Export/import restrictions on products

Under the GATT, attempts to ban environmentally damaging products are seen as being contrary to the rules of free trade. Examples of such bans would include bans on products which contain heavy metals such as batteries and bans on throw-away packaging. Bans on aluminium cans or the imposition of deposit systems would affect foreign producers, and are therefore considered to be trade-distorting and unnecessary since packaging can otherwise be dealt with through a waste disposal system.

Countries such as Indonesia and the Philippines prohibit or limit log exports to control the rate of logging and thereby protect their local forests and industry. Such bans have been opposed by Japan and the European Community (EC) as being contrary to the GATT rules.

Countries may also wish to ban imports of hazardous materials and wastes. However, the GATT only allows this if local production or disposal of the same material is also banned. Belgium has recently been taken before the European Court of Justice because it banned some hazardous waste imports. This could mean that if Australia builds a facility for dealing with organochlorine wastes or radioactive wastes, it will not be able to limit imports of these types of wastes from other countries for disposal.

Back...

Export/import restrictions on unsustainable practices

Even though there is provision under the GATT for countries to argue the case for environmental standards that are applied to products, there is no provision for standards to be applied to production processes and methods used in producing a product. The GATT precludes a country from acting to prevent environmental damage in another country or in the global commons. This is because placing a trade barrier on a product because of the way it is produced in another country is seen as breaching that other country's national sovereignty. One example of this is the Dutch proposal to ban imports of tropical hardwood logged in an unsustainable way by the year 1995. This would not be allowed by the GATT.

A test of this occurred in September 1991 when Mexico complained against the US ban on tuna from the eastern tropical Pacific. The USA banned this tuna because too many dolphins were being killed in the process of obtaining it. The Mexicans argued that the USA was unfairly discriminating against them. The GATT panel ruled in Mexico's favour, arguing that 'regulations governing the taking of dolphins incidental to the taking of tuna could not possibly affect tuna as a product' (quoted in Van Bennecom & Van Brakel 1992, p. 10). Therefore, whether or not Mexico had regulations against this practice was not relevant to the trade in tuna. The primary motivation for this tuna ban on the part of the USA may well have been to protect its own tuna industry, but a ban that was primarily motivated by environmental concerns would be unlikely to meet with a better reception under the GATT.

Back...

Lowering of environmental standards

The GATT encourages international standards (harmonisation) and discourages countries from maintaining their own higher standards unless these are to protect human health or safety, the health of animals and plants, or the environment. Even in these areas, the onus is on the country wanting to implement higher standards to prove scientifically that the higher standards are necessary and that the same goals could not be achieved in a way that does not affect trade.

An example of this is provided by the standards for pesticide residues in foods. If the standards adopted internationally are those set by the Food and Agriculture Organisation (FAO), countries with more stringent standards (up to fifty times tighter in some countries) would have no choice but to accept imported goods with higher levels of pesticide residues.

It is possible for the GATT to try to impose higher environmental standards throughout the world rather than lower ones. But, as was noted in chapter 10 with respect to international legislation, this is unlikely to happen because of the lowest common denominator effect. This means that where governments democratically decide to implement high standards, these have to be justified scientifically. Political and social factors shape the standards individual countries decide upon, and often a decision has to be made despite a large amount of scientific uncertainty (see chapter 12). That uncertainty is likely to make it very difficult for a nation to prove its standards are necessary before a panel of hostile scientists chosen by GATT.

Greenpeace International says that 'by not allowing countries to adopt stricter standards, harmonisation will slow environmental protection as countries can advance only in lockstep, using narrow scientific and cost&endash;benefit criteria.' (1992b, p. 5)

While countries are discouraged from enforcing higher environmental standards than those accepted internationally, countries that do not impose any standards or regulations are not penalised under the GATT. This is the case even though such a situation is like a subsidy to polluters, since it allows them to keep their costs down by using the environment as a free disposal resource. It is for this reason that the Social and Economic Council in the Netherlands argues that 'it is not countries with high environmental standards that distort the trading system, but the countries with too low standards' (Van Bennedom & Van Brakel 1992, p. 4). This principle is recognised in the OECD's polluter-pays principle; but the polluter-pays principle is not recognised by GATT.

Back...

Economic instruments to encourage environmentally friendly behaviour

In the USA&endash;Canada free-trade pact, which is seen as a model of what the GATT is trying to achieve, the government of British Columbia was prevented from planting trees because it was seen as a subsidy to the Canadian timber industry. Similarly, subsidies to stimulate cleaner production methods have been viewed as protectionist under this pact.

Also, nations which attempt to internalise environmental costs into prices would be unable to apply tariffs to prevent similar products with lower prices that did not include environmental costs from coming into the country. Recently, a GATT panel disapproved of US taxes on oil and chemical feedstocks that were levied to pay for hazardous waste clean-ups.

Back...