ROLE OF WTO IN SUSTAINABLE DEVELOPMENT GOVERNANCE

JAMIA MILLIA ISLAMIA, NEW DELHI

( Taught man what he knew not )

FACULTY OF LAW

INTERNATIONAL TRADE & FINANCE

“ROLE OF WTO IN SUSTAINABLE DEVELOPMENT

GOVERNANCE”

SUBMITTED BY: - SUBMITTED TO: -

PRIYAM (s/f) DR. SUBHRADIPTA SARKAR

B.A. LL.B (HONS) ASST. PROF. (ITF)

TABLE OF CONTENT

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 ROLE OF WTO IN SUSTAINABLE DEVELOPMENT GOVERNANCE

INTRODUCTION TO SUSTAINABLE DEVELOPMENT 4

WTO AS AN INSTRUMENT FOR SUSTAINABLE DEVELOPMENT 5

TRADE IN COMMODITIES AND UN SUSTAINABLE DEVELOPMENT GOALS 7

NEW CREDENTIALS IN TRADE LAW FOR SUSTAINABLE DEVELOPMENT 9

THE DOHA DECLARATION 11

CONCLUSION 13

BIBLIOGRAPHY 14

INTRODUCTION TO SUSTAINABLE DEVELOPMENT

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 ROLE OF WTO IN SUSTAINABLE DEVELOPMENT GOVERNANCE

‘‘One of the most pressing challenges with which the WTO is confronted today is how to
reconcile free trade and sustainable development. The relationship between the two issues is
complicated and they sometimes seem incompatible. Yet the maintenance of free trade helps
economic development on a sustainable basis if these two issues are put into a proper
relationship”.

– Mitsuo Matsushita, founding member of the WTO Appellate Body

Development can be defined as the processes of expanding people’s choices, enabling

improvements in collective and individual quality of life, and the exercise of full freedoms
and rights.1 Amartya Sen, in Development as Freedom, describes development as a process of
amplifying the domain of personal freedoms people can enjoy. 2 Sen characterizes the
expansion of freedoms as the ‘instrumental’ and ‘constitutive’ roles of development (the
means and the ends respectively), recognising in particular five instrumental freedoms that
encompass the manners in which individual opportunities and capabilities of citizens living in
developing countries could be improved.3 Sen’s second category of “economic facilities” has
an intrinsic human rights element. When regimes and regulations allow the opening and
stabilization of developing country markets there is often a concomitant augmentation in the
exercise of fundamental rights and freedoms. However, in order for this positive spill over to
actuated economic policies must reflect and not side-line other developmental aspirations.4

According to the 1987 Brundtland Report: “sustainable development is development that

meets the needs of present generations without compromising the ability of future generations
to meet their own needs”.5 In plain English, sustainable development is development as if the
unborn and the environment mattered. The concept of sustainable development is widely
accepted by the global community; its underlying ideas have governed the practices of many
ancient cultures and traditions for thousands of years.6

WTO AS AN INSTRUMENT FOR SUSTAINABLE DEVELOPMENT

1 See, e.g., United Nations Development Programme, Human Development Reports, available online: UNDP .
2 Amartya Sen, Development as Freedom (Oxford: Oxford University Press, 1999) at 35.
3 Ibid.
4 Ibid.
5 Kristine Kruma, Sustainable Development in World Trade Law, 14 EUR. L.J. 387 (2008)
6 As observed by H.E. Judge C.G. Weeramantry in his extraordinary Separate Opinion for the Case Concerning
the Gabcikovo-Nagymaros Project (Hungary v. Slovakia) [1997] I.C.J. Rep. 7.

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Historically, trade has proven to be an engine for development and poverty reduction by
boosting growth, particularly in developing countries.

