Environmental Protection versus Trade

Liberalization : Finding the Balance

An examination of the legality of environmental regulation under international trade law regimes

Sandra L. Walker

DOI: 10.4000/books.pusl.13383
Publisher: Presses de l’Université Saint-Louis
Year of publication: 1993
Published on OpenEdition Books: 28 May 2019
Serie: Travaux et recherches
Electronic ISBN: 9782802803515

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ISBN: 9782802800859
Number of pages: 193

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WALKER, Sandra L. Environmental Protection versus Trade Liberalization : Finding the Balance: An
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 1

Recent years have witnessed a proliferation of laws regulating the environment. Such laws aim to
protect the environment of the legislating country and increasingly, the environment beyond its
borders. While the objectives of these rules appear to be laudable ones, environmental regulation
is frequently criticized as trade-restrictive and protectionist. In addition, attempts to regulate
foreign production processes are attacked as interfering with the sovereign right of foreign
countries to determine their own standards of environmental management. Environmental
protection goals may also hinder international trade and consequently, become vulnerable to
legal challenge under international trade law.
The manner in which international trade law weighs the competing objectives of environmental
protection and trade liberalization is the subject of this book. The experience of the European
Economic Community in this regard provides a useful backdrop against which the treatment of
environmental regulation under the GATT can be both examined and improved. The author
concludes that GATT reforms, such as the incorporation of environmental principles into GATT
jurisprudence, are critical to ensuring the legality of legitimate environmental protection
measures. Such efforts would serve to safeguard both the environment and a more stable
international trading system.
The study was financed by the Brussels Capital Region through the Visiting Scientist's
Programme.

SANDRA L. WALKER
Holds a Master of Laws from the London School of Economics, a Bachelor of Laws from
the University of Toronto, and a Bachelor of Arts in Economics and Political Studies from
Queen's University (Canada). She has practised law with a Toronto law firm, and more
recently, has worked for the Ontario Government as both a trade policy advisor and an
environmental policy analyst. Ms. Walker spent seven months in Brussels, Belgium in
1991- 1992 as a participant in the Visiting Scientist's Programme offered by the Brussels
Capital Region, joining the Centre d'étude du droit de l'environnement (CEDRE) at the
Facultés universitaires Saint-Louis as a research associate.
 2

TABLE OF CONTENTS

Foreword to Mrs. Sandra Lee Walker’s work

Environmental Protection versus Trade Liberalization: finding the Balance
Robert Hotyat

Acknowledgements

I. Introduction

II. An historical and institutional perspective on trade and environment

A. GATT
B. The European Community

III. Product versus production regulation

IV. Legality of product-related environmental regulations

Section One. Compatibility of product-related environmental measures with trade liberalization
rules
Section Two. Possibility of exemption for product-related environmental measures
Section Three. Use of public security exemption
Conclusion to Part IV

V. Legality of production-related environmental measures

VI. Institutional perspective on the environment within GATT

VII. Conclusion

Bibliography

Appendix

Agreement on Technical Barriers to Trade - Selected Provisions (GATT Standards Code)

Technical Regulations and Standards
Conformity with Regulations and Standards
Treaty of Rome - Selected Provisions
Chapter 2. Elimination of quantitative restrictions between Member States
Chapter 3. Approximation of laws
Title VII. Environment
Commission Directive on The Free Movement of goods*

Résumé
Nicolas de Sadeleer

Samenvatting
Nicolas de Sadeleer
 3

EDITOR'S NOTE
An examination of the legality of environmental regulation under international trade law
regimes.
 4

Foreword to Mrs. Sandra Lee

Walker’s work
Environmental Protection versus Trade Liberalization: finding the
Balance

Robert Hotyat

1 The programme “Research in Brussels” was launched on my initiative in 1990 to help

develop the scientific research potential in the Brussels-Capital Region. The scholarships
granted within this framework enable foreign post-graduates and distinguished foreign
scientists to put their knowledge and experience at the disposal of university research
units established in the Region.
2 Mrs. Sandra LEE WALKER, an eminent Canadian scientist, Master of Laws, and Policy
Advisor in the Trade Policy Branch of the Government of Ontario, was in Brussels from
September 1991 till March 1992. She worked with the teams of Professors OST, de
SADELEER and VAN HOECKE at the Facultés universitaires Saint-Louis and the KUB, where
she carried out excellent research.
3 It has therefore seemed appropriate to me to grant regional aid for the publication of her
results in conjunction with a specialized publisher.

4 Robert HOTYAT
Minister of State
of the Brussels-Capital Region,
responsible for Non-economic Scientific Research
 5

AUTHOR
ROBERT HOTYAT
Minister of State, of the Brussels-Capital Region, responsible for Non-economic Scientific
Research
 6

Acknowledgements

1 This study was made possible through a grant from the Brussels Capital Region’s Visiting
Scientist Programme offered by the Institut pour l’encouragement de la recherche
scientifique dans l’industrie et l’agriculture. The author would like to thank the members
of the Centre d’étude du droit de l’environnement (CEDRE) at the Facultés universitaires
Saint-Louis in Brussels for their support.
 7

I. Introduction

1 Environmental protection measures or disguised barriers to trade? The characterization

of environmental protection1 regulations under international trade law is a difficult and
complex issue, and currently the subject of heated debate. On one side are ranged those
in the trade policy community who regard the rubric of environmental protection as
merely offering another cloak of legitimacy to measures which are really trade
restrictions taken for protectionist reasons2. On the other side are ranged
environmentalists who see the structures of international trade policy and law as
fundamentally subversive to national regulation for environmental protection purposes3.
Numerous international and national fora have been examining the link between trade
and environmental policies and objectives. These include such diverse bodies as the
Secretariat of the General Agreement on Tariffs and Trade4 which produced in February
of 1992 a report on trade and the environment5, the GATT Working Group on
Environmental Measures and International Trade which, although established in 1971,
held its first substantive discussions at the beginning of 1992, the OECD whose trade and
environment directorates have both produced papers on the issue, the World Commission
on Environment and Development, which presented its conclusions and
recommendations in a report known as the Brundtland Report6, the US Congressional
Service'7, the Canadian National Round Table on the Environment and the Economy as
well as its provincial counterparts, the United Nations Conference on Environment and
Development in June of 1992, and most recently, the Canadian, Mexican, and American
Governments who expressly recognized the trade/environment link in the North
American Free Trade Agreement signed in August 1992.
2 Different perspectives on the true nature of trade-restricting environmental regulations
held by trade policymakers as opposed to environmentalists co-exist for several reasons.
One reason is the complex nature of the relationship between international trade and the
environment. Trade liberalization may serve to increase the wealth of trading nations so
that they can then afford to institute environmental protection measures. Indeed, one
study shows a strong positive correlation between higher income levels in a country and
the level of its air quality.8 Thus it is argued that, for developing countries in particular,
trade liberalization which accelerates economic growth should in the early stages
predominate over environmental protection measures which might slow the economy
down. On the other hand, although these arguments have some merit, trade expansion at
 8

all costs and without proper environmental management is short-sighted and may result
in long term damage to the environment as well as a diminished resource base upon
which to develop the economy. Consequently some environmentalists view the trade/
environment relationship as reflecting a latent conflict between freeing international
trade and achieving environmental protection objectives. Since the advantages of free
trade are based on the idea that each country exploits comparative cost advantages to
produce particular items with the lowest priced inputs, if the environment is not highly
valued in one country, that country will be able to produce goods which are more
pollution — or resource — intensive at a lower cost. In contrast, countries which place a
high priority on environmental protection will use less of their «environmental capital»
in production or will have to pay higher costs to control the environmental consequences
of production. The disparity in environmental protection levels between such countries
will likely be magnified by trade liberalization as the pollution-intensive goods are likely
to be more competitively priced in domestic and foreign markets. Free traders would
argue that this is acceptable. Others, less market-oriented in their approach, see limits to
its advantages: not only may environmental degradation increase in countries with lax
environmental regulation but strong pressures may be exerted by industry on
environmentally advanced countries to reduce environmental compliance costs, thus
ensuring its ability to compete more effectively against companies from jurisdictions with
lax environmental regulation. Alternatively, countries with high standards may try to
force other countries’ standards up to minimize their own disadvantage. The former
response will result in less environmental protection and the latter response has the
potential to increase trade disputes.
3 A second reason for the conflict between free trade goals and environmental protection
objectives lies in the practical consequences of a difference in ideological approach. While
free trade involves deregulation or a laissez-faire approach, environmental protection
policy is interventionist, whether it is based on command and control regulation or
providing market-based incentives to change industry behaviour. This difference is
significant because while environmental measures may appear to be purely domestic in
scope, in fact their regulatory consequences may be felt abroad and may directly
interfere with trade liberalization objectives. Foreign producers are affected by having to
conform to «domestic» regulations, frequently at a higher cost than domestic industries
for whom the home market may be the primary market. Thus «purely domestic»
environmental protection measures may serve to restrict access to markets with more
stringent environmental regulations than the exporting country.
4 Increasingly, national governments are acknowledging the necessity of making trade and
environmental policies compatible. At the UNCED, participating countries supported
Agenda 21, which promotes sustainable development, an amalgam of environment and
development goals, through trade liberalization and making international trade and
environmental policies mutually supportive:
An open, multilateral trading System makes possible a more efficient allocation and
use of resources and thereby contributes to an increase in production and incomes
and to lessening demands on the environment. It thus provides additional
resources needed for economic growth and development and improved
environmental protection. A Sound environment, on the other hand, provides the
ecological and other resources needed to sustain growth and underpin a continuing
expansion of trade. An open, multilateral trading System, supported by the
adoption of Sound environmental policies, would have a positive impact on the
environment and contribute to sustainable development9.
 9

5 Despite these signs of rapprochement between trade and environmental goals, however,
in practice international trade law still encounters, and will likely encounter for some
time, disputes in which free trade objectives and environmental protection policies
appear to be at cross-purposes.
6 This study focusses on the two principal situations in which environmental regulations
may give rise to international trade disputes: 1) where environmental standards make
access to national markets more difficult or expensive for foreign producers; and 2)
where a concern about global environmental problems, often coupled with the objective
of remedying the impaired competitiveness of products from countries with higher
environmental standards, leads to restrictive trade responses by such countries. This
categorization corresponds to two different types of trade-restricting environmental
measures: on the one hand, those which concern the environmental impact products will
have on the market in which they are used or disposed, whether the products are of
foreign origin or not, and on the other hand, those which aim to respond to
environmentally destructive production processes in foreign countries or in the global
commons. Both types of measures are usually directed towards imports, although
environmental regulations may also have restrictive effects on exports.
7 Where conflicts arise because of the use of either type of measure, countries wishing to
challenge such measures may turn to international trade law, the centrepiece of which is
the General Agreement on Tariffs and Trade (the GATT). Alternatively, members of
regional trading groups such as the European Economic Community10 or the Canada-US
Free Trade Agreement (FTA) may invoke the provisions of their respective agreements.
Whether a complainant country is successful will depend on how the respective
institutions of these trade organizations balance trade liberalization and environmental
protection goals, and how willing each is to intervene in the public policy determinations
of sovereign States. The question of how this balance is struck under international trade
regimes is the focus of this paper. Under the GATT’s international trade law regime, the
treatment of environmental regulations is still unsettled. Only seven «environmental» or
«environment-related» cases have been decided on the basis of the GATT text, two of
these through the Canada-US FTA dispute settlement process11. This paucity of legal
interpretation as well as the continued proliferation of new types of environmental
regulation will place pressures on the international trade System. It will also mean that
certain environmental measures will have, at best, an uncertain and, at worst, an illegal
status under the GATT. While it is not within the purview of this paper to examine each
type of trade-affecting environmental regulation, the paper analyzes some of the legal
difficulties which such regulations face under the GATT (as well as the Standards Code, to
which many GATT members are signatories, where relevant) and comments on possible
reforms to safeguard legitimate environmental measures.
8 In addition to the decisions of the GATT, this paper considers the developing law
interpreting the Canada-US Free Trade Agreement12. The decision to include this
jurisprudence was based on two factors. First, the FTA dispute settlement panels13 have
addressed environmental questions in two cases in the short history of the FTA. Second,
the FTA incorporates by reference the principal GATT articles relevant to the present
discussion14. As a result, it is unlikely that the FTA reading of GATT articles would diverge
significantly from a GATT Panel interpretation15. This conclusion is reinforced by the
institutional objectives of the FTA which, like the GATT, does not seek to achieve as high a
 10

level of integration between the US and Canadian markets16 as the EC’s Treaty of Rome
does.
9 While the primary emphasis of the paper is weighted towards the GATT System, this
paper also examines relevant European Community law and institutions. A comparison
with the treatment of environmental regulations under the EC’s internal market law is
fruitful for several reasons. First, EC institutions and case law are highly developed for an
international System. The EC jurisprudence on balancing public policy objectives against
the free movement of goods (the EC terminology for trade liberalization) is more highly
developed than the GATT’s. Second, like the GATT, the EC Treaty began with the primarily
economic objective of trade liberalization, albeit a more ambitious one. Environmental
protection was not originally a goal of either organization. Given this similar beginning
and the subsequent development in the European Community of environmental policy as
an essential objective of the Community17, a comparison of the two Systems reveals how
environmental objectives are balanced against trade liberalization objectives within
different institutional contexts. An attempt will be made to raise these institutional issues
where they are salient to the balancing process. Finally, the reference to EC law raises
questions about the potential evolution of and limitations of GATT responses to trade-
related environmental measures. Nevertheless, the limits to the usefulness of the
comparison of the GATT and the EC must also be recognized. The EC currently comprises
twelve relatively homogeneous States with similar cultural and historical backgrounds.
The GATT is a heterogeneous body with almost nine times the membership of the EC,
including poor developing countries as well as the richest Western countries. Moreover,
GATT signatories have not committed themselves to a single market but have merely
agreed to reduce barriers to trade.
10 The rest of this paper is divided into five main Parts. Part II gives an historical and
institutional overview of trade and environment issues within the GATT and the EC. Part
III explains the rationale behind a classification of environmental regulation into product
and production regulation. Part IV analyzes the provisions of the GATT and EC law
applicable to the analysis of all environmental regulation, but concentrates on issues
relevant for product-related environmental regulation. Part V focusses on the particular
problematic of extraterritoriality which is raised by environmental regulation of foreign
production processes and evaluates different responses to divergent environmental
protection levels in trading States. Part VI addresses some of the institutional weaknesses
of the GATT in dealing with environmental regulation and suggests some reforms.

NOTES
1. In this paper, «environmental protection» policies include measures both to reduce pollution,
and to conserve and manage natural resources.
2. See Runge 1990. Developing countries have also been concerned that they might be
disadvantaged by increased environmental standards. At the 1979 UN Conference on the Human
Environment, one of the Conference recommendations was that governments should try to
 11

ensure that environmental measures were not invoked as a «pretext for discriminatory trade
policies or for reduced access to markets... Environmental standards... should not be directed
toward gaining trade advantages. » Report of the United Nations Conference on the Human
Environment (the Stockholm Declaration), New York, 1972, UN Doc. A/Conf. 48/14, (1972) 11
Int’l. Leg. Mat. 1416, Recommendation 103.
3. See Stephen Shrybman 1990a, and Mark Ritchie 1990.
4. Hereinafter referred to as the General Agreement or the GATT.
5. GATT Secretariat, February 1992. As well, the GATT Secretariat reported in its October 1991
newsletter that «the link between trade and environmental policies is to become a key focus of
GATT’s work, especially after the conclusion of the Uruguay Round». See GATT Secretariat
October 1991 at 1.
6. World Commission on Environment and Development 1987.
7. See Grimmett 1991.
8. G.H. Grossman and A.B. Krueger (1991), «Environmental Impacts of a North American Free
Trade Agreement», paper prepared for a conference on the US — Mexico Free Trade Agreement,
Princeton University, October, cited in GATT Secretariat (1992) at 18.
9. Chapter 2, Agenda 21 at 9.
10. In accordance with popular usage, the European Economic Community will be referred to
below as the European Community, the Community, or the EC.
11. GATT Herring and Salmon 1988, Superfund 1987, Tuna/Dolphin 1991, Canadian Tuna Imports 1982,
Thai Cigarettes 1990, Canada-US Free Trade Agreement Reports on Lobster 1990, Salmon and Herring
1989.
12. Agreement between Canada and the US was reached on October 4, 1987.
13. Chapter 18 of the FTA establishes a dispute resolution process which is similar to the GATT
dispute settlement process, including the use of panels.
14. See Article 407 of the Canada-US Free Trade Agreement affirming the parties’ obligations
under the GATT with respect to restrictions or prohibitions on bilateral trade in goods, Article
501 incorporating the GATT rule in national treatment, and Article 1201 incorporating public
policy exemptions found in GATT Article XX.
15. Article 501.2 of the FTA provides that the provisions regarding national treatment shall be
applied in accordance with existing interpretations by the Contracting Parties to the GATT.
16. The objectives of the FTA are to eliminate barriers to trade between Canada and the US, to
facilitate conditions of fair competition, liberalize significantly the conditions for investment,
and establish effective procedures for joint administration of the FTA and the resolution of
disputes. See the preamble to the FTA.
17. Danish Bottles at Recital 8.
 12

II. An historical and institutional

perspective on trade and
environment

A. GATT
1 The General Agreement on Tariffs and Trade, the GATT, was created after the Second
World War to avoid the neo-mercantilist or protectionist policies of the 1930s which
many believed to be the cause of the war.18 Originally, it was the intent of the United
Nations Economic and Social Commission, ECOSOC, to establish an International Trade
Organization (ITO). Together with the two Bretton Woods institutions, the World Bank
and the International Monetary Fund, the ITO was to govern the international economy.
The negotiations of the draft Charter for the ITO consisted of three parts: the first
concerned the institutional issues for the ITO, the second focussed on negotiating the
reciprocal reduction of tariffs, and the third was concerned with the general clauses of
obligations to protect tariff obligations from being undermined by other trade-restricting
measures such as quotas and internal laws and regulations19. The second and third parts
formed the basis of the General Agreement on Tariffs and Trade. The draft ITO Charter,
named the Havana Charter after the location of the 1948 Conference, did not, however,
proceed beyond draft status, primarily because the US Congress did not approve it. The
GATT which was supposed to be applied under the umbrella of the ITO became, therefore,
an agreement without an organization. Furthermore, the GATT itself was never passed by
national legislatures for various reasons20 and was only implemented through a Protocol
of Provisional Application applying the GATT obligations «provisionally on and after 1
January 1948». A second attempt to create an organizational structure for GATT in 1955
also foundered. Thus the GATT continues to have provisional application to the present.
Nevertheless its obligations are binding under international law and apply to a current
membership of 103 countries accounting for approximately 90% of world merchandise
trade21.
2 The primary objective of the GATT is to liberalize trade. In the first three decades of its
existence, the main instrument for achieving this objective was the commitment by the
 13

contracting parties to reduce the level of tariffs imposed upon imports from other
countries. The process of trade liberalization was to be expedited through a requirement
that tariff reductions and other trade advantages given to one party be extended to all-
the «most-favoured-nation» (MFN) rule expressed in Article I. The GATT addressed
barriers to trade arising from internal national laws through the obligation to treat like
domestic and foreign products the same — the principle of national treatment. As tariffs
fell and government regulation grew, non-tariff barriers assumed an increasingly larger
role in restricting trade flows. As a result, since the Tokyo Round, the focus of GATT
negotiations has shifted to non-tariff barriers to trade.
3 Despite the trade liberalizing goal of the GATT, the exemption of certain trade-restricting
national public policies from GATT obligations was critical to the accession of parties to
the GATT. While trade liberalization was seen as necessary to combat the negative effects
of the mercantilist policies of the 1930s, governments were wary of giving up their
freedom to determine and implement national goals. Thus embedded in the liberal spirit
of the GATT is a carve-out for national sovereignty on public policy matters. The objective
of environmental protection is not, however, one of the exceptions mentioned within the
Agreement. Indeed, this omission is hardly surprising since the environment was not a
major concern of countries in the early post-war period. Nevertheless, among the
exemptions are two which relate to environmental protection: those measures which are
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)). Thus the
status of environmental protection under GATT is merely that of an exemption from the
primary objective of trade liberalization.
4 Where a dispute arises between two GATT members over the trade-restrictiveness of a
measure or its fulfillment of the requirements for exemption for public policies, it is
referred to an internal dispute settlement process. Unlike the International Trade
Organization which would have referred cases to the International Court of Justice, the
central institutional mechanism for settling conflicts between members of the GATT
(known collectively as the Contracting Parties and individually as contracting parties), is
the process set out in Articles XXII and XXIII. Article XXII provides for the right to consult
with other contracting parties regarding any matter relating to the GATT. Article XXIII is
the primary dispute settlement provision. In addition to consultation between the
disputants, this Article permits an aggrieved contracting party to invoke an investigation
of the matter by the Contracting Parties on grounds of «nullification and impairment» of
any benefit accruing to it under the Agreement, whether caused by a breach of a GATT
obligation or not. This investigation is followed by a recommendation to the disputants or
a ruling. In serious circumstances, the Contracting Parties may authorize suspension of
GATT obligations. More frequently, the Contracting Parties recommend the withdrawal of
the incompatible measure.
5 The GATT provides no right to private individuals to challenge the administrative action
of another State before a domestic court or before the GATT authorities. Only a
contracting party can challenge another contracting party. This limitation is significant.
As is discussed in the next section on the European Community, an environmental
regulation of an EC Member State may be challenged through a number of channels,
including by private parties. The implication of this difference is that GATT contracting
parties face a lower risk of having their legislation challenged than EC countries do under
EC law. This exposure to challenge may be further reduced by a reluctance of national
 14

governments to challenge the legislation of influential or powerful countries for fear of

upsetting international political relations. On the other hand, the inventory of tribunal
decisions balancing trade liberalization and environmental protection objectives may, as
a consequence, be more limited under the GATT. While proponents of environmental
regulation may be content with less international scrutiny by a trade institution, fewer
cases may also mean a less thorough canvassing of the issues and a less knowledgeable
disposition of the cases that do arise, and may diminish the perceived urgency for action
to remedy defects in the balancing process.
6 While originally disputes were discussed by the Contracting Parties or a committee
thereof, a panel of experts acting independently of their national governments has
become the norm. This panel is composed of three or five «experts» — usually GATT
diplomats but occasionally «non-governmental» types including former GATT officials
and academies. The panel is an ad hoc construction rather than a permanent institution.
Establishment of panels, adoption of panel rulings and authorization of retaliation may be
blocked by the losing side.
7 In contrast to the General Agreement, the «environment» as such is expressly mentioned
in the Agreement on Technical Barriers to Trade, commonly known as the GATT
Standards Code22. This agreement, which was signed in 1979 as part of the Tokyo Round23,
addresses non-tariff barriers arising from standards promulgated either by governmental
or non-governmental bodies to ensure that products or services meet physical or
performance characteristics24, including health and safety, and environmental protection.
The Code reiterates the national treatment principle and in addition requires parties to
ensure that technical regulations and standards are not adopted or applied with a view to
creating obstacles to international trade or will not have the effect of creating
unnecessary obstacles to international trade (Article 2.1). The parties are obliged to use
international standards where they exist except where inappropriate for parties for
reasons of, inter alia, national security, protection of human health or safety, animal or
plant life or health, or the environment (Article 2.2). The Code does not currently apply to
services or production processes.

B. The European Community

8 The European Economic Community was created in 1957 with the Treaty of Rome which
came into force in 1958 with six Member States.25 The goals of the EEC were the
establishment of the common market and the progressive approximation or
harmonization of the economic policies of Member States. To achieve these objectives,
the EEC is empowered under Article 3 to act to, inter alia, eliminate customs duties and
quantitative restrictions on barriers to trade between Member States and measures of
equivalent effect, establish a common customs tariff and common commercial policy
towards third countries, abolish obstacles to the free movement of capital, services, and
persons, ensure that competition in the common market is not distorted, and
approximate the national laws of Member States to the extent necessary for the proper
functioning of the common market.
9 It is clear from this list of activities that the institutional goals of the EEC have always
been much broader than those of the GATT. Nevertheless, the liberalization of intra-
Community trade in goods clearly was of the highest priority at the inception of the
Community. Indeed, there was no mention of the environment within the Treaty except
 15

to the extent that regulation of the health and life of humans, animals, and plants was a
ground for exemption (Article 36) from the prohibition of obstacles to the free movement
of goods (Article 30). Only with the passage of the 1986 Single European Act 26 (SEA) has
the environment been explicitly recognized in the Treaty of Rome. Environmental policy
has, however, been the subject of Community legislation since 196727. This development
was possible because of the close relationship perceived between economic integration
and environmental policy, and later because of the necessity to pursue economic growth
that included a qualitative dimension28.
10 Articles 100 and 235 provided the legislative bases for the development of environment
policy prior to the SEA29. Article 100 empowers the Council to issue directives for the
«approximation» of national rules directly affecting «the establishment or functioning of
the common market». The goal of this provision is to reduce obstacles to trade between
Member States resulting from disparities in national laws. It is clear that the requirement
that the rules «directly» affect the establishment or functioning of the Common Market
covers product-related environmental standards, since different product requirements
could be seen as non-tariff barriers. Differences between Member States in their
regulation of the environmental consequences of production are less obviously caught by
this provision. Nevertheless, it has been argued that this Article covers any rules which
have an effect on the competitive conditions in the EC closely connected with and
substantially affecting the functioning of the Common Market30. Production regulations
alter the costs of production and would thus appear to meet this criterion. (This issue is
examined more fully in Part V.) An additional requirement for Article 100 coverage is that
environmental regulation must be «substantially related to industrial or commercial
activities»31.
11 Article 235 was the second pillar for environmental regulation before the Single European
Act. In essence, this provision gives residual powers to the Council to take measures to
attain one of the objectives of the Community where the Treaty does not explicitly
provide the necessary powers. The objectives of the Community outlined in Article 2 of
the Treaty include «a harmonious development of economic activities», «an accelerated
raising of the standard of living», and «a continuous and balanced expansion». In order to
use Article 235 as a basis for environmental regulation, these ostensibly exclusively
economic aims were interpreted as including qualitative elements. This interpretation is
confirmed by a 1972 declaration of the Heads of State and Governments of the (then) nine
Member States which stated that economic expansion «should result in the improvement
in the quality of life as well as in standards of living... particular attention will be given to
intangible values and to protecting the environment»32. As well, it could be argued that
the economic dimension to environmental issues is strong: environmental pollution has
economic consequences because it creates costs. Moreover, environmental regulation
could be seen as contributing to the maintenance of a common good33. In the practice of
the EC, Article 235 is used where national rules regarding potentially environmentally
harmful activities do not have a clear or exclusively financial impact on trade or industry
34
.
12 The 1986 Single European Act aims to establish the European single market by the end of
1992. Article 130R expressly empowers the Community to take measures to protect the
environment: to preserve, protect, and improve the quality of the environment; to
contribute towards protecting human health; and to ensure a prudent and rational
utilization of natural resources35. While environmental regulation therefore appears to
 16

stand apart from economic objectives under Article 130R, in fact trade liberalization
objectives may be considered where a Member State wants to introduce more stringent
protective measures than the EC legislation since the former have to be «compatible with
this Treaty» (Article 130T), including its goal of the free movement of goods. 36
13 Like Article 100, Article 100A, which was introduced by the Single European Act, also
provides for the approximation of national rules but (unlike Article 100) by majority
voting. Moreover, Article 100A permits Member States to derogate from harmonized
standards where necessary for, inter alia, environmental protection purposes. Such a
derogation is, however, subject to conditions. The Member State must face a «major
need», the Commission must confirm that the provisions are not a «means of arbitrary
discrimination or a disguised restriction on trade between Member States», and the
harmonization measure must have passed by qualified majority37. Thus a Member State
wishing to pursue higher environmental standards may still be reined in by the trade
liberalization imperative. Moreover, Article 100A can work against environmental
protection objectives. This situation may arise where the harmonization measure is
undertaken as a means of levelling trade barriers where one Member State wishes to
impose stricter standards than others. If the primary objective of an EC measure is to
promote the unencumbered circulation of goods, then the environmental protection
concern can be compromised. The directive on vehicle emission standards is illustrative
of the fact that to meet objectives of economic integration, standards merely have to be
uniform, not stringent38. Conversely, the fact that Article 100A requires only a qualified
majority means that environmentally stringent Member States could impose higher
standards against the wishes of (a minority of) environmentally lax States.
14 While the Treaty itself now provides a fundamental basis for the recognition of
environmental protection, the European Court of Justice also plays a role in its
recognition as the final arbiter on the interpretation and application of the Treaty39. The
Court is appointed by agreement among the Member States’ Governments40. In contrast
to the limited means of challenging national legislation before the tribunals (panels) in
the GATT System, several avenues exist through which the legality of a national
environmental measure may come before the European Court of Justice. Actions may be
brought by the Commission where a Member State has not complied with an obligation
under the Treaty (Article 169), or by a Member State which believes another Member
State has violated its obligations (Article 170). As well, the Court may rule on the validity
of national legislation where a private party has challenged such legislation in his/her
national courts and this latter court has asked the ECJ for a preliminary ruling. If the
Court finds that such a violation has occurred, the State is required to take the necessary
measures to comply with the Court’s judgment (Article 171). In deciding the status of
Member State legislation, the Court has played a key role in defining the limits to both
the free movement of goods and environmental protection41.
15 In summary, the EC institutional framework has several distinguishing features which
influence how it balances trade liberalization and environmental protection goals and
which suggest some comparisons with the GATT. First, unlike the GATT, the EC gives
institutional legitimacy to the goals of both environmental protection and free movement
of goods. The environment has gained more than an exemptive status in EC law. Second,
while environmental regulation at the Community level was largely incidental to
economic integration until the Single European Act, the dynamic character of the
European Community Treaty permitted an evolution to a constitution more sensitive to
 17

the necessity of regulating environmental problems and balancing this goal against trade
liberalization42. Whether such an evolution is desirable or possible at the international
trade community level merits further examination and is discussed in Part VI.

NOTES
18. See Jackson 1989b at 31.
19. Ibid, at 32.
20. Ibid, at 35.
21. GATT Secretariat November/December 1991 at 8.
22. GATT, Agreement on Technical Barriers to Trade, 26th Supp. BISD 8 (1980).
23. There were 39 signatories as of February 1990. van Houtte, «Health and Safety Regulations in
International Trade» in Sarcevic and van Houtte 1990 at 131.
24. Theodore H. Kassinger, «Introduction to Agreement on Technical Barriers to Trade» in
Zamora and Brand 1990 at 135.
25. Treaty Establishing the European Economic Community as Amended by Subsequent Treaties,
Rome, 25 March, 1957 (hereinafter referred to as the Treaty or the Treaty of Rome) in Rudden
and Wyatt 1989 at 19.
26. Id.
27. Kramer 1990 at 2.
28. Lomas 1988 at 511.
29. Lomas 1988 at 510.
30. Rehbinder and Stewart 1988 at 25.
31. Ibid, at 26.
32. Kramer 1990 at 2.
33. Rehbinder and Stewart 1988 at 21.
34. Ibid, at 28.
35. Such action must be taken unanimously, except where the Member States have agreed to act
by majority vote.
36. See Sexton 1992 at 570.
37. Article 100A.
38. Lomas 1988 at 514.
39. Article 164.
40. Article 167.
41. In addition to the Court, the European Commission also has a role in validating or
invalidating national environmental legislation. Under Article 100A(4) of the Single European
Act, the Commission is required to «confirm» that national provisions, mandatorily notified,
which derogate from harmonization measures are not a means of «arbitrary discrimination or a
disguised restriction on trade between Member States». The Court does, however, have the final
word on this question.
42. See Articles 100A and 130R to T.
 18

III. Product versus production

regulation

1 This paper analyzes the treatment of environmental regulation under international trade
law according to whether the measure is product-related or production-related. The
reason for this dichotomy is that while the same rules are applicable to each, different
issues arise according to the category. Product-related environmental measures address
the harm to the environment which the product may cause in use or at the end of its
useful life43. Examples of such measures would include those which regulate pesticides,
car emissions, discarded refrigerators or air conditioners containing CFCs, as well as
product packaging. Regulation of the use and disposal of such products may cause certain
restrictions on trade. For instance, a ban on the use of CFC refrigerators by some
countries would mean that countries still producing such items would find such markets
closed. Regulations aiming to limit the amount of waste from packaging might require
the use of certain kinds of packaging or recycling; foreign manufacturers may bear
relatively higher costs to adapt to such requirements particularly where their home
countries do not have similar regulations and where they are required to establish
recycling or re-use facilities within the export market. The main issues which product
regulations raise for international trade law are therefore market access and
discrimination between domestic and foreign products.
2 For the purposes of this paper, measures aiming to reduce the environmental harm
caused by the production process are considered to include laws regulating the pollution
caused by the manufacture of products as well as laws regulating the management of
natural resources. Examples of production regulations include requirements for
«recycled content» in newsprint, limits on the discharge of effluent in the production of
certain products, and the requirements that sustainable forest management practices be
used. Such laws do not raise trade law issues if they are only applied to domestic
production processes. However, governments frequently have an interest, environmental
and economic, in regulating the production processes of other countries. They may be
genuinely concerned about the threat to natural resources within other countries or in
the global commons. Alternatively, they may be seeking to ensure that domestic industry
is not at a competitive disadvantage in domestic or foreign markets because of high
environmental compliance costs. The main issue for production-related environmental
 19

regulation is the legality of the different means used to regulate the extraterritorial
environment under international trade law (and conversely, the degree of sovereignty
which such law leaves to contracting parties or Member States).

NOTES
43. See Ingo Walter, «International Economic Repercussions of Environmental Policy: An
Economist’s Perspective» in Rubin and Graham 1980 at 36.
 20

IV. Legality of product-related

environmental regulations

1 The discussion of the legality of product-related environmental measures under the GATT
and European Community law is divided into three sections. Section One addresses
whether such measures constitute a breach of prohibitions on trade restrictions at the
international and European level. Section Two discusses the possibility for exemption for
illegal measures under the public policy exemptions provided for in the GATT and the
Treaty of Rome. Section Three evaluates the possibilty of using public security as a
ground for exemption. Section Four concludes Part IV with some proposais for GATT
reform.

Section One. Compatibility of product-related

environmental measures with trade liberalization rules
A. The GATT
1. Overview of Key GATT Provisions

2 The principal provisions of the GATT affecting environmental regulation are Articles I, III,
XI and XX. (See Appendix for full text of these provisions.) Article I articulates the Most
Favoured Nation principle that any «advantage, favour, privilege or immunity granted by
any contracting party to any product originating in or destined for any other country
shall be accorded immediately and unconditionally to the like product44 originating in or
destined for the territories of all other contractingparties». This rule essentially prohibits
a country from discriminating between other countries in its trade laws regarding
importation and exportation and in its internai laws and regulations.
3 Article III articulates the other non-discrimination principle of «national treatment»
which disciplines a contracting party’s use of internal taxation and regulation. National
treatment requires that imported goods be accorded the same treatment as domestic
«like products» and is the domestic/foreign product counterpart to the Most Favoured
Nation rule. The drafters of the GATT applied the national treatment principle to both
bound and unbound items45 because they were concerned not only about «protecting
 21

scheduled concessions but also of preventing the use of internai taxes and regulations as
a System of protection»46.
4 Article XI proscribes quantitative restrictions on the trade of other contracting parties —
those «prohibitions or restrictions other than duties, taxes or other charges, whether
made effective through quotas, import or export licences». The GATT preferred tariffs to
quantitative restrictions, such as import and export licences, or outright bans or quotas,
because quantitative restrictions were viewed as being more certain in their protective
effect in limiting the volume of trade, more effective when tariffs might not be, and more
discriminatory between foreign countries47. While tariffs have been reduced over the
course of several rounds of negotiations, quantitative restrictions on trade were
proscribed from the outset in Article XI.
5 Article XX provides an exemption to a contracting party whose measures have been
challenged and found to be in breach of one of the GATT obligations, including all of the
Articles discussed above. Article XX enumerates a list of public policy exemptions
including some environmental protection measures by which countries can justify
breaches of GATT obligations.

