The Preamble of the Marrakesh Declaration of 15 April 1994 which established the World Trade Organization (WTO) states that:

“relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.”

Ministers issued at this time a Decision on Trade and Environment that called for the establishment of a Committee on Trade and Environment (CTE). This was to follow on to the work of the GATT’s Group on Environmental Measures and International Trade (EMIT). The CTE’s mandate is to:

• identify the relationship between trade measures and environmental measures in order to promote sustainable development;
• make appropriate recommendations on whether any modifications of the provisions of the multilateral trading system are required, compatible with the open, equitable and non-discriminatory nature of the system.

The WTO agreements contain numerous provisions with implications for the environment. GATT Article I requires countries to extend the same treatment to like products from all countries, known as most favored nation (MFN) treatment. Article III, the principle of national treatment, requires countries to treat imported products no less favorably than like domestic products.¹GATT Article XX, the General Exceptions clause, allows for certain measures even when they violate other GATT rules. Among the measures excepted are those “necessary to protect human, animal, or plant life or health” or “relating to the conservation of exhaustible natural resources if such measures are made effective in con junction with restrictions on domestic production or consumption.” However, Article XX measures are subject to the chapeau, which prohibits them from being “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.” The test of whether a measure complies with the chapeau is based largely on the way the measure is applied.²

The Agreement on Technical Barriers to Trade (TBT) prohibits countries from maintaining technical regulations that restrict trade, if their concerns can be addressed in a less trade-restrictive manner. However, Article 2.5 of the TBT permits the application of technical regulations, if they are applied for environmental reasons in accordance with international standards.

The Doha Round (also known as the Doha Development Agenda), launched in 2001, was the first negotiating round in which the nexus between trade and environment was explicitly discussed. Negotiations were mandated to focus on three issues: (i) the relationship between WTO rules and specific trade obligations set out in MEAs; (ii) procedures for regular information exchange between MEA secretariats and the relevant WTO committees, and the criteria for the granting of observer status; and (iii) the reduction or elimination of tariff and non-tariff barriers to environmental goods and services. In addition, the CTE was instructed to focus on (i) the effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development; (ii) the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs); and (iii) labeling requirements for environmental purposes.

1. Particularly in the environmental context, there is much debate over what constitutes a “like” product.  The Appellate Body, deciding European Communities (EC) – Asbestos, required the text of WTO rules to consider a broad range of characteristics in determining “likeness,” including effects on human health. Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos Containing Products, WT/DS135/AB/R, adopted on April 5, 2001, paragraphs 98-100, 103. However, it remains unsettled whether production processes and methods (PPMs) can or should be taken into account in determining “likeness.”  The answer to this question has significant implications for environmental legislation, since a product’s lifecycle environmental impact is often determined by its PPM characteristics.
2. Appellate Body Report, United States-Gasoline, p. 22; Appellate Body Report, United States-Shrimp, paragraph 160.