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The World Trade Organisation - An Australian Guide
- 2006 Edition
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Download the PDF version of this guide here

WTO & the Environment

Every time the WTO has been asked to rule on an environmental issue, it has demanded the weakening of environmental regulations. There are a variety of WTO agreements affect the environment, including the restrictions on government regulation of service corporations under the GATS.

But the element of the WTO which has had the most environmental impact has been its restriction on discriminating on the basis of "process and production methods" (PPMs). Under Article XX(b) of the GATT, the WTO has deemed it illegal for a country to restrict trade in a product based on environmental concerns over the way it has been processed, manufactured or harvested, as distinct from the impact or characteristics of the product itself. This raises serious problems, since most environmental impacts from a product occur through its production. There have been several cases before the WTO where a country's effort to ensure better environmental outcomes has been challenged and overturned by the WTO.

REACH for Weaker Regulations?

In 2001, the European Union (EU) released a plan for new chemical regulatory policy known as REACH, requiring manufacturers to provide safety information about chemicals before putting them on the market, and restricting use of the most dangerous chemicals. The World Wildlife Fund has estimated the health and environmental benefits of REACH at approximately $180 billion. But at the urging of the US chemical industry, the US government successfully used the WTO to water down REACH by arguing that it breached the EU's WTO commitments. "The proposals could . . . violate the non-discrimination requirements of the WTO, and could impose more trade-restrictive measures than are necessary to accomplish the EU's health and safety objectives" the US argued. Even after REACH was watered down, the US has continued to use the WTO to challenge it. In June 2004, the Bush administration submitted comments to the WTO Technical Barriers to Trade Committee that strongly criticized REACH as "a costly, burdensome, and complex approach, which could . . disrupt global trade". While the US can't formally challenge REACH at the WTO until the law is formalized (probably in 2006), there is little doubt that when they get the chance, they will try to have the WTO overturn the EU law as a "barrier to trade" (68).

Next Section: WTO & Non-Agricultural Market Access

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