How does the WTO seek to balance the interests of free trade and environmental protection?

As the world becomes more aware of the acute problems that arise with the environment, and knowledge of environmental disasters has increased with widespread media coverage and the lucid arguments of specialist groups. Though not a new ideology, the 1972 Stockholm Conference marked a recognition of the concerns that often relate economic growth with negative social and economic development.[1] The Secretariat’s study in at the Stockholm Conference investigated the interconnections between environmental policy and its impacts on trade, this led to the creation of EMIT[2] which was tasked with further investigating the impacts.[3] In parallel, China’s accession to the WTO sparked further concern as its history of trade practices had shown little regard for environmental protection.[4] The WTO has since taken numerous measures designed at achieving a healthy balance between its primary purpose, trade liberalisation, and its peripheral ‘duty’, environmental protection; it is debatable whether such measures have been successful.

The first and most mentioned step was the addition of “sustainable development” into the WTO preamble. Comparisons show that this element was absent from the GATT 1994 and it is suggested that this addition marks a reorganisation of priorities. Furthermore, Article XXII of the WTO adopts the principle laid down in GATT Article XX(g) that whilst discrimination in terms of trade shall be allowed, as an exemption to the normative prohibitions, where the exceptions are concerned with the conservation of natural resources. However, the Appellate Body (AB) has been tasked with applying test in a manner than ensures it is only invoked where appropriate. To this end, the case of US-Shrimp evidences the AB asking whether bans were justifiable under Article XX(g).[5]

In respect of the above, Reid prefers the test adopted by the AB in considering the necessity of a measure as opposed to the typical EU tests which considers proportionality, it is argued that the latter test compels or encourages a consideration of a crude cost-benefit analysis.[6]

Another example of the trade-environmental balance is shown by the fact that whilst, in general terms, trade subsidies are prohibited as they can be an indirect means of distorting competition, the WTO has allowed subsidies for environmental purposes after it has been recognised that environmentally friendly trade practices need to be encouraged.[7] One area where the WTO seems not to have acted as efficiently is that of taxation. Some nations are in the habit of taxing environmentally harmful emissions are part of their pledge to make trade practices more environmentally friendly; conversely those who do not tax emissions could be seen as providing an indirect subsidy to their industries – this provides a disincentive to those who are taxing their emissions by reason of a distortion of competition.[8]

In all, whilst the WTO has moved forward with regards to environmental protection, a more consistent approach is required in order to prevent their being a disincentive to those who are otherwise concerned with environmental protection.

[1] World Trade Organisation, ‘Early Years: Emerging Environment Debate in GATT/WTO’, Available: <> [accessed: 29.03.2013].
[2] GATT group on Environmental Measures and International Trade.
[3] Fn.1.
[4] Xiaomei E, ‘China’s WTO Accession and Sustainable Development: Challenges and Policy Responses’ (2009) 43(3) J.W.T. 541, 548.
[5] United States — Import Prohibition of Certain Shrimp and Shrimp Products WTO case Nos. 58 (and 61). Ruling adopted on 6 November 1998.
[6] Emily Reid, ‘Squaring the Circle for Tomorrow’s World: A Comparative Analysis of the Approaches of
the EC and WTO to balancing Economic and Non-economic Interests in International
Trade’ in Takis Tridimas and Paolisa Nebbia, European Union Law for the Twenty-first Century, (Hart, 2004), 303, 314-315.
[7] Agreement on Subsidies and Countervailing Measures – as discussed in: Thomas L. Brewer, ‘The WTO and the Kyoto Protocol: Interaction Issues’ (2004) 4(1) Climate Policy 3, 7.
[8] Bradley Condon, ‘Climate Change and Unresolved Issues in WTO Law’ (2009) 12(4) Journal of International Economic Law 895, 901.