Taking Care of Business

the World Trade Organization

by Joel Bleifuss

In These Times, July, 1997


A three-judge panel of the World Trade Organization (WTO) is currently considering which is more important: the survival of the world's sea turtles or the sanctity of free trade. In an effort to protect endangered sea turtles, the United States requires, through a provision in the Endangered Species Act, that all shrimp imported into the country be caught by fishermen who use turtle-excluder devices. If deployed by the entire international shrimp fleet, these devices would save an estimated 150,000 sea turtles a year. Three shrimp-fishing nations (Pakistan, Malaysia and Thailand) have responded to the U.S. initiative by petitioning the WTO to declare that the United States has, in effect, imposed an illegal embargo.

The WTO was established on January 1, 1995 to administer and enforce the multilateral trade agreements negotiated during the eight years of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). As a condition for joining the organization, a member country must surrender a tremendous amount of sovereignty. WTO regulations unequivocally state that all countries must "ensure the conformity of their laws, regulations and administrative procedures" with WTO rules. That does not bode well for hard-fought regulations to protect human health and the environment.

Whereas under the old GATT accords, nations were permitted to veto rulings that went against them, the WTO forecloses this possibility. Moreover, the 131 members of the WTO have empowered the Geneva-based entity to penalize any nation that enacts legislation that contravenes WTO regulations. Consequently, corporate interests, acting through what have become, in effect, their client states, are increasingly turning to the organization to challenge, in the name of free trade, environmental regulations that interfere with their ability to exploit the earth's human and natural resources.

"The WTO has set off the race to the bottom for environmental and health protections that everyone predicted," says Lori Wallach, director of Public Citizen's Global Trade Watch. "It is just happening much faster."

Due to heightened public scrutiny, the North American Free Trade Agreement included side agreements (however ineffective) meant to protect the environment and labor rights. By contrast, GATT was formulated in a media vacuum and originally contained no provision for the environment. Responding to objections from environmentalists, the Uruguay Round, in one of its final acts, created the Committee on Trade and the Environment (CTE). The CTE's principal function is to advise the organization on how to resolve conflicts between WTO trade rules and international and national environmental regulations.

"Politically, the CTE is a sop to environmentalists, who were concerned about the environmental implications of international trade," says Steven Shrybman, an environmental lawyer who has worked on trade issues with the Sierra Club of Canada and Greenpeace USA. "There was tremendous resistance at the WTO to considering the impact on the environment. The only concession they were willing to make was to establish this committee." In the end, says Shrybman, the CTE has concentrated not on how the WTO can help protect the environment, but rather on how to dilute those environmental protections that already exist.

Among the most pressing environmental issues that the WTO must resolve is the legal status of three pre-existing multilateral environmental agreements: the Montreal Protocol on Ozone Depletion, the Convention on International Trade in Endangered Species (CITES) and the Basel Convention on Hazardous Wastes. These multilateral agreements contravene official WTO policy because they permit the use of international sanctions to achieve environmental goals. But rather than make a firm ruling on the issue, the WTO panels are dealing with each environmental dispute on a case by case basis. These rulings will set precedent for future cases.

Consider the sea turtle case that was argued before a WTO panel in June. Sea turtles are protected under CITES, which lists five of the world's seven kinds of sea turtles as species that are "threatened with extinction [and] affected by trade." Aware of the danger that an adverse ruling by the WTO poses to the world's sea turtles, more than 200 scientists from 25 countries have petitioned the organization, demanding that the WTO panel "not interfere in anyway with the right of countries to use scientifically developed facts-not trade or economic concerns-to identify and implement appropriate measures necessary to protect endangered species."

Charlene Barshefsky, the U.S. trade representative, attached the scientists' petition to a recent U.S. submission to the WTO. But the administration is hardly a stronger defender of sea turtles. A coalition of environmental groups, led by Earth Island Institute, had to sue the U.S. government in federal court to compel the administration to begin enforcing the provision of the Endangered Species Act that requires all shrimp imported into the United States to be caught with boats using turtle-excluder devices. Furthermore, when presenting the U.S. case to the WTO panel, Barshefsky's office refused to argue that the U.S. law protecting sea turtles advances the goals of CITES and therefore does not fall under the purview of WTO trade rules. Instead, her lawyers argued on the more narrow grounds that turtles were an exhaustible natural resource, and that the U.S. regulation was therefore permissible under a WTO provision that allows countries to protect exhaustible natural resources. Patti Goldman, a staff attorney with the EarthJustice Legal Defense Fund in Seattle, explains that the United States didn't want to set a precedent that would diminish the powers of the WTO. "While the United States is a defender today of sea turtle protections, it will be a challenger tomorrow," she says. "For example, the United States has its eye on the European Union ban on fur caught with leghold traps. It doesn't want to have a rule in place that could stand in the way of its next challenge."

The WTO is also grappling with the legal status of "eco-labeling," the practice of providing information on a label about the environmental impact of the total lifecycle of a product. The most politically contentious use of eco-labeling involves wood and paper products in Europe. The E.U. currently certifies paper products that come from trees that have been ecologically harvested and are manufactured by environmentally sound processes. The United States, Canada and Brazil oppose this practice because their timber and paper industries would have to meet tougher European pollution limits for toxins such as dioxin to merit the label.

"U.S. industry doesn't want to be forced to improve its environmental performance to meet European standards," says Brennan Van Dyke, director of the Geneva office of the Center for International Environmental law, which keeps tabs on the WTO. "They would rather take away the consumers' right to know about the environmental impact of products. Transnational corporations are trying to achieve through international trade law what they would never be able to achieve domestically."

The WTO has already proven that it has no compunction about riding roughshod over environmental regulations. Venezuela, at the behest of its oil industry, persuaded a WTO tribunal to gut an EPA regulation that, as part of the Clean Air Act, eliminated dangerous contaminants from gasoline. Last year, a three-judge WTO panel invalidated the U.S. regulation, which was years in the making and involved substantial compromise between environmentalists and the oil industry. The WTO panel ruled that "WTO members were free to set their own environmental objectives, but they were bound to implement these objectives only through measures consistent with [the WTO's] provisions." It ordered the United States to either pay Venezuela $150 million a year or change its gasoline standards.

"This is part of why the WTO is so dangerous," says Wallach from Public Citizen. "Basically in this case, it allows three trade lawyers to sit in a room and second-guess the best judgment and research of our entire EPA."

After unsuccessfully appealing the WTO ruling (under WTO regulations, all appeals go before the same three judges that made the original ruling), the United States has accepted the WTO verdict on gasoline standards and has until August 20 to comply. It has indicated that it will nullify current regulations for gasoline contaminants and replace them with an oil industry-backed proposal that EPA has on two previous occasions rejected as unenforceable, unreliable and too expensive.

The U.S. law protecting sea turtles could suffer a similar fate. The WTO panel's ruling, which is expected later this year, is likely to set a binding precedent on whether countries are allowed to implement species protection laws.

"A huge, well-financed push by corporations around the world-and a silence that becomes complicity on the part of most of the press-has allowed both the biggest power grab and the biggest environmental rollback ever," says Wallach. "If the WTO is ever implemented fully on its own terms, the implications for the environment and human health, to say nothing of our standard of living, would be absolutely devastating."

50 Years Is Enough

World Trade Organization