is sufficient to  3 1 0  See Schoebaum, The Continuing Search for Reconciliation, supra note 180, at pp.281-283.  103  achieve the necessary three fourths majority to secure a waiver. In the case of the Basel 311  Convention, countries seeking a waiver may have to persuade the recalcitrant nations by applying diplomatic pressure.  The waiver should be as comprehensive as possible. The degree and importance of trade restraints are important factors for the waiver request to pass. The waiver applicant should demonstrate either that the MEA has only a minimal burden on trade, or that trade restraints are a significant cause of the problem involved. In this case, the chances of the waiver application being granted are maximized.  Although waivers have been granted on numerous occasions to remove some obligations of MEA parties under GATT, and can be deemed as an alternative to solving the conflicts between MEA and GATT, their use for this purpose is still undesirablefromthe policy perspective. First, these waivers provide no assurance as to the consistency of the trade provisions with GATT in future MEAs. Procedurally, a waiver to these specific MEAs could institute a precedent whereby all future MEAs seeking to use trade provisions would have to receive approvalfromthe GATT before they were able to proceed. The 312  overall impression that a GATT waiver is an arbitrator on the legitimacy of the MEAs and that GATT and goals of liberalized trade it presents have priority over all other concerns is closely related to this point.  Furthermore, there is no assurance that GATT  can provide MEAs' trade provisions that will satisfy the 'exceptional circumstances' of  311 3 , 2 3 1 3  The Percentages have been discussed in the previous part of this article. Brack, Environmental Treaties and Trade, supra note 80, at 288. Brack, Environmental Treaties and Trade, Ibid., at 288.  104 Article XX: 5 .  314  Also, the responses from members of non-MEA parties to the waiver  will probably be negative because a grant of a waiver is effectively a de facto acceptance of the ME A by those non-parties who have resisted joining the agreement at an earlier time. The most probable result is that the non-parties will vote against a waiver or reserve TIC  their rights to vote.  Finally, voting for each environmentally—related trade measure is  inconvenient for the members.  b. Using the amendment procedure to modify Article XX  The amendment procedure can provide a mechanism for WTO members to set up criteria to ensure that environment—related trade measures are consistent with GATT through negotiation.  b.l Improvements to the amendment procedure  The old amendment procedure prescribed by GATT is so strict that no amendment has been enacted under it according to Article XXX of GATT (except amendments to MostFavored-Nation and Concessions):  other amendments to this Agreement shall become effective, in respect of those Contracting Parties which accept them, upon acceptance by twothirds of the Contracting Parties and thereafter for each Contracting Party upon acceptance.  See Esty and Geradin, Environmental Protection in Regional Trade Agreements, supra note 5, at 319, which discusses the inconsistency of the case-by-case decision process. This is especially a problem when a trade measures under the Basel Convention is requested by a WTO member for exemption. Furthermore, future MEAs will also face this difficulty. 3 1 5  105 Thus, only those accepting the amendment are bound by it. It may be concluded that under the original GATT rules, only a unanimously accepted amendment can be effective. Current WTO rules open up the possibility for an amendment that does not gain full acceptance to be effective. Article X (3) of WTO Agreement states that,  Amendments to provisions of this Agreement, ... of a nature that would alter the rights and obligations of the member, shall take effect for the Members that have accepted them upon acceptance by two-thirds of the Members and thereafter for each other Member upon acceptance. The Minister Conference may decide by a three-fourths majority of Members that any amendment make effective under this paragraph is of such natural that any member which has not accepted within the period specified by the Ministerial Conference shall befreeto withdraw from WTO or to remain a Member with the consent of the Minister Conference.  Thus, the WTO Amendment Procedure allows an amendment to bind all members, even those who do not accept it. Unlike the treaty obligation, adding a new amendment is a preventive approach, which will provide much certainty to countries seeking legal environmental protection with the support of the multilateral trade mechanism.  