2. Legality of Product-Related Environmental Regulations under Article III or XI48

6 The determination of whether an environmental measure with restrictive effects on trade

falls to be treated under Article III or Article XI may, in certain cases, be dispositive of the
fate of the measure under the GATT. The reason is that if a measure is judged to be a
restriction but is imposed equally on both domestic and foreign products under Article
III, the measure may be legal under GATT obligations. In contrast, if a prohibition or
restriction falls under Article XI, the measure is illegal under the GATT unless it can be
exempted under one of the GATT exceptions49. The applicable exemption for
environmental protection regulations will most likely be Article XX(b) or (g). As discussed
below, neither paragraph provides comprehensive protection for such regulations.
Moreover, the measure must meet the individual requirements of paragraphe (b) and (g),
which go to the necessity of the measure, as well as the preambular requirements that
the measure be neither «a means of arbitrary or unjustifiable discrimination» or a
«disguised restriction on trade». Fulfilling these criteria may be difficult, as is discussed
below.

3. Article III as a Non-Discrimination Principle

7 As noted above, the purpose of Article III is to prevent discrimination against imported
products. But what kind of discrimination is proscribed by Article III? The question is
significant since the nature of the prohibited discrimination under the national
treatment principle determines the vulnerability of environmental measures to challenge
under Article III. Facial or de jure discrimination arises where a measure overtly
discriminates (on its face) between foreign and domestic products. In contrast, material
or de facto discrimination exists where a facially neutral measure has a disproportionately
burdensome impact on foreign as opposed to domestic goods. Article III offers both
versions. Paragraph 4 of Article III which relates to laws and regulations affecting sale,
distribution, and use appears to prohibit only facial discrimination in stating that
imported products “shall be accorded treatment no less favourable” than that accorded
to domestic products. This speaks only of government action, not of the effects of such
 22

action. An argument in favour of this interpretation of national treatment is that the

differential impact of a measure may be difficult to assess in some instances. In addition,
if the legality of a measure is evaluated according to its impact on foreign producers, this
may be seen to undermine a country’s freedom to set domestic policy as it wishes. An
example is the EC/US dispute over the EC ban on the import of hormone-grown beef
products in which the EC argued that the measure was facially neutral and as a resuit,
non-discriminatory50. The EC stated that the ban was merely the equivalent of an EC ban
on the production of such beef; the same treatment was therefore accorded both to
domestic foreign hormone-grown beef. If Article III only prohibited de jure
discrimination, then a GATT panel would conclude that the measure was legal.
8 Limiting the proscribed discrimination to facial discrimination does not, however, accord
with the wording of Paragraph 1 of Article III which governs both internai regulations
respecting the sale, distribution and use (the subject matter of Paragraph 4) as well as
internai charges or taxes: internai taxes and regulations “affecting the internai sale,
offering for sale, purchase, transportation, distribution or use of products, and internai
quantitative regulations... should not be applied to imported or domestic products so as to
afford protection to domestic production”. The underlined text clearly prohibas measures which
have the effect of assisting domestic industry. The policy rationale for prohibiting
material discrimination is obvious. If the aim of national treatment is to ensure equality
between foreign and domestic goods, then a contracting party should not be permitted to
circumvent this GATT principle through measures which are not overtly discriminating
but resuit in a heavier burden on foreign products. In the case of the EC/US hormone-
grown beef dispute, it would appear that the application of the same rule to the different
situations of the EC and US industry meant that the ban on the import of hormone-grown
beef had a harsher impact on the US industry as compared to the EC industry. The EC
industry produced a much greater proportion of its beef for its home market than the US
did for the European market. The EC industry could therefore more readily recoup the
costs associated with any adjustment required by a ban on hormone-grown beef products.
As a resuit, a greater commercial burden would fall on foreign producers than on
domestic producers, despite the fact that the measure appeared on its face to apply
equally to US and EC hormone-grown beef products.
9 While the EC/US beef dispute was never addressed at the formai dispute resolution stage,
the nature of the non-discrimination principle was addressed squarely in the FTA Salmon
and Herring case under the Canada-US Free Trade Agreement (FTA). The FTA Panel was
applying GATT law since Chapters 4 and 5 of the FTA incorporate by reference both
Articles III and XI of the GATT. In this case, Canada had argued that its requirement that
all salmon and herring caught off Canada’s West Coast be brought to a landing station for
counting and biological sampling was equally applicable to both domestic and foreign
fishing boats, and thus was not contrary to the national treatment principle. A doser
examination of the facts of the case reveals a different view of this facially neutral
regulation. Since landing stations were located contiguous to Canadian processing plants,
Canadian fishermen would have had to land their fish there in any event. In contrast,
American fishermen would have been making an unwanted landing. They would have
been forced to offload the fish and then reload if they were shipping to the US. The
resultant costs and possible damage to the fish meant that American fishermen suffered a
commercial disadvantage over their Canadian counterparts (although some American
 23

fishermen may not have been disadvantaged as they may have intended to transport the
fish overland in any case).
10 The Panel rejected the Canadian argument that Article XI, the counterpart to Article III
for export restrictions51, captures only measures which are overtly discriminatory,
finding that: «[S]uch an approach would create a significant limitation on the scope of
GATT obligations regarding exports. It would allow governments to impose measures that
in fact place heavier commercial burdens on exports than on domestic products, provided
only that the form of the measure itself was neutral»52. In support of its reasoning, the
Panel noted that no such limitation existed for the «parallel GATT obligation regarding
imports in Article III.2 and Article III.4»53.
11 The view that the non-discrimination principle in Article III and Article XI (with respect
to sales for export) extends beyond facial discrimination is confirmed in another FTA
Panel case regarding US regulations prohibiting, inter alia, the sale or transport in or
from the US of whole live lobsters smaller than the minimum possession size in effect
under US law. The resuit of this measure was that Canadian lobsters below that size could
not be sold in the US. The majority panel in Lobster noted that the non-discrimination
principle «bars a country from extending internai measures to imported goods in a way
that bears more onerously on the imported products than on the like domestic products» 54
(emphasis added). The Panel also underscored the rationale for this interpretation of
nondiscrimination: the safeguarding of a competitive relationship for imported goods 55.
The Panel cited the GATT Panel on Section 337 of the (US) Tariff Act of 1930 on the
meaning of Article III: «the drafters of the Article intended to cover in paragraph 4 [of
Article III] not only the laws and regulations which directly governed the conditions of
sale or purchase but also any laws or regulations which might adversely modify the
conditions of competition between the domestic and imported products on the internai
market»56. The Lobster Panel further noted that the US restriction did modify the
conditions of competition between US-origin and Canadian-origin lobsters and in
particular noted that the alteration to the competitive relationship was the basis for the
Canadian contention that it had been deprived of a «natural comparative advantage»57.
12 Finally, it is clear that Paragraph 2 of Article III prohibits not only facial discrimination
but also tax measures which have the effect of protecting domestic industry. In the
Japanese Alcoholic Beverages case, the GATT Panel noted that the “object and purpose of
Article III.2 or promoting non-discriminatory competition among imported and like
domestic products could not be achieved if Article III.2 were construed in a manner
allowing discriminatory and protective internai taxation of imported products in excess
of like domestic products”58.

4. Relevance of the Policy Objective of a Measure

13 An interesting feature of Article III is the apparent irrelevance of the purpose of the
measure in question to the issue of its validity. Since, as argued above, the validity of a
measure under Article III is predicated on whether it maintains non-discrimination in the
conditions of competition between imported and domestic products, then the GATT will
not enquire further into the measure.
14 In the Superfund case, the GATT Panel’s task was to judge the compatibility with GATT
obligations of an excise tax levied on imported petroleum products. The Panel ruled that
GATT rules did not distinguish between taxes for different purposes: «Whether a sales tax
 24

is levied on a product for general purposes or to encourage the rational use of

environmental resources, is therefore not relevant for the determination of the eligibility
of a tax for border tax adjustment».59 In contrast, a measure falling under Article XI can
only be saved by showing its legitimacy on public policy grounds under Article XX. While
it could be argued that non-tax measures may not benefit from this holding, in the Lobster
case the majority did not distinguish tax from non-tax measures in discussing the
relevance of the objectives of the policy measure in that case, a regulation regarding sale.
The Panel emphasized that the tests for coverage of Article III turned on whether the
measure was protective or not, not on its policy purpose.60
15 The irrelevance of the policy purpose under Article III may be regarded positively by
environmentalists to the extent that the GATT will not second-guess the legitimacy of a
government’s measures as long as the tax or policy is borne equally by national and
foreign producers. However, the failure to consider the policy purpose of a national
measure under Article III may not always work in favour of environmental principles. As
discussed in greater detail in Part VI, the Panel’s holding in the Superfund case defeated
the application of the polluter-pays principle. The Panel expressly rejected the EC
argument that the environmental tax on foreign products was not justified because it
resulted in foreign products subsidizing the pollution caused by domestic production in
violation of the environmental principle of «polluter pays».61

5. Article XI

16 As noted above, Article XI is the principal GATT provision prohibiting the use of non-
tariff barriers, proscribing quantitative restrictions such as quotas «instituted or
maintained by any contracting party on the importation.... or on the exportation or sale
for export of» another contracting party’s product. Three possible exceptions to Article
XI.1 are set out in Article XI.2: 1) temporary export restrictions to relieve shortages of
food or other products essential to the exporting country; 2) import and export
restrictions necessary to the application of standards for grading or classification of
commodities; and 3) import restrictions on any agricultural or fisheries products under
certain defined circumstances. Exceptions are also made for balance of payments reasons
under Article XII and XIV; however, it is likely that these will not be applicable in most
cases of export restrictions for environmental purposes.
17 A significant feature of Article XI is that it disciplines not only border measures but also
measures which appear to be internai regulations as in FTA Salmon and Herring (as Article
III does for internai measures affecting sales of imports). Article XI proscribes
prohibitions or restrictions instituted or maintained by any contracting party on the
«exportation or sale for export» (emphasis added) of any product destined for the territory
of any other contracting party. It will be recalled that for imports, Article XI only
proscribes prohibitions and restrictions on «importation». Because of the additional
phrase regarding exports in Article XI, a contracting party cannot avoid illegality by
arguing that the restriction is merely an internai measure affecting export sales and
therefore beyond the scope of Article XI. In the export context, this argument has no
meaning since all potential exports begin as domestic products. According to the Panel in
the FTA Salmon and Herring case: «While an import retains its distinct character as an
import throughout its commercial life, and is identifiable as such, an export does not
exist as an export until it is committed to the export process»62. The Panel in this case
 25

interpreted «sale for export» as covering restrictions imposed on goods destined for
export even though the restriction does not take place at the border.
18 Finally, as noted above, the Panel ruled that a finding of material discrimination would
resuit in a violation of Article XI for exports. The Panel noted that the «landing
requirement was not merely a general measure that happened to have an adverse impact
on exports...where the primary effect of a measure is in fact the regulation of export
transactions, the measure may be considered a restriction within the meaning of Article
XI. 1 if it bas the effect of imposing a materially greater commercial burden on exports than on
domestic sales» (emphasis added).63 Thus, with respect to internai measures affecting
imports and exports, both Article III and XI appear to capture material discrimination.

6. Factors to Distinguish Between Article III and Article XI Regarding Imports

a) Wording of the Texts

19 The first distinction between Article III and XI is found in the wording of the text. Article
III refers to «imported products» whereas Article XI refers to the «importation of any
product». This would seem to imply that the Article III applies to products which have
already passed the border of the country and have entered the internai market of the
importing country, while Article XI would apply to border measures affecting whether
and with what charges a foreign good passes the border. This apparently simple
dichotomy is blurred by the Ad Note to Article III which allows internai measures to be
«collected» (in the case of taxes) or «enforced» (in the case of regulations) at the time or
point of importation; this means that even though a measure is implemented at the
border, it is not necessarily a border measure subject to Article XI (unless it is an internai
regulation affecting exports).
20 The question of distinguishing between Article III and Article XI was raised in the FTA
Panel hearing in the Lobster case. Canada argued that Article III was not applicable
because it covered products which can enter the country and which thereafter have to
comply with national regulations such as labelling64. On the other hand, «importation [in
Article XI] covered products that are in the process of being brought in but are not yet in
the country»65. The Panel found that Article III and not Article XI was applicable for
several reasons. First, the Panel referred to discussions at the Havana Conference of
1947-48 regarding the classification of a charge as an import charge or an internai tax.
There a subcommittee considered certain charges to be import duties analogous to
Article XI measures because of their border nature, because «a) they are collected at the
time of, and as a condition to, the entry of the goods into the importing country and b)
they apply exclusively to imported products without being related in any way to similar
charges collected internally on like domestic products».66
21 On the basis of this analysis as well as the Ad Note to Article III, the Panel concluded that
US restrictions in Lobster were not covered by Article XI because they did not apply only
to imports and were not conditions to entry. The Panel found that Article III applied to
both measures applied at the border and measures imposed on foreign goods once they
have crossed the frontier: «Even if the measures were imposed fully at the border, the
measures would apply to domestic and Canadian lobsters»67 Second, the Panel seems to
have been swayed towards an Article III interpretation because of its concern that many
marketing regulations applicable to both imported and domestic products would be
 26

threatened if Article XI applied because many of such regulations could not meet the
requirements of Article XX.

b) Intensity of Coverage

22 The Lobster Panel also considered whether the intensity of the measure in question — that
is, whether it was a prohibition or a restriction — would affect its categorization under
Article III or Article XI.1. In this respect, the Panel noted that neither Article XI nor
Article III distinguishes between measures in terms of their intensity68. Article XI
expressly mentions both, but Article III does not differentiate, merely referring to «laws,
regulations and requirements affecting» the internai marketing of foreign products. The
Panel observed, however, that with respect to Article III an imported product will be
affected by a regulation whether it is a restriction or a prohibition. Furthermore, a
restriction on internal marketing of an import could be as detrimental to the sales of that
product in the country as a prohibition.69
23 The Minority members of the Panel did not agree on this point. They argued that the use
of the term «affecting» in Article III «presumes the real or potential existence of internal
“sale, use or transportation” of “imported” products in competition with domestic
products»70. therefore excluding from its scope the complete prohibition of marketing.
The implication of the Minority position is that a prohibition on certain products, even if
applied as well to domestic products, would be illegal under Article XI and would have to
be redeemed under Article XX or one of the other GATT exceptions. By structuring the
analysis in this way, the Minority Position would mean that the measure would have to
fulfill all the criteria set out in Article XX which could prove onerous, thus creating more
obstacles for trade-banning environmental measures. On balance, the Minority position
seems tenuous. Given the absence of a reference to the terminology of restrictions or
prohibitions in Article III, there would not appear to be any textual basis for their
interpretation. Furthermore, there would appear to be no reason for the GATT would
want to proscribe a measure which applied equally to domestic as well as imported
products, even if it were a prohibition rather than a restriction.

c) Are Articles III and XI Mutually Exclusive?

24 It would appear, at first glance, that a measure could fall both under Article III and Article
XI. The text of Article XI does not appear to preclude this possibility. Indeed, this
interpretation appears to be supported by reference to Article XI.2(c)(i), in which a
measure is exempted from Article XI prohibitions where import restrictions are
necessary to the enforcement of measures operating to restrict the quantities of like
domestic products71; that is, Article XI.2(c)(i) appears to contemplate exempting internai
regulations specifically. The mutually exclusive interpretation also seems to be justified
by the argument that an importing country might be able to avoid the prohibition in
Article XI by prohibiting the internai sale of products which it does not produce itself or
making such sale very difficult by imposing prohibitively high taxes. The weakness of this
argument is that a country would still have to show that the measure met the provisoes
that the measure does not run afoul of the Ad Note to Article III.2 which disallows taxes
involving competition «between, on the one hand, the taxed product and a directly
competitive or substitutable product which was not similarly taxed» and of the general
non-protectionist requirement of Article III.1.
 27

25 On the other hand, Article III refers to «internai» laws expressly. Furthermore, Article XI
applies to the «importation» of goods while Article III refers to goods which have already
been imported. Moreover, a number of cases72 interpreting the GATT have accepted that
Article III and Article XI must be mutually exclusive; that is, measures must be
categorized into one category or another. In the FIRA case, the Panel concluded that if
this were not the case, then Article III would be partly superfluous73.

7. Conclusion

26 It is likely that import measures designed to regulate environmental consequences of

product use and disposai would be respected under Article III and not prohibited under
Article XI, regardless of whether the measure involved a prohibition or restriction or was
applied at the border or internally, and without an enquiry into the legitimacy of that
objective provided that: the measures affected both imports and like domestic products
(thus bringing the measure within the coverage of Article III); and the measures were
non-discriminatory in intent and in effect (de jure and de facto equality). In contrast,
import measures would fall under Article XI where they involved a quantitative
restriction, were applied only at the border, and did not compensate for domestic
regulatory or tax measures applied to domestic goods. An environmental measure
restricting the exportation of a product would be illegal under Article XI while a
regulation affecting a sale for export would be proscribed if it created a commercial
disadvantage for exporters.
27 How difficult is it for bona fide environmental measures to pass these hurdles? The
following is a brief review of some difficulties that might arise for certain product-related
environmental regulations under the GATT.

a) Tax Measures

28 The imposition of a levy or tax on products which cause pollution in their use of disposai
would appear to be unassailable under GATT Article III.2 provided that the levy was
applied equally to domestic and foreign products. If the tax on imports were applied at
the border and equivalent taxes were imposed on domestic products, it would not be
considered an import charge because of Article II.2(a), which permits “a charge
equivalent to an internai tax imposed consistently with the provisions of paragraph 2 of
Article III in respect of the like domestic product”. In addition, the policy purpose of the
tax would not be considered relevant.
29 In practice, however, taxes which are applied equally to both foreign and domestic goods
may not have equivalent effects on their sale. The tax could apply to goods which are
primarily imported and in competition with untaxed, like domestic goods. An example is
the 1992 environmental levy on non-refillable alcoholic beverage container in the
Canadian province of Ontario. Although this measure has an impact on wine and spirit
bottles which are not refilled, the most contentious trade issue has been over beer in
metal cans. US beer producers have strongly denounced this levy as discriminatory since
US beer is almost exclusively packaged in metal containers (which may be recyclable but
not refillable as required for the Ontario levy not to apply) while Ontario beer is largely
sold in reusable bottles (for which no levy is charged). In response to the argument that
US beer producers could change to bottles, the US industry would have to incur the
capital costs of changing over to bottling as well as the shipping costs which are likely
 28

higher than for exporting the lighter metal cans. In order to challenge the Ontario levy,
the US would first have to demonstrate that bottled and canned beer were “like products”
under Article III.2. This should not be difficult; the packaging of beer in bottles or cans is
unlikely to affect either the end-use of the beer consumption) or its market, two key
factors in determining the “likeness” of products74. The US would also have to prove that
there was a discriminatory or protective tax burden on US beer in metal cans75. While it is
not a foregone conclusion that the US could establish that the national treatment
principle was being violated, this example reveals how environmental tax measures could
be subject to challenge under Article III.

b) Non-Τax Measures

30 Similary, non-tax measures risk challenge under GATT rules. For example, a requirement
that certain products used in Country X meet specified emission standards which are
higher than other countries’standards might be incompatible with GATT rules. If the
regulation applied equally to like imported and domestic products, there would be no
violation of a de jure non-discrimination standard under Article III. However, since GATT
establishes a non-discrimination standard based on differential impact, it is possible that
such a standard would not be legal under the GATT. Foreign companies might be required
to produce a special product line for one country, raising the cost of these products,
particularly if X’s market is not a principal one for country Y exporters.
31 A second example of a non-tax measure would be a mandatory re-use programme
requiring all beverage producers to ensure that their bottles are returned and re-used.
Again, on its face such a requirement applies equally to domestic and foreign beverage.
However, the foreign producer may very well be disadvantaged. In the best case scenario,
he will be close enough to his export market that he can arrange to have the bottles
returned to his plant. This is the same cost borne by the domestic producer. For the
majority of foreign producers, however, this may not be a realistic possibility because of
the distance between their plants and the export market. The foreign producer may be
forced to send his beverage in bulk to the importing country and bottle it there, an option
that could undermine the marketing and quality of the product. Thus regulations
regarding the disposai of products may contravene the GATT where such regulation
creates a heavier burden on foreign than domestic producers.
32 The threat to environmental measures under Article III is significant. As Article III
proscribes non-discrimination to the level of differential impact, then it captures not only
measures with clear discriminatory intent but also bona fide regulations which
inadvertently cause discrimination. A recent GATT panel ruled that Article III.4
establishes the principle of «effective equality of opportunity for imported products»76
with respect to sale, distribution or use. The question left unanswered is the extent of
equality which a GATT panel will demand. If it means absolute equality, that is, the
measure has to have an equivalent effect on both foreign and domestic products, it would
capture a large number of national regulations affecting products not only in the
environmental field but also in other public policy fields. It is highly probable that bona
fide environmental regulations and standards will frequently apply more favourably to
domestic products than foreign ones given that national legislatures tend to take into
account local conditions, traditions, production patterns, and domestic consumer
preferences and priorities77. Whether international trade law should deem such
legislation invalid is open to question. The ramification of an absolute equality
 29

interpretation of the non-discrimination principle in Article III is that countries would

have to resort to Article XX with increasing frequency in order to defend the validity of
their provisions. This would seem to undermine the very predictability and certainty
which the GATT aims to provide for the international trading System. Furthermore, it is
likely that this consequence was not foreseen at the time of the GATT’s creation. As noted
above, after World War Two national regulation of public policy areas such as the
environment was not as widespread, nor was the volume of world trade as great, as it is
today. The repercussions of national regulation in ostensibly nontrade areas like the
environment on the trade of other countries are thus much more extensive in today’s
interdependent world economy. This raises the issue of whether GATT panels should
protect facially neutral environmental regulations which require minor adjustments by
foreign producers. The difficulty with this option is that the threshold demarcating
significant from insignificant restrictive effects of environmental regulation may be hard
to find. One possibility is that a de minimus effect on trade could be established below
which no regulation would be challenged. Beyond this modest proposai, however, the
best solution to avoid invalidating legitimate regulations under the GATT may be to
construe broadly, or revise, the exemptions provided under Article XX.78

B. European Community Law

1. Overview of Key Provisions

33 One of the main principles of the Treaty of Rome establishing the Common Market is the
free movement of goods as set out in Article 3(a): the activities of the Community shall
include the «elimination, as between Member States, of customs duties and quantitative
restrictions on the import and export of goods, and of all other measures having
equivalent effect». The concept of «goods» is not defined in the Treaty itself. The Court of
Justice has ruled that: «By goods within the meaning of [Article 9 of the Treaty], there
must be understood products which can be valued in money and which are capable, as
such, of forming the subject of commercial transactions. »79 In the recent Walloon Waste
case, the Court specifically examined the status of «waste», holding that recyclable and
reusable wastes had an intrinsic commercial value and therefore, were «goods» under the
Treaty. The Court also rejected the Belgian argument that non-reusable and non-
recyclable waste did not fall within Article 30 (dealing with goods) but within the freedom
to provide services provisions of the Treaty. The Court observed that objects which are
transported across borders for the purpose of commercial transactions fall under Article
30, whatever the nature of the transaction. Moreover, the Court held that distinguishing
between recyclable and non-recyclable waste was necessarily subjective and depended on
uncertain factors.80
34 Articles 30 to 36 are the main provisions of the Treaty implementing the goal of
liberalizing the circulation of goods within the EC. Article 30 covers non-financial
restrictive measures relating to imports81:
Quantitative restrictions on imports and all measures having equivalent effect
shall, without prejudice to the following provisions, be prohibited between Member
States.
35 Article 34 is the Article 30 counterpart for quantitative restrictions on export and
measures having equivalent effect.82 Article 36 provides an exemption from Article 30 and
Article 34 on certain defined groundsprovided that the Community has not exhaustively
 30

legislated in the area.83 As well, the European Court of Justice has developed exemptions to
Article 30 and 34 in its jurisprudence (the so-called mandatory requirements).

2. Comparison with GATT Structure

36 That the Treaty of Rome’s founders were aware of the GATT provisions at the time of
drafting is readily apparent on comparing the language of the two agreements. For
instance, both require justification for measures which violate the principle of free
movement of goods and both proscribe «disguised restrictions on trade» and «arbitrary
discrimination». Nevertheless, the prohibitions on trade restrictions in the GATT and the
Treaty of Rome are structured somewhat differently. As noted above, GATT Article XI
covers quantitative restrictions on imports at the border while Article III covers internai
regulations and taxes. In contrast, Article 30 does not explicitly distinguish between
border and internai measures. All total and partial prohibitions on imports are treated as
quantitative restrictions on imports, even if they also apply to national production, and
all other obstacles are covered under the concept of measures of equivalent effect (MEEs).
84
MEEs extend beyond measures which directly affect imports; if not, internai measures
would entirely escape censure and Article 30 would therefore only cover Article XI
restrictions and not Article III restrictions85. It should also be noted that tax measures do
not fall within Article 30.86 (As such, the EC treatement of environmental tax measures
has not been included in this study.) On the other hand, Article 34 corresponds closely to
Article XI with respect to exports.

3. Article 30

37 Quantitative restrictions were defined by the European Court of Justice as «measures

which amount to a total or partial restraint of, according to the circumstances, imports,
exports or goods in transit»87. Like GATT Article XI, Article 30 covers not only quotas but
also absolute prohibitions on imports. The distinction between quantitative restrictions
and MEEs is not wholly clear; as one commentator has argued, it may only be material
before the European market is fully integrated88 since at that time internai laws will be
harmonized and MEEs should, in theory, no longer exist. In its early case law, the
European Court of Justice interpreted the meaning of «measures of equivalent effect»
expansively:
All trading rules enacted by Member States which are capable of hindering, directly
or indirectly, actually or potentially, intraCommunity trade are to be considered as
measures having an effect equivalent to quantitative restrictions89.
38 According to this definition in Dassonville, measures do not have to affect intra-
Community trade in fact but only have to have the potential to do so. Nor do the measures
in questions have to be directed at trade; they simply have to have an effect on trade. The
implication of this definition is that it would appear to capture almost any national
regulation which caused even a de minimus, indirect restriction of trade. The danger with
this approach is that it would amount to a severe encroachment on Member
States’national sovereignty to pursue particular public policies having a trade-restrictive
effect.
39 The broad interpretation of MEEs in Dassonville is in contrast to an earlier definition
provided by the European Commission in its Directive 70/50 in 196990. This Directive is
significant in that it established the distinction between «distinctly applicable» measures
 31

and «indistinctly applicable» measures. Distinctly applicable measures which were

forbidden outright are those which hinder imports which would otherwise take place.
More specifically, the Directive proscribes measures which require that imports or their
sale meet conditions required only for imported products or different from those
required for domestic products and more difficult to satisfy, as well as measures which
favour domestic products or grant them a preference. Paragraph 3 of Article 2 of the
Directive enumerates a non-exhaustive list of measures which are strictly prohibited. It is
clear from Article 2 that the Commission is attempting to target, and prohibit, overtly
discriminatory measures — measures which are discriminatory on their face. 91 In
contrast, measures which deal with the marketing of products including their shape, size,
weight, composition, presentation, identification and which are equally applicable
(indistinctly applicable) to both imports and domestic products are not caught by Article
30, unless the restrictive effects on the free movement of goods are out of proportion to
their purpose or a less restrictive alternative may achieve the same objective. 92 Thus this
Directive appears to confer prima facie legality on facially neutral measures but will
capture them if they do not fulfill proportionality criteria. Such criteria include whether
there is a disproportionate burden placed on imports vis-a-vis domestic products with
respect to the «marketing» of products: «where imports are either precluded or made
more difficult or costly than the disposai of domestic production and where such effect is
not necessary for the attainment of an objective within the scope of the powers for the
regulation of trade left to Member States by the Treaty»93. The rationale for the treatment
of indistinctly applicable measures is expressed in the preamble to the Directive:
«[E]ffects on the free movement of goods of measures which relate to the marketing of
products [and which are indistinctly applicable] are not as a general rule equivalent to
those of quantitative restrictions, since such effects are normally inherent in the
disparities between rules applied by Member States in this respect».
40 The difference between the Dassonville interpretation and the Commission’s view in the
1969 Directive is significant for environmental regulation. The early ECJ interpretation
would invalidate all rules which would have a restrictive effect on trade and would put
the onus on the challenged State to defend those measures as justified by Article 36 or the
mandatory requirements exception. To be proscribed, it would not be necessary to show
either facial discrimination or a heavier impact of the regulation on a foreign producer
than a domestic producer. Any restriction on trade would be sufficient to establish
illegality. The Directive, on the other hand, would capture overt discrimination but
«material discrimination» only where the measure was not necessary for certain
objectives left to national jurisdiction or where the measure was disproportionate to its
purpose. Member State sovereignty to retain or implement national regulations would
therefore be less readily challenged under the Directive than under the Dassonville
interpretation.
41 The judgment of the European Court of Justice which (partly) responded to this debate on
the meaning of measures of equivalent effect was the Cassis de Dijon case. This case arose
because an importer was denied authorization to import Cassis de Dijon (a liqueur) into
Germany since it did not meet the minimum alcohol content (25%) required for certain
liqueurs and other spirits under German law. The importer challenged this requirement
as a measure of equivalent effect. It was clear that the measure was neutral on its face as
between domestic and imported products. Nevertheless, the plaintiff argued that the
German rules led to the resuit that well-known spirits products from other Member
 32

States could not be sold in Germany. In order to gain access to the German market, the
plaintiff would have been obliged to manufacture cassis in a form specifically designed to
meet the German standard which would have made its importation both more difficult
and more costly relative to the sale of German liqueurs94.
42 Germany countered that its laws were meant to protect the health of consumers against
excessive drinking and against abuses and unfair practices in the manufacture and sale of
spirits. As such, the laws fell within the margin of discretion which belonged to Member
States. Further, it argued that the conditions regarding minimum alcohol content met the
requirement of both formai equality and material equality; national producers did not
gain any material advantage. Any obstacles to trade were solely due to the disparity in
the legal requirements for alcohol content between different Member States and could
not constitute material discrimination.95 If the Court found German laws in violation of
European Community law, then, according to Germany, Article 30 would be the
instrument for a levelling of national laws to the requirements of the least exigent State
without the democratie safeguards and consultation of the Article 100 harmonization
process: «In an extreme case, a single Member State could enact legislation for the whole
Community, without the collaboration or even the knowledge of the other Member
States. The resuit would be to lower minimal requirements to the lowest level set in any
given national rules, in the absence of the authorization required by Article 100 of the
Treaty, which presupposes the consent of the Member States».96
43 The Court rejected Germany’s arguments and agreed with the plaintiff that the measure
was proscribed under European Community law. The measure was held to be within
Article 30 and did not fall within the available exemptions under Article 36. Nevertheless,
the Court stated that where there were no common rules in EC law relating to the
production and marketing of alcohol, it was the Member State’s responsibility to
«regulate all matters relating to the production and marketing of alcohol and alcoholic
beverages on their own territory».97 The restrictions on intra-Community trade resulting
from disparities between national laws on the marketing of products «must be accepted
in so far as those provisions may be recognized as being necessary in order to satisfy
mandatory requirements relating in particular to the effectiveness of fiscal supervision, the
protection of public health, the fairness of commercial transactions and the defence of
the consumer»98. It was held that the burden was on the Member State whose legislation
had been challenged to prove that the measure taken fell within one of the «mandatory
requirements» exemptions (see discussion below). This decision was quoted with
approval in the Danish Bottles case, an important environmental case in European
Community law.
44 European Community law on the interpretation of material discrimination under Article
30 has evolved again since Cassis de Dijon. The impugned measure in that case created a
trade restriction because of the differences between two Member States’rules regarding
the minimum alcohol content for liqueurs. The effect of this difference was
discriminatory; foreign producers were forced to adapt to the local market or stop
exporting while local producers did not have to make any adjustment. In contrast, recent
cases indicate a return to the Dassonville formula. In these cases, the European Court of
Justice has condemned internai rules regulating the sale of products under Article 30
even where both foreign and domestic producers bear the burden of the new rule equally
99. In the Milk Substitutes case, the Court ruled that the French prohibition of the sale of

substitute milk powder was caught by Article 30 even though the measure did not provide
 33

protection for a French product. As well, in Cinetheque, the Court considered whether a
restriction on the sale of videos in stores within one year after cinema release would
violate Article 30 even though there was no effect of favouring national production. While
the Court determined that no violation had occured, the decision is significant in that
proscribed restrictions on trade could arise simply where there are disparities between
Member States’rules. The Court in Oosthoek and Buet similarly ruled that Article 30 was
violated even where the trade-restricting legislation applied to domestic and imported
products without distinction in form and effect. It is interesting to note that the Court
held that the impugned measure in Cinetheque could be excepted from Article 30 where it
was «justified with regard to Community law», an apparently lower standard
than«mandatory requirements100» This lower standard may be explained by the fact that
such measures are not discriminatory and therefore are less restrictive of trade.
45 A GATT panel would not likely be persuaded by a similar interpretation of GATT Article
III. The concern of Article III is national treatment, treating domestic and foreign like
products in a similar manner. While the level of the «equality» called for by this article
may be debatable, it would be very difficult to argue that discrimination is not required
for a contravention of Article III at all. This difference between European Community and
international jurisprudence can be understood by reference to their different
institutional goals. The EC is aiming to establish a single integrated market; this cannot be
accomplished if different Member States have rules which will mean that a film which
can be released in video in one Member State will be prohibited from entering another
Member State — the Cinetheque fact situation. The degree of integration at the GATT level
is more superficial. The resuit is that there is no jurisprudential basis upon which to
attack non-discriminatory internai rules which restrict trade under Article III as there is
under Article 30. Facially neutral discrimination will always be caught by Article III;
material discrimination will likely also be caught where it requires that only the foreign
producer has to adjust or has to adjust significantly more than domestic producers.
However, restrictions on trade arising merely from disparities between national rules
which do not require foreign producers to adjust more than domestic producers would in
all likelihood not be caught under GATT rules since discrimination is a fundamental
requirement of Article III.