We are currently living in the age of globalization. World commerce is an important aspect of
globalization and over the years, international trade, production and markets have become
exceedingly integrated. World commerce can be viewed as machinery with several complex
parts which are affected by various actors and regulated by numerous institutions and
organizations. The most important of these organizations is arguably the World Trade
Organization (WTO). The Organization was established in 1995 and consists of 153 member
countries. It has a broad and extensive agenda, which covers trade in merchandizing,
services, intellectual property and investment issues.7

Economic development is a core objective of the World Trade Organization 8 and forms a part
of the underpinning ideological framework for trade liberalization. 9 Nonetheless, the
relationship between trade liberalization and development has historically been a tense one,
pitting entrenched developed economies against developing members and bringing
competing views within each group, over the appropriate interpretation or application of
development as a policy objective, in conflict.10

In recent years as international trade compacts have proliferated and the scope of World
Trade Organization (WTO) activities has extended beyond purely economic parameters, there
has been a growing awareness that the implications of trade have developmental, social,
environmental and health aspects. Given these nexuses, it is crucial that trade law regulating
transactions is informed by a holistic perspective that takes into account potential impacts
from a sustainable development point of view. The infrastructure of sustainable development
must reconcile three premises: the trade perspective is adamant that economic liberalization
provides the most efficient way of environmental protection and societal betterment; the
environmental viewpoint asserts that the status quo is fatally harming natural capital and must
be modified and the development schema prioritizes curtailing the incidence of poverty

7 Baylis John, Steve Smith and Patricia Owens, The Globalisation of World Politics: An Introduction to
International Relation, 3rd Edition. USA: Oxford University Press, 2005, p.601.
8 Marrakesh Agreement Establishing the World Trade Organization, First recital, Preamble, Apr. 15, 1994,
1867 U.N.T.S. 154
9 See generally M. Herdegen, Principles of International Economic Law 13-15 (2013)
10 For an evocative account of such debates, see N. Lamp, The “Development” Discourse in Multilateral Trade
Lawmaking, 16 WORLD TRADE REV. 475 (2017).

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One of the great challenges facing the world today is how to strike an appropriate balance
between growth in global trade and sustainable development. This is a contentious issue
without quick-fix solutions. The available evidence points to a simultaneous spectacular
growth in global trade and a spectacular failure to achieve sustainable development. The
World Trade Organisation (WTO) firmly believes that continued growth in global trade is the
way to go, as it will bring tremendous benefits to the world at large. 11 For example, according
to the Director-General of the WTO, if existing barriers to trade in agriculture, manufacturing
and services were cut by one-third, it would boost the global economy by US$ 613 billion.
This has been estimated to be the equivalent of adding the size of the Canadian economy to
the global economy.12 The world could do even better; if all trade barriers were removed, this
would boost the global economy by something in the order of US$ 1.9 trillion, which has
been estimated to be equivalent to two Chinas.13 In particular, it has been asserted that
increasing growth in global trade would help to reduce poverty.

11 Specifically, SDG 14.6, Transforming Our World: The 2030 Agenda for Sustainable Development, G.A.
Res. 70/1, U.N. Doc. A/Res/70/1) [hereinafter The 2030 Agenda].
12 Moore n 1 above 'Open societies, freedom, development and trade' speech to Plenary Opening WTO
Symposium on Issues Confronting the World Trading System', Geneva
13 Ibid.

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The stated objective of GATT and the WTO is “to provide secure and predictable
international trade environment for the business community and a continuing process of trade
liberalisation in which investments, job creation and trade can thrive.” 14 WTO might claim
that in promoting global economic growth, it is also fostering sustainable development by
relying on the weak hypothesis to achieve this goal. At most, it seems that WTO relies on
weak conditions to achieve sustainable development.

TRADE IN COMMODITIES AND UN SUSTAINABLE DEVELOPMENT GOALS

A number of current challenges facing the international community, particularly in the

pursuit of sustainable development, are intimately tied to trade and most notably trade in
commodities. Note, for example, the role that the surge in food prices during the food crisis
of 2007-08 played in sparking popular unrest across three continents, bringing the importance
of food security into sharp relief.15 Or how the unprecedented economic growth changing the
political landscape in some regions such as sub-Saharan Africa has been led in part by
historically high commodity prices, such as of oil, and has subsequently risked throwing
some of these ‘success’ stories off-kilter as energy prices collapsed in 2014,

This relationship is most notable when examined through the goals set out in the successor to
the Millennium Development Goals (MDGs), the United Nations’ 2030 Agenda. It sets out a
number of targets (including indicators with which to measure their progress) - the
Sustainable Development Goals. The SDGs have been designed to incorporate the lessons
learnt from the experience of the MDGs which had developed organically over time. It was in
the years following the original Millennium Declaration that details were added to their aims,
means to measure their success were evolved, and financial support for their completion was
clarified, whereas the 2030 Agenda includes from the beginning a detailed list of goals, their
targets, and the means to assess their progress.

