Challenging the WTO

Global trade rules threaten to undermine

environmental laws of sovereign nations.
But with those nations often beholden to
their own trade-hungry corporations, it has
fallen to nongovernmental organizations
to make sure the WTO is accountable.

22
 by Hilary French
N LATE JULY, THE U.S. GOVERNMENT decided to
I get tough with the countries of the European
Union—slapping 100 percent tariffs on $116.8
million worth of European imports, including
fruit juices, mustard, pork, truffles, and Roquefort
cheese. The European “offense” was its refusal to
revoke a ban on the import of meat treated with
growth hormones—a refusal that defied a World
Trade Organization (WTO) ruling that the ban was
an unfair barrier to U.S. and Canadian beef exports.
The U.S. sanctions were greeted with widespread
consternation in Europe, particularly in France,
where a number of McDonald’s restaurants were tar-
geted for protests. In a symbolic tit-for-tat, the mayor
of the French village of St. Pierre-de-Trivisy, which
lies in the heart of Roquefort cheese country, decid-
ed to retaliate by doubling the price of Coca-Cola
sold at the town’s campground and recreation center.
This burgeoning transatlantic food fight is
emblematic of a new kind of global trade conflict, in
which various national health and environmental
laws, rather than such traditional trade-war issues as
tariffs, quotas, and the “dumping” of commodities
like steel or wheat, are now at stake. The European
Union (EU) insists the ban isn’t an intentional trade
barrier at all, but only a prudent response to public
concern that eating hormone-treated beef might
cause cancer and other health problems. So far, the
EU has refused to back down.
The origins of today’s brewing environmental
trade battles can largely be traced back to December
1993, when negotiators struck a deal in the long-
running “Uruguay Round” of global trade talks. The
text of the agreement ran to an astounding 26,000
pages, and covered a bewildering array of issues,
including agriculture, intellectual property rights,
investment, and services. Perhaps most importantly,
it stipulated the creation of a new World Trade
Organization that would encompass the pre-existing
General Agreement on Tariffs and Trade (GATT) as
well as the new provisions resulting from the
Uruguay Round. The WTO was charged with over-
seeing the implementation of the new rules of world
trade, as well as with settling any disputes about these
rules between nations. Member countries granted the
new organization unprecedented powers for an inter-
national body, including a binding dispute resolution
mechanism and provisions for stiff trade penalties to
enforce its rulings.
ILLUSTRATION BY EDITH R. THOMPSON
The WTO quickly became a lightening rod.
Although its creation was hailed by many in the busi-
ness community, government, and academia as a key
to global economic growth and prosperity, critics
view the new organization as a dangerous suprana-
tional entity that elevates corporate rights to a new
plane, while devastating local communities and the
environment. Critics also decried the secrecy in
which WTO activities are shrouded. Many important
documents are unavailable to the public, and most
WTO committees, as well as all dispute resolution
proceedings, are conducted in closed sessions.
In a concession to the concerns of environmen-
talists, the preamble to the WTO agreement includes
environmental protection and sustainable develop-
ment among the organization’s goals. The accord
also included a commitment to create a Committee
on Trade and Environment charged with analyzing
the relationship between trade liberalization and
environmental protection, and making recommenda-
tions on any changes to WTO rules that might be
needed to make the two goals “mutually supportive.”
But more than five years later, the committee has
produced much talk but no concrete action.
In early December 1999, trade ministers from
around the world will gather in Seattle, where they
will decide whether or not to launch a new “millen-
nium round” of global trade talks. Thousands of
nongovernmental activists are expected to also be on
hand (see “Action on the Front Lines,” page 12).
Five years after the conclusion of the Uruguay
Round, the political backdrop for global trade nego-
tiations has evolved. Nongovernmental organizations
(NGOs) were emboldened by their successful cam-
paign in 1998 to bring to a halt negotiations on
another controversial international economic agree-
ment, the proposed Multilateral Agreement on
Investment. And in the United States, the failure of
Congress to grant the Clinton administration “fast-
track” trade negotiating authority has strengthened
the hand of trade critics.
Many activists are hoping to use their new-found
clout to stop the new round in its tracks—at least
until the environmental impact of the rules estab-
lished five years ago are better understood. Others,
while not aiming to scuttle the WTO altogether,
argue that the agenda for any new round should
include a clear commitment to greening the rules of
world trade. Although the outcome of the Seattle
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WORLD•WATCH November/December 1999 23
 meeting is unpredictable, one thing is clear: reform is
desperately needed to marry the rules of the global
trading system with the imperative of reversing glob-
al ecological decline.
