The Earth is changing, its future looks bleak. Yet, we, the world, produce and consume goods as if nothing were at stake. How is it, then, that “the WTO does not discuss climate change?”, asked Amina Mohamed, once one of the shortlisted candidates for the post of new Director-General at the World Trade Organization (WTO).
There are multiple reasons for this, many of which are both legal and political. However, the WTO faces a new major crisis: its Dispute Settlement Body has ceased to properly function since the US blocked the appointment of new Appellate Body (AB) members. Consequently, climate-concerned WTO member states can no longer enforce their right to appeal to the AB to defend measures, including the ones aimed at fighting climate change.
Technical, you say? Allow me to explain how the AB can play an essential role in allowing broad-ranging action against climate change, and why the next WTO Director-General should be chosen for their plan on solving this issue.
BACK TO THE BASICS
What is the WTO? The WTO was born out of the 1994 General Agreement on Tariffs and Trade (GATT). It was given the mandate to “serve as a forum for negotiations on trading rules as well as a mechanism for dispute settlements in trade issues”, explains Stanford economics professor Anne O. Krueger.
WTO members are bound by the GATT and other WTO agreements. The Dispute Settlement Understanding (DSU), one of such agreements, wields much authority. The DSU, often seen as the WTO’s “crown jewel”, provides for a Dispute Settlement Body (DSB) to be its enforcing hand. The DSB, in turn, establishes an impartial ad-hoc panel whose role is to evaluate both legal and factual issues of a dispute between member states before producing a report. The parties can then appeal the panel’s report to the tribunal’s Appellate Body (the infamous AB).
Clearer? Great, but while you may have survived my WTO/DSU crash course, you are probably still wondering what climate change has to do with it all!
TRADING WITH THE ENVIRONMENT IN MIND
With its 163 members, the WTO is the world’s largest trade negotiation organisation. The large membership means that the body has great potential, as it can orientate the practice of international trade through international talks (which could result in new binding measures). Such talks could focus on implementing coherent measures for sustainable development and the protection and preservation of the environment on a global scale.
Environmental awareness is already enshrined in the WTO’s mandate. The Marrakesh Agreement states, in the very first paragraph, that the parties should act with respect to “the optimal use of the world’s resources in accordance with the objective of sustainable development”. Furthermore, the WTO’s Committee on Trade and Environment examines how global trade at the WTO could further environmental protection. Some possible measures include the removal of tariffs on environmental goods or boosting the diffusion of green technologies by fostering investment and innovation into environmentally aware solutions.
The measures envisioned by the Committee on Trade and Environment require member-state impetus that would likely have an impact on the state’s trading partners. Thus, chances are that states willing to implement environmental policies pertaining to trade will face some backlash from another state and end up before the DSB defending such policies on the basis of general exceptions permitted in article XX.
GATT article XX allows governments to enable policies inconsistent with GATT obligations in specific spheres. This includes article XX(b) allowing measures “necessary to protect human, animal or plant life or health” and article XX(g) relating to the conservation of exhaustible natural resources.
APPELLATE BODY: SORROW… AND HOPE?
This is when the AB comes back into our story. Its role in permitting states to pursue their objectives of fighting climate change is not to be overlooked; in the famous US - Gasoline case, the panel found that the US requirement that certain gasoline be cleaner-burning so as to lower motor emissions was a violation of GATT article III:4. The US then presented a defense based on aforementioned articles XX(b) and XX(g). With regards to XX(g), the seemingly climate-aware AB ended up overturning the panel’s conclusion on that point and accepted the justification, understanding the green objective of the American policy.
But that was when the AB was able to function. Though it is not a given that the panel would decide in a manner contrary to climate change action, if the AB crisis remains unresolved, legally contentious “climate measures” risk being either stricken by the panel’s sole decision, or worst, enforced by the implementing state despite WTO laws.
Therefore, while the world trades goods as if nothing were at stake, one should now hope that the new WTO Director-General will be chosen for their plans on solving the Appellate Body crisis to allow and promote environmental-friendly interpretations of WTO measures.
Simon is a dual BCL and JD student as well as an Islamic Studies candidate at McGill University, Canada. His research interests cover public international law, comparative constitutional systems, national security laws, international trade law, public law as well as international politics and policy matters. He is also a volunteer researcher and coordinator at a pro bono organisation defending the rights of low income migrant workers in Canada.