The SDGs are also ambitious from the start, with the 2030 Agenda boldly proclaiming:

“We resolve, between now and 2030, to end poverty and hunger everywhere; to combat
inequalities within and among countries; to build peaceful, just and inclusive societies; to

14 Duncan French “The changing nature of 'environmental Protection”: recent developments regarding trade
and the environment in the European Union and the World Trade Organization' (2000) XLVII Netherlands
International Law Review 1.
15 P. LAMY, THE GENEVA CONSENSUS: MAKING TRADE WORK FOR ALL 68-70

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protect human rights and promote gender equality and the empowerment of women and
girls; and to ensure the lasting protection of the planet and its natural resources. We resolve
also to create conditions for sustainable, inclusive and sustained economic growth, shared
prosperity and decent work for all, taking into account different levels of national
development and capacities.”16

Sustainable development is a deeply integrative concept. 17 The success of the 2030 Agenda
and the SDGs requires concerted effort by diverse actors (international organisations, states,
civil society and private enterprises), across economic, political, and environmental spheres
of governance. While the SDGs make only passing reference to commodities in relation to
two Goals,18 they are almost uniformly related to either historic or current trade in
commodities. This is in line with the Havana Charter definition: “any product of farm, forest
or fishery or any mineral, in its natural form or which has undergone such processing as is
customarily required to prepare it for marketing in substantial volume in international
trade.”19 Trade in commodities has long been a topic of concern for international markets and
governments, as the following examples demonstrate.

For example, in the case of Goal 2 (“end hunger, achieve food security and improved
nutrition and promote sustainable agriculture”), the cyclical pattern of sowing and harvesting
of agricultural commodities, such as wheat or rice, necessarily creates difficulties for food
planning.20 Where agricultural commodities are traded, an increase in prices is customarily
matched by an increase in production, which in turn leads to a glut as the ability to alter
supply is often limited to seasons. Where demand consistently increases such patterns are not
problematic, but where response to demand is slow, as is often the case in farming,
agricultural exporters are subjected to considerable price volatility. 21 The recent food crisis of
2007-08 discussed above is one such example where a range of different factors led to a spike

16
17 On the integrative nature of sustainable development, see F. Ortino, Investment Treaties, Sustainable
Development and Reasonableness Review: A Case Against Strict Proportionality Balancing, 30 LEIDEN J.
INT’L L. 71, 83-87 (2017).
18 Goals 2, “End hunger, achieve food security and improved nutrition and promote sustainable agriculture”
and 9, “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”,
The 2030 Agenda, supra note 10.
19 Final Act of the United Nations Conference on Trade and Employment, Nov. 21, 1947- Mar. 24, 1948,
Havana Charter art. 56(1), U.N. Docs. E/Conf. 2/78 (Apr. 1948).
20 See the examples in Food & Agr. Org., The State of Food Insecurity in the World 2015 33-35 (FAO, IFAD,
WFP 2015), http://www.fao.org/3/ai4646e.pdf.
21 See Org. for Econ. Coop. & Dev., Price Volatility in Food and Agricultural Markets: Policy Responses (June
12, 2011), http://www.oecd.org/tad/agricultural-trade/48152638.pdf.

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in food prices causing serious difficulties for consumers in least developed and developing
countries.22

Each of the Goals has at its core a necessary or substantial overlap with the international
regulation of commodities (either as primary goods or as financial instruments). This
exacerbates the challenges faced by individual States and the international community as they
pursue the completion of the SDGs.

Yet, in spite of trade in commodities being at the heart of the interlocking challenges
confronted in the pursuit of sustainable development, the 2030 Agenda makes few references
to their trade or regulation and the potential impact this may have on achieving sustainable
development or pursuing the completion of the SDGs.

NEW CREDENTIALS IN TRADE LAW FOR SUSTAINABLE DEVELOPMENT

A highly practical example of the integration of economic, social and environmental concerns
(as envisaged by sustainable development) is found in the increasing use of impact
assessment tools in the international arena.23 These tools come in various forms, ranging in
scope from environmental impact assessments and human rights impact assessments to the
broadest tool, sustainability impact assessments. Impact assessments operate as a formalised
consideration of the wider effects of particular policies (usually trade policies or development
projects), and aim to ensure that trade and development decisions result from processes that
promote sustainability and public participation.