Tuna & Dolphins to Shrimp & Turtles
WIDESPREAD CONCERN ABOUT the environmental
impact of the GATT dates to September 1991, when
a GATT dispute resolution panel shocked U.S. envi-
ronmentalists by ruling that an embargo against
Mexican tuna imposed under the U.S. Marine
Mammal Protection Act violated the GATT agree-
ment. The United States had imposed the embargo
after determining that Mexican fishermen were trawl-
ing the ocean for tuna with “purse-seine” nets that
often have the unintended effect of ensnaring dol-
phins along with tuna. In reaching their conclusion
that the tuna embargo breached GATT rules, the
panelists emphasized a key though controversial dis-
tinction between import restrictions aimed at the
characteristic of products themselves, versus those
having to do with production processes. The pan-
elists decreed that the U.S. law was GATT-illegal
because it was the process by which the tuna was har-
vested, rather than the tuna itself, that was being
rejected by the United States.
Although the GATT agreement—and later the
WTO—contains a specific provision that ostensibly
protects the right of countries to pursue environ-
mental protection policies that might otherwise con-
tradict trade rules, the panelists ruled that this
exception pertains only to efforts by countries to pro-
tect the environment within their own borders.
Because the Mexican tuna fishing took place outside
of U.S. waters, the panelists viewed the embargo as
tantamount to the U.S. imposing its environmental
laws and values on the rest of the world. This point
of view resonated with many people, particularly in
the developing world, who look to the rule-based
WTO as a check on the U.S. tendency to wield its
economic power unilaterally.
But the ruling exposed some glaring inconsisten-
cies between the rules of the world trading system
and emerging international environmental principles
and practices. Particularly worrisome was the ruling’s
failure to acknowledge the right of countries to take
action to protect the atmosphere, the oceans, and
other parts of the global commons—a failure that
raised questions about the GATT-legality of an array
of other environmental policies besides the one aimed
at protecting dolphins. What would become of poli-
cies aimed at reducing the use of harmful drift nets in
fishing, protecting primary forests, or staving off
ozone depletion or global warming? By the panel’s
reasoning, it seemed that even provisions of interna-
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24 WORLD•WATCH November/December 1999
tional environmental agreements designed to protect
global resources could be ruled GATT-illegal. This
clash between two different spheres of international
law presented the world with a major legal challenge,
as it is not always clear which agreement trumps
another in cases where two treaties are in conflict.
The trading system’s aversion to process-related
trade restrictions struck many environmentalists as
particularly arbitrary, as environmental policy is mov-
ing increasingly toward focusing on the environmen-
tal impacts of products throughout their
“life-cycle”—including production, distribution, use,
and disposal. Products such as gold or timber may be
harmless or beneficial as products, but enormously
costly to human or environmental health in the ways
they are processed—with gold extraction leaching
cyanide into groundwater, or clear cutting reducing
vast swaths of primary forests to wastelands. Reform
of extraction and manufacturing processes are essen-
tial to making real environmental advances, yet trade
rules could pose a significant impediment to pursuing
such efforts in a world economy that is becoming
steadily more integrated.
Despite the furor over the tuna-dolphin decision,
the WTO struck again in 1998, ruling against a U.S.
law aimed at reducing unintended sea turtle mortali-
ty as a byproduct of shrimp trawling. This conflict
had been set in motion back in 1996, when the U.S.
Court of International Trade ordered the U.S. gov-
ernment to begin enforcing certain provisions of the
U.S. Endangered Species Act that were intended to
protect sea turtles. Sea turtles are both extremely
endangered and highly mobile, making international
action to protect them a high priority. According to
the California-based Sea Turtle Restoration Project,
some 150,000 turtles are ensnarled in fishing nets
each year. The provisions of the law in question
closed the lucrative U.S. shrimp market to countries
whose shrimpers are not required to use “turtle
excluder devices” (TEDs). A TED is a simple but
highly effective piece of equipment that prevents tur-
tles from getting ensnared in shrimp nets. Their use
has been required for U.S. shrimpers since 1988. If
employed properly, TEDs reduce turtle mortality in
shrimp trawling by 97 percent or more, according to
U.S. government studies. Spurred by the U.S.
embargo, 16 nations, including 13 Latin American
nations and Indonesia, Nigeria, and Thailand, have
by now moved to require the use of TEDs.
