1) INTRODUCTION
International trade has grown and evolved as movement of goods, services, capital and labor have liberalized and expanded. This development has been based in the two cardinal rules of GATT: most favored nation (MFN) and national treatment (NT). Same treatment is to be accorded to foreign like products, and once in the domestic market, they should be accorded the same treatment as the like national product. The likeness is to be based on the product characteristics.
However, the International Community´s new concerns for the 21st century have shifted towards environmental protection, and States are re-visiting their ideas about the balance between international trade and environment. Many States have taken upon their domestic policies to preserve the global environment, as most new challenges exceed national borders. This new trend provides possibilities to achieve more environment friendly production processes.
The way this new trend is taking place is though Technical Barriers to Trade. States can follow their legitimate objectives by setting and enforcing requirements for products and their characteristics, which may include, inter alia, protection of the environment. The condition for these schemes is that they shall be only necessary to achieve Government´s legitimate objectives, and shall not act as “unnecessary” obstacles to international trade.
Since standards function as barriers to trade, they are not explicitly protectionist; none the less, their potential character as disguised restrictions is an area of conflict in the international forum. As trade barriers traditionally in the form of tariffs and quotas, have been limited or struck down over time by the effect of trade agreements, product standards are more relied upon by States when seeking to replicate former levels of economic protection.
Labeling programs use market incentives to encourage management improvements above the minimum level required by law, to implement laws that are otherwise difficult to enforce, or to suggest a framework in circumstances where formal laws may not exist. The success of some of these labeling initiatives (eco-labeling) have given rise to debates on the extent to which these labeling initiatives are subject to WTO provisions and whether they violate them or not.
This paper intends to show that eco-labeling is a valuable technique to encourage environment friendly products, and if correctly implemented, there should be no reason to consider these schemes inconsistent with WTO law.
2) THE DEBATE ON TRADE VS. ENVIRONMENT
The debate about the relationship between international trade and protection of the environment remains unresolved, as some authors believe that environmental issues should be dealt with through Multilateral Environmental Agreements. Others believe that it is fundamental to include environmental issues within the WTO, rather than treating them separately.
However, there have been some developments in WTO case law, as the Shrimp Case has recognized that States can regulate trade, even with extra-territorial implications. Some authors believe that it may be better for WTO Members to deal with environmental issues comprehensively and effectively on a multilateral basis rather than risk exposing them to the legal vagaries of a trade dispute panel.
There is by no means a consensus on npr-PPMs between the leading industrialized countries; however, there is clear evidence of a ‘North–South’ dichotomy. Many developing countries are deeply suspicious of proposals for the explicit inclusion of PPMs in the WTO.
The primary reason for this is their fear of the imposition of harmonized environmental, technological and other qualitative standards with high thresholds set by the industrialized countries. These would threaten the already precarious market access of developing countries and not take account of their special position in the WTO.
Labeling schemes (such as eco-labeling) provide a milder approach, a mid way between restrictions and tariffs, and non-regulation. They rely on consumer taste, and if accepted under the TBT agreement, could prove very useful in finding a balance between the interests of the industrialized countries, and the interests of developing and least developed countries.
3) ECO-LABELING AND PROTECTION OF THE ENVIRONMENT
Eco-labels are standards that focus on consumer choice for differentiating products based on there entire life cycle, and and serve to inform on the processes used by producers and certain minimum environmental standards. It is strongly argued that eco-labels can serve as an effective environmental tool, and they are certainly less trade restrictive than quotas or in certain cases trade restrictions.
Consumers´ growing concerns for environmental protection are leading to more information about the environmental characteristics of products, being made available through eco-labeling. Eco-labeling has become a means to promote both the production and consumption of products that are more environment friendly than competing products. Due to this consumer choice tendency, eco-labeling has become an issue with regards to its implications for market access of similar products.
Also, questions have been raised regarding the legality of eco-labeling based on the production processes of products under WTO law, especially when such processes are not related to the characteristics of the final product. However, the focus on the entire life cycle brings concerns regarding the possible violations of International Trade Agreements such as the Technical Barriers to Trade (TBT) Agreement, on in second instance the GATT.
The main concerns are the possible use of npr-PPM measures as trade restrictive tool to ban or discriminate against products from developing countries. United States and Canada have also joined this position, as they have strong interests on production of genetically modified products.