Section Two. Possibility of exemption for product-

related environmental measures
46 The legality of an environmental regulation is not finally decided at the Article III or
Article 30 stage. Both the GATT and the European Treaty provide exemptions from strict
trade liberalization requirements for public policy purposes. The primary GATT
exemptions are set out in Article XX which enumerates the possible grounds, although
public security is exempted under Article XXI as discussed in Section Three. Article 36 of
the Treaty establishes grounds for derogating from Article 30 and 34. In addition, the case
law of the European Court of Justice has developed the concept of «mandatory
requirements» which may supersede trade liberalization objectives. In the following
section, these GATT and EC provisions will be analyzed and compared.
 34

A. The GATT - Treatment of Product-Related Environmental

Regulations under Article XX

47 Article XX of the GATT establishes the public policy exemptions from the GATT obligation
of national treatment (Article III) and from the prohibition on quantitative restrictions
(Article XI). This exemption is not, however, without limits. Article XX does not grant the
challenged party «carte blanche» to legislate any measures with any imaginable public
policy purpose. Article XX limits the scope of potential policy objectives by enumerating a
list of those which are deemed acceptable. Furthermore, the preamble to Article XX sets
limits on a contracting party’s ability to determine for itself the specifie measure taken to
achieve one of the allowable public policy goals. It requires that «such measures are not
applied in a mannner which would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions prevail», or a «disguised
restriction on international trade».
48 These preambular qualifications, in particular the reference to disguised restrictions on
trade, are significant in that they grant to the GATT Contracting Parties authority to
question the national government’s stated purpose of a particular policy measure. This
enquiry is made more daunting for the national government because the onus is on it to
show that its legislation falls within Article XX. The level of intervention or second-
guessing by the GATT which this preamble justifies is an important question which is
examined in greater detail below. As well, certain institutional questions arising out of
the GATT Panel’s role as adjudicator of Article XX issues are considered in Part VI.
49 As noted above, the environment was not a major concern at the time of the GATT’s
creation. Only two main exceptions which can really be termed «environmental» are
listed as acceptable public policy exceptions to GATT obligations. These are found in
Article XX(b) which exempts measures «necessary to protect human, animal or plant life
or health» and in Article XX(g) which excepts measures «relating to the conservation of
exhaustible natural resources» with the qualification that such measures must be «made
effective in conjunction with restrictions on domestic production or consumption».
50 The following discussion examines the factors to be considered in determining the
legality of an environmental protection measure with trade effects: 1) a determination of
whether the measure constitutes a means of arbitrary or unjustifiable discrimination
between countries (Article XX Preamble); 2) an assessment of whether the measure
constitutes a disguised restriction on trade; 3) a determination of whether the measure
falls within the scope of the Article XX exceptions; 4) an assessment of legitimacy of
measure — whether there is a threat to the environment and whether the measure is
directed towards solving that problem; 5) a review of proportionality of the measure in
relation to the environmental protection goal pursued. Because the fourth and fifth
factors are frequently treated as related questions, they are discussed together here.

1. Arbitrary or Unjustifiable Discrimination

51 The meaning of «arbitrary or unjustifiable discrimination between countries where the

same conditions prevail» has not been extensively interpreted. It is a weaker version of
the MFN requirements because of the qualification implicit in the modifiers of
«discrimination»101. In the 1982 Canadian Tuna case, the Panel held a measure was not
 35

arbitrarily or unjustifably discriminatory where similar trade restrictions were applied to

other countries for similar reasons102. However, many issues have not yet been addressed.
For instance, it is not known how the gloss, «where the same conditions prevail», will be
applied103.

2. Disguised Restrictions on Trade

52 The preambular condition prohibiting disguised restrictions on trade was intended to

curtail the use of the public policy exceptions in Article XX. In the Canadian Tuna case,
however, the Panel interpreted this phrase to exonerate a trade-restricting measure
because it was publicly announced as a trade measure104. Despite the perversity of this
interpretation (a measure openly taken for protectionist purposes is exempted), the
concern to deny protectionist trade restrictions disguised as environmental protection
measures the benefit of Article XX is reflected in the jurisprudence on Article XX
discussed below.

3. Scope of Article XX

a) Article XX(b)

53 Article XX(b) relates to the environment to the extern that environmental measures are
«necessary to protect human, animal or plant life or health».105 The scope of this
exception is not clear; the extent to which it will cover environmental protection depends
on how broadly a GATT panel will construe it. The reference to human life or health can
only be said to be aimed at environmental protection in a broad sense if the concern is to
safeguard human health from changes in the environment which threaten the
fundamental conditions necessary for human life — clean air, water, and a sufficient
resource base — and if the individual is seen as an element of the environment, of the
ecosystem and not merely in his capacity as a consumer or worker106. Such a broad
interpretation of «human health» has not yet been made in the GATT. The inclusion of
plant and animal life and health increases the possibility that GATT dispute settlement
panels would consider the value of protecting nature in itself where it has no «use» for
man. There is, however, no indication from the GATT jurisprudence that degradation of
other elements of the environment such as air and water would bring a measure within
the «life and health» designation. Where pollution of these elements was serious enough,
the link between air and water, and human, plant and animal life or health would not
likely be difficult to make. Nevertheless, the exemption is likely too narrow to save all
legitimate environmental protection regulations.

b) Article XX(g)

54 The scope of Article XX(g) depends on how «conservation of exhaustible natural

resources» is interpreted. One commentator has noted that Article XX(g) was intended
primarily to authorize Controls on the export of non-renewable natural resources such as
minerais in danger of exhaustion from exploitation107. It is clear now that it encompasses
imports as well108. It would also appear that Article XX(g) covers renewable as well as
non-renewable resources109. In the 1982 Canadian Tuna case concerning US import
restrictions imposed on Canadian tuna, both the US and Canada agreed that tuna, a
renewable resource, was an exhaustible natural resource, an interpretation which the
 36

Panel appeared to have accepted110. The US had argued that tuna stocks were potentially
subject to over-exploitation and exhaustion and the Panel agreed that tuna appeared to
need conservation management. In the 1988 GATT Panel on Salmon and Herring, the Panel
also accepted that salmon and herring were exhaustible natural resources111.
55 While Article XX(g) goes beyond exempting export restrictions of exhaustible, non-
renewable natural resources, it is not clear how elastic the notion of an exhaustible
natural resource is. For instance, for a regulatory programme aimed at recycling to fall
under the conservation of a natural resource, «natural resource» would have to be
interpreted to include land, and «exhaustible» would have to be understood from the
long term perspective that if nothing is done to manage or husband these resources with
care now, then those resources would be exhausted. Whether the modifier «exhaustible»
would permit coverage of measures taken to prevent damage caused by pollution is also
unknown. It has been argued that «exhaustible» could be interpreted to mean that the
resources may not survive the pollution inflicted on them.112 There are other, more
vexing questions. Would air and water, previously seen as limitless, fall within the
purview of «exhaustible natural resources»? A strong argument can be made that these
elements should be covered, given the numerous international environmental
agreements which now seek to protect them113 — an implicit acknowledgement that they
are «exhaustible».
56 The meaning of the word «conservation» is also not without difficulties. Canada argued in
the GATT Panel on Salmon andHerring that conservation should be interpreted broadly to
include not just the maintenance of physical levels of a resource but to cover: the range of
scientific and economic issues arising from resource utilization. In the case of fisheries,
the concept of conservation has evolved to include socio-economic as well as biological
dimensions which have been embodied into international as well as bilateral agreements
and treaties guiding fisheries management114.
57 Canada argued further that the export restrictions it imposed on unprocessed salmon and
herring facilitated conservation management undertaken by the Canadian government
because such restrictions enabled Canada to make the necessary public expenditure on
salmon enhancement «with the expectation that economic benefits would continue to
flow to all sectors of the fishing industry and not just to the harvesting sector»115 In other
words, Canada justified the restriction on trade in part by arguing that the economic
benefits of the restriction paid for management efforts necessary to ensure Sound
utilization of the resources.
58 While the GATT Panel did not directly reject the Canadian Government’s extended
definition of conservation, it explicitly excluded any reference to international fisheries
law in coming to its decision116. In an article on this case117, one author notes that under
international fisheries law the Coastal state has unrestrained jurisdiction over the
utilization of fishery resources harvested in its waters. The concern of the Law of the Sea
Convention is management and utilization of resources in the Exclusive Economie Zone,
including its economic development. The GATT Panel considered, however, that such
international agreements were beyond its mandate, which was limited to examining
Canada’s measures in light of relevant GATT provisions118. (This issue will be discussed in
further detail in Part VI.) Nevertheless, the possibility of broadening the interpretation of
Article XX(g) beyond a narrow definition of «conservation» was accepted, if not applied,
by the FTA Salmon and Herring Panel. There the Panel «acknowledged that the
conservation of natural resources encompasses broader environmental concerns
 37

reflecting both economic and non-economic interests» and that it «was not the intention
of Article XX(g) to allow the trade interests of one State to override the legitimate
environmental concerns of another»119.
59 Panel interpretation on the phrase «in conjunction with domestic production or
consumption» has also delimited the scope of Article XX(g). In the GATT Salmon and
Herring case, the Panel held that this phrase meant that the challenged trade measure had
to be «primarily aimed at rendering effective» domestic restrictions on production and
consumption120. Thus Article XX(g) cannot be used where a country has no domestic
production or consumption of the restricted product. The implication of this
interpretation is that a country cannot ban the import of an exclusively foreign
endangered species.

4. Necessity and Proportionality of the Measure

60 In assessing whether a measure is «necessary» (Article XX(b)) or is «relating to» (Article

XX(g)) an environmental purpose (as defined above), the GATT panels enquire into the
legitimacy of the measure — the existence of an environmental problem which needs to
be addressed — and the necessity of the measure taken to address the environment
problem. In so doing, panels assess the proportionality of the particular measure chosen
in light of the objective pursued and the availability of other less restricting alternatives.
This analysis may help to determine whether a measure meets the preambular
prohibition of disguised restrictions on trade.

a) Article XX(b)

i) Meaning of «Necessary»

61 Paragraph (b) of Article XX was interpreted by the GATT Panel on Thai Cigarettes. In this
case, the Thai government prohibited the importation or exportation of tobacco except
by licence granted by the Thai Tobacco Monopoly. The Panel ruled that Thailand had
violated Article XI.1 because it had not granted an import licence during the previous ten
years. In its analysis of Article XX, the Panel accepted that smoking constituted a serious
risk to human health; that is, that a significant problem was being addressed by the Thai
ban on the import of cigarettes. Consequently, measures to reduce cigarette consumption
would fall within Article XX(b) to the extent that this provision allowed a national
government to give priority to human health over trade liberalization121.
62 However, the Panel ruled that the import restriction was not «necessary» to achieve this
goal as alternative, non-trade restrictive options were available to address the problem of
smoking122. Thailand had justified import restrictions on the grounds that such a measure
was required to protect the public from harmful ingredients in imported cigarettes and
that the competition with foreign cigarette companies would lead to an increase in
smoking in Thailand. The Panel concluded that the measures were not «necessary» as a)
with respect to quality concerns, a non-discriminatory regulation requiring full
disclosure of contents and a ban on unhealthy substances «implemented on a national
treatment basis»123 was an alternative consistent with the GATT and b) with respect to the
concern about increased consumption, the Panel accepted that a ban on advertising
cigarettes of both domestic and foreign origin as well as regulation of the supply and
prices of cigarettes would be effective and consistent with Article III. The Panel observed
 38

that these strategies would allow the Thai government to achieve its health policy goals
without resort to trade restrictive policies; as a resuit, Thailand’s ban on the import of
cigarettes was not «necessary».
63 This analysis raises the question of how a contracting party is to predict the validity of
national regulations without knowing how far afield a panel will go in finding a less
GATT-inconsistent solution to an environmental problem. Moreover, how competent are
GATT panels as currently constituted to make such a determination124. Second, the Thai
Cigarettes panel may have inappropriately borrowed the least GATT-inconsistent test from
a previous panel decision on Article XX(d). It has been forcefully argued that «necessary»
performs a different role in Paragraph (d) which exepts measures «necessary to secure
compliance with laws or regulations which are not inconsistent with the provisions» of
the GATT than in Paragraph (b). While considering other means of securing compliance
seems appropriate in (d), (b) does not say «necessary to secure compliance with health
regulations» but «necessary to protect health».125 One author has suggested that the test
for «necessary» enunciated in Thai Cigarettes was a means of denying an exemption to a
protectionist measure without resort to the preambular condition of no disguised
restrictions on trade which had been eviscerated by the panel in the Canadian Tuna case 126
.
64 The meaning of «necessity» was also considered in the GATT Panel on Tuna/Dolphin. There
the Panel held the US had not met the burden required of it in Article XX(b) to show that
it had «exhausted all options reasonably available to it to pursue its dolphin protection
objectives through measures consistent with the General Agreement»127 These options
could even include the negotiation of «international cooperative arrangements»128. Thus
the «necessity» requirement may demand not only that the measure be the least trade-
restricting but also countries secure the agreement of other countries. At first glance, this
latter condition appears excessive. It does not seem reasonable to require countries
which prefer more stringent environmental protection standards to convince a sufficient
number of other countries that they should pursue the same environmental goals before
such standards are considered «necessary» under the GATT. However, this interpretation
of the Tuna/Dolphin panel can be limited, in all likelihood, to cases where trade measures
are used to regulate production extraterritorially, since the Panel was targeting the US’s
unilateral imposition of its standards on other countries. (See discussion in Part V.)

ii) Relating «Necessity» to «Disguised Restriction on Trade»

65 The availability of other less restrictive alternatives is one means of determining whether
the measure is «necessary» for the achievement of environmental objectives. At the same
time, this scrutiny ensures that the measures are not in fact protectionist, i.e. an abuse of
the Article XX preambular proscription against disguised restrictions on trade.

b) Article XX(g)

(i) Interpretation of «Relating to»

66 The issue of whether a measure falls within Article XX(g) was addressed in the GATT
Panel on Salmon and Herring. The Panel reflected that while Paragraph (g) coverage goes
beyond measures whichare«necessary»or«essential» for the conservation of natural
resources, the purpose of including Paragraph (g) was not to «widen the scope of
 39

measures serving trade policy purposes» but not to hinder policies «aimed at»
conservation129 Therefore, it concluded that to fulfill the test of «relating to», a trade
measure had to be «primarily aimed at» such conservation.
67 The interpretation of «primarily aimed at» was given a new wrinkle in the Tuna/Dolphin
case. There the GATT Panel found that a USdetermined maximum dolphin catch rate
(which Mexico had to meet in order to be able to import tuna into the US) was based on
an actual rate achicved by US fishermen during the same period. This meant that
Mexican authorities would not know at any particular point in time whether their
fishermen were exceeding the maximum and therefore had no opportunity to sell into
the US market. The Panel concluded in obiter that the unpredictability of this limitation
on trade meant that the measure in question could not be considered as being «primarily
aimed at the conservation of dolphins».130
68 A potential problem with the «primarily aimed at» test is the risk that a panel might
interpret a trade-restricting environmental measure which had another competing goal
as not being «primarily aimed at». The related test in the FTA Salmon and Herring case —
whether the measure was worth doing for conservation reasons alone131 — also seems
stringent. (See discussion below.) It is difficult to see how «relating to» can be read in
such a restrictive manner. Indeed, it is not clear whether there is in fact a distinction in
the jurisprudence between the standards of justification for «relating to» and
«necessary». While both GATT and FTA Salmon and Herring Panels acknowledged that the
«relating to» standard under Article XX(g) was less difficult to meet than Article XX(b)’s
«necessary», it is hard to imagine wherein the difference may lie.

ii) Relating «relating to» to «disguised restriction on trade»

69 The relation between «relating to» and the preambular condition of no «disguised
restriction on trade» was elaborated upon in FTA Panel on Salmon and Herring. The Panel
tied the justification for the measure in Paragraph (g) to the notion of «disguised
restriction on trade». Noting that Article XX(g) does not exempt every measure that has a
«conservation-promoting effect», the Panel ruled that Paragraph (g) saves those
measures which are part of a «genuine conservation programme». According to the
Panel, this determination of legitimacy is at the base both of the «primarily aimed at» test
and of the preamble’s concern that the measure not be a disguised restriction on trade.
Indeed, the Panel considered that the prohibition on disguised restrictions on trade is «in
essence» just the «opposite face» of the Paragraph (g) requirement that trade-restricting
conservation measures have a «true conservation purpose.132
70 In the Panel’s view therefore, the basis for the test under Paragraph (g) is whether the
measure in question would be worth doing for conservation measures alone, despite the
fact that it could have both conservation-promoting and trade-restricting effects.133 To
apply this test, the Panel focussed on the «obj ective factors» underlying a decision to
adopt such a measure. These included: 1) the conservation benefits the measure would
produce; 2) whether a genuine conservation reason exists for choosing the actual
measure in question over others which would accomplish the same objective; and 3) the
costs of the measure including resource costs and the costs of inconvenience to
commercial and other interests affected by it.134 The first and third factors are extremely
significant because the Panel considered that all governments perform cost/benefit
analyses in determining whether to initiate environmental measures. An innovative
 40

addition by the Panel to the interpretation of Paragraph (g) is that in calculating the costs
of the measure, the Canadian government had to include the inconvenience to American
exporters in the same way as inconvenience to Canadian exporters would be treated: 135
In other words, how genuine the conservation purpose of a measure is, must be
determined by whether the government would have been prepared to adopt that
measure if its own nationals had to bear the actual costs of the measure. Otherwise,
the law of Article XX(g) would require a different test for conservation measures
imposing burdens on exporters than for measures imposing on domestic buyers 136.
71 In reaching this conclusion, the Panel noted the concern of drafters of Article XX that the
burden of public policy measures not be imposed on foreign interests alone. 137 There are
(at least) two criticisms of this analysis. First, the assumption that governments do not
impose legitimate conservation measures that do not pass a cost/benefit analysis is a
doubtful proposition given the difficulties in quantifying uncertain long term benefits.
Second, it is questionable whether a panel should be conducting cost/benefit analyses of
environmental measures. (See Part VI for a discussion of these points at greater length.)

B. European Community Law

1. Article 36

72 Like Article XX of the GATT, Article 36 provides the Treaty grounds on which exemption
from the prohibition on trade restrictions in Articles 30 and 34 may be based:
«prohibitions justified on grounds of public morality, public policy or public security; the
protection of health and life of humans, animais or plants». As these are exceptions to the
principle of free movement of goods, the European Court of Justice will interpret them
narrowly138 Furthermore, Article 36 is not available to Member States in matters for
which the Community has legislated exhaustively.

a) Scope

73 Environmental measures which restrict the free movement of goods may be subsumed
under Article 36 only to a limited extent.139 The exemption for health measures could be
used for environmental protection reasons but many environmental protection measures
would not fall under this rubric because they only indirectly affect plant, animal and
human health. In addition, since there is no provision comparable to Article XX(g) of
GATT, certain rules regarding the conservation of natural resources may not be covered.
In the Danish Bottle case, where the deposit/refund of bottles was in issue, the Court did
not find Article 36 applicable. One commentator has argued that environmental
regulation could fall under the rubric of «public policy»; however, there is no caselaw on
this point140. In addition, the possibility that public security could provide the foundation
for environmental policy may be possible141, although it is unlikely to be developed in this
direction because of developments in the European Court of Justice’s jurisprudence on
extra-36 grounds for derogation from Article 30 and 34.

b) Qualifications: No Arbitrary Discrimination and No Disguised Restrictions on Trade

74 A measure which does fall within one of the above-mentioned grounds must also fulfill
the requirements of the second sentence of Article 36 which provides that: «Such
prohibitions or restrictions shall not, however, constitute a means of arbitrary
 41

discrimination or a disguised restriction on trade between Member States». This

qualification clearly mirrors the preamble of Article XX of the GATT on which it was
modelled142. In European Community jurisprudence and commentary, these two
qualifications are described, respectively, as the non-discrimination and proportionality
requirements. The former principle has been described as being fulfilled where
discrimination can be objectively justified; if two situations are not comparable, then
their different treatment cannot be called discrimination.143 Differential treatment due to
natural phenomena is not discrimination; whereas differences in treatment arising from
human activity, especially measures taken by public authorities, do constitute
discrimination144.
75 The prohibition of disguised restrictions on trade, or the proportionality requirement, is
directed towards preventing protectionist measures, as in the preamble to GATT Article
XX. One writer has argued that the Court will regard protectionist motives for legislation
as evidence that a measure is not justified but such motives cannot in themselves
undermine the legislation since the measure in question could still be justified on one of
the Article 36 grounds145. The proportionality requirement asks instead whether a
measure restricts trade between Member States more than is necessary to achieve its
legitimate objective146.

2. Additional Grounds for Exemption — Mandatory Requirements

76 The necessity for additional grounds for exemption (beyond those provided in Article 36)
to protect indistinctly applicable national policies was implicitly recognized by the Court in
the Cassis de Dijon case. Recall that in Cassis de Dijon the Court accepted obstacles to trade
«in so far as those provisions may be recognized as being necessary in order to satisfy
mandatory requirements». Later in the same case the Court elaborated on the meaning of
«mandatory requirements» as serving «a purpose which is in the general interest and
such as to take precedence over the requirements of the free movement of goods»147 The
exemption in that case appears to be distinct from the Article 36 grounds. Protection for
national public policies beyond the narrow grounds of Article 36 has also been designated
as the «rule of reason» after the judgment in the Dassonville case. There the Court ruled
that Member States could introduce legislation having an adverse effect on free trade so
long as the legislation was «reasonable» and there were no Community laws on this
subjectif148. However it is described (here the designation «mandatory requirement» is
used), most commentators seem to agree that it is a recognition of the residual
competences of Member States149. In other words, where the Community has not
legislated or legislated exhaustively, Member States may legally retain laws which
diverge from other Member States and which, as a resuit, create restrictions on the free
movement of goods. As well, the jurisprudence indicates that the mandatory
requirements exemption is qualified by a proportionality requirement in the same way as
Article 36150 as well as by a non-discrimination requirement151.

a) Scope of Mandatory Requirements

77 In Cassis de Dijon, the mandatory requirements listed by the Court did not include
environmental protection. In the 1985 case of Brûleurs d’Huiles Usagées, however, the Court
expressly acknowledged environmental protection as a matter of general interest, that is,
a mandatory requirement protecting national policies and justifying derogation from the
 42

free movement of goods principle152. This determination was confirmed in 1988 with the
Danish Bottles case. In that case, the Court determined that a deposit/return scheme for
empty beverage containers which aimed to ensure re-use of such containers fell within
the limits of the mandatory requirements exception for environmental protection. More
recently, the Court has accepted that the mandatory requirements exemption covers a
danger to the environment posed by the accumulation of waste, especially given the
limited capacity of each region and locality to receive waste153. Finally, the enactment of
the 1986 Single European Act which explicitly recognizes environmental protection as a
fundamental objective of the European Community evidences that environmental
protection is a matter of general interest within the European Community and as such,
may take priority over the principle of the free movement of goods.

b) Significance of the Distinction between Article 36 and Mandatory Requirements

78 The significance of categorizing measures as distinctly or indistinctly applicable under

Article 30 is the subject of some debate. Some commentators contend that while the latter
measures can be exempt under Article 36 or the mandatory requirements, distinctly
applicable measures can only be saved under Article 36. Since environmental protection
per se is not a ground for exemption under this article, measures which facially
discriminate against imports for some environmental purposes could only be saved it
they fell within the scope of Article 36. In contrast, other commentators argue that
mandatory requirements are subsumed under Article 36 on the grounds of public policy
or as additions to the Article 36 list and that therefore the distinction between Article 36
and mandatory requirements is not significant154.
79 The 1992 European Court of Justice decision on the Walloon law prohibiting the import
and discharge of waste from other Member States and other Belgian regions sheds new
light on the availability of the mandatory requirements exception for distictly applicable
measures. A 1985 decree of the Walloon Regional Government prohibited the storing,
deposit, or tipping of non-Walloon waste. (The decree deemed waste not produced in the
Walloon Region as foreign.) Exemptions could be made at the request of a foreign
government but only for a limited time and only under serious, exceptional
circumstances. The Court first examined two EC waste directives. The Court found that an
EC directive focussed on waste in general did not prohibit the Walloon decree. On the
other hand, EC directive 84/631, which dealt specifically with trans-border movements of
hazardous wastes and did not permit a Member State to prohibit these movements
absolutely. As such, the Walloon law violated this directive to the extent the waste it
prohibited was hazardous. For non-hazardous wastes, the Court assessed the validity of
the Walloon rule in the light of Articles 30 and 36. After determining that waste was a
«good», the Court ruled that the restriction on its circulation was a violation of Article 30
155 In response, Belgium argued that the measure represented a mandatory requirement 156

.
80 The Court accepted this argument, rejecting the Commission’s contention that this
exception could not be invoked because the Walloon rule was discriminatory on its face
against foreign waste. The reasoning of the Court merits examination as it signifies an
important shift in the Court’s formulation of discrimination in the environmental
context. The Court ruled that to appreciate whether a trade-restricting measure was
discriminatory or not, the special character of waste had to be taken into account157. In
 43

particular, the Court found that the principle of remediation of environmental harm close
to source, enunciated in Article 130R, paragraph two, as well as the principles of self-
sufficiency and proximity articulated in the Basel Convention on the Control of the
Transboundary Movement of Hazardous Wastes and Their Disposai (1989) to which the EC
was a signatory, had to be considered. According to these principles, it is incumbent upon
each region or other local government to take appropriate measures to ensure the
treatment and elimination of its own wastes as close as possible to their production site in
order to limit their transport as much as possible. Because the Walloon measures applied
this environmental principle, they could not, according to the Court, be held
discriminatory158. Thus to the extent that the Walloon decree addressed non-hazardous
wastes, it was saved by the mandatory requirement exemption from the Article 30
prohibition on restrictions on the free movement of goods, despite the fact that the
impugned rule appeared discriminatory on its face.

3. Public Policy Justification and the Criterion of Proportionality under Article 36

and Mandatory Requirements

81 The labelling of a measure as environmental is not sufficient to establish its exemption

from Article 30. As noted above, the measure which is taken must be both justified on the
cited public policy grounds and proportional.

a) Public Policy Justification

82 According to the «mandatory requirement» and Article 36 jurisprudence, the

determination of whether a trade-restricting measure is justified involves several
enquiries, all aimed at determining whether the measure is actually necessary to attain
public policy goals. First, there must be sufficient evidence that the intervention by the
Member State enacting the restrictive measure is aimed at a situation that needs to be
addressed. For instance, in Cassis de Dijon, the Court did not accept the necessity for the
German Government to set minimum alcohol percentages on grounds of protecting the
public health. In essence, the Court was rejecting the causal connection between the
measure adopted and the goal allegedly aimed at.
83 Second, in determining whether a measure is justified, the Court has not required that
public policy problems being addressed by the restrictive measure materialize with
absolute certainty in the absence of any action. In an environmental context, this
requirement is particularly important since the extern of the effects of particular
emissions of pollutants or of other activity having an effect on the environment may not
be wholly understood. In this respect, public health cases provide a useful and reliable
indicator of how the Court will view such environmental regulations. In contrast to
consumer protection cases where a labelling requirement will frequently suffice to
achieve the same goal, the Court is much more circumspect about secondguessing
Member States in the domains of public health and environmental protection. The cases
on food additives are particularly instructive. In Sandoz, the Netherlands had imposed a
general prohibition on the sale of food and beverages to which vitamins had been added,
unless authorization by ministerial decision had been obtained. The Dutch Government
argued that it was their policy to restrict all kinds of food additives to ensure that there
was no adverse effect upon public health. Precaution was necessary since it was not
possible to State categorically that a substance was or was not harmful in view of the
 44

scientific uncertainties and of the fact that harmfulness often depended on the quantity
of the substance absorbed. The Court agreed with the Netherlands, stating that insofar as
there were uncertainties regarding the State of scientific research, it was for the Member
States (in the absence of harmonization at the Community level) to decide what degree of
protection of health and life of humans they intended to assure159, though the measure
still had to meet proportionality criteria. A Dutch ban on a preservative for cheese sold in
the home market was also considered to fall within Article 36, given that the maximum
daily acceptable intake of such additives had not been established because the assessment
of the risk depended, inter alia, on the dietary habits of the country. Moreover, the ban
did not constitute a «means of arbitrary discrimination or a disguised restriction on
trade»160.
84 Third, a measure’s necessity will also be judged in the light of international scientific
research. This criterion has been widely cited in the additive cases. In Motte, the Court
held that Member States must take into account the results of international scientific
research, especially the work of the European Community’s Scientific Committee for
Food.161 In another case, the Court specified a number of international bodies to which
reference could be made including Codex Alimentarius, the UN Food and Agriculture
Organization, and the World Health Organization162 Significantly, the Court in Motte
stated that such opinions did not have binding force163.
85 Fourth, in determining the necessity of a measure, the Court will also take into account
local circumstances. In one case, the Court ruled that in fixing a maximum permissible
level of bacteria a Member State could take account of the needs of particularly sensitive
consumers and the use of the product by consumers, in particular the fact that such
products would be stored in less than ideal conditions164. In another case regarding the
protection of animal health, the Court opined that exceptionally high health standards
for poultry in Ireland could render them highly vulnerable to infection and could
therefore justify restrictions on imports which would serve no purpose under different
circumstances»165. Similarly, the Court may give greater weight to environmental
concerns relative to the goal of free movement of goods where the local environment is
unusually susceptible to degradation.
86 At the same time, the Court will not permit national governments to use the argument
that restrictions on trade are necessary because their consumers have traditional habits
and expectations. The German Government argued in the German Beer Purity case that the
designation of «bier» could only be used for beer made from certain specifie ingredients
(traditionally used in German beer production) and that it would mislead the German
consumer to label beer made from other products with the same designation. The Court
responded that the legislation of a Member State must not «crystallize given consumer
habits so as to consolidate an advantage by national industries concerned to comply with
them». On the other hand, the Court will also take into account the context within which
a product will be used, and how well-trained the population is, in determining the safety
of imported machinery166. It appears, therefore, that in designing regulations, a country
may not specify conditions or standards that do not take into account the possibility of
the domestic population adapting to a new use of a product but there are limits on the
extent to which such adaptation will be demanded. Within an environmental context, this
may mean, for instance, that a requirement to have a deposit/refund System for
returning bottles would be seen as necessary given the tendency of the population to
throw away bottles where there exists no incentive to return them. However, an
 45

additional requirement that only a specified number of bottle types be used to ensure the
efficacy of a re-use program could be seen as overly restrictive if the current retail
System could be restructured with minimal difficulty to handle a greater number of
bottles167.

b) Proportionality

87 Once a measure is found to be necessary, the Court will enquire into its proportionality,
often examining whether any less restrictive trade measures are available168. In the Danish
Bottles case, the Court ruled that the existing System of deposit/return for beer and soft
drink containers was sufficient to ensure environmental protection without the
additional restrictive requirement that foreign bottles be submitted for approval to
ensure re-use. In plant protection cases, the Court has ruled that the authorities of a
Member State cannot require unnecessary technical or chemical analyses where such
tests have already been carried out in another Member State and the results are available
to the authorities169. With respect to consumer protection cases, one commentator has
remarked that the mandatory requirement exception is no longer applicable because
labelling and information requirements are a less restrictive means of avoiding
misleading the consumer170 A Member State’s claim that a measure is proportional may
also be undermined by conflicting evidence of its views on the safety of a product. For
instance, the fact that a Member State has not banned the use of a particular product
domestically will undermine an argument on the necessity for a ban on the same
products which are imported171.
88 Related to the condition that the measure chosen be the least restrictive alternative, the
Court will often require certain procedural safeguards to ensure that the public policy
measure is not abusively implemented. In Muller, the Court held that the principle of
proportionality required that traders be able to apply for authorization of specific
additives under a procedure which was easily accessible to them and could be concluded
within a reasonable time. These requirements were cited with approval by the Court in
the German Beer Purity case. In addition, the Court added that traders must be able to
challenge an unjustified failure to grant authorization before the courts172.
89 In determining whether a measure is the least trade-restrictive means of achieving a
particular goal, the doctrine of mutual recognition or equivalence set out by the
Commission after the Cassis de Dijon case may also be considered. According to the
Commission, an importing Member State may not in principle prohibit the sale of a
product lawfully produced and marketed in another Member State, even if the product
was produced according to technical or quality requirements which differ from those
imposed on its domestic products as long as the product «suitably and satisfactorily»
fulfills the legitimate objective of a Member State’s own rules (including environmental
protection) and despite the fact that it may fulfill this objective in a different way than
domestic products173. The Court appears to have accepted this principle174. The
implication of this doctrine is that a Member State with higher environmental standards
would be able to insist that imported products meet those standards, although it could
not specify how. It is not clear whether any deviation from the specified objective would
be permitted given that it is likely that different means of achieving environmental goals
may not be equally as effective175. This question is addressed in greater detail in the
discussion in subsection C, below, on the Level of Intervention.
 46

90 The proportionality of a national public policy measure seems to imply further that a
Member State must take procedural safeguards before the establishment of standards. The
Commission Communication on Cassis de Dijon argues that the principle of equivalence
implies that when Member States establish technical or commercial requirements for
products liable to affect the free movement of goods, they may not take an exclusively
national viewpoint and take account only of requirements confined to domestic products:
«The proper functioning of the common market demands that each Member State also
give consideration to the legitimate requirements of the other Member States. » As well,
it should be noted that Member States are obliged by directive to communicate to the
Commission at draft stage «all planned measures which may have an effect on the free
movement of goods»176. A waiting period of at least three months is required before
Member States can adopt a draft.

4. Summary

91 In summary, the EC jurisprudence on Article 36 and mandatory requirements as it relates

to the environment and related fields such as the protection of plant, animal and human
health appears to assess the validity (necessity and proportionality) of national measures
on the basis of a number of enquiries: 1) the measures must be necessary in the light of
local conditions and international scientific research, although the problem being
addressed does not have to be certain to materialize without intervention on the part of
the Member State; 2) the measure must be the least trade restrictive; and 3) procedural
safeguards must be provided where import authorization is required, and before the
legislation is enacted.

C. Comparison between the GATT and EC Law

92 The similarity between the GATT and EC jurisprudence on public policy exceptions to the
prohibitions on trade restrictions is manifest. In particular, the tribunals at both levels
mesh the «necessary» and «proportionality» requirements to determine the validity of a
public policy measure affecting trade. Nevertheless, there are certain areas where
differences may exist between the exemption provisions at the GATT and the EC level,
including: 1) scope of the environmental exception; 2) sensitivity to local conditions; 3)
treatment of scientific uncertainty; 4) procedural safeguards; and 5) level of tribunal
intervention into national public policy decisions. A review of these differences
illuminates the potential role of EC law as a precedent for GATT — a useful model in some
instances, but inappropriate in others given the fundamental distinctions between the
two Systems.

1. Scope of Environmental Exception

93 While Article 36 provides even less protection for environmental measures than does
Article XX given the absence of any reference to measures taken to conserve natural
resources under the EC provision, the addition of the mandatory requirement of
environmental protection as another ground for exemption from Article 30 and 34
obligations means that the European Court of Justice has the capability to exempt a broad
range of environmental regulations. In contrast, as noted above, the coverage of
environmental protection measures by the GATT Article XX is neither clear nor
 47

comprehensive. At a minimum, Article XX should be amended to include environmental

protection explicitly as a ground for exemption from free trade objectives.

2. Sensitivity to Local Conditions

94 The sensitivity to local conditions as a factor in determining the necessity of a particular

measure is more well-developed in the EC jurisprudence and, it is submitted, should be
taken into account in determining the necessity of a measure under Article XX. If the
GATT fails to be sensitive to the particular environmental vulnerabilities of a contracting
party, then it could become an instrument for levelling environmental regulation,
particularly in a downward direction. If the European Court of Justice which is
empowered by the Treaty of Rome to intervene to a significant degree in the affairs of
Member States is capable of recognizing individual characteristics of Member States as
relevant to the legitimacy of trade-restrictive measures, then it is submitted that GATT
panels should also do so and perhaps to a greater extent given the lower level of trade
liberalization between GATT contracting parties. The implication of such a recognition is
that States with advanced environmental agendas would be able to pursue their bona fide
preferences with less GATT interference where justified by local conditions.