India, Malaysia, and Pakistan chose a different
tack, however—deciding to launch a WTO challenge
rather than meet the U.S. requirement. Thailand
joined them in this effort as a matter of principle,
even though it had adopted TEDs. Although the
environmental effectiveness of the U.S. law was clear,
the WTO dispute resolution panel concluded in April
1998 that the measure violated WTO rules. A subse-
quent WTO appeals panel upheld this conclusion.
From an environmental standpoint, the legal reason-
ing employed by the appeals panel was an improve-
ment over earlier rulings, as it acknowledged that
countries may in some circumstances be justified in
using trade measures to protect global resources. But
the panel took issue with the way in which the U.S.
law had been implemented, arguing that it was
applied in an arbitrary manner that failed to treat
countries even-handedly. The bottom line was that
the U.S. law would have to be changed in order to
comply with WTO rules.
This outcome was particularly alarming, as the
Uruguay Round had strengthened the rules of dis-
pute resolution proceedings to make the adoption of
panel reports essentially automatic—along with the
imposition of trade retaliation in cases where coun-
tries are unwilling to adhere to their findings by
changing offending laws. In response to the ruling,
the U.S. government altered the way it was imple-
menting the law, without seeking any changes to the
statute itself. The new guidelines provide for the
import of specific shipments of shrimp that have been
approved as turtle-safe even if the country as a whole
has not met the certification requirements.
Many U.S. environmentalists take issue with this
approach. Their primary concern is that the “ship-
ment-by-shipment” method will be less effective in
safeguarding turtles than the earlier blanket restric-
tion, as it will not compel countries to mandate the
use of TEDs when fishing for shrimp not destined for
the U.S. market. They also worry that the new poli-
cy may facilitate the entry of “laundered” turtle-
deadly shrimp into the United States. The WTO
appeals panel, on the other hand, maintains that
“nation-by-nation” certification is a transparent
attempt to influence the domestic policies of other
countries. The “shipment-by-shipment” method, in
contrast, can be defended as merely regulating the
environmental impact of goods to be consumed
within U.S. borders.
Several environmental groups protested the U.S.
government’s action by filing suit at the U.S. Court of
International Trade. They contend that the govern-
ment is failing to adequately enforce the Endangered
Species Act. In a preliminary ruling in April 1999, the
U.S. Court of International Trade sided with the envi-
ronmental groups, placing national law and interna-
tional trade rules on a possible collision course.
Food and Forestry Fights
ANOTHER CONTROVERSIAL COMPONENT of the pack-
age that comprised the original WTO was an
“Agreement on the Application of Sanitary and
Phytosanitary (SPS) Measures” that imposes new
restrictions on laws designed to protect human, ani-
mal, and plant health. The ostensible reason for these
new limitations was to prevent countries from using
health and safety standards as disguised trade barriers.
Trade specialists argued that legislators were passing
disingenuous laws that lacked a scientific rationale,
with the primary goal of keeping foreign products off
of their shelves. In order to prevent this kind of pre-
sumed interference with free trade, the SPS agree-
ment encourages countries to “harmonize” a range
of relevant standards at the international level. Food
safety requirements are high on this list.
Although the agreement permits countries to
maintain national laws that are tougher than interna-
tional standards, it confronts them with sizable legal
hurdles if they choose to do so. For instance, if
an environmental law is challenged, the country
defending the law must demonstrate that it is scien-
tifically justified and based on risk assessment.
Environmentalists and consumer groups argue that
the new restrictions promote “least common denom-
inator” policymaking—adoption of policies that are
weak enough to be acceptable to the least environ-
mentally protective member countries. The worry is
that vested interests will exploit any scientific uncer-
tainty surrounding a protective law (and in science
there are always uncertainties) as a reason to limit
preventative environmental action.
The need for such action is embodied in the “pre-
cautionary principle”—an emerging principle of
international environmental law that is steadily gain-
ing ground. The Rio Declaration on Environment
and Development, for example, which was agreed to
at the June 1992 Earth Summit, declares that:
“Where there are threats of serious or irreversible
damage, lack of full scientific certainty shall not be
used as a reason for postponing cost-effective mea-
sures to prevent environmental degradation.” The
new WTO provisions, on the other hand, shift the
burden of proof by in effect requiring that all chemi-
cals and other food additives be proven harmful
before their use can be restricted. The problem with
this formulation is that we know from painful experi-
ence that extensive testing, sometimes over a period
of years, is required to know if a substance has long-
term cumulative effects that might cause cancer, dam-
age to the immune system, or other serious ailments.