These concerns are not unreasonable, as developing countries do not possess the same technology as developed countries, and possible restrictions based on environmental standards or regulations could force them to acquire technology they do not possess, thus raising costs and making their products less competitive.
In several cases of sensitive products, the environmental oriented labels become relevant by describing production process methods (PPMs) which are non-product related (npr). This means that the part of the process relevant to the protection of the environment does not eventually affect the characteristics of the final product.
Serious questions regarding the conformity of npr-PPM based eco-labels to the TBT Agreement have been raised, as many Member States and authors believe that these types of measures are not covered by the TBT Agreement.
4) DOES TBT COVER NPR-PPMS?
4.1) THE TBT AGREEMENT
The TBT Agreement reflects the important contribution that technical regulations and standards can make to facilitate international trade. The Agreement encourages the development of international standards while ensuring that they do not create unnecessary obstacles to international trade.
It has often been assumed that governments cannot reference existing non product
related Process and Production Method (npr PPM) standards, such as social and
environmental standards, with respect to labelling of products. However, legal analysis
shows that, depending on the interpretation of the TBT Agreement, the disciplines of the
TBT Agreement may or may not apply to voluntary or mandatory standards.
A technical regulation is defined in Annex 1 to the TBT Agreement: “Document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory.” Standards enjoy a similar definition, save that they are not mandatory.
Both definitions are often understood to imply that only product-related PPM-based
measures are covered, though it has not yet been confirmed by a Panel or Apellate Body. Questions are often raised on whether non-product related PPMs would be beyond the scope of the TBT Agreement.
A majority view holds that these definitions should be understood as excluding npr-PPMs of the scope of the TBT Agreement. In the TBT Committee it has been debated whether non-product-related process and production methods (unrelated PPMs) labelling was covered by the definitions of regulations or standards. Some countries believe that this is not clear because the first sentence of each definition speaks of related PPMs, but the second sentence on labelling omits the word "related".
However, it is impossible not to notice the ambiguity of the definitions on technical regulations and standards expressed in Annex I, as well as the current trend towards recognizing npr-PPMs as legitimate tools within international trade, to achieve legitimate goals.
4.2) INTERPRETATION
The relevant part of both definitions is the one that states that a technical regulation (or standard) “...lays down product characteristics or their related processes and production methods”
The Vienna Convention on the Law of Treaties rules on how treaties should be interpreted. Article 31 states as a general rule of interpretation that: “A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose”. Only if this proved insufficient, one could resort to the preparatory work as means of interpretation; these are is only supplementary means.
As stated by the VCLT art 31, if one should proceed to perform a textual interpretation of this part of the text, one should immediately notice that it allows to regulate either on product characteristics OR their related processes and production methods.
The ambiguity comes in the second part of the sentence. The key question is whether the word “related” modifies “processes and production methods”, or whether the article refers to “related processes” and “production methods” separately. In the first case, it is clear that both processes and production methods would have to be related to the product. In the second interpretation, only the processes have to be related, while the production methods could remain related or unrelated.
In the provisions at hand, two equally acceptable interpretations of a legal text are available when analyzing them textually. A narrow interpretation would lead to conclude that States can only regulate on product related “processes and production methods”. If one should attempt a broad interpretation, one could conclude that States can regulate on either “related processes”, or “production methods”, may these be product related or not. As indicated by the VCLT, if a textual interpretation does not provide a solution, one should interpret them in the light of the objects and purposes of the Agreement.
In the case of the TBT Agreement, the drafters stated the objectives and purposes of the in the preamble:“... no country should be prevented from taking measures necessary to ensure the quality of its exports, or for the protection of human, animal or plant life or health, of the environment... subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination ... or a disguised restriction on international trade...”
The General rule expressed in the preamble is that States are free to take any measures the see fit to protect human, animal or plant life or health and the environment. Then it sets the boundaries for that freedom, stating that in no case should these measures be discriminatory or act as a disguised restriction.
The interpretation that leaves the broader discretion to states should prevail, as one should opt for the reading that leaves more room for the Member States to achieve their legitimate objectives. I propose that the definitions in Annex I should be interpreted as allowing States to take measures involving npr-PPMs.