The 1992 Rio Declaration recognised the potential of impact assessment in Principle 17:

“Environmental impact assessment, as a national instrument, shall be undertaken for

proposed activities that are likely to have a significant adverse impact on the environment
and are subject to a decision of a competent national authority.”

At the international level, certain environmental treaties contain obligations to perform

environmental impact assessments in situations where one country’s activity may flow across
a border or when areas of common concern, such as the high seas 24 or the Antarctic,25 are

22 See China – Rare Earths and China – Raw Materials, infra note 54 and accompanying text.
23 For details, see M. Gehring, J. Hepburn & M.C. Cordonier Segger, World Trade Law in Practice (London:
Globe Law and Business Publishing, 2007) at 131 ff.
24 United Nations Convention on the Law of the Sea, 10 December 1982, 1833 U.N.T.S. 3, 21 I.L.M. 1245
(entered into force 16 November 1994), at Preamble and arts. 192, 194.
25 Protocol to the Antarctic Treaty on Environmental Protection, 4 October 1991, 30 I.L.M. 1461, art. 23(1).

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involved. The application of such instruments to trade agreements is relatively new, but
developing rapidly, and in some instances the assessments include a regulatory dimension.

In Canada, the Framework for Conducting Environmental Assessments of Trade

Negotiations26 has been used since 2001 to conduct environmental assessments of new
bilateral and regional trade negotiations, and since 2005 this has also been applied to
investment agreements. The assessments seek to assist Canadian negotiators in integrating
environmental considerations into the negotiating process (as envisaged by the Doha
Development Agenda), and to address public concerns. The framework includes provisions
for actively seeking public input into assessments from non-governmental organisations,
businesses, indigenous peoples and the general public. Similarly, the Office of the US Trade
Representative has conducted environmental reviews of all bilateral and regional trade
agreements signed by the United States since 1999, in which regulatory impacts, public
advice and potential impacts in the territory of the proposed new trading partner are taken
seriously and addressed.27

Sustainability impact assessments are more complex, innovative studies which take
economic, environmental and social impacts into account to provide a complete picture of the
expected effects of a trade policy or project. They include target-related indicators, which
attempt to measure sustainability against a set of defined goals, and process-related
indicators, which are based on the principle that the process itself by which policies and
decisions are adopted plays a substantial role in achieving sustainable development goals.
Indicators of sustainability used in the assessments fall into three categories:

• economic indicators, including average real income, fixed capital formation and
employment rates;
• social indicators, including poverty rates, health and education levels and equity; and
• environmental indicators, including air and water quality indicators, biological diversity and
natural resources.28

Sustainability impact assessments are mostly in use within the European Union, which
developed a framework for analysis in 1999 and has since applied it to the WTO Doha Round
negotiations and EU bilateral and regional trade agreements with Chile, Mercosur, the
African-Caribbean-Pacific nations and the Gulf Cooperation Council nations. EU
26 Online: Foreign Affairs and International Trade Canada .www.dfati.meaci.gc.ca
27 Available online: . www.ustr.gov
28 European Commission, Sustainability Impact Assessment, online: EUROPA . http://ec.europa.e//trade/comm

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sustainability impact assessments place much emphasis on consultation both within EU

member states and in the third country trade partners. The assessments themselves are
conducted by independent experts commissioned by the European Union, which then
receives a response paper from the European Commission. All results are made public.

THE DOHA DECLARATION

The 2001 Doha Ministerial Declaration, which launched the current negotiations, strongly
reaffirmed this mandate. Ministers also called on the Trade and Environment and Trade and
Development committees to act as forums for identifying and debating the environmental and
developmental aspects of the negotiations, in order to help achieve the objective of
sustainable development.29

As a result, sustainable development has been a standing item on the agenda of the
Committee on Trade and Environment (CTE). The committee decided to look at the subject
by sector and in 2003 the Secretariat briefed it on relevant developments in the following
areas of the negotiations: agriculture WT/CTE/GEN/8, market access for non-agricultural
products (NAMA) WT/CTE/GEN/9, rules WT/CTE/GEN/10 and services WT/CTE/GEN/11.