As the Uruguay Round negotiations were wrap-
ping up back in 1993, the European Community and
the United States were already embroiled in their
long-simmering dispute over the EU’s beef-hormone
ban, which is only now coming to a full boil. Since it
was first promulgated in the late 1980s, the
European law has always applied equally to domesti-
cally raised and imported livestock, and has thus
passed the WTO’s bedrock test of “non-discrimina-
tion.” But the hormone-hooked U.S. livestock
industry was threatened by the law, which stood to
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WORLD•WATCH November/December 1999 25
 block hundreds of millions of dollars worth of U.S.
beef exports, and it prevailed upon the U.S. govern-
ment to take up its cause. The “SPS” agreement pro-
vided added ammunition for this longstanding U.S.
campaign to use international trade rules to overturn
the disputed European law.
This effort culminated in February 1998 when a
WTO appeals panel ruling paved the way for the
imposition of retaliatory sanctions this past July by
upholding an earlier dispute panel ruling that the
European law violated WTO rules. The appeals panel
overturned some elements of the original findings,
but affirmed that the European law was WTO-illegal
because it was based on inadequate risk assessment.
The panel also rejected the EU’s claim that the
import restriction was justified by the precautionary
principle. Environmentalists were aghast at the deci-
sion. The U.S. consumer group Public Citizen
charged that: “Through the dispute over hormone-
treated beef, the WTO inappropriately inserted itself
as a major arbiter of domestic health and safety poli-
cy. The WTO’s beef hormone decision undermines
countries’ democratic prerogatives to safeguard their
citizen’s health and well-being.”
The beef hormone controversy is widely viewed
as just a warm-up for a more serious trade controver-
sy now brewing over genetically modified organisms
(GMOs). Once again, the European Union and the
United States are the primary antagonists. Prompted
by public concern over the health and ecological
effects of GMOs, the EU passed legislation in 1998
requiring all food products that contain genetically
modified soybeans or corn to be labeled as such.
Several other countries, including Australia, Brazil,
Japan, and South Korea, are now following suit. A
large share of food products made by U.S. compa-
nies—breads, baby food, and ice cream, among
them—now contain GMOs. Many
European producers, in contrast, are
steering clear of GMOs in the face of
public opposition. U.S. companies
complain that the labeling require-
ments amount to trade barriers,
and both the U.S. and Canadian
government are now pro-
pounding this view at the WTO
and in other international
forums.
Last February, a pro-
posed “biosafety” protocol
to the UN Convention
on Biological
Diversity became
the first major
victim of the
growing inter-
national trade war
✦
26 WORLD•WATCH November/December 1999
over GMOs. Negotiations had been underway for a
few years, aimed at putting in place a system of prior
consent for the transport of genetically engineered
seeds and products. The talks were scheduled to
wrap up in Cartagena, Colombia in February, but six
major agricultural exporting countries—Argentina,
Australia, Canada, Chile, the United States, and
Uruguay—put a monkey wrench into these plans by
blocking adoption of the accord. One of the main
U.S. arguments against the protocol was a claim that
its provisions ran counter to the rules of the WTO.
Negotiators are still hoping to bridge the differences.
These chills in transatlantic relations over food
safety are only the tip of the iceberg of trade conflicts
over agricultural policy as a whole. The Marrakesh
accord that created the WTO in 1994 stipulated the
launch of new negotiations on agriculture at the end
of 1999. The United States and other agricultural
exporters, including many from the developing
world, are pushing hard for more access to overseas
markets than they were able to secure through the
Uruguay Round. But some food importers, includ-
ing Japan and South Korea worry that cheap import-
ed grain will put their own farmers out of business.
“To follow the Uruguay Round with another round
of agricultural liberalization that serves mainly the
interests of the U.S. agricultural dumping lobby and
a small elite of Asian agro-exporters will drive the
[Asian] region’s small farmers over the edge,” warns
Walden Bello of the Bangkok-based Focus on the
Global South.
Trade in forest products is also likely to loom
large as an issue in Seattle in November. Under a
controversial proposed agreement, most developed
countries would eliminate tariffs on forest products
such as paper and wood by 2000, and developing
countries would do so by 2003. The precise
effects are difficult to predict, but environ-
mentalists warn that the lower prices for
forest products expected to result
from the proposed pact would boost
demand. A study commissioned by the
Washington, DC-based American
Forest and Paper Association confirms
this contention, finding that the elimi-
nation of all tariffs would
increase global wood
consumption by 3 to
4 percent. With so
little of today’s tim-
ber industry based on
sustainable practices,
increased consump-
tion and production
would likely translate
into increased forest
destruction.