3. Treatment of Scientific Uncertainty

95 The problem of scientific uncertainty has not been expressly addressed in the GATT as it
has in the EC case law. Given the risk of environmental harm, however, it is proposed that
the GATT adopt the precautionary approach evidenced in the European Court of Justice
judgments on additives discussed above177.

4. Procedural Safeguards

96 A fourth difference between GATT and the EC is that procedural safeguards required
within the EC (as described above) are not as extensively addressed in the GATT. These
safeguards serve to ensure the legitimacy of environmental measures before the
regulation affecting the import is enacted, and during the regulation’s application to a
particular case. The following section elaborates upon how GATT’s procedural safeguards
compare with the EC’s. Reference is also made to the safeguards provided within the
Standards Code.

a) Before the Regulation is Enacted

97 In contrast to requirements within the EC for Member States to notify other Member
States and take into account legitimate requirements of other Member States in setting
standards, Article X of the GATT States merely that regulations relating to prohibitions or
restrictions on imports or exports or affecting their marketing shall be published. Thus
while transparency is addressed, contracting parties are not expressly obliged to notify
other States or consider their concerns in establishing environmental rules which could
affect such States. A GATT contracting party therefore appears to have greater latitude in
environmental rule-making than an EC Member State. Nevertheless, a failure to consult
with foreign countries (and producers) in the formulation of trade-affecting
environmental rules means that such environmental regulations are more likely to be
challenged.
 48

98 The Standards Code does provide more extensive procedural safeguards for its 39
signatories178 to discourage the use of disguised restrictions on trade in technical
standards or regulations. Where a party decides to set mandatory national standards
(referred to as technical regulations within the Code) rather than use international ones
and such standards may have a significant effect on the trade of other parties, the
legislating party has obligations to publish a notice of the proposai so that interested
parties can be made aware of the proposai at an early appropriate stage, to notify other
parties through the GATT Secretariat of the products to be covered as well as their
objective and rationale, to provide information on the proposais to parties, to allow
reasonable time for other parties to make written comments, to discuss these comments
upon request, and to take both into account (Article 2.5). The Code emphasizes that,
wherever appropriate, standards must be specified in terms of performance rather than
design or descriptive characteristics (Article 2.4). The concern addressed by this latter
clause is the same as in the EC Commission’s communication: if the product meets the
legitimate objectives of the importing State, the means by which it does so are irrelevant.
In addition, countries are being asked in the Uruguay Round negotiations to give
«positive consideration to accepting as equivalent technical regulations of other parties
provided they are satisfied that they adequately fulfill objectives of their own
regulations»179

b) Application of Environmental Regulation Affecting Imports

99 As noted above, the European Court of Justice requires an accessible procedure for
authorization of imports. In contrast, the GATT’s provisions are minimal. Article X
provides that contracting parties are obliged to «maintain, or institute as soon as
practicable, judicial, arbitral or administrative tribunals or procedures for the purpose,
inter alia, of prompt review and correction of administrative action»180. This latter
obligation applies only to customs matters and therefore does not cover internai
regulations on environmental protection. Article VIII. 1 (c) weakly States that
«contracting parties recognize the need for minimizing the incidence and complexity of
import and export formalities and for decreasing and simplifying import and export
documentation requirements» for, inter alia, licensing, certification, analysis and
inspection.
100 The Standards Code addresses these issues more extensively. Where positive assurances
that products conform to adopted standards are required, then the Code limits the
protectionist potential by requiring national treatment for testing, test methods and
administrative procedures, and fees181. Moreover, parties are to ensure, whenever
possible, that the government bodies accept test results, certificates or marks of
conformity issued by relevant authorities in other parties or rely upon self-certification
by producers in the territories of other parties, even when different from their own, so
long as there are sufficient means of determining conformity182.
101 From an environmentalist perspective, the greater difficulties presented by the GATT to
challengers of environmental regulation might be seen as advantageous. Nevertheless,
procedural safeguards are important to the extent that they increase the perceived
fairness of the procedure for importers and decrease the possibility that the existence of
protectionist legislation cloaked in «green» will taint the legitimacy of other bona fide
environmental protection measures.
 49

5. Level of Intervention

102 One of the more significant issues raised by this review of GATT and EC jurisprudence is
the extent to which the respective tribunals will encroach upon a country’s ability to set
its own level of environmental protection.

a) GATT

103 The level of intervention of the GATT into contracting parties’public policies was
discussed in the FTA Panel on Salmon and Herring. In conducting a cost/benefit analysis in
order to ascertain the validity of the landing requirement, the Panel explicitly recognized
that it was second-guessing the Canadian government’s conservation policy. This
intervention was explained on the basis that while «each State has the sovereign right to
decide on the particular conservation policy it wishes to employ»183, accepting GATT
obligations not to have disguised restrictions on trade, the contracting parties have
acknowledged that they would «submit the purposes of trade-restricting conservation
measures to third party scrutiny»184 This, in turn, implied that the Panel would make an
independent evaluation of the conservation justification of the measure in question185.
But to what degree can the GATT «second-guess» a national government’s measures? Is
the GATT able to question only the particular measure chosen to achieve a particular
policy goal or is it able to query the very level of protection sought to be achieved? In
other words, has the GATT been empowered to regulate the level of disparity between
national legislation on a particular matter and rein in those countries which pursue
advanced environmental agendas?
104 In the Tuna/Dolphin case, the Panel explicitly addressed the question of the degree of
intervention in internai policies of contracting parties which is permitted under Article
XX of the GATT. The Panel noted that the conditions set out in Article XX(b) (that the
measure be «necessary» and meet the conditions of nondiscrimination and
proportionality) refer to the trade measure requiring justification and not to the life or
health standard chosen by the contracting party186. It would therefore appear that a panel
interpreting the GATT does not enquire into the validity of the level of protection which
the contracting party seeks to achieve. As well, the Panel emphasized in its concluding
remarks that its task did not call for a «finding on the appropriateness of the United
States’and Mexico’s conservation policies as such»187. However, the same Panel indicated
that the «necessity» requirement could mean that a State would be required to try to
reach international agreements on certain environmental problems to avoid trade-
restrictive environmental measures. Since the Panel did not examine this eventuality in
any detail, it is not at all clear what the consequences would be if such an agreement
could not be achieved or could only be achieved at a lower level of environmental
protection. For instance, would a country with advanced regulation be required to accept
a lower level of protection? If not, at what point in the international negotiations would
this country be free to terminate its participation? Such issues must be addressed so that
the level of intervention tolerated by the GATT can be more precisely defined.

b) European Community

105 In the European Community, on matters for which no harmonization of national

measures has taken place or for which it is incomplete, commentators have noted that
 50

Member States have the discretion to determine the level at which they wish to protect
their environments188. As we have seen, this discretion is limited by the proportionality
requirement; however, this should not affect the level of protection which is aimed at 189.
Nevertheless, the recent Danish Bottles case raises doubts about the sanctity of the
Member State’s discretion to set a high level of protection.
106 This case concerned the institution by Denmark of a System of deposit/refund for all soft
drink and beer bottles marketed in Denmark. The Danish government wished to
encourage reuse of bottles as, in its view, this offered the highest level of protection to
the environment. According to the Danish Government, one of the difficulties with re-use
is that the return of diverse bottle types and shapes would have to be organized
according to type. The Danish response to this problem was to require that all new bottle
types be approved and that the number of bottle types be restricted (to about 30). An
exception was made for foreign producers up to a limit of 3000 hectolitres per year per
producer. Such bottles would be subject to the same deposit System, but could only be
returned to retailers who stocked that beverage, and could be recycled instead of re-used.
107 Two aspects of the Danish legislation were challenged by the Commission: the deposit/
refund System and the bottle approval System. Because of the importance of this
judgment, both the Advocate General’s and the Court’s opinions are analyzed here.
Advocate General Sir Gordon Slynn opined that both elements of the Danish legislation
were «measures of equivalent effect» contrary to Article 30. Not only did Article 36 not
apply, but neither did the Cassis de Dijon jurisprudence exempt the measures for several
reasons. First, the Advocate General considered that even though the rules were
indistinctly applicable on their face to Danish and non-Danish manufacturers, in practice,
they imposed greater burdens on non-Danish producers. The compulsory deposit System
was unfair to foreign producers since consumers might be discouraged from buying non-
approved containers because they would have to be taken back to the retailer of that
particular product. In addition, foreign producers who surpassed the 3000 hl limit would
have to make or purchase bottles of a type already approved at an increased cost.
Moreover, the requirement for reuse would mean that foreign producers would incur
additional expenses in either transporting empty bottles back to their plants in the
country of origin or bottling it from barrels imported into Denmark. Second, the
Advocate General found that these measures were neither necessary nor proportional:
environmental protection could be ensured without the re-use requirement and the 3000
hl limit on the quantity of beer and soft drinks which did not have to be in approved
bottles was not justified or proportional. While Slynn accepted that Denmark was
achieving the highest standard of environmental protection, he concluded that, in
balancing the interests of free movement of goods and environmental protection, the
«high standard of the protection sought» might have to be reduced:«The level of
protection sought mustbe a reasonable level. »190
108 The Court did not agree with the Advocate General. First, with respect to the obligation to
establish a deposit/return System, the Court held that this was an «essential clement» of
a system aimed at re-use of containers and therefore necessary and not disproportionate
to attain Denmark’s environmental objectives. Second, the Court considered the
requirement that all bottles had to be approved by the Danish Government agency. It
accepted that foreign producers would incur extra costs associated with manufacturing
or purchasing containers of a type already approved and that this would make
importation more difficult. In addition, it stated that the existing System for approved
 51

containers resulted in a maximum percentage of re-use and therefore considerable

protection to the environment, given that the return of approved containers was easier
for consumers. Nevertheless, because the compulsory return System limited the
quantities of foreign beverages in Denmark, the Court concluded that the System for
returning non-approved containers established a sufficiently high level of environmental
protection. Consequently, the limit of 3000 hectolitres for using non-approved containers
was not proportionate to the objective.
109 The judgment is self-contradictory because the Court seems to-be giving the Member
State great leeway to make environmental policy in the first part of its decision yet takes
it back in the second half. The Court accepts the necessity for a deposit/refund System
because in its view, such a System is necessary for reuse to work. But note that the
objective against which the measure (deposit/refund System) is weighed is not
environmental protection but re-use. In this respect, it is difficult to see how a Member
State could fail to demonstrate the necessity of a measure. A Member State would simply
define its environmental goal narrowly so that the specific policy instrument designed to
achieve that goal would be indispensable.
110 The second half of the judgment reveals a more interventionist, less environmentalist
Court. Here the Court framed the issue of proportionality as whether the System of
approved containers is necessary to achieve environmental protection. It put into doubt
whether the re-use System which it had just accepted in the first part, was really essential
for environmental protection. Its ruling against the approval System was predicated on
its apparent conclusion that the non-approved container System, which would likely
offer less environmental protection because it meant a) fewer bottles would be returned
and b) recycling rather than refilling (a method which the Danish Government clearly
preferred as the best means of protecting the environment), was adequate. This
conclusion is implied when the Court said that limiting the quantity of products which
importers can market in non-approved containers was disproportionate. Thus the Court
appears to take a position very similar to the Advocate General who, it will be recalled,
argued that the level of protection should not be unreasonable when balanced against the
interest in the free movement of goods. Clearly, the Court is encroaching upon the
Member State’s ability to define the level of protection which it wishes to pursue. This
approach is supported by the opinion of the Advocate General W. Van Gerven in
Gourmetterie in which he stated that the criterion of proportionality may oblige a Member
State «to dispense with the measure in question or resign itself to a less effective one, where
the restrictive effect of the the measure is disproportionate to the objective pursued by
the measure or to the resuit actually achieved thereby»191. (italics added).
111 Within the context of the EC System, the resuit of such encroachment by the Court on a
country’s ability to determine the level at which it wishes to protect its environment may
not be as consequential for Members States with advanced environmental agendas as it
would be for GATT contracting parties. The reason is that, within the EC, a Court ruling
can be «overruled» by the legislation of a directive establishing detailed and stringent
Controls on packaging. Indeed more advanced environmental jurisdictions like Germany
may be forcing the European Commission to legislate in such areas in order to avoid the
obstacles to trade arising from such legislation192. Such a route is not possible at the
international level because there is no institutional connection (and a concomitant
reciprocal momentum) between the main trade institution, GATT, and international and
national environmental law-making bodies driving environmental regulation forward.
 52

Section Three. Use of public security exemption

112 This section evaluates the possibility of using public security as a ground for exemption
from breaches of the trade liberalization goals of the GATT and the objective of the free
movement of goods in the EC.

A. The GATT

113 Article XXI permits a contracting party to take any preventive action «which it considers
necessary for the protection of its essential security interests... taken in time of war or
other emergency in international relations». This article appears to give a wide degree of
latitude to contracting parties to take measures which are inconsistent with GATT
obligations. It is generally accepted in the GATT Council that «every contracting party is
the final judge of whatever action it deems necessary for furtherance of its own security
interests»193. Whether «security interests» extends to environmental protection has not
yet been put to the test. However, views about what defines national security have
evolved to include a wide variety of purposes. In the literature of international political
economy, economic threats to State security in an increasingly interdependent world are
widely recognized194. the international trade law literature, Jackson has noted the
possibility that a country’s ability to feed itself could be considered a national security
goal195. Finally, in a recent article, one author has argued for the necessity for a broader
interpretation of «national security» given the threats to countries posed by global
environmental change, in particular, global warming and ozone depletion: «Viewed with
traditional concepts, any force that had the power to inflict such harm upon a State — kill
some of its citizens and displace others, reduce its agricultural output, threaten its water
supply, and destabilize its ecological balance — would be received with considerable
attention»196 Given the increasingly apocalyptic changes in the global environment, the
possibility that countries might use Article XXI to claim exemptions for certain trade-
restrictive environmental measures which aim to address serious threats to a country’s
environment should not be discounted.

B. European Community Public Security Exemption

114 Within the EC, the European Court of Justice was faced with deciding whether the public
security exception found in Article 36 applied to Irish restrictions on the purchase of oil
supplies from abroad in Campus Oil. The Irish Government required that companies
importing petroleum products into Ireland buy a fixed percentage of their supplies at a
fixed price from the governmentowned, sole Irish oil refinery. Ireland argued that this
measure was necessary to guarantee the provision of supplies of petroleum products in
Ireland; otherwise all suppliers of such products would have had to obtain their supplies
from abroad, 80% of which would corne from the U.K. The ECJ ruled that the measure was
exempt under Article 36 since an interruption of supplies of petroleum products could
endanger not only a country’s economy but «above all its institutions, its essential public
services and even the survival of its inhabitants»197. It added that to fall within the ambit
of Article 36, the rules must «be justified by objective circumstances corresponding to the
needs of public security... [T]he fact that the rules are of such a nature as to make it
 53

possible to achieve, in addition to the objectives covered by the concept of public

security, other objectives of an economic nature which the Member State may also seek
to achieve, does not exclude the application of Article 36»198.
115 It is likely that certain environmental problems could also endanger a country’s
institutions and inhabitants and thus fall within the public security rubric of Article 36.
Such a categorization might be useful for excepting environmental measures which were
distinctly applicable and not normally subject to exemption under Article 36. Finally, it
should be noted that the Article 36 exemption for public security matters places
additional burdens on the challenged State that the GATT’s Article XXI does not. Both the
requirements that the measure be justified as necessary to achieve the public security
goal and that it be proportional limit the application of this exception199.

C. Conclusion

116 It would appear that environmental regulations which address severe environmental
threats to a State could be exempted from the GATT under Article XXI. As noted above,
the advantage of this Article over Article XX is that the contracting party does not have
to prove the necessity or the proportionality of the measure. The main problem with this
provision is that it could be subject to much abuse given that there is only very limited
scrutiny of what measures a country defines as necessary. Indeed, Jackson argues that
because of this possibility of abuse, countries have been hesitant to invoke Article XXI
formally200. It is therefore unlikely that the Contracting Parties would accept widespread
use of this provision for environmental purposes, except perhaps in a case of extreme
environmental threats to the legislating country. If this is the case, Article XXI offers only
limited advantages over Article XX for most environmental regulations.

Conclusion to Part IV
117 The comparison between GATT and EC provisions regarding the legality of environmental
regulations related to products as well as their interpretation suggests the potential for
the GATT to emulate EC jurisprudence in certain respects. For example, the incorporation
of environmental principles into analysis of whether an environmental regulation is
discriminatory evidences an exemplary openness of the European Court of Justice to the
mingling of trade and environmental law concepts. GATT panels should consider giving
environmental law principles similar weight in their ruling. With respect to exemptions
from free trade obligations, the GATT should follow the EC lead in expanding the scope of
the Article XX exception to include environmental protection as such; current provisions
leave gaps in GATT exemptions for environmental purposes. In addition, in establishing
more criteria for determining the legitimacy of environmental measures, the GATT
should pay greater heed to local conditions as well as to the need to be wary of
invalidating environmental measures because they do not address environmental risks
that will materialize with absolute certainty. Finally, the GATT itself (as opposed to the
Standards Code) should adopt procedural safeguards to ensure that foreign producers are
treated fairly with respect to environmental protection regulations, both in their
formulation and in their implementation, thus diminishing the likelihood of challenge to
these regulations.
 54

118 The GATT should not, however, adopt the EC approach in other areas. First, with respect
to internai laws and regulations, the national treatment principle should not be
broadened to prohibit environmental regulation which does not discriminate against
foreign goods as in the broad Dassonville formula. Dassonville and cases such as Cinetheque
aim to capture any legislative measure which reduces the volume of trade between States.
While trade liberalization is an objective of the GATT, contracting parties are less
committed than in the EC to integration in policy domains other than trade.
Furthermore, the GATT does not have the mandate to legislate on policy matters such as
environmental protection and therefore cannot set the same environmental rules for all
GATT members to avoid the problem of trade restrictions. In light of this distinction
between the GATT and EC Systems, within the GATT System the goal of trade
liberalization must cede to the sovereign right of States to pursue public policies,
qualified by their obligation not to pursue such policies in a discriminatory fashion.
Second, and for the same concerns, GATT tribunals should not emulate the example of
the EC in questioning national governments’desired level of environmental protection.
119 The GATT should also take steps towards reform in certain other areas where no direct EC
experience exists. It should expressly delimit the proscribed level of discriminatory
impact of environmental regulations between foreign and domestic products. It is
submitted that absolute equality, that is, no material discrimination against foreign
producers, would place an unreasonably heavy burden on national environmental
regulation since most producers will find foreign rules more onerous and costly than
their own countries’. This is as true of environmental regulation as of investment or
intellectual property rules. In these areas as with environmental regulation, foreign
producers should be prepared to adapt to that country’s preferences. At the same time,
where national regulation results in a significant discriminatory impact on foreign
products, then the legitimacy of that regulation should be subject to GATT scrutiny under
a revised Article XX. By permitting measures having only a minimum level of
discriminatory impact on foreign producers and by construing the Article XX exemptions
broadly, the GATT would ensure that contracting parties would not be subject to frivolous
challenges to environmental legislation. Second, the GATT should expressly indicate that
the «primarily aimed at» test in Article XX(g) does not disallow measures which have dual
objectives — both economic and environmental. Environmental measures taken to
combat legitimate environmental problems should not be undercut simply because there
may be economic benefits resulting from such measures.

NOTES
44. The phrase «like products» appears in several of the GATT Articles considered here: Article I,
Article III, and Article XI.2 (c). The importance of this phrase is that it defines the scope of the
non-discrimination principle; only «like products» must be treated similarly. It has been
interpreted in various ways. Kirgis notes that GATT investigations have emphasized the inclusion
or non-inclusion of imported and domestic products in the same item of tariff schedules of the
challenged State, where such categorization has also been accepted in other countries’tariff
 55

schedules. (See Kirgis 1972 at 888.) The Panel in the Superfundcase noted that the determination
of whether two products were «like» involved a comparison of their enduses in a given market.
(Superfund, Paragraph 5.1.1 at 154-55.) The Working Party Report on Border Tax Adjustements
decided that «like products» should be examined on a case by case basis using the following
criteria: the products’end-uses in a given market, consumers’tastes and habits, which change
from country to country, and the product’s properties, nature and quality (See Japanese Alcoholic
Beverage at 5.6 and Report of the Working Party adopted on 2 December 1970 [L/3464], BISD
18S/97 at Paragraph 18.) Clearly the phrase is not without ambiguity. For instance, how narrowly
or widely can the end-use market be defined and how far afield will the GATT go in defining
substitutes for goods?
45. The term «bound items» refers to those goods for which tariff bindings have been agreed.
These are found in the schedule to Article II of the GATT.
46. Jackson 1969 at 277.
47. Ibid, at 306 and 309.
48. As the major trade-restrictive effect of national environmental regulation of products is on
imports, this discussion focusses primarily on how international trade rules address non-tariff
barriers on imports. Nevertheless, some reference is made to the legality of environmental
measures which restrict exports.
49. See Lobster at Paragraph 7.10.2.
50. For discussion of this case, see Froman 1989 and Halpern 1989.
51. See subsection 6 of this section.
52. FTA Salmon and Herring at Paragraph 6.08.
53. Id.
54. Lobster at Paragraph 7.3.3.
55. Id.
56. Lobster at Paragraph 7.14.3 citing Section 337 at Paragraph 5.10.
57. The Panel was unable to go on to consider whether the US restriction resulted in a violation
of the national treatment principle because such a determination was outside the scope of its
terms of reference. Ibid, at Paragraph 7.14.4. It is noteworthy that the Standards Code clearly
assesses the legality of a measure on the basis of both its intent and its effects. Article 2.1 States
that, first, technical regulations and standards are not to be introduced « with a view to creating
obstacles to international trade» (emphasis added). Moreover, it echoes Article III.4 of the GATT
in stating that imported products are to be «accorded treatment no less favourable» than that
accorded to domestic products. Second, it requires the parties to ensure that such regulations
and standards and their application do not have «the effect of creating unnecessary obstacles to
international trade» (emphasis added). Material discrimination for technical standards and
regulations is therefore clearly proscribed for Standards Code signatories, where it is
«unnecessary».
58. Japanese Alcoholic Beverages at 5.5
59. Paragraph 5.2.4 at 161. The Border Tax Adjustment provision is found in Article II.2(a) which
provides that contracting parties may impose on an import a charge equivalent to an internai tax
imposed consistent with Article III.2 in respect of a «like domestic product or in respect of an
article from which the imported product has been manufactured or produced in whole or in
part».
60. Lobster at Paragraph 7.20.1.
61. Superfund at 5.2.5
62. FTA Salmon and Herring at Paragraph 6.05.
63. Ibid, at Paragraph 6.09.
64. Lobster at Paragraph 4.3.2.
65. Id.
 56

66. Ibid, at Paragraph 7.12.3.

67. Ibid, at Paragraph 7.12.5.
68. Ibid, at Paragraph 7.10.2.
69. Ibid, at Paragraph 7.9.4.
70. Ibid, at Paragraph 8.2.11.
71. Ibid, at Paragraph 8.3.10.
72. Lobster at paragraph 7.13.8, and Canada — Administration of the Foreign Investment Review
Act, Report of the Panel (L/5504), reprinted in GATT Basic Instruments and Selected Documents,
30th Supp. 140 at 162 (1986).
73. Lobster at Paragraph 7.13.5 citing FIRA.
74. See Japanese Alcoholic Beverages for definition of “like products”.
75. See Japanese Alcoholic Beverages at 5.9.
76. Tuna/Dolphin Panel at Para. 5.12 citing Section 337 at 5.11 and 5.14.
77. See Theodore W. Kassinger, «Introduction», in Zamora and Brand 1990 at 135.
78. For a similar conclusion with respect to EC law, see Keeling 1992 at 480.
79. Case 7/68, EEC Commission v. Italy [1968] ECR 423, [1989] CMLR 1 as cited in Oliver 1988 at 7.
80. Walloon Waste at Paragraph 27.
81. Clark 1988 at 758.
82. Paragraph 1 of Article 34 States: «Quantitative restrictions on exports, and all measures
having equivalent effect, shall be prohibited between Member States. » Despite the similarity in
language of Articles 30 and 34, the Court has pursued restrictions on imports under Article 30
more vigorously, possibly because Member States are less likely to restrict exports. See Keeling
1992 at 468. As a resuit, this paper focusses primarily on Article 30.
83. Jadot 1990 at 430.
84. White 1989 at 241.
85. Ibid, at 242.
86. Oliver 1988 at 77.
87. Geddo v. Ento Nazionale Risi (Case 2/73 [1973] ECR 865 at 879, [1974] 1 CMLR 13 at 42.
88. Peter Oliver 1988 at 63.
89. Dassonville, Recital 5.
90. [1970] O.J. L13/29
91. The determination of whether a distincly applicable environmental measure is illegal has
recently evolved in EC jurisprudence. In the 1992 Wallon Waste case, the Court invoked
environmental principles to find a Belgian law which was distinctly applicable on its face to be
non-discriminatory. See discussion in Section Two, B, below
92. Article 3, Directive 70/50.
93. Recital 10 of Directive 70/50.
94. Cassis de Dijon at 653.
95. Ibid, at 656.
96. Id.
97. Ibid., Recital 8.
98. Id.
99. See Oosthoek, Buet, Cinetheque.
100. Keeling 1992 at 480.
101. See Jackson 1969 at 743.
102. Canadian Tuna at Paragraph 4.8.
103. See section on the Legality of International Environmental Agreements.
104. Canadian Tuna at Paragraph 4.8.
105. For an historical review of the scope of Article XX(b), see Charnovitz 1991 at 44.
106. Jadot 1990 at 412.
 57

107. Kirgis 1972 at 893.

108. See Canadian Tuna case.
109. The NAFTA expressly exempts measures related to the conservation of both living and non-
living exhaustible natural resources (Article 2101).
110. Canadian Tuna at Paragraph 4.9.
111. GATT Salmon and Herring at Paragraph 4.4.
112. Kirgis 1972 at 893.
113. For example, the Convention on the Law of the Sea (1982) UNCLOS A/CONF 62/122.
114. GATT Salmon and Herring at Paragraph 3.37.
115. Id.
116. Ibid, at Paragraph 5.3.
117. McDorman 1990 at 107.
118. GATT Salmon and Herring at Paragraph 5.3.
119. FTA Salmon and Herring at Paragraph 7.05.
120. GATT Salmon and Herring, Paragraph 4.6.
121. Thai Cigarettes at Paragraph 73.
122. Thai Cigarettes at Paragraphe 74 and 75.
123. Ibid, at Paragraph 77.
124. These issues are discussed more fully in Part VI.
125. Charnovitz 1991 at 50.
126. Id. See the above discussion on the meaning of «disguised restriction on trade».
127. Tuna/Dolphin at Paragraph 5.28.
128. Id.
129. GATT Salmon and Herring at Paragraph 4.6.
130. Tuna/Dolphin at Paragraph 5.33.
131. FTA Salmon and Herring at Paragraph 7.07.
132. FTA Salmon and Herring at Paragraph 7.04.
133. Ibid, at Paragraph 7.07. This test was also applied in Lobster at Paragraph 9.4.2.
134. Ibid., Paragraph 7.08
135. Ibid., Paragraph 7.09
136. Id.
137. Ibid, at Footnote 19.
138. Bauhuis at Recital 12.
139. See discussion of the scope of Article XX(b) in Subsection A on GATT, above.
140. Jadot 1990 at 412v — 413.
141. See Section Three of this Part.
142. Oliver 1988 at 168.
143. Italy v. EEC Commission (Case 13/63), ECR 165, [1963] CMLR 289.
144. Debauve at Recital 21.
145. Oliver 1988 at 171.
146. Oliver 1988 at 171.
147. Cassis de Dijon at Recital 14.
148. Dassonville at Paragraph 6.
149. L. Gormley 1985 at 57. See also Mattera 1990 at 274.
150. Clark 1988 at 763.
151. Brûleurs d’Huiles Usagées at Recital 15.
152. Brûleurs d’Huiles Usagées at Recital 15.
153. Walloon Waste at Paragraphe 30 and 32.
154. For further discussion, see Oliver 1988 at 92.
155. Walloon Waste at Paragraph 28.
 58

156. Ibid, at Paragraph 29.

157. Ibid, at Paragraph 34.
158. Ibid.at Paragraph 36.
159. Sandoz at Recital 16.
160. Nisin at Recital 16.
161. Motte at Recital 20.
162. German Beer Purity at Recital 44.
163. Motte at Recital 20.
164. Melkunie.
165. Irish Poultry at Recital 42.
166. See Woodworking Machines.
167. See the Danish Bottles case for a similar scenario.
168. Danish Bottles Case at Recital 6.
169. Biologische Producten at Recital 14.
170. Clark 1988 at 765.
171. German Beer Purity at Recital 49.
172. Germany Beer Purity at Recitals 45 and 46.
173. Communication from the Commission concerning the consequences of the judgment given
by the Court of Justice on 20 February 1979 in Case 120/78, [1980] O.J. C256/2.
174. See Woodworking Machines.
175. See the difference in environmental protection offered by, respectively, recycling and re-use
of bottles in the Danish Bottles case.
176. Kramer 1990 at 34. See Directive 83/189, OJ 1983, L109/8.
177. The issue of scientific uncertainty is elaborated upon in Part VI.
178. As of February 1990. See van Houtte, «Health and Safety Regulations in International Trade»
in Sarcevic and van Houtte 1990 at 130.
179. Article 2.7, Dunkel DraftText, December 21,1991, MTN.TNCTW/FA, Agreement (1991) on
Technical Barriers to Trade.
180. Article X(3)(b)
181. Article 5.1, Standards Code.
182. Article 5.2.
183. FTA Salmon and Herring at Paragraph 7.11.
184. Id.
185. Id.
186. Tuna/Dolphin at Paragraph 5.27
187. Ibid, at Paragraph 6.1
188. Jadot 1990 at 409.
189. Woodworking Machines at Recital 16. See also Rau v. De Smedt, Case 261/81 [1982], ECR 3961,
[1983] 2 CMLR 496, where the Court stated the measures would be disproportionate only if the
mandatory requirement «can be fulfilled just as effectively by other measures».
190. Danish Bottles at 629.
191. Gourmetterie at I — 2158 at Paragraph 10, Advocate General opinion.
192. David Gardner, Quentin Peel, John Hunt, «Green Germany drags Brussels into environmental
arena», Financial Times, January 24, 1992.
193. P.J.KUYPER, International Legal Aspects of Economic Sanctions, in Sarcevic and van Houtte 1991
at 149.
194. See, for example, Rowlands 1991 at 99.
195. Jackson 1969 at 752.
196. Rowlands 1991 at 103.
197. Campus Oil at Recital 34.
 59

198. Ibid, at Recital 36.

199. Ibid, at Recital 37.
200. Jackson 1989b at 204.
 60

V. Legality of production-related
environmental measures

1 The regulation of production processes causing pollution or other environmental

degradation differs from the regulation of product-caused pollution in one fundamental
respect. When applied to foreign products imported into the country, a production
regulation aims to reduce environmental harm not in the country of import but in the
country of export201. Because of this extraterritorial aspect to production regulation, it
has been the subject of heated political and legal controversy in the last few years. The
most recent example in GATT jurisprudence is the Tuna/Dolphin case decided in August of
1991. In this case, US import bans on tuna captured on the high seas using methods which
US legislation prohibited were found to be in violation of the GATT rules202. The issue of
regulating another country’s production processes also arose in the context of the
negotiations of a North American Free Trade Agreement (NAFTA) between Canada, the US
and Mexico. A coalition of environmentalist groups lobbied for a tightening of Mexico’s
lax environmental regulations and argued that reducing barriers to trade with Mexico
would lead to even higher levels of industrialization and pollution within Mexico with
cross-border impacts on the US.
2 In addition to the threat or possibility of transfrontier pollution, economic arguments
have been made in support of extraterritorial production regulation. A major element in
any country’s concern about the production processes in another country is the cost of
environmental regulation. An industry with stringent environmental standards will in
most cases face higher costs (at least in the short term) than a country condoning
rampant pollution. The OECD estimates that environmental policy now costs the United
States 2 to 3.5% of its Gross National Product and that such expenditures reduce
industry’s capital investment203.
3 The concern voiced during the NAFTA negotiations was that there would be both trade
and investment diversion because of the divergent environmental protection costs in
Canada and the US vis-a-vis Mexico. Trade diversion would occur since products from
Mexico would be cheaper than like products from Canada or the US because of lower
environmental protection compliance costs in Mexico. Investment diversion would also
arise because investors who normally would invest within the US or Canada to profit from
the large US market would be able to move south to Mexico to reduce environmental
 61

costs and still retain access to the US market. This concern is not without a factual basis.
The case of California furniture manufacturers who moved to Mexico to escape stringent
US environmental laws and take advantage of lax Mexican environmental standards has
been documented204. Such companies may be more competitive in home and foreign
markets than their foreign counterparts who are subject to more demanding Controls.
Alternatively, such investors could apply pressure to Canadian and US governments to
lower environmental standards in order to increase their competitiveness with
companies locating in Mexico. Negotiators of the NAFTA sought to address this latter
concern by recognizing that NAFTA countries should not lower health, safety or
environmental standards for the purpose of attracting investment205. The weakness of
this clause is that it is hortatory, rather than binding.
4 Disparities in the stringency of national environmental regulations frequently lead to
demands for protection from unfair competition and for the creation of a «level playing
field». A level playing field denotes a market in which all players face the same cost
structure, founded, for example, upon similar environmental standards, occupational
health and safety legislation, and other regulatory requirements. It is argued that the
failure of foreign governments to enact environmental protection policies tilts the
playing field in their favour by altering the conditions of competition. Without protection
against unfair competition, proponents of the level playing field argue, the more
stringent jurisdictions will be unable to retain high standards in the face of competition
from low standard countries. Restrictive trade policies are increasingly the instrument of
choice to neutralize lax environmental regulation in other countries. Such a response is
feared by trade policy makers, especially those in the less developed countries who
regard such laws as protectionist and as establishing standards for developing countries
which developed countries did not have to meet in their formative years of economic
development206.

A. GATT Jurisprudence

5 The GATT jurisprudence on the legality of attempts by national governments to regulate

the environmentally degrading production processes in other countries is not extensive.
The Tuna/Dolphin case affords the principal means of identifying the GATT perspective on
this practice. This section examines the GATT Panel decision in this case and assesses its
significance for national and international environmental policy.