The committee then debated: non-trade concerns mentioned in the Preamble of the
Agreement on Agriculture; trade-distorting agricultural policies; fishery subsidies;
liberalization of environmental goods and services; classification of environmental services;
regulatory issues concerning services; Paragraph 51 of the Doha Declaration on sustainable
development and developing countries; and coordination between the Trade and Environment
and Trade and Development committees under Paragraph 5130

The WTO clearly considers itself bound by its commitment to sustainable development as an
objective, and arguably, may also be influenced by sustainable development in its role as an
‘interstitial norm’ in public international law.31 As such, the outcomes of trade negotiations
may present opportunities to modify certain trade rules in order to ensure that they can better
support sustainable development. Many caveats remain and these have become doubly
apparent in subsequent Doha Round negotiations in Cancun and Hong Kong. At first there
were high initial expectations for the agenda underpinning the DDA as it was widely

29 WTO, Ministerial Declaration, Ministerial Conference, Fourth Session–Doha, 9-14 November 2001, WTO
Doc. WT/MIN(01)/DEC/W/1 (2001).
30 https://www.wto.org/english/tratop_e/dda_e/dda_e.htm
31 Nelson, R., 1999, The Sources of Economic Growth. Cambridge: Harvard University Press.

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understood as intending to place development priorities at the very heart of the new
negotiations. However, in spite of recent Appellate Body and WTO statements on the
importance of delivering on the development promises of world trade, and of ensuring that
trade law contributes to the objective of sustainable development, the process has been
inconsistent and repeatedly obstructed.32 While developing countries have made great efforts
to ensure that their voices and interests are heard and taken into account, there has been little
tangible advancement on important development issues. Similarly, progress has been scant in
constructively addressing overlaps between trade and human rights questions or trade and
environment questions, in a way that seamlessly integrates development interests.

CONCLUSION

To ensure that international trade law can deliver on sustainable development in the current
context, a constructive, integrated approach is needed to address overlaps between social
32 WTO, Appellate Body Report, European Communities-Conditions for the Granting of Tariff Preferences to
Developing Countries, supra note 47 at para. 93.

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development, economic development and environmental protection. This approach must

focus specifically on achieving solid results for developing countries and for development in
general.

The WTO’s central role in providing coherence and coordination in pursuing the 2030
Agenda should be noted:

“We recognize the role the WTO can play in contributing towards achievement of the 2030
Sustainable Development Goals, in so far as they relate to the WTO mandate, and bearing in
mind the authority of the WTO Ministerial Conference.

We recognize the importance of strengthened coherence in global economic policy-making.

We underscore the Marrakesh coherence mandate, and encourage initiatives for cooperation
with other international organizations in pursuit of our common objectives, while respecting
the competence of each organization.”33

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member
States in 2015, provides common goals for the wellbeing of people and the environment.  The
Sustainable Development Goals (SDGs) call on countries to seize trade-related opportunities
to promote sustainable development.

The infrastructure of sustainable development must reconcile three premises: the trade
perspective is adamant that economic liberalization provides the most efficient way of
environmental protection and societal betterment; the environmental viewpoint asserts that
the status quo is fatally harming natural capital and must be modified and the development
schema prioritizes curtailing the incidence of poverty.

BIBLIOGRAPHY

33 World Trade Organization, Ministerial Declaration of 19 December 2015, WTO Doc. WT/MIN(15)/DEC 8-
9 (2015) (emphasis added).

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⮚ Anderson, K. “Agricultural Trade Reforms, Research Initiatives, and the

Environment”. Pp.71-82 in Ernst Lutz (editor), Agriculture and the Environment:
Perspectives on Sustainable Rural Development, World Bank, Washington D.C. 1989.
⮚ World trade Organisation, “Making trade work for the environment, prosperity and
resilience”, 2009.
⮚ Markus W. Gehring, “Sustainable Development in World Trade Law: New
Instruments”, 2016.
⮚ Kruma, K., “Sustainable development in world trade law”, 2008
⮚ Gregory Messenger, “Sustainable Development and The Commodities Challenge:
The Eventual ‘Greening’ Of the World Trade Organization”, 2017.
⮚ Nil Lante Wallace-Bruce, “Global trade and sustainable development: two steps
forward in the WTO?”, 2002.
⮚ Gary P. Sampson, “The WTO and Sustainable Development”, 2005.
⮚ Clem Tisdell, “Globalisation, WTO And Sustainable Development” 2000.
⮚ World trade Organisation , “Sustainable development”, 2006.
⮚ World trade Organisation, “The Doha Round”, 2011.
⮚ M.W. Gehring and M.C. Cordonier Segger, “Sustainable Development in World
Trade Law”, 2008.

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