National treatment and Environmental protection

National treatment and environmental protection: Balancing right to free trade with sustainable development

 

 

Introduction

The World Trade Organization's (WTO) decision in the Tuna Dolphin Cases (I and II) and the Shrimp Turtle Case, in particular, highlights the growing tension between environmental protection and international trade as well as the challenge that the WTO faces in trying to find a solution that strikes a balance between the two, i.e., being environmentally conscious while upholding its goal of defending free trade. Many environmental scholars believe that free trade inevitably excludes environmental protection because the WTO consistently interprets its environmental exceptions so narrowly, despite the fact that its enforcement powers far exceed those of environmental treaties.[1] This research paper attempts to analyse the foresaid two cases, and endeavours into presenting an answer to the assumption if the aforesaid statement is in actuality credible. The said endeavour will be made via an analysis of exceptions under Article XX of the GATT in light of the Panel and Appellate Body reports made in the Tuna Dolphin case (I and II) and the Shrimp Turtle case.

Tuna Dolphin Case (I and II)

In The Tuna Dolphin Case I, the United States imposed import restrictions on yellowfin tuna from Mexico that had been taken in purse-seine nets in the eastern tropical Pacific.  The United States put a complete ban on Mexican tuna caught in dolphin-killing nets after determining that Mexico had exceeded this quota in accordance with the Marine Mammals Act (MMPA) of the US.  The National Treatment Principle was breached as an internal rule by the United States' measure, according to a tribunal appointed by GATT.[2] In the Tuna I case, the panel construed Article XX(b) as being “necessary” thereunder. The ruling barred any effort to impose trade restrictions unilaterally to protect the world's animal population or natural resources. According to the panel, "necessary" solely refers to the one measure that is best in line with GATT's core principles. So long as there are less limiting options, no measure can satisfy the exception. Yellowfin tuna import limitations were at issue in the Tuna II dispute once more, but this time the "intermediary country" clause of the MMPA was at issue. In contrast to Tuna I, the panel in Tuna II concluded that extra-territorial measures were covered by the "relating to" phrase in Article XX(g)'s "relating to the conservation of exhaustible natural resources".  [3] Nonetheless, Tuna II limited measures to protecting those exhaustible resources as determined by GATT, meaning the least inconsistent measures.

The ruling in Tuna I substantially determined how Article XX(b) should be interpreted. As a result, Article XX(b) does not apply to resources that are outside the ambit of a member state, and the term "necessary" has been defined in a specific manner which is narrowly tailored. Measures are exempt under Article XX(g) if they are implemented with limitations on domestic production or consumption. A comparison of the Tuna I and Tuna II cases reflect how there is a lower standard to be met under Article XX (g) which allows for application of extra-territorial measures in contrast to Article XX(b) but deems that both provisions under Article XX exceptions provide for the use of only the least inconsistent measures so as to safeguard free trade even when providing for exceptions under environmental protection.

Shrimp Turtle Case

In the Shrimp Turtle case, the United States embargo largely affected developing countries that did not adhere to the United States standard, which required TED usage on all shrimp trawlers and whose fisheries contained sea turtle habitat. These nations contended that the unilateral actions taken by the US amounted to environmental imperialism and were really a thinly veiled attempt at protectionism. [4] Embargoes are undoubtedly one of the more protectionist ways to enforce environmental regulations. Because they lack the economic might to respond, developing countries are an easy target in protectionist schemes. The legislative background of Section 609 demonstrates that the commercial benefits of an embargo to the American shrimp industry were in fact taken into account when the law was adopted.[5]

The shrimp embargo, according to the United States, falls under XX(b) since it is a necessary precaution to safeguard animal life, specifically the sea turtle. As an alternative, the United States contended that the embargo was protected under XX(g) since sea turtles are a finite natural resource. The concerns raised by developing nations in the Shrimp Turtle ruling are similar to those raised in the Tuna cases, namely that Article XX exemption measures must be "least inconsistent" with GATT principles and that multilateral actions should be preferred over unilateral ones. These defences against protectionism are undoubtedly essential to the majority of panel conflicts.

For a measure to fall under the ambit of Article XX of the GATT,  three aspects are to be considered – (1) its inconsistency with GATT; (2) if it is provisionally justified and (3) if it passes the Chapeau test. It is to be noted that the Chapeau test hereunder acts as a safeguard to prevent abuse of exceptions. In the Shrimp Turtle case, the United States measure's ability to pass the chapeau depended on whether it satisfied the requirements of exceptions XX(b) and XX(g). A measure may discriminate, but not in a "arbitrary" or "unjustifiable" way, according to the chapeau of Article XX. Although the Appellate Body upheld the Panel's ruling invalidating the United States embargo, its rationale provides encouragement for future environmental protection measures. The Appellate Body determined that Article XX(g) exemption applied to Section 609. The Panel shouldn't have ignored the explicit exceptions of Articles XX(b) and XX(g) in favour of the chapeau of Article XX, according to the Appellate Body. Sea turtles do qualify as an exhaustible natural resource, according to the Appellate Body's analysis of Article XX(g)'s text. This ruling is noteworthy not just for the reasoning behind it but also for the approach the Appellate Body took in coming to its decision. In accordance with Article XX(g), it was determined that Section 609 was a measure that was 1) "relating to" the conservation of exhaustible natural resources and 2) implemented in connection with limits on domestic prawn harvesting.  The Appellate Body then went back to its fatal analysis of the Article XX chapeau after making these steps, though. The Appellate Body determined that the interpretation of Section 609 had led to "unjustifiable discrimination" in violation of the Article XX chapeau, concurring with the first Panel.

The GATT/WTO pact should be read in light of current concerns among the international community regarding environmental preservation and protection, the Appellate Body ruled in the Shrimps Turtle case. This attention on "the actual application of the measure" by the Appellate Body in the Shrimp Turtle Case offers some hope for the future. The Appellate Body's comments in conjunction with the interpretation of Article XX(g) suggest that future environmental policies like Section 609 might be successful if their implementation does not result in "unjustifiable discrimination" across nations. The WTO Preamble acknowledges the importance of environmental factors in interpreting the WTO Agreement, but the main goal of that agreement is still to promote economic growth through trade. Meanwhile, GATT provisions are essentially geared towards liberalising access to markets on a non-discriminatory basis.

Conclusion

Therefore, we can ascertain that even though the reading into of Article XX of the GATT by the WTO might on the face of it seems to be consistently interpreting its environmental exceptions so narrowly that free trade inevitably excludes environmental protection in a way, taking into instance the final decisions in both the Tuna Dolphin Case and Shrimp Turtle Case which ruled against the US in a way, it must be noted that the same is only a reflection of protecting free trade for all, especially the developing nations who are a step behind in technological advancements and who need time to pace up to reach the standard of care the developed nations possess the potential to effectuate. The WTO has an onus upon itself to prevent any deceitful advantage taking by the developed nations to restrict the free trade of developing nations because of their lag in technological advancement or economic lag under the garb of exceptions provided for under Article XX. Therefore, the panels are conscious while spelling out a reading of Article XX exceptions but WTO has been taking consistent and constant effort to look at the larger picture and provide for more environmentally conscious measures and reading into the provisions as is reflected through the appellate panel report in the Shrimp Turtle Case.