b.2 New amendment  The idea is to add a new environmental exception to Article XX as a subsection. The standards and contents of this new exception cannot be formulated solely by the WTO, but should extensively heed the opinions and views of environmental protection groups, especially those of the NGOs. Furthermore, the interests of the developing countries should be taken into account. In other words, this new environmental exception should not become a tool of internal market protection. Also, an appendix should be attached to  106 the WTO Agreements to enlist regulations concerning the conditions of revoking environmentally—related trade restrictive measures. The new subsection of Article XX and the Appendix will become components of the WTO Agreement and apply equally to each member of the WTO. Actually, this approach asks both the developed countries and the developing countries to make concessions. Reaching a compromise is a fundamental element in the process of international law formation, and it is certain that both parties will benefit from it. The clarification of environmentally—related trade measures will ease the competitive pressure of imports for the developed countries to some extent. The developing countries can not only use the negative veto to oppose the incorporation of some measures, but can restrict their counterparts' use of environmentally—related trade measures according to the attachment and Appendix.  Considering all this, Niseen suggested that Article XX be revised as follows:  Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this agreement shall be construed to prevent adoption or enforcement by any contracting party of measures: (k) undertaken in pursuance of obligations under a multilateral environmental agreement listed in Annex 5, provided the measure is proportional to the environmental harm. If the measure is not proportional, then the party may bring a dispute.  316  Nissen, Achieving the Balance between Trade and Environment, supra note 89, at 925 and 926. Also see Brack, Environmental Treaties and Trade, supra note 80, at 293. Brack went further to divide "amendment" approach into "Agreement-specific exemptions" and "criteria-specific exemptions." 3 , 6  107 The concept of 'proportion' of the SPS Agreement is incorporated into this new environmental exception. As Daniel Esty suggests, " the severity of the trade action taken should vary with the locus and severity of the environmental harm."  317  Measures taken  might include anything from labeling to sanctions or to an outright ban. It must be remembered that environmental protection measures are far less developed in the developing countries than in the northern countries. Thus, it is vital for them to ask for a transitional period in this new agreement as in other WTO Agreements.  The Annex should state that MEAs will be exempted from GATT obligations pursuant to article XX (k) if the criteria below are satisfied: (1) The extent of participation by countries concerned with the specific problem is adequate; (2) scientific evidence of the environmental problem being addressed is provided; and (3) the MEA is open to accession by all who want to join. 318  Under the first prong (the level of participation), the question is how many countries are necessary to make the MEA legitimate? Some commentators suggest that participation by the majority of the GATT members is required. Yet, while there should be more than two parties in the agreement if it is to receive automatic acceptance, participation by the majority of the GATT members should not be required. Some commentators also suggest that membership should reflect a substantial proportion of both producer countries and those affected by the practice in question. This requirement is probably not practical because it gives veto power to the MEAs who are causing the environmental problem. The crucial factor in determining the minimum MEA membership requirement is that the  Martin A. McCrory and Eric L. Richard, "The Sea Turtle Dispute: Implications for Sovereignty, The Environment and International Trade Law" 71 U. Colo. L. Rev. 334. Nissen, Achieving the Balance between Trade and Environment, supra note 89, at 928.  3 1 7  3 , 8  108  number should be significant enough to ensure that it is indeed a multilateral effort, as opposed to a disguised restriction on trade.  The second point—using scientific evidence—ensures that there is a true environmental problem present needing a remedy. The scientific method should be used because it is generally more objective than individual judgments. It will further provide protection to developing countries that are worried that some MEAs are deliberately attempting to discriminate against them. Furthermore, it will separate environmental issues from government choices that reflect values. Values are not generally based on science, but are instead based on emotions or moral concerns.  The third condition simply ensures that no country is barred from choosing to participate intheMEA.  319  Besides this subsection and the annex, another clause should be added to the Annex for future MEAs. Namely, if more than two-thirds of the WTO members participate in any future MEA, these members may propose a suggestion to the Minister Conference to include any obligations prescribed in the new MEA the in the Annex. Trade—restrictive measure in this Agreement will become permissible under WTO by a three fourth majorities acceptance of the Minister Conference.  319  Ibid.  109  II. China's Current Circumstances of Market Access and Environmental Protection and its Legal Strategies  1. Potential environmental impacts on China's foreign trade regime  The current international market is changing rapidly in response to consumer preference for environmentally friendly products in the developed countries. There is an increasing public perception that trade liberalization needs to consider environmental and other social values. Chinese exports are likely to encounter environmental challenges due to increased environmental concerns of consumers in some countries.  