1. The Tuna/Dolphin Case

a) Facts and Arguments

6 The trade dispute between Mexico and the US arose because of restrictions which the US
imposed on the import of Mexican tuna pursuant to the US Marine Mammal Protection
Act (MMPA) of 1972. This legislation regulates the incidental taking of dolphins in tuna
fishing in the Eastern Tropical Pacific (ETP) Ocean both by the domestic US fishing
industry and by foreign fisheries207. The ETP includes international waters and an area
within Mexico’s two hundred mile zone. The ETP is significant for the fishing industry
because of the tendency for dolphins in the ETP to swim above schools of underwater
tuna, an association which fishermen exploit to find and catch the tuna by encircling the
dolphins with purse-seine nets. As a resuit, many dolphins are taken and die. The MMPA
 62

authorizes limited incidental taking of marine mammals by US fishermen pursuant to a

permit, one of which has been issued to the American Tuna Boat Association to cover all
domestic tuna fishing operations in the ETP. The permit establishes that a maximum
number of dolphins may be incidentally killed or injured each year by all US fishermen in
the ETP. MMPA is enforced with respect to US fishermen by providing for forfeiture of
cargo as a penalty for violation of its regulations; it does not prohibit or regulate the
marketing (sale, offer for sale, purchase, transportation, distribution or use) of yellowfin
tuna by US fishermen.
7 Foreign yellowfin tuna fishermen are subject to a different regime under the MMPA. The
Act requires the US Government to ban the importation of tuna harvested with purse-
seine nets in the ETP and products therefrom unless the Secretary of Commerce finds
that 1) the harvesting country has a comparable programme regulating the taking of
marine mammals, and 2) the average rate of incidental taking of such mammals by boats
of the exporting country does not exceed 1.25 times the average taking rate of US vessels
in the same period. The burden is on the harvesting country to prove that both its
regulatory regime and taking rates are comparable208. The adverse trade impact of this
provision is reinforced by an MMPA requirement that six months after an embargo on the
tuna, the Secretary of Commerce is required to certify this information to the President
who then has discretionary authority under the Pelly Amendment to order a prohibition
of imports of fish products (not limited to tuna) for as long as the President wishes and to
the extent that this is in conformity with GATT209. In addition to regulations governing
tuna from countries harvesting in the ETP, the MMPA also provides for an import
prohibition from intermediary countries who export to the US unless the intermediary
country provides evidence that it bans imports from any country which is prohibited
from exporting tuna to the US. The Pelly Amendment may also be triggered with respect
to these intermediary nations.
8 Mexico argued that the US ban on Mexican and intermediary nations’tuna constituted a
violation of the prohibition against quantitative restrictions under Article XI and as well,
an infringement of Article III. The US position was that measures imposed respecting
Mexican tuna under the MMPA were internai regulations relating to the harvesting of
domesting tuna which were enforced at the time or point of importation and covered by
the Ad Note to Article III210. In the alternative, if the measures did violate Article III, then
they were exempt under Article XX(b) or (g). With regard to the embargo on tuna
products from intermediary nations, the US argued that these measures also fell under
Article III and if not, could be exempted under Article XX(b) or (g).

b) Panel’s Findings

i) Article III or Article XI

9 The Panel found that Article III was not applicable to the impugned législation because
the MMPA neither regulated the scale of tuna as a product nor prescibed fishing
techniques affecting tuna as a productif211. Article III covered only measures affecting
«products» as such, given the references in Article III and in the Ad Note to imported or
domestic «products» of laws212. In support of its views, the Panel cited the Superfund case,
finding that Article III.2, first sentence, obliges contracting parties to «establish certain
competitive conditions for imported products in relation to domestic products»213. With
respect to Article III.4, the Panel held the words «treatment no less favourable» require
 63

«effective equality of opportunities for imported products... and that this standard has to
be understood as applicable to each individual case of imported products»214. The
comparison implied was one between the measures applied to imported products and the
measures applied to like domestic products215. In addition, the Panel considered the
conclusion of the Working Party on Border Tax Adjustments that taxes borne by domestic
products may be applied to imported products, but not taxes indirectly levied on
products such as corporate income tax, and applied this principle to the case of
regulations. The Panel noted that «it would be inconsistent to limit the application of the
Ad Note to taxes that are borne by products while permitting its application to regulations
not applied to the product as such»216 (emphasis added) The tuna harvesting regulations
at issue did not, therefore, regulate the sale of tuna or tuna as products; rather the MMPA
regulated the harvesting of tuna with fishing techniques designed to decrease incidental
taking of dolphins217. Consequently, the tuna embargo did not constitute an internai
regulation covered by Article III218 but was instead caught under Article XI.1.
10 The significance of this conclusion is that a measure regulating a product cannot
discriminate between like domestic and imported products on the basis of the
environmental harm the product causes in its production, unless it can claim one of the
GATT exemptions.

ii) Article XX and The Issue of Extraterritoriality

11 The Panel on Tuna/Dolphin addressed for the first time the question of whether a country
can apply measures to protect the environment outside of its own territory. The Panel
found that import restrictions imposed to respond to differences in environmental
regulation of producers could not be justified under the exceptions in Article XX(b) and
Article XX(g).
12 The Panel noted that the text of Article XX did not address the issue of extraterritoriality.
It will be recalled that Article XX(b) provides that the contracting parties may take
measures «necessary to protect human, animal or plant life or health» without expressly
restricting that protection to the enacting state’s jurisdiction. Similarly, Article XX(g)
does not mention where the «exhaustible natural resources» are located. In considering
the drafting history of Article XX(b), the Panel concluded that the drafters were
concerned with the use of sanitary measures to protect health or life within the
jurisdiction of the importing country. Second, and perhaps the key point in relation to
extraterritoriality, the Panel argued that if extraterritoriality were accepted, then
[E]ach contracting party could unilaterally determine the life or health protection
policies from which other contracting parties could not deviate without
jeopardizing their rights under the General Agreement. The General Agreement
would then no longer constitute a multilateral framework for trade among all
contracting parties but would provide legal security only in respect of trade
between a limited number of contracting parties with identical internai
regulations.219
13 The Panel went on to consider whether Article XX(g) were applicable and rejected its
applicability on similar grounds of extraterritoriality. Given the requirement that
measures be taken «in conjunction with restrictions on domestic production or
consumption» and that a measure will only have met this requirement if it was primarily
aimed at rendering effective these domestic restrictions, the Panel concluded that the
purpose of XX(g) was to exempt only measures relating to exhaustible natural resources
 64

under a country’s control, which control did not extend beyond its jurisdiction. The Panel
proceeded to reiterate the argument it had made in relation to XX(b) that if
extraterritoriality were permitted, each contracting party «could unilaterally determine
the conservation policies from which other contracting parties could not deviate without
jeopardizing their rights under the General Agreement»220.
14 With respect to the intermediary nations’embargo, the US had argued that this measure
fell within Article III and Note Ad Article III since it ensured the enforcement of the
import ban. The Panel held that in accordance with its ruling on the direct embargo,
Article XI, not Article III, was applicable to the indirect embargo. The Article XX (b) and
(g) defences were rejected for the same reasons as they were for the direct embargo. The
Panel also ruled that the intermediary nations’embargo did not fall within Article XX(d)
(exempting measures «necessary to secure compliance with laws or regulations which are
not inconsistent with the provisions of this Agreement») because the direct embargo was
inconsistent with the General Agreement221.

2. Significance of the Tuna/Dolphin Decision

15 The conclusions of the Tuna/Dolphin Panel are that: 1) products are alike regardless of
how environmentally damaging their production is and 2) that a country cannot require
all products sold in it to be produced according to domestic standards. In other words,
environmental regulation cannot be applied extraterritorially. This ruling has significant
repercussions. First, proposed and existing environmental laws in member countries
could run afoul of GATT obligations. Second, international environmental agreements
which use trade restrictions to enforce their provisions may be judged as violations of
GATT222. Third, the GATT may be forced to address unilateral responses to the problem of
disparities in environmental regulation given the strong support in environmentally
advanced jurisdictions for counteracting trade measures and the importance of
disciplining such responses223.

3. National Legislation Affecting Production Regulation

16 As witnessed in the Tuna/Dolphin case, regulatory measures such as import bans will not
be upheld under the GATT, as currently written. Clearly, this is a setback for
environmentalists who wish to use trade sanctions to pressure other countries to uphold
higher environmental standards. Nevertheless, two arguments might be made. First, it is
arguable that the Tuna/Dolphin judgment would not be applicable where foreign pollution
arising from production causes pollution in the legislating country. In that case, while the
imported product is not directly polluting the importing country, the restriction on
import is meant to pressure the exporter to clean up its industrial process. It could be
argued under Article XX(g) that such a measure is taken in conjunction with a restriction
on domestic production if similar industries in the importing country were subject to
environmental control. A potential weakness of this argument is that the link between
the trade restriction and the environmental protection goal may be too indirect224.
Second, the GATT might be persuaded to consider that products are not «like» where
environmental protection is at widely divergent levels. The GATT is, however, unlikely to
deal with anything less than the most extreme cases given the difficulty in objectively
assessing the differences between two countries’environmental protection Levels225.
 65

17 Another threatened category may be certain tax measures. A tax on product emissions, if
applied domestically, might not raise any GATT problems. However, if because of
pressure from industry a government decided to impose equivalent taxes on imports,
several GATT incompatibilities could exist. The measure could violate Article III's national
treatment requirement if it were applied on the basis of the quantity of emissions in the
production of the good. In that event, the measure would not apply to the product but to
the production process, and therefore, as the Panel held in Tuna/Dolphin, would not fall
within Article III and would be considered a violation of Article XI. Such a measure might
also run afoul of the MFN requirements of Article I since the level of the tax would vary
with the volume of emissions in each country. This problem might be overcome under
Article XX if it could be successfully argued that the measure does not discriminate
between two foreign countries because «similar conditions» do not prevail in those
countries. It is not known how the GATT would respond to such an interpretation.
However, once the conclusion has been drawn that a measure applies to the production
process underlying the product, and not to the product directly, then the measure will
not be saved by Article XX because of its extraterritoriality. On the other hand, a tax
measure could be saved if designed as a consumption tax on the product, since then it
would apply to products directly and not to the production process, therefore falling
under the protection of Article III.

B. European Community Treatment of Disparities in Production

Regulation

18 The European Community may respond to Member State differences in environment-

related production regulation through the harmonization of national legislation under
Article 100 or 100A of the Treaty. States wishing to promote environmental protection
will have a strong incentive to push for harmonization in order to avoid the competitive
disadvantage associated with the costs of compliance with environmental legislation.
However, where harmonization has not yet occurred, Member States would appear to be
prohibited from setting up trade restrictions against goods produced by pollution-
causing processes since a Member State is not permitted to impose its own standards or
morals on other Member States226. In Dassonville, for example, the Advocate General stated
that derogations from Article 30 were only permitted for the the protection of a Member
State’s own interests and not for the protection of the interests of other Member States 227.
19 Nevertheless, some support has been expressed by the European judiciary for allowing
extraterritoriality in very limited circumstances. In Bauhuis, the Court held that exporting
Member States could carry out veterinary and public health Controls for the benefit of
the importing Member State under Article 36. However, as noted by the Advocate General
in Gourmetterie, an interpretation of Bauhuis as involving unilateral extraterritoriality may
not be justified given that a directive required such export Controls. In Gourmetterie which
assessed the legality of a Dutch import ban on red grouse, the Commission argued that it
was compatible with Article 36 for a Member State to take measures to protect bird life
not only on its own territory but even outside it. Furthermore, the Commission argued
that an import ban was proportional since the measure allowed the Netherlands to avoid
any potential or actual encouragement of the slaughter of birds where such birds did not
enjoy any protection or enjoyed much less protection228 It should be noted that in this
case a directive applied to all bird species naturally occurring in the wild State in
 66

European territory of the Member States. The Dutch Government argued that it was
irrelevant that grouse were not found within its territory since the Directive emphasized
the importance of Community heritage.
20 The Advocate General and the Court both found that the Dutch measure was not
justifiable under the exemptions of the Treaty. The Advocate General stated that while
«Article 36 does not expressly State that the interest which it protects must be located in
the legislating Member State», it is «less appropriate to regard that article as
encouragement to adopt legislation for the protection of interests located in other
Member States.» Nevertheless, he did go on to conclude that, in view of the transfrontier
nature of the protection of birds expressly recognized in the directive and in the CITES
Convention, a «Member State can rely on the concern for animal life in another Member
State to justify a restriction on the free movement of goods». In this case, however, the
measure was not necessary; less restrictive alternatives were available such as collecting
information on the red grouse and submitting it as evidence of the necessity for inclusion
of that species as an endangered species in the directive. In essence, the Advocate General
was advocating international evaluation and action to deal with the problem over
unilateral measures. In support of this view, he argued that if the Netherlands acted
unilaterally, certain local interests could not be taken into consideration, such as the
advisability of authorizing hunting so as to protect agricultural crops.
21 The Advocate General’s opinion is significant in that it supports extraterritorial action
where there is a consensus (evidenced by international agreement) regarding a common
interest in the environment. This notion could be developed further. There is some
evidence for the view that within the European Community the concept of a shared and
indivisible «European environment» may develop in which all Member States as well as
individuals and non-governmental organizations could participate in its protection,
regardless of their home Member-State229. This concept would build on the notion of a
Community heritage cited above. Similarly, at the international level, one could argue
that where international environmental law designated certain elements of the
ecosystem or certain places as the «common heritage of mankind» or recognized the
imperative of addressing certain problems through international cooperation, then
extraterritorial regulation may be justified230. How the GATT may be used or modified to
permit trade sanctions in the case of such internationally agreed measures will be
discussed in the next section.

C. International Environmental Agreements

1. Legality of International Environmental Agreements under the GATT

22 International trade rules, and in particular, the results of the Tuna/Dolphin Panel, may
pose a challenge to international environmental agreements. Trade restrictions are
increasingly used as a means of ensuring that environmental safeguards are met and of
offering an incentive for non-signatories to join by disadvantaging those who are not
signatories. Such restrictions may be crucial to the success of international cooperation
in environmental policy where a threat to global common resources exists. Generally,
unilateral measures to conserve natural resources of the global commons or to prevent
pollution of common resources such as the ozone layer are not capable of realizing their
objective unless all environmentally significant nations cooperate. Where a resource is
common, no one international actor can control its management. Each country has an
 67

incentive to exploit such common resources to the fullest extent possible because it
receives only a fraction of the benefit of any restraint it exercises but must bear the cost
of such restraint in full. Countries have no incentive to regulate their own conduct when
others will continue to benefit from exploitation. This is the «tragedy of the commons»
described by Garret Hardin231. In other terminology, the achievements of those who
manage the commons with restraint will be subverted by those who «freeride» on their
efforts.
23 This study briefly examines three main examples of the trend to include trade
restrictions in international environmental agreements. First, the Basel Convention on
the Control of Transboundary Movements of Hazardous Wastes and Their Disposai (1989)
seeks to regulate the movement of hazardous wastes by, inter alia, establishing a System
of import and export prohibitions and restrictions, and reporting procedures. Second, the
Convention on International Trade in Endangered Species of Wild Flora and Fauna (1973)
restricts the trade in endangered species through a permit System or outright bans.
Third, the Montreal Protocol on Substances that Deplete the Ozone Layer (1987), a
protocol to the Ozone Convention, seeks to reduce the consumption and production of
chlorofluorocarbons (CFCs) in order to reduce the damage done to the ozone layer. To
enforce compliance, the Montreal Protocol bans trade with non-signatories. Under the
international trade rules of the GATT, provisions of each of these conventions would be
illegal under Article I, III, and XI of the GATT without, in most cases, being eligible for
exemption under Article XX.
24 This illegality may not exist, however, where the illegal action takes place between two
signatories to the international environmental convention. Where conflicts exist between
international treaties, the Vienna Convention on the Law of Treaties232 determines which
shall prevail. While all GATT parties are not parties to the Vienna Convention, GATT
parties are bound where Vienna Convention provisions codify customary international
law. Article 30, in particular, may represent such a codification233. Article 30(3) States that
where all parties to an earlier treaty (e.g. the GATT) are parties to a later treaty and the
earlier treaty is not terminated or suspended in operation, «the earlier treaty applies only
to the extent that its provisions are compatible with those of the later treaty». However,
where the parties to the later treaty do not include all parties to the earlier one, then
between a party to the ealier treaty and a party to both treaties, «the treaty to which both
States are parties governs their mutual rights and obligations»234 The rules in Article 30
have effect for each individual party from the date of entry into force of the treaty for
that party. Thus, where a longstanding GATT signatory alleges infringement of GATT by
another contracting party who is a signatory to a more recent international
environmental agreement which authorizes the use of trade restrictions, the legality of
the trade restriction will depend upon whether the complaining State is also a signatory
to this agreement.
25 Article 41 of the Vienna Convention which relates to modifications to multilateral treaties
between only some parties of that agreement supports the Article 30 approach. It States
that where an international treaty is clearly intended by the parties to modify an earlier
treaty, it will do so as between parties to the later agreement only, subject to the
following requirements: the older treaty cannot prohibit such a modification, the new
agreement cannot derogate from a provision which is incompatible with the effective
execution of the objects and purposes of the older treaty as a whole, and the new treaty
cannot affect enjoyment by other parties of their rights under the older treaty or
 68

performance of their obligations. One commentator argues that an explicit statement

that modification of an earlier treaty is intended is not necessary where the later treaty is
«unmistakably inconsistent» with the previous one235. No GATT panel has yet addressed
the conflict of international legal regimes explicitly. Indeed, there has been a manifest
reluctance by international trade panels to consider international legal rules outside the
realm of trade law236.
26 Where two GATT contracting parties are not both members of the international
environmental agreement authorizing the use of trade sanctions, a number of common
features of these agreements could be subject to challenge under the GATT: first,
violations of Most-Favoured-Nation principles (Article I), second, violations of national
treatment (Article III) since there may not be equivalent restrictions on domestic
products and production, third, violation of national treatment even where equivalent
restrictions on domestic production exist since under the Tuna/Dolphin decision import
restrictions cannot be applied as a function of how damaging to the environment their
production is, and finally, violations of Article XI. Exemption under Article XX is possible
in some cases but several obstacles to its use could arise. First, there may be difficulty in
showing that discrimination against non-signatories is neither arbitrary nor unjustifiable.
In some cases, it may be argued that the «same conditions» do not «prevail» in signatory
versus nonsignatory countries but given the Tuna/Dolphin Panel’s narrow interpretation
of «like product» (to exclude looking beyond the product to the production process) and
its rejection of extraterritorial production regulation, such an argument would probably
not succeed. Second, the exemption may fail if the provision applies extraterritorially.
Finally, it may be difficult to show that a measure was «necessary» to protect life or
health under Article XX (b) or «relating to» the conservation of exaustible natural
ressources under Article XX (g) and that no less restrictive alternative is available. A brief
review of the three agreements noted above should clarify the potential problems under
the GATT for international environmental agreements which use trade measures.

a) Montreal Protocol to the Ozone Convention

27 The Montreal Protocol to the Ozone Convention institutes a progressive ban on imports
from non-parties of ozone-depleting substances, products containing them, and products
produced with such substances but not containing them. As well, it requires parties to
ban the export of controlled substances to non-parties. The most obvious problem under
the GATT is that the measures violate MFN principles. In addition, the first two import
restrictions will violate the national treatment principle of Article III where such
products are still in use within signatory countries. Furthermore, the restriction on
import of products produced with such substances but not containing them entails
discrimination against like products on the basis of their production process, according
to the GATT Panel in the Tuna/Dolphin case. An export ban clearly violates the prohibition
on quantitative restrictions on export. Thus all of these measures contravene GATT rules.
28 Moreover, Article XX may not exempt these provisions. The non-extraterritoriality of the
import restrictions, if coupled with domestic prohibitions on use of CFCs, might be
successfully argued with respect to an agreement to protect the global commons since
such a restriction would reduce the threat to the importing country’s environment (more
precisely, “its” ozone layer). Export bans to non-parties of controlled substances might
also meet this test for the export to other countries obviously increases the consumption
of such Chemicals resulting in greater destruction of the ozone layer and could threaten
 69

the territorial environment of the exporting State. However, the discrimination in import
and export measures between foreign countries depends on whether they are signatories
or not. This distinction may not be sufficient to argue that the measure is not «arbitrary
or unjustifiable discrimination» under the preamble to Article XX, since a GATT Panel
might consider that the «same conditions prevail» in certain non-signatory and signatory
countries. Moreover, it may be difficult to demonstrate that such measures are
«necessary» in view of the stringency of this requirement and in particular, the
possibility that other less trade-restrictive measures may be available.

b) The Basel Convention

29 The Basel Convention on the Control of Transboundary Movement of Hazardous Wastes

could also be subject to challenge under international trade law. The Convention requires
the prohibition of imports of hazardous waste where there is reason to believe that the
waste will not be properly managed. A GATT panel might view such a restriction on
hazardous wastes as fulfilling Article III non-discrimination principles if there were
similar regulations on the disposai of such wastes in the importing country. However,
there could be a violation of the MFN principle under Article I since imports from non-
parties are strictly prohibited. Justification under Article XX would be difficult. The ban
on imports from non-signatories would likely be considered discriminatory since it is
based on the fact of non-signature which does not relate to the «product» of hazardous
waste itself but on the source. Bans on export to non-signatories would also be vulnerable
to attack on the same grounds, although an argument could be made under Article XX
that the same conditions do not prevail in signatory and non-signatories, i.e. non-
signatories do not have in place a regulatory regime for dealing with the disposai of
hazardous wastes. In this respect, it should be noted that the European Court of Justice
has held that there is no arbitrary discrimination where differences of treatment are
justified objectively237. Nevertheless, since the purpose of such bans is to protect the
extraterritorial environment, they will likely violate the extraterritoriality proscription
set out in the Tuna/Dolphin decision.

c) Convention on International Trade in Endangered Species (CITES)

30 CITES has been considered «the most successful of all international treaties concerned
with the conservation of wildlife»238. This success is largely attributed to its use of trade
bans and restrictions to ensure its enforcement. The Convention regulates the trade of
wild flora and fauna according to how endangered a species is. Thus international
commercial trade in species threatened with extinction is virtually prohibited. Import
restrictions for species threatened with extinction include the prior grant of import
permits and either an export permit or a re-export certificate (Article III(3) of CITES).
Import permits require, among other conditions, that the importing State authority be
satisfied that the species is not to be used for primarily commercial purposes, while
export permits are only granted where the appropriate authority of the exporting State
has advised that export will not be detrimental to the survival of the species and the
specimen was not obtained in contravention of national laws of the exporting State.
These restrictions on import would constitute a violation of Article XI and would not
likely be exempted under Article XX (b) or (g) because they are directed towards the
conservation policies for endangered species in the exporting State.
 70

31 Restrictions on export include both outright bans and limitations, depending on how the
particular species is categorized. These would violate Article XI and would probably not
be eligible for exemption under Paragraph 2 of this Article except possibly to «prevent...
critical shortages of... other products essential to the exporting contracting party». The
limitations are, however, that the exemption only applies temporarily and for «essential»
products. It is not clear what measures fall within this subparagraph. Article XX could
save the export restriction if it were interpreted as «necessary» to the life or health of the
species239 in the exporting country or to ensure the conservation of exhaustible natural
resources. However, even if it meets these requirements, the State trying to prohibit the
export may be discriminating between countries since export permits may be conditional
on the prior issue of an import permit (Article III.2(d)) which non-signatories can only do
if they produce documentation comparable to that required of a signatory240.
32 This review of three principal international environmental agreements reveals their
susceptibility to challenge from non-signatories as violations of the General Agreement.
The GATT does not permit significant consideration of the value of trade restrictions in
enforcing international environmental agreements. There are, however, strong reasons
for treating the case of international environmental agreements differently from the
unilateral measures taken by the US in the Tuna/Dolphin situation. First, the concern with
violation of another nation’s sovereignty may be much weaker in the case of multilateral
environmental agreements because, depending on the extent of international support for
the agreement, the agreement may be evidence of international law241. The trade
restriction may therefore be viewed as a legal reprisai under international law242. Second,
even if the agreement is not evidence of international law, a significant number of
signatories will help to ensure that the trade-restricting response is based more on
objective criteria and less politically motivated.

2. Possible Reforms of GATT to Accommodate International Environmental

Agreements

33 The outmoded nature of the GATT is being recognized by many contracting parties who
regard the use of trade restrictions in international environment agreements as a
legitimate instrument for promoting environmental protection. GATT Panels also seem
aware of the pressure for change. The GATT Panel in the Tuna/Dolphin decision stated
that, if the Contracting Parties decided to permit trade restrictions in response to
differences in environmental policies, then limits would have to be imposed justifying
such responses243. The Panel’s preferred choice would be to amend or supplement
provisions of the GATT or waive GATT obligations244. The following section briefly
discusses possible reforms to the GATT to accommodate international environmental
agreements which employ trade restrictions to support environmental objectives.

a) Article XXV Waiver

34 One possibility is for the GATT Contracting Parties to waive GATT obligations under
Article XXV where a broad consensus exists on the validity of using of trade restrictions
in a particular international environmental agreement245. Article XXV provides for joint
action by the Contracting Parties: Paragraph 5 would allow the waiver of a GATT
obligation imposed on contracting parties «in exceptional circumstances not elsewhere
provided for in this Agreement». Such a decision would have to be approved by a two-
 71

thirds majority of the votes cast with the qualification that the majority must comprise
more than one-half of the contracting parties. Aside from the requirement for a two-
thirds majority, a potential difficulty is that traditionally the waiver has been used to deal
with individual country exemptions rather than «broad subject matter» exemptions
which would affect goods cutting across many product sectors246. The advantage of an
Article XXV(5) waiver is that it would be a political decision of national governments and
not the decision of a relatively unaccountable trade panel concerned with the technical
interpretation of the General Agreement. Taking the decision out of a panel’s purview
also means that countries who are keen to strengthen international environmental policy
through trade means would be forced to bargain with less developed countries whose
priority is economic development. This could have the beneficial by-products such as a
greater sharing of environmentally safer technology as well as an international transfer
of funds for environmental protection.

b) Amendments to the GATT

35 Given the large number of countries which would have to agree, amendment of GATT
provisions has not historically been the primary means of amending or supplementing
the GATT’s terms247. Instead, agreements and understandings have been used.
Nevertheless, Article XXX States that amendments to Part I of the GATT (which includes
the Most-Favoured Nation clause and the schedules of concession) are effective upon
unanimous acceptance by all contracting parties while most other amendments require
acceptance by two-thirds of the contracting parties.

i) Article XX(h)

36 One option is to amend Article XX(h) which currently exempts measures «undertaken in
pursuance of obligations under any intergovernmental commodity agreement which
conforms to criteria submitted to the Contracting Parties and not disapproved by them»
to include multilateral environmental agreements with provisions inconsistent with
GATT rules. This proposai mirrors the provision of the founding charter of the
International Trade Organization which would have exempted measures «taken in
pursuance of an intergovernmental agreement which relates solely to the conservation of
fisheries resources, migratory birds or wild animais»248. The recently signed NAFTA also
provides a precedent for such a provision. Article 104 of that agreement States that: «In
the event of any inconsistency between this Agreement and the specific trade obligations
set out in...[CITES, the Montreal Protocol on Substances that Deplete the Ozone Layer, the
Basel Convention, and other agreements set out in an annex], such obligations prevail to
the extent of the inconsistency», provided that «the Party chooses the alternative that is
the least inconsistent with the other provisions of this Agreement».

ii) Article XI(2)

37 A second option would be to include international environmental agreements as an

exception to the obligation not to impose quantitative restrictions under Article XI. As
the above review of international environmental agreements shows, however, the MFN
principle could still be violated.
 72

c) Common heritage of mankind

38 A more imaginative resolution to the problem of extraterritoriality might be to consider

certain global environmental resources as the «comon heritage of mankind»249 Trade
restrictions which aimed to protect resources defined as such would then not be judged
as beyond the jurisdiction or control of a contracting party. By requiring international
agreement on the resource to be so designated, the problem of unilateral identification of
global resources which need protection would be avoided. This option is discussed in
greater detail in Part VI.

D. Other Possible Responses/Approaches to Disparities in

Production Regulations

39 Trade restrictions or bans are likely the most popular response to perceived inequities
arising from differential environmental regulation. Witness the threat of a European
embargo against Canadian lumber on the grounds that the forestry practices of Canadian
companies are unsustainable250, as well as the recommendations of many environmental
groups to freer trade between Canada and the US, two countries with relatively advanced
environmental regulation, and Mexico, a country with a poor environmental record.
Increasingly, however, other options are being explored. Individual GATT members are
responding to divergent environmental protection levcls by using or proposing a new
range of trade instruments and approaches. The following section assesses a selection of
these other means of addressing the problem of varying levels of environmental
regulation.

1) The Comparative Advantage Approach

40 One possible technique for differentiating between environmental production regulations

which can and cannot be regulated extraterritorially is to use the notion of comparative
advantage. For example, trade restrictions which seek to compensate for «unfair» foreign
government policies or «artificial comparative advantages» would be valid, while trade
restrictions that would eliminate a country’s «natural» (for example, physical)
endowments or its «real comparative advantages» would be disallowed. Whether a
distinction between elements of a country’s endowments which are natural (valid) and
which are artificial (invalid) seems dubious. As the following discussion reveals, this line
of argument is fraught with difficulties.
41 First, there does not appear to be any analytically sound means of making the distinction
between different types of rules affecting the production of goods. One view is that the
rubric of acceptable differences between countries encompasses a wide gamut of
characteristics: «If all countries were the same and if all firms were identical there would
be no reason to trade. International exchange is beneficial exactly because economic
conditions, knowledge, resources, skills, and preferences are different in different
countries»251.. According to this view, a country’s high assimilative capacity for pollution
or a currently low level of pollution might count as part of its natural endowment252 (its
real comparative advantage). As such, it would be saved from the threat of restrictive
trade measures. From an environmentalist perspective, this approach does not offer
much comfort.
 73

42 Second, the protectionist pitfalls of using the notion of comparative advantage to clarify
which environmental regulations are exempt from the proscription against
extraterritorial production regulation are gaping. This approach is related to arguments
regarding «unfair trade» — the inequity underlying a nation’s perceived right to respond
with trade restrictions to the absence of or lax regulation of environmental protection
standards in other countries. According to the «unfair trade» argument, the results of
competition are legitimate only when all competitors are trading initially in comparable
circumstances and with equal capability253. This has been expressed as follows:
Free exchange only Works where the exchange is an equal one that occurs with a
common framework of laws, customs, sales and regulations... American companies
therefore end up competing not with foreign companies but with foreign
governments.254
43 The weakness in this argument is that if government policy is not a proper basis for
advantage in international markets, then numerous other public policy reasons could be
used to justify trade restrictions. It is difficult to determine where this attempt at
levelling would end. For example, it has been proposed that countries could discriminate
against each other on the basis that labour rights are not equivalent255. It is also not clear
against whose standards the regulation in the foreign country is to be compared. If
countries establish unilateral standards, it is evident that the benchmark will be highly
subjective, as were the US harvesting restrictions for the Mexican tuna fishing industry in
the Tuna/Dolphin case. Moreover, as the GATT Panel pointed out in that case, the
imposition of trade restrictions by one country against countries with whose
environmental regulation the first country does not agree violates the right of sovereign
States to determine their own environmental policies in accordance with their own
problems and preferences, and could be harmful to the security of the international
trading System.
44 A counter argument to this «slippery slope» concern might be that because
environmental degradation may have irreversible long term consequences, issues of
sovereignty and order in the world trading System are not as high priorities. Therefore,
any measure which put pressure on other countries to raise their own environmental
standards should be supported rather than undercut by an«environmentally unfriendly»
international trade law regime. Some way of segregating legitimate environment-related
trade measures from disguised restrictions would, however, have to be found to meet the
real concern that the legalization of trade-restricting environmental measures might
unleash protectionist forces. This task would likely prove very difficult, although such
distinctions might be possible where 1) internationally agreed standards exist; or 2)
where protectionist objectives are not likely, for example, where the importing country
does not produce a like product.
45 In conclusion, using notions of «unfair trade» or distinctions between real and artificial
comparative advantages do not appear to be a helpful tool to separate out legitimate from
illegitimate restrictions on trade as a response to divergent standards for regulating
environmental consequences of production. These concepts are not based on objective,
external standards and therefore have a high potential for exploitation for protectionist
purposes.
 74

2) Border Duties

46 The application of border duties to imported products to offset competitive advantages

gained through lax environmental regulation of production is another means of
addressing differential environmental protection. Three options are briefly discussed
below: the import charge, countervailing duties against implicit subsidies, and
antidumping duties against eco-dumping.

a) Charge

47 The imposition of a charge equal to the estimated cost of environmental protection in the
foreign country would conflict with Article II.1 (b) for bound items only. This Article
provides that duties shall not exceed those set out in the tariff schedules. Moreover, even
for unbound items, a surcharge would likely violate the Most-FavouredNation principle
since a tax would not be placed on products from countries with pollution control
comparable to the importing country. Moreover, wile Article II. 2(a) permits equalization
of internai taxes by placing an equivalent charge on imports, this equalisation must be
imposed «in respect of the domestic product». In other words, the equalization tax on
imports must relate to an internai tax on products and not to taxes related to the
production of that product.256 Exemption under current GATT rules would not be possible
because of the Tuna/Dolphin decision’s proscription against extraterritorial regulation.

b) Implicit Subsidies and Eco-Dumping

i) Implicit Subsidies

48 It is argued that States which do not regulate their environment to a high enough
standard are providing the producers of highly polluting production processes with an
implicit subsidy which could be offset by a countervailing duty (CVD) under Articles VI
and XVI and the Subsidies Code. This argument is another variation of the «unfair trade»
argument discussed above. It is based on the view that the costs of such pollution are
merely being deferred to and will be borne by future generations. In other words, there is
an intergenerational transfer of responsibility for present day pollution from current to
succeeding generations. This deferral means that goods produced by such pollution-
causing processes are more competitively priced than the same goods from countries
with more stringent regulation in the present and cheaper than these goods will be in the
future, presuming environmental costs will be borne at some point. The use of the
«implicit subsidy» concept to offset the competitive advantage of such products has
generated a substantial amount of interest257. A recent US example of such an initiative is
the International Pollution Deterrence Act which would allow the imposition of
countervailing duties on imports from States with lax environmental regulation258.

ii) Eco-Dumping

49 Another related concept is the notion of eco-dumping. In traditional trade terms,

dumping is the export of goods at prices below the price for the same goods in the
domestic market. This difference between the two prices, the dumping margin, may be
offset by antidumping duties under Article VI and the Dumping Code. Where a country
does not sufficiently regulate its environment, it could be argued that the home market
 75

price would include the price on the market (x) plus the implicit price paid by the
country as a whole which is equal to the externality costs (y) of the pollution or
mismanagement of natural resources. The price abroad would be x and the difference of y
would represent the dumping margin. This analysis is novel to antidumping law to the
extent that, where a domestic market price exists, the price used in antidumping analysis
is x. Nevertheless, antidumping rules in many countries do provide that in non-market
economies or where the good is not sold in the home market, a «constructed cost» can be
used instead of the home market price. In that case, given that many elements of the
price are estimated, for example, a particular profit margin, it is not a great leap to
include the costs of a certain minimum degree of compliance with environmental
regulations.

iii) Analysis

50 An advantage of the implicit subsidy and eco-dumping approaches over trade restrictions
such as bans is that it does not cut off trade totally but merely increases the costs of the
foreign product. The weakness in these approaches is that the view that another country
is subsidizing or eco-dumping is based on a unilateral determination of the «correct»
level of environmental regulation. This was illustrated in the case of the Canadian
softwood lumber dispute between the US and Canada259. The US International Trade
Administration found that the Canadian tree-cutting stumpage fees were so low as to
constitute a subsidy and threatened to impose countervailing duties against this alleged
subsidy. The Canadian government responded to the threat by levying a tax on softwood
lumber exported to the US260. The subjectivity of determining a «correct price» for
cutting timber is readily apparent. As well, the ability of an influential country like the US
to establish unilaterally such reference standards and to pressure the Canadian
government to comply reflects the potential role for strongarm tactics which powerful
economies could use against weaker ones.
51 One means of avoiding this problem is to pursue a multilateral approach. This might
involve an internationally accepted standard against which countries’environmental
regulation would be compared for its efficacy. Countries would then be permitted to levy
a CVD or antidumping duty equal to the difference between the actual standard of
environmental protection provided and the international standard. The solution sounds
neat, but a number of problems would have to be resolved. As is discussed in the section
on international harmonization, it may be difficult to achieve anything but the most basic
international level of agreement on the regulation of polluting industries. Minimum
international standards for the conservation of certain living species or for pollution
tolerances may be easier to achieve where they do not involve a costly threat to a
country’s economic situation, but this may well be where such harmonization is the most
crucial. Even if such international standards could be established, the process of
measuring actual levels of environmental protection in various countries would be an
unwieldy process, both at a practical and at a conceptual level. For example, the size of a
subsidy may be difficult to establish if physical conditions (for example, a greater
assimilative capacity) vary widely between countries, therefore resulting in divergent
levels of environmental degradation for any given amount of pollution or
mismanagement261.
 76

52 Even were there no difficulty in establishing international standards and measuring the
deviation from them for particular industries in particular countries, another major
problem with the «implicit subsidy» argument is that «subsidies» in international trade
law have traditionally involved active government assistance to industry262. Article XVI of
the GATT refers to «any subsidy, including any form of income or price support»263. With
an «implicit subsidy», it is the government’s failure to regulate which is to be offset.
While there is no definition of «subsidy» in the Subsidies Code, the Code’s annex lists
twelve examples of export subsidies, all of which are directed towards affirmative
government action264. Similarly, a review of American legislation revealed no case where
an omission to act was considered a subsidy265. It is also unclear whether at this time,
international legal principles establish a positive obligation on all States to act to protect
their own environments266, the failure to do so then constituting an economic injury for
all those States who do regulate the environmental management of their industries. Even
if such an obligation does exist, it would be difficult to establish what level of government
intervention should be required.
53 Nevertheless, international law may evolve so that an argument based on a failure to act
could succeed. At the present, a subsidy argument might be successful at the
international level where the exporting state does not require the exporting industry to
follow all of the costly process requirements it requires of similar domestic industries 267
This could constitute an export subsidy under Articles VI and XVI and Article 8(4) of the
Subsidies Code.
54 In addition, the «polluter pays» principle may provide some basis for an implicit subsidy
argument. This principle requires that polluters be charged the costs of action required
by public authorities to ensure the environment is in an acceptable State, the cost of such
measures being reflected in the price of goods which cause pollution in production and/
or consumption268. Failure to make the polluter pay could constitute an implicit subsidy.
The scope of this principle would, however, be narrower than the implicit subsidy
argument since it would not appear to apply to conservation measures directly. The
advantage of connecting the two concepts is that the polluter pays principle is widely
recognized269, particularly in the OECD countries, if not fully implemented in practice.
Within the European Community, the polluter pays principle has been accepted as one of
the fundamental principles for Community action in relation to the environment (Article
130R(2) of the Treaty). Its link to State aid (subsidies) is found in Article 92 which
provides that «aid granted by a Member State or through State resources in any form
whatsoever which distorts or threatens to distort competition by favouring certain
undertakings or the production of certain goods» shall be incompatible with the Common
Market. This would seem to capture the payment by government for cleanup of industrial
pollution. However, it has been argued that a failure to enforce environmental
protection, «although perhaps giving the affected undertakings a substantial and
quantifiable benefit», would not be caught by Article 92270 This may be understandable
given that there are other means by which to enforce environmental standards within
the European Community. However, another commentator has argued in a recent article
271
that measures to avoid damage to the environment which are financed by the public
(that is, Member States) would have to be considered in the light of Article 92272
55 In conclusion, the countervailing of eco-dumping or implicit subsidies could be pursued
provided there existed a sufficient level of international consensus on minimum levels of
environmental protection. Given likely difficulties in achieving such consensus, it is
 77

probable that the level would be relatively undemanding. Nevertheless, this could permit
the imposition of a small duty which would at least partially offset a competitive
advantage resulting from an egregious failure to regulate the environment.

