Are International Trade and Protection of the Environment Enemies?
Are International Trade and Protection of the Environment Enemies?

As demonstrated by the protestors in Seattle, the effect of international trade on the environment has been one of the most contentious elements in the world-wide debate about globalization. Opponents of globalization fear that uncontrolled economic growth, fueled by free trade, harms the environment by causing more pollution and exhaustion of natural resources. Furthermore, they suspect that environmental protection laws are weakened under the guise of promoting free trade by corporations and governments unconcerned about the negative environmental effects of commerce.

In contrast, many corporations, governments, and citizens in developing countries (and some in developed countries as well) are willing to accept a certain level of environmental damage in exchange for economic well-being. They fear that environmental protection laws are really ways for developed countries to prevent their goods from competing fairly.

These concerns, however, are relatively recent. When the first General Agreement on Tariffs and Trade (GATT) came into force in 1947, there was no such explicit acknowledgement of any broad linkages between trade and the environment. The only mention of the environment came in Article XX, which contained exceptions to the basic rules of the treaty. Those exceptions allowed countries to impose measures “necessary to protect human, animal or plant life or health” or “relating to the conservation of exhaustible natural resources” so long as those measures did not amount to unfair discrimination against foreign products or operate as disguised restrictions on trade. For decades, no further exploration of the trade-environment linkages was made within the GATT framework.

In the early 1970s, however, when the environmental movement was gaining strength internationally, the members of the GATT were invited to submit comments for consideration at the UN (United Nations) Convention on the Human Environment, held in Stockholm, Sweden in 1972. The secretariat of the GATT prepared a study on the impact on international trade of various measures proposed to deal with pollution, but the study did not address the larger issue of the balance between economic development and environmental protection (GATT, 1971).

The GATT also set up the Group on Environmental Measures and International Trade (EMIT) to provide advice to GATT members on trade policy and pollution issues. EMIT, however, was never called upon for advice until 1991, when governments began preparing for the UN Conference on Environment and Development, to be held in Rio de Janeiro, Brazil, in 1992.

EMIT held two years of meetings on the relationship between trade and the environment, eventually producing a report that said there was no inherent contradiction between environmental protection by individual countries or through multilateral treaties and the GATT trading system. Nevertheless, the report also said that the GATT was not the forum to review national environmental laws or develop international environmental standards. The role of environmental concerns in international trade was thus not spelled out, the importance of the GATT’s orientation toward free trade was emphasized, and the issue was not addressed.

Meanwhile, trade disputes involving environmental protection that would demonstrate the conflicting positions were rare until the 1990s. With minor exceptions, the GATT dispute resolution system never addressed the conflict between the free trade principles of the treaty and environmental protection under the Article XX provisions. That changed in 1990 when Mexico and Venezuela challenged a U.S. law intended to prevent dolphins from being killed in the tuna-fishing process. The case was the first in a series of disputes in the 1990s whose outcome in GATT dispute resolution panel reports seemed to prioritize free trade over the environment and galvanized opposition to free trade among environmentalists.

 

Next: The Tuna-Dolphin Case