An Asia Pacific Economic Cooperation (APEC) report shows that 52.5% of China's export flows to the markets of developed countries. Of this amount, 12.8% goes to the EU, 19.8%) to the U.S. and 17.02% to Japan. Essentially, most of China's exports flow to the above three areas, whose environmental standards are most stringent. The APEC study also indicates that environmental regulations and standards in the U.S., Japan and EU countries have mainly impacted twenty four categories of products in the APEC developing countries.  320  Of the twenty-four categories of products surveyed, twenty-one  APEC report, supra note 208. For discussions of "effects of environmental regulations on China's exports" please refer to Rene Vossenaar and Veena Jha, "Environmental Policy, Market Access and Competitiveness: the Experience of Developing Countries", in Veena Jha, Ail Markandya and Rene Vossenaar, ed., Reconciling Trade and the Environment (United Kingdom: Edward Elgar Publishing Limited 1999) at 115.  110  are affected b y e n v i r o n m e n t a l m e a s u r e s .  321  C h e m i c a l products are the most affected,  f o l l o w e d b y a g r i c u l t u r a l products, forest products a n d fishery products.  P r e d i c t a b l y , as a major export country o f textile products, agriculture products a n d r a w materials, C h i n a i s under a lot o f pressure to change its current practices. A l t h o u g h it i s h o p e d that C h i n a w i l l f o l l o w the lead o f d e v e l o p e d e c o n o m i e s a n d incorporate s o m e e n v i r o n m e n t a l standards a n d regulations into its l a w s , it is u n l i k e l y to h a p p e n i n the near future. It w i l l not be i m m e d i a t e l y p o s s i b l e f o r C h i n a to adjust its e n v i r o n m e n t a l p r o t e c t i o n standards to the h i g h l e v e l r e q u i r e d b y the d e v e l o p e d countries. T h i s w i l l result i n the r e d u c t i o n o f its export variety. In a d d i t i o n , C h i n e s e products are o f l o w e r e n v i r o n m e n t a l q u a l i t y than those o f the d e v e l o p e d countries and the cost to i m p r o v e e n v i r o n m e n t a l q u a l i t y i s huge. T h i s situation m a y create a s l u m p f o r C h i n a as f o r e i g n c o m p a n i e s compete for the market share a n d C h i n a looses to m o r e e n v i r o n m e n t a l l y f r i e n d l y countries. F i n a l l y , the danger that d e v e l o p e d countries m a y abuse e n v i r o n m e n t a l regulations s t i l l exists. T h i s w i l l b r i n g potential trade conflicts between C h i n a a n d other developed countries.  2.  322  Suggested strategies for C h i n a  C h i n a s h o u l d not be frustrated w i t h its situation, because 'green w a v e s ' u l t i m a t e l y p o i n t to n e w e c o n o m i c circumstances o f sustainable d e v e l o p m e n t .  321  3 2 3  The economic  ibid.  322Qin,  Tianbao, "Several Considerations on China's Foreign Trade in 'Green Era'" (1999) 1 International Economy and Trade Research at pp.63-67. Rene Vossenaar and Veena Jha, "Environmental Policy, Market Access and Competitiveness: the Experience of Developing Countries—China," in Veena Jha, Ail Markandya and Rene Vossenaar, ed.,  3 2 3  Ill transitional period will require China to adjust to pertinent environmental policies and regulations, and improve its cooperation with international organizations and nongovernmental organizations.  324  A. The macro-policy adjustment  The guiding principle for improving foreign trade policies and regulations is to emphasize sustainable foreign trade development.  325  Ideally, foreign trade should not  harm the environment while expanding, but should instead promote environmental protection and natural resource conservation.  This trade pattern requires governments to fully implement basic environmental protection policies to obtain comprehensive benefits of foreign trade. They must shift their mentalityfromlarge quantity and fast trading to suitable scale, suitable speed and sustainable development. They must learn to depend on technology innovation to control negative impacts of foreign trade on the environment and they must advance environmental quality of products. This trade also requires governments to respect other nations' sovereignty to protect their domestic, human, animal, plant, and environmental concerns.  Reconciling Trade and the Environment (United Kingdom: Edward Elgar Publishing Limited 1999) at 120[hereafter Vossnaar and Jha, Environmental Policy, Market Access and Competitiveness: the Experience of Developing Countries—China]. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at pp.66-67. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, Ibid., at 87. 3 2 4  3 2 5  112 At the same time, this trade pattern does not mean that we should restrictfreetrade in order to protect the environment. Instead, under the sustainable development guiding principle, we should continue to promote free trade. On one hand, trade-related environmental protection regulations should be formulated in good will with no intention of utilizing them as legitimate 'green barriers' against other members. In addition, all possible legal resources should be used to resist other members' abusing environmental regulations.  