3) Harmonization

56 As discussed above, the establishment of international environmental standards may

provide the basis for other trade responses such as countervailing against implicit
subsidies. As well, harmonization of international environmental standards may be a
solution in itself to the problem of a disparity in national standards. It thus merits some
brief discussion. Harmonization is one of the principal means by which the European
Community addresses the problem of divergent regulation. Article 100A provides for the
approximation of national laws in order to create a single integrated market and avoid
the distortions of competition which resuit from divergent national laws. Article 100A(3)
provides that, in achieving harmonization, the Community shall take as a base a high
level of protection273. In addition, Article 130R of the Treaty provides for Community
legislation in environmental protection. At the international level, the Standards Code
encourages its 39 parties to harmonize technical regulations and standards but does not
create a legal obligation to do so (Article 2.3). As well, the North American Free Trade
Agreement encourages the parties to make their standards-related measures compatible
274
.
57 Harmonization would be an effective means of avoiding trade disputes and differences in
competitive advantage. At the present, however, harmonization is not likely to be
achieved at the international level except within certain specifie regions for several
reasons: different national preferences for environmental regulation, different
environmental conditions or assimilitative capacities275, and insufficient incentive to
cooperate given the current trade regime’s prohibition on use of trade restrictions
against products produced by environmentally damaging processes276. At the
international level, while unanimity may not be required before an environmental
standard becomes international law (provided it becomes customary international law), a
high level of consensus is required. The consequence is that even if agreement could be
reached, it is doubtful that the standards would provide much more than a lowest
common denominator approach. Even within the European Community of twelve
Member States, there are significant differences in the level of environmental protection
provided by national laws. As a resuit, «approximation» as well as its enforcement has
been difficult to achieve. The problem of achieving unanimity on environmental matters
within the EC has been serious enough that the Single European Act changed the
requirement to majority vote in the case of Article 100A harmonization measures which,
as noted above, include environmental protection277.
58 A final difficulty with harmonization is that if the harmonized standards are seen as the
ceiling on regulations that can be enforced on imports, then producers in countries with
more stringent regulation will still have difficulty competing in their home markets and
abroad. The resuit may be that such producers will lobby for lower standards to maintain
their competitiveness.
 78

4) Conclusion

59 The problem that differential environmental regulation of production processes creates

for countries with progressive environmental agendas cannot be easily resolved.
Unilateral responses based on unilateral evaluation of the «unfairness» of another state’s
failure to regulate the environment may be successful in changing the conservation or
pollution policies. Yet unilateral evaluations of this kind may not be based on objective
standards but rely on the exercise of economic power. As such, they cannot be condoned
by international trade law, whose very object is the disciplining of such behaviour278. At
the same time, it cannot be ignored that the use of unilateral trade measures, whether
offsetting duties or trade restrictions, can be effective to equalize competitive disparities
resulting from divergent regulation of the environment and to pressure other countries
to raise their environmental standards. To reconcile this fact with the object of
international trade law, and in light of the difficulties of objectively determining the
«correct» level of environmental protection, it is proposed that the primary means of
legitimating such trade action should be to seek international consensus on what the
minimum level of protection should be279. While agreement at the international level may
only corne at a very low standard, it would at least provide the basis for trade action
(including unilateral trade action such as a trade ban or the imposition of CVDs) in the
most flagrant cases of environmentally degrading production processes. Moreover, such
agreement could serve as the base upon which more stringent standards could be
founded280.

NOTES
201. Panels under trade agreements sometimes have difficulty separating product from
production regulation. This is illustrated in the Lobster case where the Panel did not recognize
that the US was regulating Canadian «production» extraterritorially rather than merely setting a
product standard. Canada had presented evidence that the earlier sexual maturity of Canadian
lobster from the Gulf of St. Lawrence region (and therefore the smaller size of Canadian lobster at
maturity) was part of Canada’s comparative advantage in lobster production (Lobster at
Paragraph 3.2.5 and Paragra 7.14.4): Canadian lobsters from this region attain sexual maturity,
and therefore reproductive capacity, before some of their American counterparts. The stated
rationale for US restrictions on minimum lobster size was to ensure that lobsters were not
captured before they reached reproductive capacity which would lead to a collapse of the lobster
stock. By setting a minimum size, however, the US government effectively eliminated the
comparative advantage of Canadian lobsters’earlier sexual maturity (due to Canada’s natural
endowment of warmer waters), without the US measures having any benefit for the conservation
of Canadian lobster stocks. (See Lobster at Paragraph 4.2.1.4.)
202. This case will be examined in some detail below.
203. George Graham, »US urged to tackle its structural flaws», Financial Times (London),
November 26,1991. Note that some countries may benefit from stringent environmental Controls.
Cleaner technologies may be cheaper and countries which have compelled their industries to
 79

develop environmental technology may have a lead over other countries which are slower to
establish environmental regulations.
204. The study, US-Mexico Trade: Some US Wood Furniture Firms Relocated from Los Angeles to
Mexico which was conducted by the US General Accounting Office, found that 70% of
manufacturers cited stringent air pollution emission control standards in California as a reason
for their move. This study was cited in Robyn Berry, «Dingell Presses Administration on New
Study Contradicting its NAFTA Arguments», Inside US Trade, May 10, 1991 at 16.
205. Article 1114(2) of the North American Free Trade Agreement, Text dated September 6.
206. See the response of LDCs to the activation of a working group on environment within GATT
in «Third World Cool to GATT Role in Environment», Third World Economics 1 — 15 March 1991
at 8.
207. The Eastern Tropical Pacific Ocean (or ETP) is defined as the area of the Pacific Ocean
bounded by 40 degrees north latitude, 40 degrees south latitude, 160 west longitude and the
coasts of North, Central, and South America.
208. Tuna/Dolphin at Paragraph 2.5.
209. Ibid, at Paragraph 2.9.
210. See Appendix for text of this Ad Note.
211. Ibid, at Paragraph 5.14
212. Ibid, at Paragraph 5.11.
213. Ibid, at Paragraph 5.12.
214. Id. at Paragraph 5.12
215. Id.
216. Ibid, at Paragraph 5.13
217. Ibid, at Paragraph 5.10
218. Ibid, at Paragraph 5.14
219. Ibid, at Paragraph 5.27
220. Ibid, at Paragraph 5.32
221. Ibid, at Paragraph 5.40
222. This problem will be addressed in Subsection C, below, on the legality of international
environmental agreements.
223. See Subsection D, below
224. Kirgis 1972 at 902.
225. For instance, differences in standards might not translate into differences in environmental
quality. See the section on Harmonization in Subsection D of this Part.
226. Oliver 1988 at 173, paragraph 8.13.
227. [1974] ECR 837 at 860.
228. Ibid, at 2149.
229. Sands 1991 at 698.
230. See Part VI for discussion of the concept of the common heritage of mankind.
231. Hardin 1968.
232. Ian Brownlie, ed., Basic Documents in International Law, 3rd edition, Oxford University Press,
1988 at 349. The Convention entered into force on 27 January 1980.
233. See Beacham 1992 at 668.
234. Article 30(4)(b) of the Vienna Convention.
235. McDorman 1992 at 484.
236. See McDorman 1990 for a discussion of the failure of the FTA Panel to consider international
fisheries law in FTA Salmon and Herring.
237. In Italy v. EEC Commission (Case 13/63), ECR 165, [1963] CMLR 289, the ECJ stated that the
principle of non-discrimination does not mean that treating non-comparable situations
differently constitutes discrimination. Discrimination in form may therefore correspond to the
 80

absence of discrimination in substance. Discrimination in substance could mean treating either

similar situations differently or different situations identically.
238. Lyster 1985 at 240.
239. Note that Mexico argued in the Tuna/Dolphin case that XX(b) referred only to the protection
of health of humans, animais or plants as a population and not as separate individuals. See
Paragraph 3.37.
240. Lyster 1985 at 256.
241. See McDorman 1992 at 485 where he argues that while technically GATT would prevail over
CITES as between two parties one of whom is not a party to CITES, CITES now exists as an
exception to GATT given subsequent treaties and State practices. He contends further that it is
the «will of States» regarding trade in endangered species that GATT obligations «must be
modified even for countries not a party to CITES». In support of this proposition, he makes the
following arguments: there is overwhelming international support for CITES (more States are
party to CITES than to GATT), CITES specifically concerns endangered species in contrast to the
generality of the GATT and only creates a narrow exception to the GATT, and CITES is a complete
regime and is obviously inconsistent with GATT. McDorman would generalize this argument to
the Basel Convention and the Montreal Protocol as well.
242. P.J.Kuyper, «International Legal Aspects of Economic Sanctions», in Sarcevic and van Houtte
1990 at 148-151. «[A]n economic sanction constitutes a reprisai: 1. If it infringes upon a rule of
economic treaty law, but constitutes a proportional response to an illegal wrong inflicted upon
the State imposing the economic sanction; 2. If it constitutes an economic intervention, i.e. the
economic measures taken aim to restrict a state’s freedom to choose and operate a favored socio-
economic and political System or to interfere with its policies in such a way that the measures
taken are disproportionate to policies which are legal and deserving of protection, but still
commensurate with the illegal wrong previously inflicted on the State imposing the sanctions.»
(Ibid, at 151.)
243. Tuna/Dolphin at Paragraph 6.3.
244. Id.
245. As noted above, this option was proposed by the Panel in the Tuna/Dolphin case at Paragraph
6.3 as a means for GATT to approve extraterritorial measures. In addition, there is a proposai by
OECD to waive GATT obligations for CITES, the Montreal Protocol, and the Basel Convention. See
Beacham 1992 at 680.
246. McDorman 1992 at 482.
247. Ibid, at 481.
248. «Sharing: A Survey of the Global Environment», The Economist, May 301992, at 15.
249. See Part VI for elaboration of the concept of the common heritage of mankind.
250. See William Stewart, «Canada’s Troubled Trees», Time Magazine, July 8, 1991 at 32.
251. Nicolaides 1987 at 156.
252. See comments by the World Bank’s chief economist cited in Michael Prowse, «Save Planet
Earth from Economiste», Financial Times (London), February 10, 1992. See also Jackson 1989 at
209.
253. In the Tuna/Dolphin case, the US argued that it should not be required to allow access to its
market to serve as an incentive to deplete the populations of species that are vital components of
the ecosystem. Underlying this argument is the notion that access to a country’s market is a
privilege which will not be granted indiscriminately. Not only is this a protectionist view but it
would also appear to violate the unconditionality inherent in the trade liberalization ethos.
254. Nicolaides 1987 at 156 citing Culbertson, The Folly of Free Trade, Harvard Business Review,
1986, 64(5) at 122-3.
 81

255. See article by Mandel 1989. In the Belgian Family Allowances case, the Contracting Parties
invalidated a Belgian surcharge on products purchased by public bodies from countries whose
System of family allowances did not meet specifie requirements.
256. In Belgian Family Allowances, a levy on imported products purchased by Belgian public
bodies for their own use was held to be inconsistent with Article I since exemptions from the levy
were not granted unconditionally to like products from all contracting parties, but only to some
contracting parties. See Paragraphe 3 and 8.
257. See Kenneth S. Komoroski 1988 at 189.
258. See article by Nancy Dunne, «Environment rules set stage for GATT conflicts», Financial
Times (London), December 5, 1991.
259. For a discussion of this case, see Tougas 1988-89.
260. Canada later renounced the imposition of this export tax and the US imposed a
countervailing duty.
261. Sorsa 1991 at 28.
262. Saunders, «The Legal Aspects of Trade and Sustainable Development» in Saunders 1990 at
376.
263. See GATT, Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the
General Agreement on Tariffs and Trade, BISD, 26th Supp. 56 (1978-79).
264. Komoroski 1989 at 192.
265. Ibid, at 203.
266. For a view supporting the existence of such an obligation, see Ibid, at 204 et.seq. Komoroski
argues that there are three possible bases for an affirmative duty of governments to take
environmental control measures over industry: 1.minimum international environmental
standards as found in broad policy statements such as Principle 21 of the Stockholm Conference
and the polluter pays principle; 2. arguments under US and GATT law that it is inconsistent with
commercial considerations that a government fails to regulate a polluter in disregard of
economic costs borne by citizens and governments alike; 3. moral and social considerations i.e.
that pcople die from deleterious environmental conditions. He concludes that a minimum
international obligation now exists. Once it is shown that a specific industry has benefited by
comparing it with others and showing that it would be required to expend substantial resources
to comply with minimum environmental standards, then a countervailing duty could be
imposed.
267. Rehbinder 1984 at 360.
268. OECD, Guiding Principles Concerning International Economic Aspects of Environmental
Policies, Recommendation of 26 May 1972C(72) 128, Annex, A(a)5, as cited in Saunders 1990 at
371. The financial burden which compliance with environmental regulation entails provides an
incentive for industry to reduce that pollution or find less polluting products or technologies.
See Alexander at 230, citing Council Recommendation (EEC) 75/436 (OJ L194 25.7.75 at 1).
269. The Rio Declaration at Principle 16 States: «National authorities should endeavour to
promote the internalization of environmental costs and the use of economic instruments, taking
into account the approach that the polluter should, in principle, bear the cost of pollution, with
due regard to the public interest and without distorting international trade and investment».
270. Alexender at 233.
271. Kramer 1991 at 3.
272. Ibid, at 9-10.
273. The instruments for approximation are the directive which establishes the resuit to be
achieved but leaves the form and method of implementation to the Member State and the
regulation which establishes directly applicable, specific instructions on how the objective is to
be accomplished.
274. Article 906, NAFTA.
 82

275. Ingo Walter, «International Economic Repercussions of Environmental Policy: An

Economist's Perspective» in Rubin and Graham 1980 at 31.As noted in the section on implicit
subsidies, the difficulty of establishing a common standard is also compounded by the different
assimilative capacities of different countries which may complicate the process of international
harmonization. If a standard is measured by, for example, ambient water quality, then a State
like the UK can rely on strong winds to disperse the pollution. There are two consequences: first,
the environmental protection may not be that effective since the pollution will cumulate in
another State or in the global commons; and second, there is no levelling of the competitive
advantage since Controls do not have to be as strong. Finally, as long as the GATT disallows
certain product and production related environmental measures, polluter States will have less
incentive to join harmonization efforts.
276. See arguments of Rehbinder and Stewart 1988 at 5.
277. Environmental standards which are higher than the harmonized levels are permitted,
although these too must meet certain conditions: they cannot be disguised restrictions on trade
or a means of arbitrary or unjustifiable discrimination.
278. See Jackson 1969 at 752.
279. This conclusion is suppported by Principle 12 of the Rio Declaration on Environment and
Development, and Chapter 2 of Agenda 21 of the 1992 UNCED, both of which call for the
avoidance of «unilateral actions to deal with environmental challenges outside the jurisdiction of
the importing country» (Section I. Social and Economic Dimensions, Chapter 2 of Agenda 21).
Agenda 21 (Chapter 2) and Principle 12 of the Rio Declaration also State that «environmental
measures addressing transborder or global environmental problems should, as far as possible, be
based on international consensus».
280. While trade instruments such as countervailing duties will likely reduce the pressure on
industries in jurisdictions with stringent environmental regulation, it is not at all certain that
they would lead to higher environmental protection in States with pollution-intensive
production. See Grimmett 1991 at 16. She argues that surcharges «may act as a disincentive to
countries to develop pollution Controls since products from such countries would be subject to
added internai manufacturing costs as well as to the surcharge».
 83

VI. Institutional perspective on the

environment within GATT

1 The above analysis of the treatment of environmental regulation by international trade

law regimes has focussed primarily on how trade liberalization and environmental
protection goals are balanced in the GATT (including the Canada-US Free Trade
Agreement panels’ interpretation thereof) and EC law. This Part addresses institutional
aspects of the GATT which fundamentally influence how environmental protection
objectives are treated, including the Panel process and the role for environmental
principles. (Reference is made to European Community and North American experience,
where relevant.) Such issues have gained a new prominence over the last few years in
international fora. For example, the UNCED’s Agenda 21 calls for governments to clarify
the role of GATT, inter alia, «in dealing with trade and environment-related issues,
including, where relevant, conciliation procedure and dispute settlement»281, and «to
identify and prevent actual or potential conflicts, particularly between environmental
and social/economic agreements or instruments, with a view to ensuring that such
agreements or instruments are consistent»282

A. GATT Panel Analysis — Nature of the Decision and Methodology

2 As the GATT jurisprudence indicates, the decisions taken by GATT panels in the area of
environmental regulation involve deciding whether a particular policy instrument is the
least trade restrictive. To assess alternative resolutions to an environmental or health
problem, GATT panels often refer to the evidence of scientists and other experts in
specialized fields. The panels’ concern is then to judge particular policy measures based
on these «scientific» findings. A number of potential problems arise with this type of
analysis and merit further examination.
3 First, it is open to question whether technical judgments should be relied upon so
strongly as the primary basis upon which assessments of public policy measures are
taken. The EC/US dispute over the EC ban on imports of hormone grown beef illustrates
the problem. In this case, according to the Codex Alimentarius (the international body
which examines food regulations), there was no scientific evidence indicating that
hormone-grown beef contained any identifiable differences from non-hormone growth
 84

beef and therefore did not raise any health concerns. Despite this, the EC determined to
ban such meat on the basis of public concern and opposition. This ban was not the subject
of a GATT Panel; however, given the emphasis on scientific evidence, it is questionable
whether a GATT Panel would have assessed such a ban favourably. Such analysis
implicitly rejects the legitimacy of formulating national environmental regulations on the
basis of many factors including science but not excluding other concerns such as moral
beliefs, and environmental preferences. While GATT panels should scrutinize such
preferences to a limited extent (for instance, the legitimacy of the claimed preferences),
they should exercise caution in overruling them.
4 One reason for being wary of assessing national rules on narrow, technical grounds is that
public policy decisions, and in particular decisions regarding environmental initiatives,
frequently involve scientific uncertainties. Witness developments in the scientific
evaluation of the extent of ozone depletion. While it was initially believed that there was
only a marginal depletion in the ozone layer over North America, NASA flights later
discovered that depletion could be much greater283. Where there is a risk of an
environmental danger, but not absolute certainty that it will materialize, there is a strong
argument that a decision to address this risk is a matter to be addressed by national
governments and should not be tampered with lightly284. At a domestic level, where there
is scientific uncertainty, politicians evaluate evidence, and make the value judgments and
choices regarding appropriate policies285. Since such decisions are inherently subjective,
it is likely that a GATT Panel may not concur with the national government. A forceful
argument can be made that the GATT should not, as a general rule, interfere in the
decision of a contracting party to eliminate the potential for environmental harm that
will not occur with absolute certainty. If a particular society values its environment to a
greater degree than other societies, it will take greater measures to avoid possible future
damage than a society that is less concerned about such matters. An environmental
measure which offers slightly more environmental protection but a proportionately
higher level of trade-restrictiveness may be chosen by such a society and should be
protected by the GATT (provided it does not result in extraterritorial regulation).
5 The panels’ use of cost/benefit analysis raises related concerns. As recognized by the
Panel in FTA Salmon and Herring, this type of analysis can lead to unreliable results. One of
the principal reasons is that, as the Panel recognized itself, «it is never easy to justify
imposing tangible burdens for the purpose of avoiding uncertain risks»286 Thus there may
be a bias in cost/benefit analysis in favour of placing too much weight on tangible short-
run costs of environmental measures rather than on uncertain benefits arising in the
long run. In addition, it is likely that environmental benefits which cannot be easily
quantified may be underestimated. In this particular case, the ruling by the Panel that the
trade restriction was not justified may have been correct. Nevertheless, the methodology
does not offer States much reassurance regarding the legality of national measures taken,
for example, to reduce global warming given the uncertainty over the extent of the risk
posed to humanity. This problem may be addressed by reference to the «precautionary
principle» (discussed below).
6 The concern that legitimate environmental measures may be undermined by a bias in
favour of primarily «scientific» rationales is exacerbated because the burden of proof is
on the challenged State to justify an environmental measure on one of the public policy
grounds of Article XX. The reasons for this onus likely include: 1) that the country has
access to more information about the environmental problem since it had to analyze the
 85

problem before formulating its policy response; and 2) that the prohibition on trade
restrictions must not be treated lightly. These reasons cannot be ignored. Nevertheless,
where there exists potential scientific uncertainty regarding an environmental threat or
an intense and legitimate preference by a country to avoid an environmental risk, a
lessening of the burden of proof or its reversal may be appropriate. The significance of
this shift is that in cases where doubt existed about the applicability of Article XX
exceptions, the environmental measure would be found legal.

B. The GATT Panel as an Environmental Tribunal

7 The above-noted weaknesses in GATT panel analysis may exacerbate the potential
institutional bias against environmental measures stemming in part from the
composition of GATT panels – usually trade policy experts whose concerns are naturally
skewed towards ensuring trade liberalization and who generally do not have any
expertise in environmental matters. According to one commentator on the Tuna/Dolphin
case, the three panellists had no expertise in environmental matters287. Given the large
degree of discretion which panels have in determining the legality of a measure, concerns
about the personnel of these tribunals are reinforced. To address this issue, it is
recommended that for environmental cases, some environmental representation should
be included. In the recently negotiated NAFTA, for example, panels of trade officials may
be chosen from a roster of people with expertise in «law, international trade, other matters
covered by this agreement», which presumably would permit an environmental expert to be
chosen, although it would not require such a choice288.
8 The transparency of the GATT panel process must also be reassessed when evaluating
how GATT panels should treat environmental regulation. While countries are permitted
to intervene in GATT panels, environmental interests such as non-governmental
organizations and think-tanks are not as a matter of right. For example, non-
governmental organizations were not permitted to present evidence before the Tuna/
Dolphin panel. Some organizations may be involved to the extent that the Panel requires
expert evidence. For example, in the Thai Cigarettes case, submissions by the World Health
Organization were relied upon. Nevertheless, without a right for members of the public to
intervene, the GATT may receive one-sided views on certain environmental issues. For
example, in the realm of food regulations, Codex Alimentarius is frequently cited as the
main source of acceptable scientific evidence. However, one commentator has noted that
the US Environmental Protection Agency estimates that 16% of pesticide tolerance
standards set by Codex are weaker than current US standards289. If such standards are the
basis for a GATT decision on the necessity of certain national measures to meet
environmental or health goals, more stringent national regulations could be struck down.
Clearly, GATT reform efforts should include a recognition that a diversity of viewpoints
must be adequately represented.
9 A related transparency issue is the availability of information used in the panel process.
In the Tuna/Dolphin case, none of the information the Panel used was made publicly
available.290 The effect of this closed decision-making is to foment distrust and suspicion
among the environmental community towards GATT panels291. Yet increasing the
openness of the process by allowing public input and by making information public would
serve more than a public relations function. Since decisions would be subject to greater
scrutiny, it is likely that better environmental decisions would be made.292
 86

C. Role for Environmental Principles

10 The above review of EC and GATT jurisprudence raises a number of questions regarding
the current capacity of the GATT to respond in an even-handed manner to the issue of the
legality of environmental protection measures. This problem will be magnified with the
proliferation of environmental regulations in the developed world and the consequent,
increasing likelihood that environmental regulations will be challenged by States with
less stringent environmental regulation. Critical to the ability of the European
Community to develop interpretations of Article 30, Article 36, and the related
jurisprudence on «mandatory requirements» which indicate a responsiveness to the
demands of environmental protection is the fact that such jurisprudence grows out of a
Treaty which places priority on both environmental protection and free movement of
goods, and which has had to define the interrelationships of these objectives as well as
their interrelationships with other policies such as competition and subsidy through the
development of a large body of case law of the European Court of Justice. The European
Court’s innovative use of environmental principles to gauge the legality of a trade-
restrictive environmental policy is illustrated by the recent Walloon Waste case. As noted
above, the Court in that case invoked the environmental principle that environmental
damage should be rectified at source in assessing whether the challenged measure was
discriminatory.
11 In contrast, the GATT’s goal has been mono-dimensional, defined by a rather narrow
emphasis on trade liberalization. Given the current recognition of the linkages between
environmental protection and trade liberalization, this focus seems outdated. One
example is the failure of GATT Panels to consider principles well-established in
international environmental law. It will be recalled that, in the GATT Salmon and Herring
case, the Panel excluded all reference to international fisheries law293. Such a
consideration might have to led to an evaluation of how to integrate another
international legal regime into the GATT. Instead, the Panel avoided such consideration.
The result of such a decision is that a country which is signatory to international fisheries
conventions and to the GATT may find the environmental benefits of the former nullified
by the latter. Without recognizing the linkages between environment and trade more
explicitly and in greater detail as the GATT is attempting to do in other areas such as
trade-related investment measures (TRIMs) and trade-related intellectual property issues
(TRIPs), it will be impossible for GATT to address this relationship with sufficient vision.
While it is difficult to establish detailed criteria to determine the legality of
environmental measures with trade effects, the recognition by the GATT of the validity of
certain principles from environmental law and policy might help to ensure that the
trade/environment linkage is adequately addressed.
12 While it is not within the purview of this paper to analyze these principles in depth, the
following section offers a brief examination of some environmental principles which
might be incorporated into the GATT assessment of environmental measures, thus
helping to ensure that environmental policy is not subverted by a monodimensional trade
analysis.
 87

1. A Revised Institutional Goal for GATT

13 A fundamental redirection of the GATT may be necessary to ensure that high enough
priority is accorded to environmental protection. Otherwise, trade liberalization
concerns may continue to receive greater weight than legitimate environmental
protection objectives. A major advance in the GATT’s capacity to reconcile the apparently
antithetical goals of liberalized trade and environmental protection would be the
inclusion of environmental protection policy as a fundamental value modifying the
current goal of trade liberalization. In effect, this would mean fitting the concept of
«sustainable development» to the trade context. «Sustainable development» has been
defined as «development that meets the needs of the present without compromising the
ability of future generations to meet their own needs»294 Its vagueness notwithstanding,
the concept is significant because it emphasizes the necessity of integrating
environmental considerations into economic decision-making295 Incorporating the
principle that environmental protection should be taken into account in the application
of the GATT’s provisions would not undermine the basic purpose of GATT which is
ultimately to increase the material well-being of its signatories. The preamble to the
GATT recognizes the following objectives of the GATT signatories: «raising standards of
living, ensuring full employment and a large and steadily growing volume of real income
and effective demand, developing the full use of the resources of the world and
expanding the production and exchange of goods». The integration of environmental
protection as an important consideration would merely add a new focus to this objective
by not only stressing the necessity of sustaining this well-being into the future but also
emphasizing a quality of life concern. The importance of integrating environmental
protection values into economic policy has received widespread support. Article 130R of
the Treaty of Rome requires that environmental considerations be a part of all of the
Community’s policies and adds a further qualitative dimension to the EC’s goals. The
recently negotiated North American Free Trade Agreement provides a precedent by
explicitly identifying sustainable development and environmental protection as
fundamental objectives in the preamble, which, although not directly enforceable, guides
the interpretation of that agreement.
14 The implication of expressly recognizing environmental protection concerns in the GATT
is that the GATT would then be forced to reform its thinking and its institutions. In
practical terms, adding an environmental gloss to GATT’s institutional goal (of trade
liberalization) would mean a heightened awareness of environmental concerns and the
consideration of those concerns by panels. It could also lead to the establishment of an
institutional strength in environmental issues, including for example, a roster of
environmental experts to serve on panels on environmental issues or the empowerment
of a trade/environment issues committee to review in advance the legality of innovative
national and international trade-affecting environmental measures. As well, as noted
above, the full consideration of environmental issues might require that
environmentalist interests be allowed to intervene in panel hearings on environmental
issues or in the general review of environmental regulations proposed above. On a more
general level, an environmental reorientation or «greening» of the GATT could mean that
institutional links would be established between international environmental
organizations such as United Nations Environment Programme and the GATT, a
recommendation supported by Agenda 21 which calls for governments to encourage
 88

GATT to promote a dialogue between trade, development and environment communities

296. Facilitating communication between these communities would create the possibility

of a mutually beneficial relationship between them. Trade and environmental goals could
thereby be more effectively reconciled. This would not mean that there would be an
overlap of functions between these institutions. GATT would continue to address trade
questions but would merely become more open to concepts from international
environmental law.

2. Common Heritage of Mankind

15 A second environmental principle that could be imported into the international trade law
regime is the concept of the «common heritage of mankind». This concept aims to
safeguard the earth’s environment for the benef it of present and future generations
through careful international planning and management297. The concept has led to the
creation of, and has defined, international obligations both with respect to the
environment outside the territorial jurisdiction of any state298 — the global commons —
and more recently, the environment inside states’ territorial jurisdiction299. These latter
treaties oblige signatories to ensure the protection of certain defined elements of the
environment within their own jurisdictions that are deemed «essential not only for
themselves, but also for the rest of the world»300. A common characteristic of both types
of treaty enshrining this concept is that, in view of their long run aim to protect the
biosphere against deterioration in the present and the future through international
cooperation, signatories accept limitations on their sovereignty with no immediate
advantage as in traditional treaties301. According to Kiss, the common heritage of
mankind «means that the States suspend or do not assert rights or claims to territorial
jurisdiction, or in some cases exercise such jurisdiction only within set limits, for the
benefit of the whole human community, without any direct or immediate advantage, and
conserve and if necessary manage areas in conformity with the common interest for the
benefit of all mankind302.
16 The implication of this concept for trade law is that it offers one means of avoiding the
problem of extraterritoriality as evidenced in the Tuna/Dolphin case. Within the concept
of the common heritage of mankind is the notion of a trust; trustees may include
international bodies, groups of States or individual States under some supervision by the
international community303. Thus if the notion of the common heritage of mankind were
accepted within the GATT, individual States could legally impose trade-affecting
environmental regulations on foreign production processes provided there was
international community consensus that a trust relationship existed, that is, that the
object of the trust was a resource defined as the «common heritage of mankind» and that
the individual State was acting as a trustee. A committee of environmental experts within
the GATT could make determinations of the status of the environmental resource in
question. A qualification to the use of this concept is that it could only be applied to
signatories of international agreements on the common heritage status of a certain
resource, unless such treaties were accepted widely enough to become part of customary
international law304.
 89

3. The Precautionary Principle

17 The precautionary principle attempts to enshrine a bias in decision-making in favour of

the environment instead of against it, where there is an unknown risk of serious injury305.
Essentially, this principle States that substances or activities should be regulated even in
the absence of conclusive scientific evidence of harmfulness306, but where there is
sufficient evidence that an activity is harmful to the environment. In addition, it may
shift the burden of proof from those seeking to protect the environment to those whose
actions may place the environment at risk307, For instance, proof that no harm above a
certain maximum threshold will be caused may be required by this principle before an
activity can be undertaken. The problem with the precautionary principle is that it is still
unclear how exactly it would operate in practice. For example, what level of unproved
harm is unacceptable?308 Despite the ambiguity of this principle, a strong argument can
be made that given the potential costs to the environment of inaction on the part of
governments, GATT panels should be considerate of the precautionary approach.

