11/12/08ESPP-781. 11/12/08ESPP-782 Globalization, Environment, and the “Battle of Seattle” (1999) New alliances: labor and environment –Worries about.

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Globalization, Environment, and the “Battle of Seattle” (1999)

• New alliances: labor and environment– Worries about governance: the non-

accountable role of large corporations– Loss of local networks and control– Loss of jobs: concern for both South and North– Lowering of environmental standards– Race to the bottom: in pay; in labor standards;

in environmental quality

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Institutions of Global Governance

• Spheres of action:– Political: United Nations – Economic: World Trade Organization (also World

Bank, International Monetary Fund)– Environmental: Many institutions have a slice of the

pie• Types of international legal frameworks

– Soft law: not binding (e.g., codes of conduct, Global Compact, Agenda 21)

– Treaties: binding powers delegated by nation states– Constitution: living federal system (EU?)

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WTO and the Environment

Can free trade and environmental protection co-exist effectively?

Are the WTO’s governing principles sound?

Is a new institution required?

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History and Functions of the WTO

• Successor to GATT (General Agreement on Tariffs and Trade) 1947, created in Uruguay Round (1994)

• New global norm “trade liberalization”

• Expansion from 50 countries to 185

• Legalization of trade disputes– Compulsory adjudication

– Binding outcomes, with serious monetary sanctions

– Dispute Settlement Panel

– Appellate Body

– Dispute Settlement Body (“reverse consensus”)

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Conflicts between Trade and Environment

• Environmental regulations may operate as non-tariff barriers (NTBs) to trade:

-- e.g., EPA requires turtle-friendly trawlers

• Cultural preferences may conflict with harmonized regulations:

-- e.g., Genetically Modified Organisms

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WTO’s Governing Principle: Equal Treatment (except when…)

• Overall aims– Freer trade, through rounds of negotiation– Predictable environment for trade– More competitive trading, through elimination of “unfair”

practices– More beneficial for developing countries, with adjustment

opportunities and special privileges where needed

• National Treatment– Imported and locally produced goods to be treated equally

• Most Favored Nation (MFN) status– Members are required to treat all nations equally

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Central Assumption of “Free Trade”:

Product Equivalence

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Greening the WTO

• Preamble language (cited in Shrimp-Turtle case)

“. . . 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 . . .”

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Environmental Exceptions

• Article XX So long as “such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination, . . . .this Agreement shall not be construed to prevent the adoption or enforcement by any contracting party of measures . . .

(b) necessary to protect human, animal or plant life or health; . . .

(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. . . .”

• Shrimp-Turtle case (1998) - tests scope of Art. XX

• Dolphin-Tuna case (1991 panel report)– “Product” not “process”

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Trade in Food: The SPS Agreement

• Goals: harmonization, technical rationalization • Key language and features:

– “based on scientific principles and is not maintained without sufficient scientific evidence”

– “Members shall base their sanitary or phytosanitary measures on international standards” (Codex Alimentarius Commission, UN)

– If not in compliance with international standards, then must “justify” deviation.

– Level of protection must be “based on risk assessment” as developed by the relevant international organizations (5.1)

• Is Europe’s precautionary approach justified (beef hormones)?

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How democratic is the WTO?

• U.S.A. as 800 lb. gorilla• Unclear role of citizens:

transparency; standing; amicus briefs

• Who decides law? Not bound by precedent.

• Who decides who decides (e.g., dispute settlement panels)?

• Validity of basic principles?

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Do we need a Global Environmental Organization?• For• Need explicit authority

for environment• WTO’s trade bias• Economist values may

override environmental ones

• Against• Unnecessary?• Unwieldy?• Unrepresentative?• Unscientific? • Unrealistic?