The WTO’s bad reputation with environmentalists, particularly in the United States, stems from recent WTO panel decisions on several controversial cases against the United States – the Tuna-Dolphin, the Shrimp-Turtle, and the Gasoline Standards case. In each of these, the rulings limited the ability of the United States to enforce its environmental laws, and have led, or will lead, to a watering down of these laws.
The Tuna-Dolphin case arose from a complaint by Mexico in 1991 under the old GATT regime that its exports of yellowfin tuna to the United States had been banned. The Mexican tuna was embargoed because the Mexican government was unable to prove to the US Authorities that the tuna had been caught using fishing techniques that protected dolphins as required under the US Marine Mammal Protection Act. This Act forbids the sale in the United States of tuna caught using the mile-long nets favoured by Mexico that were notorious for killing the large schools of dolphins that typically swam above the tuna, revealing their location. The embargo on Mexican tuna also applied to intermediary countries, including Canada, that processed and canned Mexican tuna.
The panel ruled that the United States could not ban tuna products from Mexico simply because the way the tuna was caught did not meet US regulations. This decision was based on the GATT Article III proscription against discrimination based on process and production methods. The panel also concluded that the United States could not take trade action to enforce its own domestic laws in other countries such as Mexico in this case. Under the old GATT regime, the United States never had to formally accept the ruling. It was able to maintain its restrictions during lengthy bilateral consultations with Mexico and in the face of another,
contrary ruling by a second panel requested by the European Union to enforce the decision of the first. During this time, observers were introduced on Mexican tuna fishing boats and there were some improvements in Mexico’s fishing practices but not enough to satisfy environmentalists and the US government. Nevertheless, the United States eventually agreed to comply with the ruling. Amendments to the MMPA proposed by the Clinton Administration will soon allow foreign tuna to be imported even though it is still caught using mile-long nets lethal to dolphins. And to add insult to injury in the view of environmentalists, the tuna will be able to qualify for the label, “dolphin-safe.”
The Shrimp-Turtle case was launched in 1997 by India, Malaysia, Pakistan and Thailand against a US ban on the import of shrimp caught using nets without a turtle-excluder device (TED). This is a metal grid sewn into a net which protect turtles by guiding them through a hole in the net. In contrast, shrimp pass through the grid into the back of the net where they are captured. Nets without these devices are the biggest killers of sea turtles, which are listed as endangered species under the CITES. The US Endangered Species Act requires foreign
countries selling shrimp in the United States to use nets with TEDs. The WTO panel, supported by the Appellate Body, confirmed the earlier Tuna-Dolphin decision and ruled that the United States could not ban the import of products that did not meet US PPM regulations. Again the
United States was slapped on the wrist for attempting the extraterritorial application of its domestic environmental laws.
The Gasoline Standards case against the United States was the first heard under the new WTO dispute settlement mechanism in 1995-96. Venezuela and Brazil challenged a US
Environmental Protection Agency (EPA) rule, which enforced Congressionally-mandated clean air standards to reduce smog and toxic air pollutants, on the grounds that it discriminated against their exports. The standards required that the cleanliness of gasoline sold in the most polluted US cities improve by 15 per cent and that gasoline sold elsewhere in the US maintain 1990 levels. For operational purposes, the EPA rule established a standard for contaminants in gas from domestic and foreign refiners without adequate documentation on their 1990 levels of contaminants, such as those in Venezuela and Brazil, that was based on the 1990 average of all refiners able to provide documentation. The WTO panel ruling, confirmed by the Appellate Body, was that the EPA rules discriminated against foreign refineries. Consequently, the United States relaxed the standards.
In contrast, a 1994 GATT panel ruling on a EU challenge of the US gas guzzler tax and other conservation measures ruled in favour of the United States even though the US exempted primarily US-produced small trucks and utility vehicles from the fleet-wide, fuel-efficiency standards. This exemption made the required reduction in fleet-wide average gasoline
consumption much larger for European automobile manufacturers. A clearer case of disguised protectionism is hard to find.
For those interested in the legal fine points, it is worth noting that, while the Shrimp- Turtle and Gasoline Standards cases both ruled against the United States, they provided a
different interpretation on the issue of the “extra-jurisdictional” application of domestic laws than in the Dolphin-Tuna case. Based on these cases, it is now accepted that measures “necessary to protect human, animal or plant life or health” Article XX (b) and measures “relating to the conservation of exhaustible natural resources” Article XX (g) can be applied “extra-
juridictionally” as long as the measures are really “necessary” and are not a “disguised restriction on international trade.” The earlier decision against the United States in the Dolphin-Tuna case is attributed by some trade law experts to the fact that the United States acted unilaterally before taking a reasonable approach to try to resolve the issue and not to any inherent prohibition on the “extra-jurisdictional” application of domestic law.
In another, environmentally-related case, Canada, which produces 95 per cent of exported asbestos, is the complainant against a EU ban on asbestos imports, which applies even to
asbestos embedded in building materials. It claims that the ban is a violation of the Technical Barriers to Trade Agreement and runs counter to GATT Articles XI and III banning quantitative restrictions on imports and discriminatory trade measures. The EU counterclaim is based on the right to a safe workplace free of a known carcinogen. However, while there is ample scientific evidence on the carcinogenic properties of asbestos, it is not clear that asbestos in building materials constitutes a threat to human health. A panel decision is awaited.
A final case with environmental implications, which is discussed fully in Chapter 3 above, is the EU ban on beef treated with growth hormones. Suffice it to say here that it puts limits on the extent to which any country can set its own food standards that are higher than international standards unless they are backed by substantial scientific evidence. The
precautionary principle, which applies to drugs and requires the manufacturer to demonstrate that a drug is safe, does not apply to foods, which are governed by the less strict criterion of risk assessment.