Safe Trade — Reversing the Current Order
Sustainable trade takes place when the international exchange of goods and services yields positive social, economic, and environmental benefits. Currently, our global trade is not fulfilling this goal. Corporate globalization has eroded democratic participation and the focus on local sustainable production.
Free Trade Rules in North America Undermine Environmental Health
“NAFTA’s investment provisions are being used by investors to undermine environmental and human health and safety measures, in a process that is closed to the public at every turn and cannot be effectively appealed. Instead of using these provisions as intended — as a last ditch response to unfair treatment — corporations are using NAFTA’s Chapter 11 as a strategic weapon to resist and deter legitimate government regulation. The result: provisions meant to protect private rights have now become a real public problem.”
Example: Ethyl Corporation wins battle to force Canada to accept toxic gasoline additive
NAFTA includes a chapter of liberalized investment rules that grant broad rights to foreign investors in North America. Investors have filed a number of challenges to state and national laws under the NAFTA rules. For example a U.S. company, the Ethyl Corporation, filed and essentially won an investment claim against the Canadian government over a measure that would have prevented Ethyl from continuing to sell MMT, a manganese-based gasoline additive. Canada enacted a ban on MMT based on concerns that it damages automotive pollution control devices and may be dangerously toxic. Ethyl, the sole manufacturer of MMT, aggressively opposed the Canadian ban and used the threat of the NAFTA claim in an effort to defeat the legislation. When that effort was unsuccessful, Ethyl filed an arbitral claim under NAFTA against Canada for $251 million for ‘expropriation’ of its investment. When it appeared that Canada would lose the arbitration, it settled with the corporation, agreed to withdraw the MMT ban, and paid in excess of $10 million in damages.
For a critique, visit http://iisd1.iisd.ca/trade/newsdisplayentry.asp?id=21
World Trade Organization (WTO) Asserts Trade Rights over Environmental Concerns
The WTO was established January 1, 1995, by a Ministerial declaration signed in April 1994. One of the bodies of law on trade in goods that the WTO administers is the General Agreement on Trade and Tariffs (GATT). The WTO also administers and embodies the rest of the results of the Uruguay Round of Negotiations, including the General Agreement on Trade in Services, the Agreement on Intellectual Property Rights, and the Understanding on Rules and Procedures Governing the Settlement of Disputes. The WTO, as well as being a body of law, is an international institution based in Geneva.
What does the WTO have to do with sustainable development? Briefly, any law or regulation passed by a WTO member that affects trade flows — even if its purpose is primarily environmental protection — has to comply with GATT rules.
Unlike most United Nations treaties, where NGOs can have observer status and a right of access to papers, and all but the most heated of negotiations, the WTO has refused to allow NGOs access to WTO documents, negotiations, and working committees.
Trade liberalization has limited governmental law-making and regulatory authority to ensure minimal interference with transnational business. For rules that are deemed necessary, these rules must be applied uniformly under the subject heading of harmonization. Technical Barriers to Trade (TBTs) are laws that include regulating all forms of commerce including, production, products, services, investment, and intellectual property rights. As most environmental laws are based on trying to make industry internalize its environment costs most environmental laws are, by definition, potential nontariff trade barriers.
The WTO has been granted an enforcement mechanism unique in international law. The dispute settlement panel’s power within the WTO consists of three corporate lawyers that meet in secret, arriving at decisions with or without input which only they can request. There are no conflict of interest regulations. Final rulings can invalidate laws passed by any democratically elected parliament around the world. Their decision can be appealed, but once the appellate body makes its determination the matter is final and can only be overturned by a consensus of all of the 134 WTO member countries, including the country who first brought the grievance.
The WTO is the world’s first treaty with a serious enforcement mechanism authorizing countries to levy significant financial sanctions against those governments unwilling to jettison their domestic decisions in a timely manner. The WTO ruled that the U.S. and Canada had a right to levy 100% retaliatory trade duties against European Union farm products to the tune of nearly $125 million each year, unless and until the EU agrees to allow imports of U.S. and Canadian beef with artificial hormones.
In 1998 the WTO Appellate Body ruled that a U.S. ban on imports of shrimp caught without the use of turtle excluder devices violated WTO rules. The case arose when India, Pakistan, Thailand, and Malaysia filed a challenge against the U.S. measure. The Shrimp/Turtle case demonstrates that differences in production based on environmental harm can be overturned and that WTO rules determined in a closed process superceded national rules.
Resources and Links to Campaigns Working to Reform the WTO
The Center for International Environmental Law (CIEL) is seeking to participate in the WTO dispute settlement system in order to ensure that international trade law and policy-making respect and do not conflict with principles of sustainable development. With the failure of the WTO’s Committee on Trade and Environment to resolve key issues, the dispute resolution system has become the venue for policy development by default. CIEL is actively pursuing NGO participation in the dispute settlement process at the WTO. Visit their website.
The Institute for Agriculture and Trade Policy promotes resilient family farms, rural communities, and ecosystems around the world through research and education, science and technology, and advocacy. Visit IATP’s Trade Observatory website.
Public Citizen is a U.S. national, nonprofit consumer advocacy organization founded by Ralph Nader in 1971 to represent consumer interests in Congress, the executive branch, and the courts. Visit their trade campaign at www.citizen.org.