 Although the proposed accord would initially
take aim at tariffs alone, its scope might well be
expanded in the future to include “non-tariff barriers
to trade.” Over the longer-term, these provisions
might pose an even greater threat to the health of the
world’s forests, and to the diversity of species that
inhabit them. Even under existing agreements, con-
cern is rising that laws designed to minimize the
introduction of harmful exotic species will run afoul
of WTO rules. Pests and other species introduced
through trade are one of the greatest threats to native
species and ecosystems, and impose massive econom-
ic costs as well.
In what may be a foreshadowing of controversies
to come, the Chinese government (which is not yet a
member of the WTO) has complained that a ban on
the import of wooden packing crates, imposed by the
United States in late 1998, amounts to an unfair
trade barrier. The U.S. government imposed the ban
after determining that Chinese packing crates were a
primary culprit in the recent introduction to U.S. ter-
ritory of the Asian long-horned beetle, a voracious
tree-devouring invader that poses a major threat to
hardwood forests. Forest certification initiatives,
aimed at creating a market for sustainably harvested
timber, could also run head-on into WTO rules in
the years ahead.
Toward Seattle
AS OPPOSITION TO THE WTO CONTINUES to mount,
many governments are beginning to acknowledge—
rhetorically, at least—that reforms are desperately
needed to make the world trading system environ-
mentally sound. In an address commemorating the
50th anniversary of the GATT in 1998, U.S.
President Bill Clinton conceded that: “We must do
more to make sure that this new economy lifts up liv-
ing standards around the world, and that spirited eco-
nomic competition among nations never becomes a
race to the bottom in environmental protections, con-
sumer protections, and labor standards.” And at the
G8 summit meeting of industrial powers held in Köln,
Germany in June 1999, world leaders agreed “that
environmental considerations should be taken fully
into account in the upcoming round of WTO negoti-
ations.” But governments have for the most part been
vague about exactly how this should be done.
One key question is whether or not governments
are prepared to amend existing WTO rules to buffer
environmental laws from trade challenges. NGOs are
particularly adamant that eco-labeling programs be
protected, to insure that there is no undermining of
consumers’ right to know about the health and envi-
ronmental impact of products they purchase. NGOs
would also like to see the WTO formally recognize
the precautionary principle, as well as provide some
deference to multinational environmental agreements
in cases where they conflict with WTO rules. The
European Union has voiced general support for these
ideas, but the United States appears lukewarm about
writing any new environmental guarantees into the
WTO. Ongoing controversies over beef hormones
and GMOs undoubtedly color the U.S. view.
On the more positive side, the WTO could con-
ceivably be enlisted in an effort to reduce environ-
mentally harmful subsidies. World trade rules have
long discouraged subsidies, as they distort the eco-
nomic playing field. The United States and six other
nations have suggested building on this tradition by
making the elimination of fishing subsidies an objec-
tive for the upcoming round of trade talks. These
subsidies, which add up to some $14–20 billion
annually, help propel overcapacity in the world’s fish-
ing fleet, which is itself a powerful driving force
behind today’s depleted fisheries. Other environmen-
tally harmful payouts could also be tackled at the
WTO—including multi-billion dollar agricultural
and energy subsidies.
The question of how the World Trade Organiza-
tion itself operates will also be on the table in Seattle.
The recent spate of environmentally related trade dis-
putes has opened the WTO to intense scrutiny, with
critics charging that its secretive ways pose a basic
threat to democracy. Procedural changes are impera-
tive if the WTO is to garner the public support it
needs to stay in business. Even The Economist, which
normally pushes a free-trade agenda with near reli-
gious zealotry, acknowledges that: “The four-year old
WTO is at a crossroads. It has become a quasi-judicial
body, an embryo world government ...Yet it is now
being asked to arbitrate on matters that are intensely
political. It lacks the legitimacy to do so.” The Indian
activist Vandana Shiva makes essentially the same
point, although she carries it a step further: “The
WTO is basically the first constitution based on the
rules of trade and the rules of commerce. Every other
constitution has been based on the sovereignty of
people and countries. Every constitution has protect-
ed life above profits. But [the] WTO protects profits
above the right to life of humans and other species.”
The thousands of citizen activists who gather in
Seattle this November will make clear their opposi-
tion to international governance based on such a nar-
row conception of the global interest. Building more
democratic and environmentally attuned internation-
al governance structures will be a preeminent
challenge in the early part of the 21st century.
Hilary French is vice president for research at the
Worldwatch Institute. This article is based on her
forthcoming book, Vanishing Borders: Protecting the
Planet in the Age of Globalization, to be published by
W.W. Norton & Company in March 2000.
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