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Some most controversial trade-related environmental issues dealt with by the provisions in these WTO agreements would be inquired into here. (1) Subsides: subsides can contribute either positively or negatively to the environment. Subsidies might be beneficial when they are used to encourage environmentally beneficial activities or technologies, and on the other hand, they are widely considered distort trade and cause environmental degradation by encouraging the overuse natural resources. During the Uruguay Round, the contributions that subsides make to the environment were considered and two agreements, the Agreement on Agriculture and Subsides and Countervailing Measures, make certain exemptions for environmental subsides. (2) Eco-labelling: labeling products is an important environmental policy instrument. Well designed programmes for eco-labelling can be effective environmental policy instruments, which may be used to foster environmental awareness amongst consumers. They, however, could be the trade barriers if eco-labels developed by different countries based on the same criteria. The principal WTO rules dealing with labelling are those of the Technical Barriers to Trade (TBT) Agreement. There are two issues at the heart of the eco-labelling debate are: firstly, the labelling requirements and practices should be compatible with the principle of non-discrimination, and further discussions are needed on how criteria based on processes of production methods (PPMs) that are not related to the product itself should be treated under the TBT Agreement.
(III) Dispute Settlement
When the disputes about trade restrictions that aim at the environmental protection arise between GATT/WTO members, which could be brought before a panel to decide. These disputes could be discussed here respectively by (i) Trade restrictions aim at the protection of the domestic environment. For instance, in October 1990, a panel ruled against Thailand’s restrictions on the import of foreign cigarettes and its higher taxes on imported as opposed to domestically produced cigarettes (GATT, 1990). The panel ruled against Thailand because its measure treated foreign cigarettes less favorably than domestic ones, and this trade discrimination was not necessary to achieve its health objectives. (ii) Trade restrictions aim at the protection of the environment outside a country’s jurisdiction. One of the most famous decisions is shrimp appellate report in 1998. An appellate body overruled an earlier panel report concerning the United States restricting import of shrimp and shrimp products that threaten sea turtles. The appellate body ruled against the way the United States imposed its own regulatory standards on foreign countries, but it did not rule against a need for protection for sea turtles. The body emphasized this point by a full paragraph: “We have not decided that the protection and preservation of the environment is of no significance to the Members of the WTO. Clearly, it is. We have not decided that the sovereign nations that are Members of the WTO cannot adopt effective measures to protect endangered species, such as sea turtles. Clearly, they can and should. And we have not decided that sovereign states should not act together bilaterally, plurilaterally or multilaterally, either within the WTO or in other international fora, to protect endangered species or to otherwise protect the environment. Clearly, they should and do.” The panel further pointed out that United States did not negotiated the similar agreement with the complaining countries, India, Pakistan, Thailand, and Malaysia, as the Inter-American Convention they had signed to protect sea turtles.
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