4. Polluter Pays Principle

18 As noted above, in the Superfund case, the GATT Panel refused to take into account the
polluter-pays principle, a principle of environmental policy widely accepted among the
OECD countries309 and within the European Community310, in its ruling on the validity of a
tax on certain Chemicals. The EC claimed that the tax was an unfair burden on European
importers into the US since the tax was to cover pollution created by domestic
production, and not by foreign production, and that therefore it violated the national
treatment principle in Article III would have been bolstered. The acceptance of this
principle by the GATT Panel would have meant that US producers of these Chemicals
would have borne a higher proportion of the costs to clean up the hazardous waste
created by the use of these Chemicals in process of production in the U.S.
19 The acceptance of the polluter pays principle in GATT jurisprudence as a criterion for
judging the legality of environmental regulations would mean that producers of
environmental harm would have an economic disincentive to pollute or use resources in
an unsustainable manner. However, there are limitations on the utility of this principle
for international trade/environment law. First, while the European Community has
enshrined the polluter pays principle in Article 130R, Paragraph 2 as a result of the Single
European Act, the principle is only recommendatory in many international fora and is
subject to exceptions and national variations311. For example, the 1974 OECD
recommendation recognizes the legitimate possibility of government assistance for
easing the transition to more stringent pollution control312. On the other hand, there is
evidence of increasing support for this principle. Agenda 21 includes as a fundamental
objective that countries «incorporate environmental costs in the decisions of producers
and consumers, to reverse the tendency to treat the environment as a “free good” and to
pass these costs on to other parts of society, other countries, or to future generations»313.
A second limitation of the polluter pays principle is that it has the same difficult
ambiguity as the notion of «implicit subsidy» or «eco-dumping» or «level playing field».
The question of «pollution» only arises legally where the legislator has established
emission limits314; as we have seen, «environmental legislation» is not easily achieved at
the international level. Nevertheless, where there is a failure to provide environmental
 90

clean-up, the GATT should be amenable to considering the polluter pays principle, for
example, as a basis for a countervailing duty.

NOTES
281. Agenda 21, Chapter 2 at 9.
282. Ibid., Chapter 39 at 4.
283. Michael Lemonick, «The Ozone Vanishes», Time Magazine, February 17, 1992, No. 7 at 28.
284. The role of science in policy formulation is merely advisory, according to Ritchie 1990a at
10. An environmental regulation may begin with a scientific fact but it will be subject to review
and modification by those who are affected including those who are democratically accountable.
285. Rowlands 1991 at 112.
286. FTA Salmon and Herring at Paragraph 7.37
287. Beacham 1992 at 681.
288. Article 2009(2).
289. Ritchie 1990 at 3.
290. Beacham 1992 at 681.
291. Id.
292. The goal of increasing transparency in government decision-making which affects the
environment received support from national governments at the UNCED. See Agenda 21, Chapter
2 at 11.
293. Paragraph 5.3 of GATT Salmon and Herring. The FTA Salmon and Herring decision did, however,
concede that such factors could be included.
294. World Commission on Environment and Development 1987 at 43.
295. As well, it stresses full participation in the decision making process to ensure that
development decisions with environmental implications will be more compatible with
sustainable development. Gibbons, Muldoon, and Valiante, «Sustainable Development and
Energy» in Saunders 1990 at 201.
296. Agenda 21, Chapter 2 at 10.
297. See the 1972 Stockholm Declaration on Human Environment, June 16, 1972, in Edmund Jan
Osmanczyk, Encyclopedia of the United Nations and International Agreements, second edition,
Taylor and Francis, London 1990. Principle 2 States that «The national resources of the earth,
including the air, water, land, flora and fauna and, especially, representative samples of natural
ecosystems, were to be safeguarded for the benefit of present and future generations through
careful planning or management, as appropriate.» For other commentary on the common
héritage of mankind, see Fleischer, «The International Concern for the Environment: The
Concept of Common Heritage», in Bothe (ed.), Trends in Environmental Policy and Law (1980),
Larschau and Brennan, «The Common Heritage Principle», 21 Columbia J. Transnat’l L. 305
(1983), Gorove, «The Concept of the Common Heritage of Mankind», (1971) 9 San Diego L.R. 390.
298. Two international treaties specifically refer to the common heritage of mankind: Agreement
Governing the Activities of States on the Moon and Other Celestial Bodies, UNGA Official Records,
34th session, supplement 20; Convention on the Law of the Sea, Article 136, for the seabed
beyond limits of national jurisdiction.
 91

299. Kiss (1985b) at 1084. See the UNESCO Convention for the Protection of the World Cultural
and Natural Heritage. November 16, 1972, UN Yearbook, 1972 Yearbook of International
Organizations.
300. Kiss 1985b at 1084.
301. Kiss 1985b at 1085. See also Kiss 1985a at 427.
302. Kiss 1985a at 428.
303. Ibid, at 439.
304. The Law of the Sea Convention has not been accepted by many States including some of the
major powers such as the US. As well, the Moon Treaty lacks support from participants in major
space activities. See Kiss 1985a at 436. The concept of the common heritage of mankind is also
analagous to the notion of establishing one indivisible environment without political divisions.
The concept is already used within the EC (see above); however, the notion of one global
environment at the international level will likely take considerable time and effort to be
established.
305. The status of this principle in international law is debated. It seems clear that it does not
have the status of «hard» international law. The «precautionary approach» is promoted in
Principle 15 of the Rio Declaration.
306. See generally Cameron and Werksman 1991.
307. Ibid, at 1.
308. Ibid, at 25.
309. OECD, Guiding Principles Concerning International Economic Aspects of Environmental
Policies, Recommendation of 26 May 1972, C(72)128, Annex A (a)k(4), reproduced in Organisation
for Economie Cooperation and Development, OECD and the Environment (Paris: OECD, 1986) 23 at
24.
310. See Article 130R, paragraph 2.
311. Saunders, «Legal Aspects of Trade and Sustainable Development», in Saunders 1990 at 378.
312. Saunders, «Trade and Sustainable Development», in Saunders 1990 at 378.
313. Agenda 21, Chapter 8 at 12. The principle that «national authorities should endeavour to
promote the internalization of environmental costs and the use of economic instruments» is also
found in Principle 16 of the 1992 Rio Declaration.
314. See Kramer 1991.
 92

VII. Conclusion

1 This study began by noting the competing characterizations of environmental regulations

– environmental protection measures or disguised restrictions on trade. As the above
discussion has evidenced, national and international environmental rules may restrict
international trade even though that may not be their objective. The result is that
international trade law may cast its net too broadly, capturing not only protectionist
measures in «green» guise but also bona fide environmental regulations.
2 As this review of the GATT provisions and the related jurisprudence has shown, a GATT
panel could readily find some environmental measures in contravention of GATT
provisions. National rules which regulate the environmental consequences of product use
and disposal are vulnerable because it is likely that they will impose a heavier adjustment
burden on foreign products in view of the probability that consultations have occurred
between government and the local industry, and that the legislating country is less likely
as important a market for foreign producers. As a consequence, such regulations may be
held discriminatory in violation of the national treatment principle. In view of this
possibility, GATT panels should exercise caution in finding environmental measures with
minor discriminatory impacts illegal under Article III. Furthermore, the GATT should
emulate the recent jurisprudence of the European Community which evidences a new
willingness to import well-recognized environmental principles into a determination of
whether a trade-restrictive measure is discriminatory.
3 Where a GATT panel has determined that a product-related environmental regulation has
more than a de minimus discriminatory impact on foreign producers, such measures
should be scrutinized to evaluate whether they are more trade-restrictive than necessary
to achieve their objective. In so doing, however, the GATT panel should not dictate the
necessary level of environmental protection to be sought and should not exclude from
coverage those measures which do not easily fit into either of the two principal Article
XX exceptions relating to the environment. Indeed, the Article XX list should be amended
to include environmental protection specifically.
4 Attempts by countries to regulate the environmental impact of foreign production
processes raise equally intractable issues for the GATT. Protecting the environment,
whether it be the global commons or resources within another country’s jurisdiction,
without unduly restricting trade or interfering with the sovereign «right» of other
 93

countries to define their own environmental policies is an onerous balancing act. As the
recent Tuna/Dolphin ruling indicates, the GATT will not tolerate trade embargoes imposed
to discipline foreign countries’ use of global resources. Regulations which seek to do so do
not comply with the GATT because they do not regulate «products» and their object is not
to protect the legislating country’s environment, but the extra-territorial one. The GATT
Panel’s opinion is compelling in that unilateral extra-territorial regulation flies in the
face of the existence of any international trade law regime. At the same time, prohibiting
trade remedies for environmental objectives deprives countries of an effective means of
combatting environmental degradation beyond their own borders. It is also at odds with a
number of significant international environmental agreements.
5 While there do not appear to be any easy solutions, a strong argument can be made that
where there is international consensus that action to protect the environment should be
taken, trade restrictive measures should be permitted under the GATT. Such
international consensus could take several forms. First, where there was agreement on
minimum standards for environmental protection, responding to violations of these
standards through, for example, trade sanctions or eco-dumping and countervailing
duties should be permitted by the GATT. The weakness with this solution is that it may be
difficult to achieve a high standard for environmental protection at the international
level. Nonetheless, it is foreseeable that international agreed minimum standards of
environmental protection will rise over time. Second, in contrast to the standards
approach, an international decision that a particular resource is to treated as part of the
common heritage of mankind would permit individual countries or the international
community acting together to take action against a polluting or mismanaging State.
Third, the Contracting Parties could follow the example of the North American Free Trade
Agreement and exempt specific international environmental agreements which have
achieved a high degree of international acceptance from the prohibitions on trade
restrictions.
6 The environmental reform of the GATT would be incomplete without a review and
overhaul of fundamental aspects of the institution. The Contracting Parties need to
examine how to reconcile the primary objective of the GATT — trade liberalization —
with environmental protection. In part, this reconciliation can be achieved through the
importation of a concept such as «sustainable development» as a guiding principle for the
GATT. As well, the GATT dispute settlement process should be reviewed to ensure that
environmental measures are accorded a fair hearing. In addition to including
environmental representation on panels and making the panel process more transparent,
panel decisions could be made more environmentally effective if selected and widely
shared environmental principles were incorporated. International trade law should not
be exempt from the growing international recognition that environmental considerations
must be infused into economic policy decisions. In the long run, the GATT Contracting
Parties will have little choice but to accept this conclusion. After all, the sustainability of
expanding international trade requires the Sound management of the earth’s resources.
 94

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 95

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International agreements and declarations

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 98

Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General
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Agreement on Technical Barriers to Trade («Standards Code»), 26th Supp. BISD 8 (1980).
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GATT panel decisions

Belgian Family Allowances, Report of the Panel, 1st Supp. BISD 59 (1953).
United States — Prohibition of Imports of Tuna and Tuna Products from Canada («Canadian Tuna»),
Report of the Panel, adopted February 22, 1982, BISD 29S/91.
Canada-Administration of the Foreign Investment Review Act («FIRA»), Report of the Panel, February 7,
1984, BISD 30S/140.
Japan - Customs Duties, Taxes and Labelling Practices on Imported Wines and Alcoholic
Beverages («Japanese Alcoholic Beverages»), Report of Panel, adopted on November 10, 1987
(L/6216), 34th Supp. BISD 83 (1987).
United States-Taxes on Petroleum and Certain Imported Substances («Superfund»), Report of the Panel,
adopted on 17 June 1987 (L/6175),» GATT, 34th Supp. BISD 137 (1988).
Canada-Measures Affecting Exports of Unprocessed Herring and Salmon(«GATT Salmon and Herring»),
Report of the Panel adopted on 22 March 1988 (L/6268), GATT, 35th Supp. BISD 98 (1989).
In Re Canada’s Landing Requirements for Salmon and Herring («FTA Salmon and Herring»), US-Canada
Binational Panel Final Report, October 16, 1989, 12 ITRD 1027.
United States — Section 337 of the Tariff Act of 1930 («Section 337»), Report of the Panel, January 161989
(L/6439), BISD/35S/345.
Lobster from Canada («Lobster»), US-Canada Binational Panel Final Report, May 25, 1990.
Thailand—Restrictions on Importation of and Internal Taxes on Cigarettes («Thai Cigarettes»), Report of
the Panel, adopted November 71990, BISD 37S/200, DS10/R.
United States—Restrictions on Imports of Tuna («Tuna/Dolphin»), Report of the Panel (unpublished),
August 16, 1991.
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European court of justice decisions

Procureur du Roi v. Dassonville («Dassonville»), [1974] E.C.R. 837, [1974] 2C.M.L.R. 436.
W.J.G. Bauhuis v. The Netherlands State («Bauhuis»), Case 46/76 [1977] ECR 5.
Re Inspection Fees on Exported Plants: Commission of the European Communities v. The Netherlands,
[1978] 3C.M.L.R. 630.
Rewe-Zentral AG v. Bundesmonopolverwaltung fur Branntwein («Cassis de Dijon»), Case 120/78, [1979]
E.C.R. 649, [1979] 3C.M.L.R. 494.
Procureur du Roi v. Marc Debauve («Debauve»), Case 52/79, [1980] ECR 881, [1981] 2C.M.L.R. 362.
Criminal Proceedings against Frans-Nederlandse Maatschappij voor Biologische Producten BV («Biologische
Producten»), Case 272/80, [1981] ECR 3277.
Officer van Justitie v. Koninklijke Kaasfabriek Eyssen («Nisin»), Case 53/80, [1981] ECR 409, [1982] 2
CMLR 20.
Oosthoek’s Uitgeversmaatschappij («Oosthoek»), Case 286/81, 1982 ECR 4575.
Criminal Proceedings against Sandoz B.V. («Sandoz»), Case 174/82, [1983] 3 ECR 2445.
Commission of the European Communities v. Ireland («Irish Poultry»), Case 74/82, [1984] ECR 317.
Campus Oil Limited and Others v. Minister for Industry and Energy and Others («Campus Oil»), Case
72/83, [1984] E.C.R. 2727, [1984] 3C.M.L.R. 544.
Criminal Proceedings against CMC Melkunie BV («Melkunie»), Case 97/83, [1984] ECR 2367, [1986] 2
CMLR 318.
Procureur de la République v. Association de défense des brûleurs d’huiles usagées («Brûleurs d’huiles
usagées»), Case 240/83, [1985] ECR 531.
Cinétheque SA and Others v. Fédération nationale des cinémas français («Cinétheque»), Joined Cases 60
and 61/84, [1985] 3 ECR 2605.
Criminal Proceedings against Leon Motte («Motte»), Case 247/84, [1985] ECR 3887.
Ministère Public v. Claude Muller and Others («Muller»), [1987] 2 CMLR 484, [1986] ECR 1511.
E.C. Commission v. France («Woodworking Machines»), Case 188/84, [1986] ECR 419.
E.C. Commission v. Germany («German Beer Purity»), Case 178/84, [1988] 1C.M.L.R. 780, [1987] 3 ECR
1227.
Commission of the European Communities v. French Republic («Milk Substitutes»), Case 216/84, [1988] 2
CMR at 793.
Re Disposable Beer Cans: E. C. Commission v. Denmark («Danish Boules»), Case 302/86, [1988] 8 ECR 406,
[1989] 1C.M.L.R. 619.
Buet v. Ministère Public («Buet»), Case 382/87, 1989 ECR 1235.
Criminal Proceedings against Gourmetterie Van den Burg («Gourmetterie»), Case C-169/89, [1990] 5 ECR
I—2143.
Commission c. le Royaume de Belgique («Walloon Waste»), July 1992 judgment of the European Court of
Justice, Recueil, 1992, 4431.

European commission
Commission Directive of 22 December 1969 (70/50/EEC) [1970] O.J. L13/29.
Communcation from the Commission concerning the consequences of the judgment given by the
Court of Justice on 20 February 1979 in Case 120/78, [1980] O.J. C-256/2.
 100

Appendix

GATT- Selection’s Provisions*

PART I
Article I. General Most-Favoured-Nation Treatment

1 1. With respect to customs duties and charges of any kind imposed on or in connection
with importation or exportation or imposed on the international transfer of payments for
imports or exports, and with respect to the method of levying such duties and charges,
and with respect to all rules and formalities in connection with importation and
exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article
III, any advantage, favour, privilege or immunity granted by any contracting party to any
product originating in or destined for any other country shall be accorded immediately
and unconditionally to the like product originating in or destined for the territories of all
other contracting parties.

Article II. Schedules of Concessions

2 1. (a) Each contracting party shall accord to the commerce of the other contracting
parties treatment no less favourable than that provided for in the appropriate Part of the
appropriate Schedule annexed to this Agreement.
3 1. (b) The products described in Part I of the Schedule relating to any contracting party,
which are the products of territories of other contracting parties, shall, on their
importation into the territory to which the Schedule relates, and subject to the terms,
conditions or qualifications set forth in that Schedule, be exempt from ordinary customs
duties in excess of those set forth and provided for therein. Such products shall also be
exempt from all other duties or charges of any kind imposed on or in connection with
importation in excess of those imposed on the date of this Agreement or those directly
and mandatorily required to be imposed thereafter by legislation in force in the
importing territory on that date.
 101

4 2. Nothing in this Article shall prevent any contracting party from imposing at any time
on the importation of any product :
5 (a) a charge equivalent to an internal tax imposed consistently with the provisions of
paragraph 2 of Article III in respect of the like domestic product or in respect of an article
from which the imported product has been manufactured or produced in whole or in
part ;...

PART II
Article III. National Treatment on Internal Taxation and Regulation

6 1. The contracting parties recognize that internal taxes and other internal charges, and
laws, regulations and requirements affecting the internal sale, offering for sale, purchase,
transportation, distribution or use of products, and internal quantitative regulations
requiring the mixture, processing or use of products in specified amounts or proportions,
should not be applied to imported or domestic products so as to afford protection to
domestic production.
7 2. The products of the territory of any contracting party imported into the territory of
any other contracting party shall not be subject, directly or indirectly, to internal taxes or
other internal charges of any kind in excess of those applied, directly or indirectly, to like
domestic products. Moreover, no contracting party shall otherwise apply internal taxes
or other internal charges to imported or domestic products in a manner contrary to the
principles set forth in paragraph 1. ...
8 4. The products of the territory of any contracting party imported into the territory of
any other contracting party shall be accorded treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application of
differential internal transportation charges which are based exclusively on the economic
operation of the means of transport and not on the nationality of the product.

Article VI. Anti-dumping and Countervailing Duties

9 1. The contracting parties recognize that dumping, by which products of one country are
introduced into the commerce of another country at less than the normal value of the
products, is to be condemned if it causes or threatens material injury to an established
industry in the territory of a contracting party or materially retards the establishment of
a domestic industry. For the purposes of this Article, a product is to be considered as
being introduced into the commerce of an importing country at less than its normal
value, if the price of the product exported from one country to another.
a. is less than the comparable price, in the ordinary course of trade, for the like product when
destined for consumption in the exporting country, or,
b. in the absence of such domestic price, is less than either
I. the highest comparable price for the like product for export to any third country in the
ordinary course of trade, or
II. the cost of production of the product in the country of origin plus a reasonable addition
for selling cost and profit.
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10 Due allowance shall be made in each case for differences in conditions and terms of sale,
for differences in taxation, and for other differences affecting price comparability.
11 2. In order to offset or prevent dumping, a contracting party may levy on any dumped
product an anti-dumping duty not greater in amount than the margin of dumping in
respect of such product. For the purposes of this Article, the margin of dumping is the
price difference determined in accordance with the provisions of paragraph 1.
12 3. No countervailing duty shall be levied on any product of the territory of any
contracting party imported into the territory of another contracting party in excess of an
amount equal to the estimated bounty or subsidy determined to have been granted,
directly or indirectly, on the manufacture, production or export of such product in the
country of origin or exportation, including any special subsidy to the transportation of a
particular product. The term « countervailing duty » shall be understood to mean a
special duty levied for the purpose of offsetting any bounty or subsidy bestowed, directly
or indirectly, upon the manufacture, production or export of any merchandise....
13 6. (a) No contracting party shall levy any anti-dumping or countervailing duty on the
importation of any product of the territory of another contracting party unless it
determines that the effect of the dumping or subsidization, as the case may be, is such as
to cause or threaten material injury to an established domestic industry, or is such as to
retard materially the establishment of a domestic industry.

Article VIII. Fees and Formalities connected with Importation and Exportation

14 1. (c) The contracting parties also recognize the need for minimizing the incidence and
complexity of import and export formalities and for decreasing and simplifying import
and export documentation requirements...
15 4. The provisions of this Article shall extend to fees, charges, formalities and
requirements imposed by governmental authorities in connection with importation and
exportation, including those relating to :
a. consular transactions, such as consular invoices and certificates ;
b. quantitative restrictions ;.
c. licensing ;
d. exchange control ;
e. statistical services ;
f. documents, documentation and certification ;
g. analysis and inspection ; and
h. quarantine, sanitation and fumigation.

Article X. Publication and Administration of Trade Regulations

16 1. Laws, regulations, judicial decisions and administrative rulings of general application,

made effective by any contracting party, pertaining to the classification or the valuation
of products for customs purposes, or to rates of duty, taxes or other charges, or to
requirements, restrictions or prohibitions on imports or exports or on the transfer of
payments therefor, or affecting their sale, distribution, transportation, Insurance,
warehousing, inspection, exhibition, processing, mixing or other use, shall be published
promptly in such a manner as to enable governments and traders to become acquainted
 103

with them. Agreements affecting international trade policy which are in force between
the government or a governmental agency of any contracting party and the government
or governmental agency of any other contracting party shall also be published. The
provisions of this paragraph shall not require any contracting party to disclose
confidential information which would impede law enforcement or otherwise be contrary
to the public interest or would prejudice the legitimate commercial interests of particular
enterprises, public or private...
17 3 (a) Each contracting party shall administer in a uniform, impartial and reasonable
manner all its laws, regulations, decisions and rulings of the kind described in paragraph
1 of this Article.
18 (b) Each contracting party shall maintain, or institute as soon as practicable, judicial,
arbitral or administrative tribunals or procedures for the purpose, inter alia, of the
prompt review and correction of administrative action relating to customs matters. Such
tribunals or procedures shall be independent of the agencies entrusted with
administrative enforcement and their decisions shall be implemented by, and shall
govern the practice of, such agencies unless an appeal is lodged with a court or tribunal
of superior jurisdiction within the time prescribed for appeals to be lodged by importers ;
Provided that the central administration of such agency may take steps to obtain a review
of the matter in another proceeding if there is good cause to believe that the decision is
inconsistent with established principles of law or the actual facts.

Article XI. General Elimination of Quantitative Restrictions

1. No prohibitions or restrictions other than duties, taxes or other charges, whether made
effective through quotas, import or export licences or other measures, shall be instituted or
maintained by any contracting party on the importation of any product of the territory of
any other contracting party or on the exportation or sale for export of any product destined
for the territory of any other contracting party.
2. The provisions of paragraph 1 of this Article shall not extend to the following :
a. Export prohibitions or restrictions temporarily applied to prevent or relieve critical
shortages of foodstuffs or other products essential to the exporting contracting party ;
b. Import and export prohibitions or restrictions necessary to the application of standards
or regulations for the classification, grading or marketing of commodities in international
trade ;
c. Import restrictions on any agricultural or fisheries product, imported in any form,
necessary to the enforcement of governmental measures which operate :
a. to restrict the quantities of the like domestic product permitted to be marketed or
produced, or, if there is no substantial domestic production of the like product, of a
domestic product for which the imported product can be directly substituted ; or
b. to remove a temporary surplus of the like domestic product, or, if there is no
substantial domestic production of the like product, of a domestic product for which
the imported product can be directly substituted, by making the surplus available to
certain groups of domestic consumers free of charge or at prices below the current
market level ; or
c. to restrict the quantities permitted to be produced of any animal product the
production of which is directly dependent, wholly or mainly, on the imported
commodity, if the domestic production of that commodity is relatively negligible.
 104

19 Any contracting party applying restrictions on the importation of any product pursuant
to sub-paragraph (c) of this paragraph shall give public notice of the total quantity or
value of the product permitted to be imported during a specified future period and of any
change in such quantity or value. Moreover, any restrictions applied under (i) above shall
not be such as will reduce the total of imports relative to the total of domestic
production, as compared with the proportion which might reasonably be expected to rule
between the two in the absence of restrictions. In determining this proportion, the
contracting party shall pay due regard to the proportion prevailing during a previous
representative period and to any special factors which may have affected or may be
affecting the trade in the product concerned.

Article XX. General Exceptions

20 Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where
the same conditions prevail, or a disguised restriction on international trade, nothing in
this Agreement shall be construed to prevent the adoption or enforcement by any
contracting party of measures :
a. necessary to protect public morals ;
b. necessary to protect human, animal or plant life or health ;
c. relating to the importation or exportation of gold or silver ;
d. necessary to secure compliance with laws or regulations which are not inconsistent with the
provisions of this Agreement including those relating to customs enforcement, the
enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the
protection of patents, trade marks and copyrights, and the prevention of deceptive
practices ;
e. relating to the products of prison labour ;
f. imposed for the protection of national treasures of artistic, historic or archaeological value ;
g. relating to the conservation of exhaustible natural resources if such measures are made
effective in conjunction with restrictions on domestic production or consumption ;
h. undertaken in pursuance of obligations under any intergovernmental commodity
agreement which conforms to criteria submitted to the CONTRACTING PARTIES and not
disapproved by them or which is itself so submitted and not so disapproved ;
i. involving restrictions on exports of domestic materials necessary to ensure essential
quantities of such materials to a domestic processing industry during periods when the
domestic price of such materials is held below the world price as part of a governmental
stabilization plan ; Provided that such restrictions shall not operate to increase the exports of
or the protection afforded to such domestic industry, and shall not depart from the
provisions of this Agreement relating to non-discrimination ;
j. essential to the acquisition or distribution of products in general or local short supply ;
Provided that any such measures shall be consistent with the principle that all contracting
parties are entitled to an equitable share of the international supply of such products, and
that any such measures, which are inconsistent with the other provisions of this Agreement
shall be discontinued as soon as the conditions giving rise to them have ceased to exist. The
CONTRACTING PARTIES shall review the need for this sub-paragraph not later than 30 June
1960.
 105

Article XXI. Security Exceptions

21 Nothing in this Agreement shall be construed

a. to require any contracting party to furnish any information the disclosure of which it
considers contrary to its essential security interests ; or
b. to prevent any contracting party from taking any action which it considers necessary for the
protection of its essential security interests
i. relating to fissionable materials or the materials from which they are derived ;
ii. relating to the traffic in arms, ammunition and implements of war and to such traffic in
other goods and materials as carried on directly or indirectly for the purpose of supplying
a military establishment ;
iii. taken in time of war or other emergency in international relations or,
c. to prevent any contracting party from taking any action in pursuance of its obligations
under the United Nations Charter for the maintenance of international peace and security.

Article XXII. Consultation

22 1. Each contracting party shall accord sympathetic consideration to, and shall afford
adequate opportunity for consultation regarding, such representations as may be made
by another contracting party with respect to any matter affecting the operation of this
Agreement. The CONTRACTING PARTIES may, at the request of a contracting party, consult
with any contracting party or parties in respect of any matter for which it has not been
possible to find a satisfactory solution through consultation under paragraph 1.

Article XXIII. Nullification or Impairment

23 1. If any contracting party should consider that any benefit accruing to it directly or
indirectly under this Agreement is being nullified or impaired or that the attainment of
any objective of the Agreement is being impeded as the result of
a. the failure of another contracting party to carry out its obligations under this Agreement, or
b. the application by another contracting party of any measure, whether or not it conflicts
with the provisions of this Agreement, or
c. the existence of any other situation, the contracting party may, with a view to the
satisfactory adjustment of the matter, make written representations or proposals to the
other contracting party or parties which it considers to be concerned. Any contracting party
thus approached shall give sympathetic consideration to the representations or proposals
made to it.

24 2. If no satisfactory adjustment is effected between the contracting parties concerned

within a reasonable time, or if the difficulty is of the type described in paragraph 1 (c) of
this Article, the matter may be referred to the Contracting Parties. The Contracting
Parties shall promptly investigate any matter so referred to them and shall make
appropriate recommendations to the contracting parties which they consider to be
concerned, or give a ruling on the matter, as appropriate. The CONTRACTING PARTIES may
consult with contracting parties, with the Economic and Social Council of the United
Nations and with any appropriate inter-governmental organization in cases where they
consider such consultation necessary. If the CONTRACTING PARTIES consider that the
circumstances are serious enough to justify such action, they may authorize a contracting
 106

party or parties to suspend the application to any other contracting party or parties of
such concessions or other obligations under this Agreement as they deter mine to be
appropriate in the circumstances. If the application to any contracting party of any
concession or other obligation is in fact suspended, that contracting party shall then be
free, not later than sixty days after such action is taken, to give written notice to the
Executive Secretary to the CONTRACTING PARTIES of its intention to withdraw from this
Agreement and such withdraw a shall take effect upon the sixtieth day following the day
on which such notice is received by him.

Annex I to GATT - Selected Provision

Ad Article III

25 Any internal tax or other internal charge, or any law, regulation or requirement of the
kind referred to in paragraph 1 which applies to an imported product and to the like
domestic product and is collected or enforced in the case of the imported product at the
time or point of importation, is nevertheless to be regarded as an internal tax or other
internal charge, or a law, regulation or requirement of the kind referred to in paragraph
1, and is accordingly subject to the provisions of Article III.

ENDNOTES
*. Text of the General Agreement, Geneva, 1980.
 107

Agreement on Technical Barriers to

Trade - Selected Provisions (GATT
Standards Code)*

Technical Regulations and Standards

Article 2. Preparation, Adoption and Application of Technical
Regulation and Standards by Central Government Bodies

1 With respect to their central government bodies:

2 2.1 Parties shall ensure that technical regulations and standards are not prepared,
adopted or applied with a view to creating obstacles to international trade. Furthermore,
products imported from the territory of any Party shall be accorded treatment no less
favourable than that accorded to like products of national origin and to like products
originating in any other country in relation to such technical regulations or standards.
They shall likewise ensure that neither technical regulations nor standards themselves
nor their application have the effect of creating unnecessary obstacles to international
trade.
3 2.2 Where technical regulations or standards are required and relevant international
standards exist or their completion is imminent, Parties shall use them, or the relevant
parts of them, as a basis for the technical regulations or standards except where, as duly
explained upon request, such international standards or relevant parts are inappropriate
for the Parties concerned, for inter alia such reasons as national security requirements;
the prevention of deceptive practices; protection for human health or safety, animal or
plant life or health, or the environment; fundamental climatic or other geographical
factors; fundamental technological problems.
4 2.3 With a view to harmonizing technical regulations or standards on as wide a basis as
possible, Parties shall play a full part within the limits of their resources in the
preparation by appropriate international standardizing bodies of international standards
 108

for products for which they either have adopted, or expect to adopt, technical regulations
or standards.
5 2.4 Wherever appropriate, Parties shall specify technical regulations and standards in
terms of performance rather than design or descriptive characteristics.
6 2.5 Whenever a relevant international standard does not exist or the technical content of
a proposed technical regulation or standard is not substantially the same as the technical
content of relevant international standards, and if the technical regulation or standard
may have significant effect on trade of other Parties, Parties shall:
7 2.5.1 publish a notice in a publication at an early appropriate stage, in such a manner as
to enable interested parties to become acquainted with it, that they propose to introduce
a particular technical regulation or standard;
8 2.5.2 notify other Parties trough the GATT secretariat of the products to be covered by
technical regulations with a brief indication of the objective and rationale of proposed
technical regulations;
9 2.5.3 upon request, provide without discrimination, to other Parties in regard to technical
regulations and to interested parties in other Parties in regard to standards, particulars
or copies of the proposed technical regulation or standard and, whenever possible,
identify the parts which in substance deviate from relevant international standards;
10 2.5.4 in regard to technical regulations allow, without discrimination, reasonable time for
other Parties to make comments in writing, discuss these comments upon request, and
take these written comments and the results of these discussions into account;
11 2.5.5 in regard to standards, allow reasonable time for interested parties in other Parties
to make comments in writing, discuss these comments upon request, and take these
written comments and the results of these discussions into account.
12 2.6 Subject to the provisions in the heading of Article 2, paragraph 5 where urgent
problems of safety, health, environmental protection or national security arise or
threaten to arise for a Party, that Party may omit such of the steps enumerated in Article
2, paragraph 5 as it finds necessary provided that the Party, upon adoption of a technical
regulation or standard, shall:
13 2.6.1 notify immediately other Parties through the GATT secretariat of the particular
technical regulation, the products covered, with a brief indication of the objective and
the rationale of the technical regulation, including the nature of the urgent problems;
14 2.6.2 upon request provide, with discrimination, other Parties with copies of the technical
regulation and interested parties in other Parties with copies of the standard;
15 2.6.3 allow, without discrimination, other Parties with respect to technical regulations
and interested parties in other Parties with respect to standards, to present their
comments in writing upon request to discuss these comments with other Parties and take
the written comments and the results of any such discussion into account;
16 2.6.4 take also into account any action by the Committee as a result of consultations
carried out in accordance with the procedures established in Article 14.
17 2.7 Parties shall ensure that all technical regulations and standards which have been
adopted are published promptly in such a manner as to enable interested parties to
become acquainted with them.
 109

18 2.8 Except in those urgent circumstances referred to in Article 2, paragraph 6, Parties

shall allow a reasonable interval between the publication of a technical regulation and its
entry into force in order to allow time for producers in exporting countries, and
particularly in developing countries, to adapt their products or methods of production to
the requirements of the importing country.
19 2.9 Parties shall take such reasonable measures as may be available to them to ensure that
regional standardizing bodies of which they are members, comply with the provisions of
Articles 2, paragraphs 1 to 8. In addition, Parties shall not take measures which have the
effect of, directly or indirectly, requiring or encouraging such bodies to act in a manner
inconsistent with those provisions.
20 2.10 Parties which are members of regional standardizing bodies shall, when adopting a
regional standard as a technical regulation or standard fulfil the obligations of Article 2,
paragraphs 1 to 8 except to the extent that the regional standardizing bodies have
fulfilled these obligations.

Conformity with Regulations and Standards

Article 5. Determination of Conformity with Technical Regulations or
Standards by Central Government Bodies

21 5.1 Parties shall ensure that, in cases where a positive assurance is required that products
conform with technical regulations or standards central government bodies apply the
following provisions to products originating in the territories of other Parties:
22 5.1.1 imported products shall be accepted for testing under conditions no less favourable
than those accorded to like domestic or imported products in a comparable situation;
23 5.1.2 the test methods and administrative procedures for imported products shall be no
more complex and no less expeditious than the corresponding methods and procedures,
in a comparable situation for like products of national origin or originating in any other
country;
24 5.1.3 any fees imposed for testing imported products shall be equitable in relation to any
fees chargeable for testing like products of national origin or originating in any other
country;
25 5.1.4 the results of tests shall be made available to the exporter or importer or their
agents, if requested, so that corrective action may be taken if necessary;
26 5.1.5 the siting of testing facilities and the selection of samples for testing shall not be
such as to cause unnecessary inconvenience for importers, exporters or their agents;
27 5.1.6 the confidentiality of information about imported products arising from or supplied
in connection with such test shall be respected in the same way as for domestic products.
28 5.2 However, in order to facilitate the determination of conformity with technical
regulations and standards where such positive assurance is required, Parties shall ensure,
whenever possible, that their central government bodies:
29 accept test results, certificates or marks of conformity issued by relevant bodies in the
territories of other Parties; or rely upon self-certification by producers in the territories
of other Parties;
 110

30 even when the test methods differ from their own, provided they are satisfied that the
methods employed in the territory of the exporting Party provide a sufficient means of
determinating conformity with the relevant technical regulations or standards. It is
recognized that prior consultations may be necessary in order to arrive at a mutually
satisfactory understanding regarding self-certification, test methods and results, and
certificates or marks of conformity employed in the territory of the exporting Party, in
particular in the case of perishable products or other products which are liable to
deteriorate in transit.
31 5.3 Parties ensure that test methods and administrative procedures used by central
government bodies are such as to permit, so far as practicable the implementation of the
provision in Article 5, paragraph 2.
32 5.4 Nothing in this article shall prevent Parties from carrying out reasonable spot checks
within their territories.