Also, one could hardly hold that npr-PPMs are allowed in GATT but not in TBT. It is only through the general exceptions to GATT that these measures could be allowed. If the objectives that legitimize one are present in the other, there is no reason to hold otherwise. Interpretation should favor the maintenance of both regulatory Agreements, TBT and GATT within their own scopes of influence. It would not be beneficial to the system if a non conforming TBT measure could be justified under GATT General Exceptions.
Finally, although the majority view on npr-PPMs is that they are not covered by TBT, it does not seem reasonable that the AB in the US-Shrimp case would accept a npr-PPM under general exceptions to GATT, but would not accept them under TBT. It should be borne in mind that the legitimate objectives pursued in both are very similar, and the chapeau of art. XX GATT is present as a requirement in the TBT preamble.
This should lead to the conclusion that the Agreement must be interpreted in a way that it leaves the broader discretion to States, so long as the measures do not violate the conditions stated above or other conditions set forth in the Agreement itself.
5) ADVANTAGES OF NPR-PPMS BEING COVERED BY TBT
In light of what has been stated above, npr-PPM labeling schemes should be allowed under TBT, given the necessary conditions. None the less, it is understandable why certain exporting countries might be fearful of potential abuses by developed countries. As trade barriers and protectionism fade away in international trade, new ways to protect the domestic producers might tend to emerge. Eco-labeling, if abused, could become a tool for protectionism.
Accepting npr-PPMs under the TBT agreement could prove to be a satisfactory middle point between both positions. The test on TBT could prove to be a higher threshold that GATT art. XX, thus satisfy all parties. A higher threshold would allow a Panel to review not only legitimate objectives, but also non discrimination and the possible existence of other measures which might be less restrictive.
There is a certain added value in allowing eco-labels as an environmental policy tool. They are certainly less restrictive than quotas, and if the labeling scheme is just necessary to fulfill the one of the State´s objectives and does not impose unnecessary barriers to trade, it could be argued that it could be right balance between trade and environmental protection.
There is a very broad range of types of voluntary environmental labels in existence, with more potentially being developed. These include, but are in no way limited to, a range of organic labels, labels identifying Genetically Modified Organisms or Genetically Engineered Foods, environmental performance rating
labels, resource management labels, labels of verified environmental claims.
A key element of the TBT is regulatory proportionality; that any such import regulations – for example, packaging and labelling requirements – should not be more trade-restrictive ‘than is necessary … taking into account the risks non-conformity would create’ (Article 5:1:2 of the TBT Agreement).
It should also be borne in mind that the legitimate objectives pursued by TBT also broader that the general exceptions to GATT, for instance, in protecting against deceptive practices. Moreover, the requirements for legitimacy seem to be similar, or even higher on TBT, as they require that the measures be the least restrictive. If under GATT art. XX, npr-PPMs would be justified, there is no reason to hold that this would not apply to TBT.
Eco-labels are a desirable scheme to encourage producers to employ environment friendly production process mechanisms. In the meantime, this could also encourage States to be more concerned of the potential limitation to its exports, and participate more actively in international standard setting institutions.
6) CONCLUSION
Ideally, the best way to internationally protect the environment is through negotiations, commitments and treaties. However, I have intended to show that eco-labels, although not an ideal tool for implementing environmental policies, are a good mid-way to protect the environment through consumer choice, and an effective way of encouraging environment friendly PPMs.
I have proposed that it is possible to include npr-PPMs under the coverage of the TBT Agreement. A reasoned interpretation of the text and purposes of TBT (as provided by the VCLT), as well as recent developments on GATT interpretation by the AB on the Shrimps case, would lead to this conclusion.
Moreover, I believe it is desirable to place eco-labeling and other npr-PPMs under the scope of the TBT Agreement, as this would provide for better means of controlling and limiting the ability of States to arbitrarily place disguised restrictions to trade by technical barriers and standards. TBT is more demanding, as it requires states to use only the least trade restrictive means to achive a legitimate objective.
The use of eco-labeling could also be a positive approach, as it might encourage States to resort to international standard setting institutions and come up with more environment friendly technical regulations or standards. This would enhance transparency and participation, and these international regulations would have to be used as a basis by WTO member states, thus harmonizing in a way that could improve environmental protection.