B. Upgrading foreign trade policies and regulations  326  Under the planned economy, the emphasis of China's foreign policies and regulations are placed on the generation of foreign currency. This policy, based on short-term interests 327  that have caused abuse of natural resources, should be abolished entirely. However, the sustainable development principle requires that export expansion does not sacrifice natural resources and the environment.  The Foreign Trade Law of China made some improvements in this regard. Article 16, 328  17, 21, 24 and 25 enumerate seven environmentally pertinent circumstances, under which China has the right to limit or prohibit the importation or exportation of trade and services. These circumstances are for the protection of public interests, non-renewable domestic resources, lives or health of the people, ecological environment and natural  Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at 87. "Policy Research on Interactions between China's Foreign Trade and Environmental Protection" (August 1999) online: USD Homepage< http://iisd.ca>. Foreign Trade Law, People's Republic of China Adopted at the 7 Session of the Standing Committee of the 8 National People's Congress, promulgated on 12 May 1994 and effective as 1 July 1994. 3 2 6  3 2 7  3 2 8  th  th  113 environment. They are also used where it is necessary to restrict imports of agriculture, animal husbandry or fishery products; where it is necessary under international treaties or agreements concluded or acceded by China; and where it is required by other laws or administrative regulations. All of these restrictions or prohibitions should be applied only where they are necessary.  These provisions show China's efforts of integrating environmental protection into its foreign trade regime. However, compared with the complex system of the developed countries, China's provisions are too abstract and lack enforceability. Additionally, they echo the subjective and restrictive languages of GATT that requires that such measures be applied only when necessary. Finally, the flexible language of "where laws or administrative regulations contain provisions prohibiting or restricting the import or export of... wild animals, plants goods or articles such as the products of such wild animals and plants... such import or export shall be handled in accordance with relevant laws or administrative regulations" could potentially be criticized for the lack of 329  transparency.  Thus, more detailed regulations have to be worked out for the purpose of promoting sustainable development.  330  In formulating sustainable import and export regulations, the  following suggestions should be taken into account. The first important measure in upgrading export policies and regulations is to upgrade the products' environmental  There are two other regulations later enacted as responses to these suggestions: Interim Rules for the Impact of Electromechanical Products, and Interim Rules of Limitation for the Import of Ordinary Goods. However, this is still not enough.  114  requirements and to integrate international standards and measures into these requirements. Second, some regulations should be enacted to reduce or limit the export of primary products which directly derive from natural resources, and to encourage the exports with more technological content. Finally, packing requirements need to be 331  upgraded in the foreign trade area.  Recent years have shown more and more trade  conflicts triggered by regulations concerning packaging materials. This illustrates that old packaging, which does not satisfy environmental protection standards of many developed economies, has become a big problem for China. Thus, a 'green packaging' system should be set up to meet the need for environmentally—friendly packaging in the international market. Rigorous review and approval procedure established by multilateral environmental agreements are valuable references for China as it integrates 'green elements' into its import policies and regulations. China should also strictly follow international obligations to control or ban trade in wild animals and plants prohibited by international conventions. Supervise in importing hazardous wastes, prevention of harm to the environment and human health by the importing equipment and products and making imports inductive to effective allocation and supplementation of natural resources are issues that should be borne in mind when formulating new import policies and regulations for China. Import policies and regulations should encourage and provide conveniences for importing advanced technologies and management skills. Encouraging advanced technologies and management skills and prohibiting products that can harm the environmentfromentering China should be one of the main goals of  Vossenaar and Jha, Environmental Policy, Market Access and Competitiveness: the Experience of Developing Countries, supra note 323, at 129.  3 3 1  115 China's foreign trade policy.  332  Foreign trade regulations should fully implement related  multilateral environmental agreements' provisions. They should state expressly that importing hazardous wastes should be done under supervision. Imports of equipment and products should not pose any threat to the environment and human health. They should, on the contrary, be inductive to the effective allocation and supplementation of natural resources. Every effort should be made to introduce advanced 'green technologies' that are practical and that effectively utilize natural resources and environmental protection. These advanced technologies should be carefully chosen to promote the implementation of cleaner production and processes in enterprises to minimize energy and resource consumption and to eliminate pollution in the whole production process.  