Treaty of Rome - Selected Provisions†

33 Article 2. The Community shall have as its task, by establishing a common market and and
progressively approximating the economic policies of Menber States, to promote
throughtout the Community a harmonious developement of economic activities, a
continuous and balanced expansion, an increase in stability, an accelerated raising of the
standard of living and closer relations between the States belonging to it.
34 Article 3. For the purposes set out in Art. 2, the activities of the Community shall include,
as provided in this Treaty and in accordance with the timetable set out therein:
a. the elimination, as between Member States, of customs duties and of quantitative
restrictions on the import and export of goods, and of all other measures having equivalent
effect;
b. the establishment of a common customs tariff and of a common commercial policy towards
third countries;
c. the abolition, as between Member States, of obstacles to freedom of movement for persons,
services and capital;
d. the adoption of a common policy in the sphere of agriculture;
e. the adoption of a common policy in the sphere of transport;
f. the institution of a System ensuring that competition in the common market is not
distorted;
g. the application of procedures by which the economic policies of Member States can be
coordinated and disequilibria in their balances of payments remedied;
h. the approximation of the laws of Member States to the extent required for the proper
functioning of the common market;
i. the creation of a European Social Fund in order to improve employment opportunities for
workers and to contribute to the raising of their standard of living;
j. the establishment of a European Investment Bank to facilitate the economic expansion of
the Community by opening up fresh resources;
k. the association of the overseas countries and territories in order to increase trade and to
promote jointly economic and social development.
 111

Chapter 2. Elimination of quantitative restrictions

between Member States
35 Article 30. Quantitative restrictions on imports and all measures having equivalent effect
shall, without prejudice to the following provisions, be prohibited between Member
States.
36 Article 34. I. Quantitative restrictions on exports, and all measures having equivalent
effect, shall be prohibited between Member States.
37 2. Member States shall, by the end of the first stage at the latest, abolish all quantitative
restrictions on exports and any measures having equivalents effect which are in existence
when this Treaty enters into force.
38 Article 36. The provisions of Arts. 30 to 34 shall not preclude prohibitions or restrictions
on imports, exports or goods in transit justified on grounds of public morality, public
policy or public security; the protection of health and life of humans, animais and plants;
the protection of national treasures possessing artistic, historic or archaeological value;
or the protection of industrial and commercial property. Such prohibitions or restrictions
shall not, however, constitute a means of arbitrary discrimination or a disguised
restriction on trade between Member States.

Chapter 3. Approximation of laws

39 Article 100. The Council shall, acting unanimously on a proposai from the Commission,
issue directives for the approximation of such provisions laid down by law, regulation or
administrative action in Member States as directly affect the establishment or
functioning of the common market.
40 The Assembly and the Economic and Social Committee shall be consulted in the case of
directives whose implementation would, in one or more Member States, involve the
amendment of legislation.
41 Article 100A. 1. By way of derogation from Article 100 and save where otherwise provided
in this Treaty, the following provisions shall apply for the achievement of the objectives
set out in Article 8A. The Council shall, acting by a qualified majority on a proposal from
the Commission in co-operation with the European Parlement and after Consulting the
Economic and Social Committee, adopt the measures for the approximation of the
provisions laid down by the law, regulation or administrative action in Member States
which have as their object the establishment and functioning of the internal market.
42 2. Paragraph I shall not apply to fiscal provisions, to those relating to the free movement
of persons nor to those relating to the rights and interests of employed persons.
43 3. The Commission, in its proposals envisaged in paragraph I concerning health, safety,
environmental protection and consumer protection, will take as a base a high level of
protection.
44 4. If, after the adoption of a harmonisation measure by the Council acting by a qualified
majority, a Member State deems it necessary to apply national provisions on grounds of
major needs referred to in Article 36, or relating to protection of the environment or the
working environment, it shall notify the Commission of these provisions.
 112

45 The Commission shall confirm the provisions involved after having verified that they are
not a means of arbitrary discrimination or a disguised restriction on trade between
Member States.
46 By way of derogation from the procedure laid down in Articles 169 and 170, the
Commission or any Member States may bring the matter directly before the Court of
Justice if it considers that another member State is making improper use of the powers
provided for in this Article.
47 5. The harmonisation measures referred to above shall, in appropriate cases, include a
safeguard clause authorising the Member States to take, for one or more of the non-
economic reasons referred in Article 36, provisional measures subject to a Community
control procedure.

Title VII. Environment

48 Article 130R. 1. Action by the Community relating to the environment shall have the
following objectives:
• to preserve, protect and improve the quality of the environment;
• to contribute towards protecting human health;
• to ensure a prudent and rational utilization of natural resources.
49 2. Action by the Community relating to the environment shall be based on the principles
that preventive action should be taken, that environmental damage should as a priority
be rectified at source, and that the polluter should pay. Environmental protection
requirements shall be a component of the Community’s other policies.
50 3. In preparing its action relating to the environment, the Community shall take account
of:
• available scientific and technical data;
• environmental conditions in the various regions of the Community;
• the potential benefits and costs of action or of lack of action;
• the economic and social development of the Community as a whole and balanced
development of its regions.
51 4. The Community shall take action relating to the environment to the extent to which
the objectives referred to in paragraph 1 can be attained better at Community level than
at the level of the individual Member States. Without prejudice to certain measures of the
Community nature, the Member States shall finance and implement the other measures.
52 5. Within their respective spheres of competence, the Community and the Member States
shall co-operate with third countries and with the relevant international organizations.
The arrangements for Community co-operation may be the Subject of agreements
between the Community and the third parties concerned, which shall be negotiated and
concluded in accordance with Article 228.
53 The previous paragraph shall be without prejudice to Member States’ competence to
negotiate in international bodies and to conclude international agreements.
54 Article 130S. The Council acting unanimously on a proposal from the Commission and after
Consulting the European Parliament and the Economic and Social Committee, shall decide
what action is to be taken by the Community.
 113

55 The Council shall, under the conditions laid down in the preceding subparagraph, define
those matters on which decisions are to be taken by a qualified majority.
56 Article 130T. The protective measures adopted in common pursuant to Article 130S shall
not prevent any Member State from maintaining or introducing more stringent
protective measures compatible with this Treaty.

Commission Directive on The Free Movement of

goods*
57 Commission directive of 22 December 1969 based on the provisions of Art. 33 (7), on the
abolition of measures which have an effect equivalent to quantitative restrictions on
imports and are not covered by other provisions adopted in pursuance of the EEC Treaty
(70/50/EEC)
58 The Commission of the European Communities.
59 having regard to the provisions of the Treaty establishing the European Economic
Community, and in particular Art. 33 (7) thereof;
60 Whereas for the purpose of Art. 30 et seq. ‘measures’ means laws, regulations,
administrative provisions, administrative practices, and all instruments issuing from a
public authority, including recommendations;
61 Whereas for the purposes of this Directive ‘administrative practices’ means any standard
and regularly followed procedure of a public authority; whereas ‘recommendations’
means any instruments issuing from a public authority which, while not legally binding
on the addressees thereof, cause them to pursue a certain conduct;
62 Whereas the formalities to which imports are subject do not as a general rule have an
effect equivalent to that of quantitative restrictions and, consequently, are not covered
by this Directive;
63 Whereas certain measures adopted by Member States, other than those applicable equally
to domestic and imported products, which were operative at the date of entry into force
of the Treaty and are not covered by other provisions adopted in pursuance of the Treaty,
either preclude importation or make it more difficult or costly than the disposal of
domestic production;
64 Whereas such measures must be considered to include those which make access of
imported products to the domestic market, at any marketing stage, subject to a condition
which is not laid down for domestic products or to a condition differing from that laid
down for domestic products, and more difficult to satisfy, so that a burden is thus placed
on imported products only;
65 Whereas such measures must also be considered to include those which, at any marketing
stage, grant to domestic products a preference, other than an aid, to which conditions
may or may not be attached, and where such measures totally or partially preclude the
disposal of imported products;
66 Whereas such measures hinder imports which could otherwise take place, and thus have
an effect equivalent to quantitative restrictions on imports;
67 Whereas effects on the free movement of goods of measures which relate to the
marketing of products and which apply equally to domestic and imported products are
 114

not as a general rule equivalent to those of quantitative restrictions, since such effects are
normally inherent in the disparities between rules applied by Member States in this
respect;
68 Whereas, however, such measures may have a restrictive effect on the free movement of
goods over and above that which is intrinsic to such rules;
69 Whereas such is the case where imports are either precluded or made more difficult or
costly than the disposal of domestic production and where such effect is not necessary for
the attainment of an objective within the scope of the powers for the regulation of trade
left to Member States by the Treaty; whereas such is in particular the case where the said
objective can be attained just as effectively by other means which are less of a hindrance
to trade; whereas such is also the case where the restrictive effect of these provisions on
the free movement of goods is out of proportion to their purpose;
70 Whereas these measures accordingly have an effect equivalent to that of quantitative
restrictions on imports;
71 Whereas the customs union cannot be achieved without the abolition of such measures
having an equivalent effect to quantitative restrictions on imports;
72 Whereas Member States must abolish all measures having equivalent effect by the end of
the transitional period at the latest, even if no Commission Directive expressly requires
them to do so;
73 Whereas the provisions concerning the abolition of quantitative restrictions and
measures having equivalent effect between Member States apply both to products
originating in and exported by Member States and to products originating in third
countries and put into free circulation in the other Member States:
74 Whereas Art. 33 (7) does not apply to measures of the kind referred to which fall under
other provisions of the Treaty, and in particular those which fall under Arts. 37 (1) and 44
of the Treaty or form an integral part of a national organisation of an agricultural market;
75 Whereas Art. 33 (7) does not apply to the charges and taxation referred to in Art. 12 et seq.
and Art. 95 et seq. or to the aids mentioned in Art. 92; whereas the provisions of Art. 33 (7)
do not prevent the application particular, of Arts. 36 and 223;
76 Has adopted this directive:
77 Article 1. The purpose of this Directive is to abolish the measures referred to in Arts. 2 and
3, which were operative at the date of entry into force of the EEC Treaty.
78 Article 2. 1. This Directive covers measures, other than those applicable equally to
domestic or imported products, which hinder imports which could otherwise take place
including measures which make importation more difficult or costly than the disposal of
domestic production.
79 2. In particular, it covers measures which make imports or the disposal, at any marketing
stage, of imported products subject to a condition — other than a formality — which is
required in respect of imported products only, or a condition differing from that required
for domestic products and more difficult to satisfy. Equally, it covers, in particular,
measures which favour domestic products or grant them a preference, other than an aid,
to which conditions may or may be attached.
80 3. The measures referred to must be taken to include those measures which:
a. lay down, for imported products only, minimum or maximum prices below or above which
imports are prohibited, reduced or made subject to conditions liable to hinder importation;
 115

b. lay down less favourable prices for imported products than for domestic products;
c. fix profit margins or any price components for imported products only or fix these
differently for domestic products and for imported products, to the detriment of the latter;
d. preclude any increase in the price of the imported product corresponding to the
supplementary costs and charges inherent in importation;
e. fix the prices of products solely on the basis of the costs price or the quality of domestic
products at such a level as to create a hindrance to importation;
f. lower the value of an imported product, in particular by causing a reduction in its intrinsic
value, or increase its costs;
g. make access of imported products to the domestic market conditional upon having an agent
or representative in the territory of the importing Member State;
h. lay down conditions of payment in respect of imported products only, or subject imported
products to conditions which are different from those laid down for domestic products and
more difficult to satisfy;
i. require, for imports only, the giving of guarantees or making of payments on account;
j. subject imported products only to conditions, in respect, in particular of shape, size, weight,
composition, presentation, identification or putting up, or subject imported products to
conditions which are different from those for domestic products and more difficult to
satisfy;
k. hinder the purchase by private individuals of imported products only, or encourage, require
or give preference to the purchase of domestic products only;
l. totally or partially preclude the use of national facilities or equipment in respect of
imported products only, or totally or partially confine the use of such facilities or equipment
to domestic products only;
m. prohibit or limit publicity in respect of imported products only; totally or partially confine
the use of stocking facilities to domestic products only, or make the stocking of imported
products subject to conditions which are different from those required for domestic
products and more difficult to satisfy;
n. make importation subject to the granting of reciprocity by one or more Member States;
o. prescribe that imported products are to conform, totally or partially, to rules other than
those of the importing country;
p. specify time limits for imported products which are insufficient or excessive in relation to
the normal course of the various transactions to which these time limits apply;
q. subject imported products to Controls, other than those inherent in the customs clearance
procedure, to which domestic products are not subject or which are stricter in respect of
imported products than they are in respect of domestic products, without this being
necessary in order to ensure equivalent protection;
r. confine names which are not indicative of origin of source to domestic products only.

81 Article 3. This Directive also covers measures governing the marketing of products which
deal, in particular, with shape, size, weight, composition, presentation, identification or
putting up and which are equally applicable to domestic and imported products, where
the restrictive effect of such measures on the free movement of goods exceeds the effects
intrinsic to trade rules.
82 This is the case in particular, where:
• the restrictive effects on the free movement of goods are out of proportion to their purpose;
• the same objective can be attained by other means which are less of a hindrance to trade.
 116

83 Article 4. 1. Member States shall take all necessary steps in respect of products which must
be allowed to enjoy free movement pursuant to Arts. 9 and 10 of the Treaty to abolish
measures having an effect equivalent to quantitative restrictions on imports and covered
by this Directive.
84 2. Member States shall inform the Commission of measures taken pursuant to this
Directive.
85 Article 5.1. This Directive does not apply to measures:
• which fall under Art. 37 (1) of the EEC Treaty;
• which are referred to in Art. 44 of the EEC Treaty or form an integral part of a national
organisation of an agricultural market not yet replaced by a common organisation.
86 2. This Directive shall apply without prejudice to the application, in particular, of Arts. 36
and 223 of the EEC Treaty.

ENDNOTES
*. 26th. Supp. BISD 8 (1980)
†. Treaty Establishing the European Economie Communitty as Amended by Subsequent Treaties,
Rome, 25 March 1957 in Rudden and Wyatt 1989 at 19.
 117

Résumé
Nicolas de Sadeleer

1 L’accord général sur les tarifs douaniers et le commerce, signé le 30 octobre 1947 et entré
en vigueur le 1er janvier 1948 précéda d’une dizaine d’années l’adoption du Traité de la
Communauté européenne, signé à Rome le 25 mars 1957.
2 Malgré leur nature fondamentalement différente, les régimes juridiques institués par ces
deux actes internationaux présentent un certain nombre de similitudes en ce qui
concerne le règlement de la libre circulation des marchandises. L’auteur de l’étude
examine les similarités et les divergences entre ces deux régimes. En examinant la
compatibilité des réglementations nationales relatives à la protection de
l’environnement, mesures susceptibles d’entraver la libre circulation des marchandises et
de générer des distorsions de concurrence, l’auteur de l’étude met en évidence les
similarités et les divergences entre le régime juridique du GATT et celui de la C.E.E. La
jurisprudence assez lacunaire du GATT dans cette matière (à ce jour, seulement cinq
différends commerciaux ont eu un lien avec l’environnement) est éclairée par une
jurisprudence assez similaire rendue dans le cadre du North American Free Trade
Agreement, signé au mois d’août 1992.
3 Le droit du GATT inspiré par une philosophie libre-échangiste ne comporte que peu de
références à l’environnement. Seul son article XX, complété par le Code sur les normes
de 1979, comporte quelques références à cette problématique. Le Traité de Rome fut
également rédigé à une époque où les questions d’environnement n’étaient pas encore
évoquées. Cette préoccupation fut néanmoins insérée lors de l’amendement du Traité par
l’Acte unique européen en 1987. Différentes dispositions du Traité (articles 130S et 100A)
reconnaissent désormais la compétence de la Communauté européenne dans cette
matière. Si l’intégration nettement plus avancée de la Communauté européenne a permis
la mise en place d’une politique régionale en matière d’environnement, ce processus a eu
comme contrepartie un contrôle plus rigoureux des mesures susceptibles d’affecter
l’établissement et le fonctionnement du marché intérieur, clé de voûte de la Communauté
européenne.
4 L’étude s’articule autour de deux axes. Dans un premier temps, le traitement et la
compatiblité des réglementations nationales relatives aux aspects environnementaux des
 118

produits sont examinés au regard de différentes dispositions du GATT et du Traité C.E.E.

Dans un second temps, la conformité des réglementations des procédés de production au
regard des mêmes règles est étudiée. Sur base des enseignements de la jurisprudence des
panels du GATT et de la Cour de justice des Communautés européennes dans ces deux
matières, l’auteur tente d’élaborer un ensemble de projets de réformes du système du
GATT.
5 L’article III du GATT interdisant les pratiques discriminatoires à l’égard des produits
importés et l’article XI visant l’élimination des restrictions quantitatives aux échanges
trouvent leurs pendants dans le Traité C.E.E. Les articles 30 et 34 du Traité interdisent en
effet aux Etats membres d’établir entre eux des restrictions quantitatives à l’importation
ou à l’exportation de marchandises, ainsi que toute mesure d’effet équivalant.
6 Chacune de ces interdictions connaissent des dérogations ayant des liens avec la
protection de l’environnement. Ainsi, l’article XX du GATT autorise les Parties
contractantes à adopter des mesures nécessaires à la “protection de la santé et de la vie
des personnes ou à la préservation des végétaux” (XX, b) ou se rapportant à la
“conservation des ressources naturelles épuisables” (XX, g) sous réserve que ces mesures
ne soient pas appliquées de façon à constituer un moyen de discrimination arbitraire ou
une rectriction déguisée au commerce interétatique. En droit communautaire,
l’interdiction aux échanges connaît deux catégories d’exceptions. La première, inscrite à
l’article 36 du Traité autorise les obstacles aux échanges dans la mesure où ceux-ci sont
justifiés par des raisons tenant entre autres à la “protection de la santé et de la vie des
personnes et des animaux” et à la “préservation des végétaux”. La seconde catégorie,
dégagée par la Cour dans l’arrêt Cassis de Dijon, permet aux Etats membres que des
restrictions soient apportées à la libre circulation intracommunautaire en raison
d’exigences d’intérêt général pouvant porter sur la protection de l’environnement (arrêts
Bouteilles danoises, et Déchets wallons). De même, les exceptions relatives à la sécurité
publique figurant à l’article XXI du GATT trouvent leur pendant à l’article 36 du Traité qui
prévoit parmi les exceptions aux articles 30 et 34, les mesures relatives à T “ordre public”
et la “sécurité publique”.
7 De la sorte, si les deux régimes étudiés érigent en principe la libre circulation des
produits, ils ont reconnu, certes de manière indirecte et souvent timide, que des
limitations soient apportées à la mise en œuvre de ce principe en raison d’une protection
accrue de l’environnement au niveau national alors même que ces nouvelles exigences
sont susceptibles d’affecter les échanges. Les solutions apportées tirent leur origine de
créations jusrisprudentielles. Pour ce faire, tant la Cour de justice des Communautés
européennes que les panels du GATT recourent au principe de proportionnalité pour
admettre qu’une mesure nationale de protection de l’environnement puisse déroger aux
impératifs de la libre circulation des marchandises. L’auteur explore à cet égard les
critères qui ont été retenus dans l’un et l’autre système dans des affaires ayant trait à la
protection de l’environnement au sens large pour vérifier si la mesure litigieuse est
proportionnée aux objectifs poursuivis. Il en ressort que l’examen de la proportionnalité
requise implique nécessairement que la nécessité de la mesure soit démontrée.
Néanmoins, l’auteur relève une série de divergences notamment quant à la portée des
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dérogations, la prise en compte des conditions locales (cfr. arrêt déchets wallons) et les
contrôles procéduraux.
8 Il n’en demeure pas moins que les régimes juridiques analysés présentent à ce niveau des
différences importantes.
a. En droit C.E.E, les mesures ne doivent pas nécessairement être discriminatoires pour être
interdites au regard de l’article 30 du Traité alors que l’article III du GATT exige que la
mesure soit discriminatoire pour qu’il y ait infraction. Cette divergence s’explique par le
caractère plus intégré de la Communauté européenne.
b. La Cour de justice des Communautés européennes a expressément reconnu que la protection
de l’environnement constituait une exigence impérative d’intérêt général dérogeant à
l’article 30 du Traité. En revanche, les panels du GATT n’admettent pas que la protection de
l’environnement puisse porter atteinte de façon globale à la libre circulation des
marchandises. De telles dérogations ne pourraient être admises que si les mesures relèvent
des catégories visées à l’article XX.
c. La Cour de justice des Communautés européennes n’a pas hésité à déterminer ce qu’elle
entendait par des mesures visant un “niveau de protection suffisant de l’environnement”
(arrêt Bouteilles danoises). La nature moins évoluée du GATT n’autorise pas une démarche
aussi interventionniste.

9 L’auteur propose une série de remèdes au caractère lacunaire et inadapté du GATT dans
cette matière. Le recours aux solutions dégagées de façon casuistique par la Cour de
justice des Communautés européennes en matière de concurrence pourrait notamment
permettre une meilleure intégration des considérations environnementales au niveau du
GATT. L’auteur suggère entre autres que le champ d’application de l’article XX soit
étendu à la protection de l’environnement. De même, l’analyse par les panels du GATT des
mesures nationales de protection de l’environnement devrait mieux prendre en compte
l’incertitude scientifique de la problématique et les besoins locaux ou régionaux. Enfin,
des procédures de sauvegarde devraient être établies en faveur des parties contractantes.
Toutefois, il est jugé inapproprié de transposer au niveau du GATT certains traits du
système communautaire. D’autres modifications sont encore proposées. Selon l’auteur,
l’on devrait admettre que les réglementations nationales relatives à la protection de
l’environnement puissent affecter plus sensiblement des importateurs étrangers que les
producteurs nationaux.
10 Quant au deuxième axe de l’étude, l’auteur examine au regard de décisions récentes
(décision Tuna/Dolphin ainsi que l’arrêt Gourmetterie Vanden Burg) la régularité de normes
de production établies au niveau national dans le but de protéger des ressources
extraterritoriales. L’auteur arrive à la conclusion que les deux régimes juridiques
perçoivent de manière quasi identique de telles mesures. Celles-ci sont en principe
interdites. Telles furent notamment les conclusions du panel établi lors du contentieux
américano-mexicain quant à l’interdiction d’importation sur le territoire des Etats-Unis
de thon pêché avec des filets dériveurs qui mettent en danger les populations de
différentes espèces de mammifères marins.
11 Sur base des enseignements de la décision Tuna/ Dolphin, l’auteur examine la
compatibilité de différentes conventions internationales au regard des règles du GATT
(articles I, III et XI). Il s’agit de la Convention de Bâle sur le contrôle des mouvements
transfrontières de déchets dangereux et de leur élimination ; la convention de Vienne sur
la protection de la couche d’ozone et la convention de Washington sur le commerce
international des espèces sauvages et de la faune et de la flore menacées d’extinction. Les
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dispositions de chacune de ces conventions soulèvent d’importantes difficultés au niveau

du GATT et les dérogations prévues à l’article XX ne pourraient guère avoir d’effet. Ces
différentes incompatibilités mettent en exergue le caractère obsolète du GATT et sa
complète inadaptation à la problématique de la protection de l’environnement. L’auteur
propose également différentes solutions (notamment des modifications à apporter à
l’article XX ou la reconnaissance du concept de patrimoine commun de l’humanité).
12 En dernier lieu, l’auteur estime que des modifications plus fondamentales doivent être
apportées au système du GATT. En effet, il est clair que sans l’insertion de principes
relatifs à la protection de l’environnement (à l’instar de ce qui est fait dans le Traité
C.E.E.), le système continuera a être boiteux. La reconnaissance expresse des principes
suivants : le patrimoine commun de l’humanité, le principe de précaution et le principe
du pollueur-payeur pourrait tempérer la philosophie libre échangiste du GATT et assurer
de la sorte la prise en compte des impératifs de protection de l’environnement.

AUTEUR
NICOLAS DE SADELEER
Directeur adjoint du Centre d’étude du droit de l’environnement
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Samenvatting
Nicolas de Sadeleer

1 Het algemeen akkoord inzake en handel- en douanetarieven, ondertekend op 30 oktober

1947, trad in werking op 1 januari 1948, dit is een tiental jaren voor de ondertekening van
het Verdrag tot Oprichting van de Europese Economische Gemeenschap, gesloten te Rome
op 25 maart 1957.
2 Hoewel zij van nature totaal verschillend zijn, hebben deze twee internationale verdragen
elk een rechtsstelsel in het leven geroepen die onderling een zekere gelijkenis vertonen
wat betreft de regulering van het vrije goederenverkeer. De verscheidene nationale
reglementeringen inzake milieubescherming, waarvan bekend is dat zij het vrije verkeer
van goederen kunnen hinderen en de concurrentie vervalsen, worden onderzocht naar
hun onderlinge verenigbaarheid, waarbij de auteur duidt op de gelijkenissen en de
verschillen tussen de rechtsstelsels van de GATT en van de E.E.G. De eerder zeldzame
rechtspraak van de GATT in dat verband (tot op heden hebben slechts 5 handelsgeschillen
enig verband met het milieu) wordt aangevuld met een tamelijk gelijkaardige rechtspraak
in het kader van het North American Free Trade Agreement, ondertekend in augustus
1992.
3 Het GATT-recht, dat zijn inspiratie vindt in de filosofie van de vrijhandel, bevat slechts
weinig verwijzingen naar het milieu. Alleen zijn artikel XX, aangevuld met het Wetboek
betreffende de Standaarden van 1979, verwijst enigszins naar deze problematiek. Het
Verdrag van Rome werd eveneens opgesteld toen het milieuvraagstuk nog niet aan de
orde was. Toch kreeg deze bezorgdheid zijn plaats in een amendement van het Verdrag,
met name in de Europese Eenheidsakte van 1987. Verscheidene bepalingen van het
Verdrag (artikelen 130S en 100 A) erkennen voortan de bevoegdheid terzake van de
Europese Gemeenschap. De verdergaande integratie van de Europese Gemeenschap was
de aanzet tot een regionale milieupolitiek, doch de keerzijde hiervan was dat een
strengere controle nodig werd van de maatregelen die een weerslag konden hebben op de
opbouw en de werking van de gemeenschappelijke markt, die de hoeksteen is van de
Europese Gemeenschap.
4 De studie heeft twee hoofdlijnen. Eerst worden de nationale reglementeringen met
betrekking tot de verschillende milieu-aspecten van de produkten onderzocht naar hun
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verenigbaarheid met de bepalingen van de GATT en van het E.E.G.-Verdrag. Vervolgens

wordt nagegaan of de reglementeringen van de produktieprocessen conform zijn aan
deze zelfde regels. De auteur trekt de lessen uit de rechtspraak van de GATT-panels en
van het Hof van Justitie van de Europese Gemeenschap in beide materies en hij werkt een
aantal hervormingvoorstellen uit van het GATT-systeem.
5 Artikel III van de GATT, die de discriminatie verbiedt ten opzichte van ingevoerde
produkten en artikel XI, die de kwantitatieve beperkingen uit het vrije handelsverkeer
wil bannen, hebben hun gelijke in het E.E.G.-Verdrag. De artikelen 30 en 34 van het
Verdrag verbieden inderdaad alle kwantitatieve invoer- en uitvoerbeperkingen tussen de
lidstaten, alsook alle maatregelen met een gelijkaardige werking. Op beide
verbodsbepalingen bestaan afwijkingen die in verband staan met de milieubescherming.
Aldus staat artikel XX van de GATT toe dat de verdragsluitende partijen maatregelen
zouden treffen die nodig zijn «ter bescherming van de gezondheid en het leven der
personen of ter vrijwaring van de planten» (XX, b) alsook «ter vrijwaring tegen de
uitputting der natuurlijke grondstoffen» (XX, g), onder voorbehoud weliswaaar dat deze
maatregelen niet worden toegepast op een wijze die een arbitraire discriminatie of een
vermomde bescherming van de tussenstatenhandel zou zijn. Ook het Gemeenschapsrecht
kent twee categorieën van uitzonderingen op het verbod om het goederenverkeer te
beperken. De eerste, ingeschreven in artikel 36 van het Verdrag, laat verboden of
beperkingen toe welke gerechtvaardigd zijn, o.a. uit hoofde van «bescherming van de
gezondheid en het leven van personen, dieren of planten». De tweede categorie werd
door het Hof uitgewerkt in zijn arrest Cassis de Dijon, dat de lidstaten beperkingen van het
vrij goederenverkeer binnen de Gemeenschap om redenen van algemeen belang, zoals de
bescherming van het milieu (arresten: Deense flessen en Waalse afvalstoffen). Ook de
beperkingen die verband houden met de openbare veiligheid in artikel XXI GATT, vinden
hun gelijke in artikel 36 van het Verdrag dat, als uitzondering op zijn artikelen 30 en 34,
beperkingen toestaat die gerechtvaardigd zijn ter bescherming van de «openbare orde en
de openbare veiligheid».
6 Derwijze hebben beide onderzochte stelsels weliswaar het principe van vrijheid van
goederenverkeer als algemeen beginsel erkend, doch eveneens, zij het op onrechtstreekse
wijze en vaak schoorvoetend, eveneens beperkingen aanvaard in de toepassing van dit
algemeen principe om redenen van grotere bescherming van het milieu op nationaal
vlak, zelfs wanneer deze bijkomende voorwaarden het vrije verkeer belemmeren. De
aangebrachte oplossingen zijn vindingen van de rechtspraak. Zowel het Hof van Justitie
van de Europese Gemeenschap als de GATT-panels deden een beroep op het beginsel van
de proportionaliteit om aan te nemen dat nationale maatregelen van milieubescherming
uitzonderingen mochten rechtvaardigen op het beginsel van vrij goederenverkeer. De
auteur onderzocht in dat verband de criteria die in het ene en het andere stelsel werden
weerhouden, die in verband staan met de bescherming van het leefmilieu in brede zin en
hij ging na of de betreffende maatregel proportioneel is aan het beoogde doel. Gebleken is
dat het onderzoek naar de vereiste proportionaliteit noodzakelijkerwijze meebrengt dat
de noodzaak van de maatregel moet worden aangetoond. Toch wijst de auteur op een
aantal verschillen, onder meer betreffende de draagwijdte van de afwijkingen, het
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rekening houden met de lokale toestanden (cfr. arrest Waals afval) en de

controleprocedures.
7 Blijft niettemin dat de onderzochte juridische stelsels op dat vlak in belangrijke mate
verschillen.
• In het E.E.G.-recht moeten de maatregelen niet noodzakelijk discriminatoir zijn om
verboden te zijn krachtens artikel 30, terwijl volgens artikel III GATT een maatregel geen
overtreding uitmaakt zolang hij niet discriminatoir is. Dit verschil is een gevolg van het
meer geïntegreerd zijn van de Europese Gemeenschap.
• Het Hof van Justitie van de Europese Gemeenschap heeft uitdrukkelijk aanvaard dat de
milieubescherming een rechtvaardigingsgrond was uit hoofde van het algemeen belang om
af te wijken van artikel 30 van het Verdrag. De GATT-panels hebben daarentegen niet
aanvaard dat de milieubescherming in het algemeen een belemmering mocht vormen voor
het vrije verkeer van goederen. Dergelijke afwijkingen zijn slechts toegestaan indien zij
vallen onder de categorieën bedoeld artikel XX.
• Het Hof van Justitie van de Europese Gemeenschap heeft zonder schroom omschreven wat
het verstond onder maatregelen strekkende tot «een voldoende bescherming van het
milieu» (arrest Deense flessen). De GATT is echter niet toegankelijk voor een zo verregaande
interventionistische politiek.
8 De auteur stelt een aantal remedies voor om te verhelpen aan dit lacunaire en
onaangepaste karakter van de GATT terzake. De oplossingen die door het Hof van Justitie
van de Europese Gemeenschap op casuïstische wijze werden uitgewerkt inzake
concurrentie zouden onder andere een betere integratie van de
leefmilieubekommeringen toelaten op het niveau van de GATT. De auteur suggereert
onder meer dat het toepassingsgebied van artikel XX zou worden uitgebreid tot de
bescherming van het leefmilieu. Ook zouden de GATT-panels bij de analyse van de
nationale maatregelen ter bescherming van het leefmilieu meemoeten rekening houden
met de wetenschappelijke onzekerheid omtrent deze problematiek en met de lokale of
regionale noden. Eveneens zouden beschermingsprocedures moeten worden uitgewerkt
ten gunste van de contracterende partijen. Toch kunnen niet alle kenmerken van het
systeem van de Gemeenschap worden getransponeerd op het niveau van de GATT. Andere
wijzigingen worden nog voorgesteld. Volgens de auteur zou men moeten aanvaarden dat
nationale maatregelen betreffende de milieubescherming in een grotere mate de
buitenlandse invoer kan treffen dan de nationale produktie.
9 Wat de tweede krachtlijn van de studie betreft, onderzoekt de auteur de regelmatigheid
van de nationale produktienormen met het oog op de bescherming van de extra-
territoriale grondstoffen in het licht van een paar recente beslissingen (beslissing Tuna/
Dolphin en het arrest Gourmetterie Vandenburg). De auteur komt tot het besluit dat beide
rechtsstelsels op een nagenoeg identieke wijze dergelijke maatregelen beoordelen. Ze zijn
in beginsel verboden. Dit was onder meer de conclusie van het panel dat werd opgericht
bij het Amerikaans-Mexicaans Conflict betreffende het invoerverbod in de Verenigde
Staten van tonijn gevist met sleepnetten die verschillende populaties zeedieren in gevaar
brengen.
10 Uitgaande van de beslissing Tuna/Dolphin onderzoekt de auteur de verenigbaarheid van
de verscheidene internationale verdragen met de GATT-regels (artikels I, III en XI). Het
betreft hier het Verdrag van Bazel betreffende de controle van grensoverschrijdende
transporten van gevaarlijk afval en van hun verwijdering; de Conventie van Wenen
betreffende de bescherming van de ozonlaag en de Conventie van Washington
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betreffende de internationale handel in wilde dieren en de bescherming van de bedreigde

fauna en flora. De bepalingen van elk van deze verdragen zijn problematisch op het
niveau van de GATT en de in artikel XX voorziene afwijkingen brengen in dat verband
weinig soelaas. De verscheidene onverenigbaarheden duiden nog maar eens op het
voorbijgestreefd karakter van de GATT en haar totale onaangepastheid aan de
problematiek van de bescherming van het leefmilieu. Ook hier stelt de auteur
verscheidene oplossingen voor (onder meer de wijzigingen naar artikel XX of de
erkenning van het beginsel van het gemeenschappelijk patrimonium van de mensheid).
11 Tenslotte is de auteur van oordeel dat meer fundamentele wijzigingen moeten worden
gebracht aan het GATT-systeem. Het is inderdaad zonder meer duidelijk dat dit systeem
zal blijven mank lopen zolang de beginselen betreffende de bescherming van het
leefmilieu er niet worden in opgenomen (zoals dit gebeurd is in het E.E.G.-Verdrag). De
filosofie van de handelsvrijheid van de GATT zou moeten worden getemperd met de
erkenning van de volgende beginselen: het gemeenschappelijk patrimonium van de
mensheid, het beginsel van de voorzorg en het beginsel van de vervuiler-betaler. Het zou
aldus worden aangepast aan de noodzaak van bescherming van het leefmilieu.

AUTEUR
NICOLAS DE SADELEER
Adjunkt directeur van het CEDRE