Eventually, international harmonization tending to more environment friendly technical regulations and standards is the ultimate goal of TBT. If labeling schemes are developed by international institutions, and although it might be debatable whether these are mandatory or voluntary, this could push countries to use these regulations and standards as a basis for their own.
The issues of ‘disguised’ protection will remain as one more of the north-south dichotomies. Questions regarding who should bear the extra costs of compliance to new regulation, or the negative effect of certain labeling schemes as an abuse of consumer taste by developed countries will still be on the table.
There will also be remaining questions regarding the use of qualitative criteria for restrictive trade measures, which may lack scientific justification; or about the proportionality issues with respect to regulatory complexity and the costs of monitoring and enforcement.
But in the meantime, our fragile environment is suffering the consequences of these trade related concerns. And if States are unable to agree at the negotiation table, it should be up to the institutions of the WTO to push npr-PPM based labeling schemes through, and encourage environment friendly production methods, and eventually, environment friendly international npr-PPM standards.
BIBLIOGRAPHY
Mathis, James. “The WTO Agreement on Technical Barriers to Trade: Interaction with International Standards and Implications for Consumers”
Joshi, Manoj. 'Are Eco-labels Consistent with WTO Law?'Journal of World Trade, Kluwer Law International. 2004
Read, Robert, “Process and Production Methods and the Regulation of International Trade”, http://www.lancs.ac.uk/staff/ecarar/ppms.doc.
ISEAL/ CIEL, “International Standards and Technical Barriers to Trade” R053 - Legal Opinion Summary, July, 2006
http://www.ciel.org/Publications/ISEALCIEL_Legal%20OpinionTBTR053_Jul06.pdf
GEN, Global Ecolabelling Network, “Trade as an Environmental Policy Tool? Environment as a Trade Policy Tool?” - 2003
http://www.gen.gr.jp/pdf/epc_01.pdf.
Dankers, Cora, “Environmental and Social Standards, Certification and Labelling for Cash Crops”, FAO, 2003
http://www.fao.org/docrep/006/y5136e/y5136e0b.htm
Palmer, Alice, “Voluntary Initiatives and the World Trade Organisation” FIELD, October 2001 No. 29.
http://www.iied.org/mmsd/mmsd_pdfs/029_palmer.pdf
International trade has grown and evolved as movement of goods, services, capital and labor have liberalized and expanded. This development has been based in the two cardinal rules of GATT: most favored nation (MFN) and national treatment (NT). Same treatment is to be accorded to foreign like products, and once in the domestic market, they should be accorded the same treatment as the like national product. The likeness is to be based on the product characteristics.
However, the International Community´s new concerns for the 21st century have shifted towards environmental protection, and States are re-visiting their ideas about the balance between international trade and environment. Many States have taken upon their domestic policies to preserve the global environment, as most new challenges exceed national borders. This new trend provides possibilities to achieve more environment friendly production processes.
The way this new trend is taking place is though Technical Barriers to Trade. States can follow their legitimate objectives by setting and enforcing requirements for products and their characteristics, which may include, inter alia, protection of the environment. The condition for these schemes is that they shall be only necessary to achieve Government´s legitimate objectives, and shall not act as “unnecessary” obstacles to international trade.
Since standards function as barriers to trade, they are not explicitly protectionist; none the less, their potential character as disguised restrictions is an area of conflict in the international forum. As trade barriers traditionally in the form of tariffs and quotas, have been limited or struck down over time by the effect of trade agreements, product standards are more relied upon by States when seeking to replicate former levels of economic protection.
Labeling programs use market incentives to encourage management improvements above the minimum level required by law, to implement laws that are otherwise difficult to enforce, or to suggest a framework in circumstances where formal laws may not exist. The success of some of these labeling initiatives (eco-labeling) have given rise to debates on the extent to which these labeling initiatives are subject to WTO provisions and whether they violate them or not.
This paper intends to show that eco-labeling is a valuable technique to encourage environment friendly products, and if correctly implemented, there should be no reason to consider these schemes inconsistent with WTO law.
2) THE DEBATE ON TRADE VS. ENVIRONMENT
The debate about the relationship between international trade and protection of the environment remains unresolved, as some authors believe that environmental issues should be dealt with through Multilateral Environmental Agreements. Others believe that it is fundamental to include environmental issues within the WTO, rather than treating them separately.