C. Upgrading environmental laws  333  In recent years, China has ratified a number of international environmental agreements.  334  The basic principles of these conventions and China's obligations under them should be reflected in China's environmental policies and regulations, particularly the Environmental Protection Law. However, Chinese management and control measures in its environmental policies generally stress environmental impacts caused by economic activities such as industry and agriculture, communication and transportation activities,  Hu Tao and WanHua Yang, "Environmental and Trade Implications of China's WTO Accession—A Preliminary Analysis" (Sep 2000), online: USD Homepage <http://iisd.ca>. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development? Supra note 15, at 87. Vossenaar and Jha, Environmental Policy, Market Access and Competitiveness: the Experience of Developing Countries, supra note 323, at pp. 121-123.  3 3 3  3 3 4  116 while rarely considering environmental impacts on trade activities. Therefore, the lie  necessary control measures for them are lacking.  However, as the new market economic system is established and gradually improved, some provisions in the environmental and natural resource policies formulated in the context of a planned economy will no longer meet the needs of the new economic system. Therefore, there is a need to speed up environmental legislation so as to establish a system of environmental policy and regulations that is compatible with the market economy. Specifically, environmental management of trade activities should be taken into account for the purposes of preventing trade activities from damaging the ecosystem and increasing environmental pressures.  D. Move towards 'green measures'  336  Although most of 'green measures' such as eco-labels and environmentally friendly management are voluntary and fall beyond the jurisdiction of environmental or trade law, they have played a very strong role in promoting enterprise management and trade development.  Some Chinese scholars conducted a study on the China Hair refrigerator's relevant experience.  In early 1990, European countries imposed a ban on the imports of  To be concrete, China's environmental protection regime is composed of the Environmental Protection Law, Marine Environmental Protection Law, Law on the Prevention and Control of Water Pollution, Law on the Prevention and Control of Air Pollution, Law on the Prevention and Control of Noise Pollution and Law on the Prevention and Control of Environmental Pollution by Solid Wastes. Jha and Vossenaar, A Positive Agenda on Trade, Environment and Development, supra note 15, at 87. 3 3 5  3 3 6  . 117 refrigerators that use Freon as refrigerant. This ban caused a heavy blow to China's 338  refrigerator export to the EU.  Hair was among one of the affected manufacturers. To  survive this challenge, Hair began to develop new environmentally friendly refrigerators and was granted a "EU Greeri Certification"fromEU in 1990. The result of this was boosted exports to overseas market for Hair in an amount of $80,000 in 1992 alone. Other Chinese industries and the government of China should draw lessons from this successful experience and adopt more practical 'green measures.' Chinese governments may regulate preferential policies to encourage enterprises, strengthen environmental management, implement environmental management standards such as ISO 14000 and apply eco-labels.  E. Strengthening international cooperation  Foreign departments and environmental departments should work closely together and participate actively in international cooperation and exchange.  Many existing international environmental conventions contain trade measures and apply them as important instruments for reaching environmental goals. Therefore, foreign trade departments should actively coordinate with environmental departments to jointly participate in negotiations concerning international environmental laws. Negotiations  Xia Qing, Liu Zunwen and Wang Yu, "Eco-labeling" (1996), online: USD Homepage <http://iisd.ca>. Chinese refrigerator exports to the European markets in 1991 dropped to 230,000 from 560,000 in 1988, a fall of 59% with the gross export value declining by 58%, falling from US$ 130 million to just US$ 54 million during the same period. 3 3 7 338  118  should be chaired by related international organizations dealing with the relationship between trade and the environment and safeguarding China's interests.  China should make full use of provisions concerning special treatment to developing countries in related international environmental agreements, including grants or preferential loans from bilateral, multilateral and non-governmental sources. Furthermore, China should strive for environmental technology transfer in fair and preferential terms, to upgrade its levels of environmental management and technological levels. International environmental conventions should be used to prevent the transfer of any pollution.  