According to Agenda 21, international trade and environmental laws should be mutually supportive. Nowhere is this challenge greater than in the relationship between the WTO disciplines and the trade provisions of multilateral environmental agreements.

Of the 200 or so MEAs currently in existence, over 20 incorporate trade measures to achieve their goals. This means that the agreements use restraints on trade in particular substances or products, either between parties to the treaty or between parties and non-parties, or both. Although this is a relatively small number of MEAs, they are some of the most important: the 1975 Convention on International Trade in Endangered Species of Flora and Fauna (CITES), the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer, the 1992 Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal, and the Cartagena Biosafety Protocol to the 1993 Convention on Biological Diversity (see Box 2-3). As well, the Convention on the Control of Persistent Organic Pollutants, currently under negotiation, will certainly contain trade measures.

Trade-restricting measures in an environmental agreement may serve either of two purposes (see the more complete discussion of this topic in section 2.4.4). First, they may control trade itself, where trade is perceived to be the source of environmental damage that the convention seeks to address. CITES, which requires import and export licences for trade in endangered species, is a good example. Another is the Rotterdam PIC Convention, which calls on parties to notify other parties before certain types of exports, and allows parties to ban some imports.

Second, trade-restricting measures play two types of enforcement roles. They provide an additional incentive to join and adhere to the MEA by barring non-parties from trading in restricted goods with parties. If you are not a party to the Basel Convention, for example, you cannot ship waste to or import waste from any of the parties. And these measures help ensure the MEA's effectiveness, again by restricting trade with non-parties. This prevents "leakage," where non-parties simply increase production of the restricted good and ship it to the parties that have restricted their own production. The Montreal Protocol, for example, bans trade with non-parties in ozone-depleting substances and products containing them, a provision that many observers agree was crucial to the wide international support the Protocol has achieved. It is difficult to see these kinds of enforcement roles being filled without trade measures.

The problem is that such measures may conflict with WTO rules. Chapter 3 described the obligations of WTO members to observe the most-favoured nation and national-treatment principles, as well as provisions on eliminating quantitative restrictions (Articles I, III and XI). An agreement that says parties can use trade restrictions against some countries (non-parties) but not against others (parties) may violate all three articles. It discriminates between otherwise "like" products based on their country of origin, it imposes quantitative restrictions, and it may treat imported goods differently from "like" domestic goods.

Such trade-restricting measures might be used in two ways. First, a party could use them against another party (for example, the prior informed consent system of the Rotterdam Convention is used just among parties to the Convention). Most analysts argue that this is not a problem, since both countries have voluntarily agreed to be bound by the MEA's rules, including the use of trade measures. This may be true where the trade measures in question are spelled out in the agreement, but problems may arise where the agreement just spells out objectives, and leaves it to the parties to make domestic laws to achieve them. Parties to the Kyoto Protocol, for example, may fulfill their obligations (spelled out in the Protocol) to lower greenhouse gas emissions by any number of trade-restrictive measures (not spelled out). Although WTO members have expressed hope that disputes between parties might be settled within the MEAs themselves, a party complaining about the use of such non-specific trade measures would almost certainly choose to take its case to the WTO.

Second, a party could use trade measures against a non-party, where both are WTO members. Here, the non-party has not voluntarily agreed to be subjected to the MEA's trade measures. As with party-to-party measures the trade-restricting party may be violating the non-party's rights under WTO rules, but here the non-party might take the matter to the WTO even if the measures are spelled out specifically in the MEA. To date no WTO or GATT dispute of this type has arisen. The spectre of a potential conflict, however, has generated considerable concern in the environment and trade communities. As well as threatening the integrity of existing MEAs, the potential for conflict with WTO rules is a near deal-breaking concern in new MEA negotiations, as demonstrated by the difficulties in drafting the Biosafety Protocol, the Kyoto Protocol and the Rotterdam Convention.

The WTO is addressing this issue in the CTE, where it has been on the agenda since the Committee's 1995 inception. Three types of proposals have surfaced:

1. To interpret the general exceptions of Article XX to create a 'window' for MEAs;
2. To seek WTO waivers for MEAs case by case; and,
3. To draw up lists of criteria or guidelines that trade measures would have to meet to be considered acceptable.

Some countries also suggested that the status quo was sufficient to deal with the problems of potential conflict.

So far it has been impossible to reach agreement. Some countries are concerned that the window approach would set dangerous precedents for other social issues and open the WTO to protectionism. The waiver approach has been criticized for failing to provide certainty and guidance to MEA negotiators. And both the waiver approach and the criteria approach seem too much like trade policy-makers passing judgment on international environmental law (some MEAs are older and have more members than the WTO). Some of these criticisms are blunted by proposals that incorporate elements of more than one approach.

In the end it is clearly in the interest of both the environment and trade communities to find a solution to the potential conflicts between the two regimes of law.

Chapter 5: Suggested readings