However, there have been some developments in WTO case law, as the Shrimp Case has recognized that States can regulate trade, even with extra-territorial implications. Some authors believe that it may be better for WTO Members to deal with environmental issues comprehensively and effectively on a multilateral basis rather than risk exposing them to the legal vagaries of a trade dispute panel.
There is by no means a consensus on npr-PPMs between the leading industrialized countries; however, there is clear evidence of a ‘North–South’ dichotomy. Many developing countries are deeply suspicious of proposals for the explicit inclusion of PPMs in the WTO.
The primary reason for this is their fear of the imposition of harmonized environmental, technological and other qualitative standards with high thresholds set by the industrialized countries. These would threaten the already precarious market access of developing countries and not take account of their special position in the WTO.
Labeling schemes (such as eco-labeling) provide a milder approach, a mid way between restrictions and tariffs, and non-regulation. They rely on consumer taste, and if accepted under the TBT agreement, could prove very useful in finding a balance between the interests of the industrialized countries, and the interests of developing and least developed countries.
3) ECO-LABELING AND PROTECTION OF THE ENVIRONMENT
Eco-labels are standards that focus on consumer choice for differentiating products based on there entire life cycle, and and serve to inform on the processes used by producers and certain minimum environmental standards. It is strongly argued that eco-labels can serve as an effective environmental tool, and they are certainly less trade restrictive than quotas or in certain cases trade restrictions.
Consumers´ growing concerns for environmental protection are leading to more information about the environmental characteristics of products, being made available through eco-labeling. Eco-labeling has become a means to promote both the production and consumption of products that are more environment friendly than competing products. Due to this consumer choice tendency, eco-labeling has become an issue with regards to its implications for market access of similar products.
Also, questions have been raised regarding the legality of eco-labeling based on the production processes of products under WTO law, especially when such processes are not related to the characteristics of the final product. However, the focus on the entire life cycle brings concerns regarding the possible violations of International Trade Agreements such as the Technical Barriers to Trade (TBT) Agreement, on in second instance the GATT.
The main concerns are the possible use of npr-PPM measures as trade restrictive tool to ban or discriminate against products from developing countries. United States and Canada have also joined this position, as they have strong interests on production of genetically modified products.
These concerns are not unreasonable, as developing countries do not possess the same technology as developed countries, and possible restrictions based on environmental standards or regulations could force them to acquire technology they do not possess, thus raising costs and making their products less competitive.
In several cases of sensitive products, the environmental oriented labels become relevant by describing production process methods (PPMs) which are non-product related (npr). This means that the part of the process relevant to the protection of the environment does not eventually affect the characteristics of the final product.
Serious questions regarding the conformity of npr-PPM based eco-labels to the TBT Agreement have been raised, as many Member States and authors believe that these types of measures are not covered by the TBT Agreement.
4) DOES TBT COVER NPR-PPMS?
4.1) THE TBT AGREEMENT
The TBT Agreement reflects the important contribution that technical regulations and standards can make to facilitate international trade. The Agreement encourages the development of international standards while ensuring that they do not create unnecessary obstacles to international trade.
It has often been assumed that governments cannot reference existing non product
related Process and Production Method (npr PPM) standards, such as social and
environmental standards, with respect to labelling of products. However, legal analysis
shows that, depending on the interpretation of the TBT Agreement, the disciplines of the
TBT Agreement may or may not apply to voluntary or mandatory standards.
A technical regulation is defined in Annex 1 to the TBT Agreement: “Document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory.” Standards enjoy a similar definition, save that they are not mandatory.
Both definitions are often understood to imply that only product-related PPM-based
measures are covered, though it has not yet been confirmed by a Panel or Apellate Body. Questions are often raised on whether non-product related PPMs would be beyond the scope of the TBT Agreement.
A majority view holds that these definitions should be understood as excluding npr-PPMs of the scope of the TBT Agreement. In the TBT Committee it has been debated whether non-product-related process and production methods (unrelated PPMs) labelling was covered by the definitions of regulations or standards. Some countries believe that this is not clear because the first sentence of each definition speaks of related PPMs, but the second sentence on labelling omits the word "related".
However, it is impossible not to notice the ambiguity of the definitions on technical regulations and standards expressed in Annex I, as well as the current trend towards recognizing npr-PPMs as legitimate tools within international trade, to achieve legitimate goals.