Cooperation with some developed countries and international organizations should be promoted to establish sustainable development zones of foreign trade in China and to discuss possible routes for sustainable foreign trade development.  Cooperation with developed countries, international organizations and non-governmental organizations should be promoted in order to gain support and assistance, enhance personnel exchange and environmental education in the foreign trade area.  Cooperation with developing countries should challenge unreasonable environmental standards put forward by the developed countries. As mentioned before, some environmental standards are easily utilized by the developed countries as 'green barriers' to protect internal industries. Although there is not much evidence that this is a serious  119 problem, nationalistic use of environmentalism is a real danger for the developing countries. Therefore, developing countries should work together to protect their legitimate interests under the WTO.  Foreign trade departments and environmental departments should cooperate internationally, exchange research and obtain international financial and technical assistance to strengthen information exchange and training in the fields of trade and environmental issues.  120  Chapter Five Conclusion  The promotion of free trade in the international context should never avoid discussing the elements that influence it, such as labor and environmental protection standards. The current WTO regime fails to provide vigorous mechanisms to fulfill the goal of environmental protection. As the administrator of international trade, the WTO believes that protection of the environment should not block the free international flow of goods. However, at the same time, WTO also reinforces in its preamble and other statements that 'sustainable development' is one of the most fundamental goals that it is pursuing this century. Unfortunately, until now the WTO has not been able to mediate successfully the interrelationship betweenfreetrade and environmental protection.  As for how to solve the tensions between free trade and environmental protection, scholars of economics and environmental science propose different schemes. The proposals range from treaty obligation to harmonization and enforcement commitment, and generally have many discrepancies. However, all of them can relieve the tensions betweenfreetrade and environmental protection to a certain extent. The European Union mainly relies on environmental standard harmonization, while making judicial measures subsidiary. NAFTA mainly relies on judicial measures, while allowing an increased involvement of environmental NGOs in the dispute resolution process.  121  The WTO has to synthetically employ these academic proposals to alleviate the tensions between free trade and environmental protection, and to finally resolve this conflict. The EU and NAFTA have both provided practical experiences in this regard. The new negotiation round has not yet begun, and it is unlikely that it will reach a firm environmental agreement. Thus, in the short term the WTO has to rely on its dispute settlement panels to accept technical advice from NGOs in dispute settlements, so that it can balance the interrelationship between free trade and environmental protection and achieve optimal development. However, this is only a corrective mechanism. The most desirable method is to adopt a precautionary mechanism that harmonizes environmental standards gradually and to the greatest extent, and thoroughly revises Article XX Exception to improve the legal basis of treaty obligations.  China is one the countries faced with the severe challenge of market access and environmental protection. Although this challenge has aroused much domestic attention, there are still many details that need to be worked out. Only by reforming related domestic foreign trade policies and reinforcing international cooperation can China successfully survive this challenge and realize the goals of sustainable development.  122  BIBLIOGRAPHY  International Treaties: Agreement on Sanitary and Phytosanitary Measures, 15 Dec. 1993, online: WTO Homepage:  <http://wvvrw.vv1;o.org/english/docs_e/legal_e/l5-sps.wpf>.  Agreement on Technical Barriers to Trade, 15 Apr. 1994, online: WTO Homepage: <http://vvfww.v^o.org/english/docs_e/legal_e/17-tbt.vvpf>.  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Bradnee Chambers, ed., Trade, Environment, and the Millennium (United Nation: University Press, 2000) 65.  Jones, T., "Economic Globalization and the Environment: an Overview of the Linkages" in OECD ed., Globalization and the Environment: Perspectives from OECD and Dynamic Non-member Economics (OECD 1997) 17.  130  Kennedy, K. C , "Reforming U.S. Trade Policy to Protect the Global Environment: A Multilateral Approach" (1994) 18 Harv. L. Rev. at 185.  Kenwood A.G. & Lougheed A.L., The Growth of the International Economy 1820-2000: An Introductory Text (London, New York: Routledge, 1989).  Kramer, L., "Environmental Protection and Article 30 EEC Treaty" (1993) 30 Common Market Law Review 25.  Kromarek, P., "Environmental Protection and Free Movement of Goods: the Danish Bottle Case" (1990) 2 Journal of Environment Law No.l 124.  Malloy R. P., Law and Economics: A Comparative Approach to Theory and Practices (St. Paul, Minn: West Pub. Co., 1990).  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