4.2) INTERPRETATION
The relevant part of both definitions is the one that states that a technical regulation (or standard) “...lays down product characteristics or their related processes and production methods”
The Vienna Convention on the Law of Treaties rules on how treaties should be interpreted. Article 31 states as a general rule of interpretation that: “A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose”. Only if this proved insufficient, one could resort to the preparatory work as means of interpretation; these are is only supplementary means.
As stated by the VCLT art 31, if one should proceed to perform a textual interpretation of this part of the text, one should immediately notice that it allows to regulate either on product characteristics OR their related processes and production methods.
The ambiguity comes in the second part of the sentence. The key question is whether the word “related” modifies “processes and production methods”, or whether the article refers to “related processes” and “production methods” separately. In the first case, it is clear that both processes and production methods would have to be related to the product. In the second interpretation, only the processes have to be related, while the production methods could remain related or unrelated.
In the provisions at hand, two equally acceptable interpretations of a legal text are available when analyzing them textually. A narrow interpretation would lead to conclude that States can only regulate on product related “processes and production methods”. If one should attempt a broad interpretation, one could conclude that States can regulate on either “related processes”, or “production methods”, may these be product related or not. As indicated by the VCLT, if a textual interpretation does not provide a solution, one should interpret them in the light of the objects and purposes of the Agreement.
In the case of the TBT Agreement, the drafters stated the objectives and purposes of the in the preamble:“... no country should be prevented from taking measures necessary to ensure the quality of its exports, or for the protection of human, animal or plant life or health, of the environment... subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination ... or a disguised restriction on international trade...”
The General rule expressed in the preamble is that States are free to take any measures the see fit to protect human, animal or plant life or health and the environment. Then it sets the boundaries for that freedom, stating that in no case should these measures be discriminatory or act as a disguised restriction.
The interpretation that leaves the broader discretion to states should prevail, as one should opt for the reading that leaves more room for the Member States to achieve their legitimate objectives. I propose that the definitions in Annex I should be interpreted as allowing States to take measures involving npr-PPMs.
Also, one could hardly hold that npr-PPMs are allowed in GATT but not in TBT. It is only through the general exceptions to GATT that these measures could be allowed. If the objectives that legitimize one are present in the other, there is no reason to hold otherwise. Interpretation should favor the maintenance of both regulatory Agreements, TBT and GATT within their own scopes of influence. It would not be beneficial to the system if a non conforming TBT measure could be justified under GATT General Exceptions.
Finally, although the majority view on npr-PPMs is that they are not covered by TBT, it does not seem reasonable that the AB in the US-Shrimp case would accept a npr-PPM under general exceptions to GATT, but would not accept them under TBT. It should be borne in mind that the legitimate objectives pursued in both are very similar, and the chapeau of art. XX GATT is present as a requirement in the TBT preamble.
This should lead to the conclusion that the Agreement must be interpreted in a way that it leaves the broader discretion to States, so long as the measures do not violate the conditions stated above or other conditions set forth in the Agreement itself.
5) ADVANTAGES OF NPR-PPMS BEING COVERED BY TBT
In light of what has been stated above, npr-PPM labeling schemes should be allowed under TBT, given the necessary conditions. None the less, it is understandable why certain exporting countries might be fearful of potential abuses by developed countries. As trade barriers and protectionism fade away in international trade, new ways to protect the domestic producers might tend to emerge. Eco-labeling, if abused, could become a tool for protectionism.
Accepting npr-PPMs under the TBT agreement could prove to be a satisfactory middle point between both positions. The test on TBT could prove to be a higher threshold that GATT art. XX, thus satisfy all parties. A higher threshold would allow a Panel to review not only legitimate objectives, but also non discrimination and the possible existence of other measures which might be less restrictive.
There is a certain added value in allowing eco-labels as an environmental policy tool. They are certainly less restrictive than quotas, and if the labeling scheme is just necessary to fulfill the one of the State´s objectives and does not impose unnecessary barriers to trade, it could be argued that it could be right balance between trade and environmental protection.
There is a very broad range of types of voluntary environmental labels in existence, with more potentially being developed. These include, but are in no way limited to, a range of organic labels, labels identifying Genetically Modified Organisms or Genetically Engineered Foods, environmental performance rating
labels, resource management labels, labels of verified environmental claims.
A key element of the TBT is regulatory proportionality; that any such import regulations – for example, packaging and labelling requirements – should not be more trade-restrictive ‘than is necessary … taking into account the risks non-conformity would create’ (Article 5:1:2 of the TBT Agreement).
It should also be borne in mind that the legitimate objectives pursued by TBT also broader that the general exceptions to GATT, for instance, in protecting against deceptive practices. Moreover, the requirements for legitimacy seem to be similar, or even higher on TBT, as they require that the measures be the least restrictive. If under GATT art. XX, npr-PPMs would be justified, there is no reason to hold that this would not apply to TBT.
Eco-labels are a desirable scheme to encourage producers to employ environment friendly production process mechanisms. In the meantime, this could also encourage States to be more concerned of the potential limitation to its exports, and participate more actively in international standard setting institutions.
6) CONCLUSION
Ideally, the best way to internationally protect the environment is through negotiations, commitments and treaties. However, I have intended to show that eco-labels, although not an ideal tool for implementing environmental policies, are a good mid-way to protect the environment through consumer choice, and an effective way of encouraging environment friendly PPMs.
I have proposed that it is possible to include npr-PPMs under the coverage of the TBT Agreement. A reasoned interpretation of the text and purposes of TBT (as provided by the VCLT), as well as recent developments on GATT interpretation by the AB on the Shrimps case, would lead to this conclusion.
Moreover, I believe it is desirable to place eco-labeling and other npr-PPMs under the scope of the TBT Agreement, as this would provide for better means of controlling and limiting the ability of States to arbitrarily place disguised restrictions to trade by technical barriers and standards. TBT is more demanding, as it requires states to use only the least trade restrictive means to achive a legitimate objective.
The use of eco-labeling could also be a positive approach, as it might encourage States to resort to international standard setting institutions and come up with more environment friendly technical regulations or standards. This would enhance transparency and participation, and these international regulations would have to be used as a basis by WTO member states, thus harmonizing in a way that could improve environmental protection.
Eventually, international harmonization tending to more environment friendly technical regulations and standards is the ultimate goal of TBT. If labeling schemes are developed by international institutions, and although it might be debatable whether these are mandatory or voluntary, this could push countries to use these regulations and standards as a basis for their own.
The issues of ‘disguised’ protection will remain as one more of the north-south dichotomies. Questions regarding who should bear the extra costs of compliance to new regulation, or the negative effect of certain labeling schemes as an abuse of consumer taste by developed countries will still be on the table.
There will also be remaining questions regarding the use of qualitative criteria for restrictive trade measures, which may lack scientific justification; or about the proportionality issues with respect to regulatory complexity and the costs of monitoring and enforcement.
But in the meantime, our fragile environment is suffering the consequences of these trade related concerns. And if States are unable to agree at the negotiation table, it should be up to the institutions of the WTO to push npr-PPM based labeling schemes through, and encourage environment friendly production methods, and eventually, environment friendly international npr-PPM standards.
BIBLIOGRAPHY
Mathis, James. “The WTO Agreement on Technical Barriers to Trade: Interaction with International Standards and Implications for Consumers”
Joshi, Manoj. 'Are Eco-labels Consistent with WTO Law?'Journal of World Trade, Kluwer Law International. 2004
Read, Robert, “Process and Production Methods and the Regulation of International Trade”, http://www.lancs.ac.uk/staff/ecarar/ppms.doc.
ISEAL/ CIEL, “International Standards and Technical Barriers to Trade” R053 - Legal Opinion Summary, July, 2006
http://www.ciel.org/Publications/ISEALCIEL_Legal%20OpinionTBTR053_Jul06.pdf
GEN, Global Ecolabelling Network, “Trade as an Environmental Policy Tool? Environment as a Trade Policy Tool?” - 2003
http://www.gen.gr.jp/pdf/epc_01.pdf.
Dankers, Cora, “Environmental and Social Standards, Certification and Labelling for Cash Crops”, FAO, 2003
http://www.fao.org/docrep/006/y5136e/y5136e0b.htm
Palmer, Alice, “Voluntary Initiatives and the World Trade Organisation” FIELD, October 2001 No. 29.
http://www.iied.org/mmsd/mmsd_pdfs/029_palmer.pdf
