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Meanwhile, in the Decision on Trade in Services and Environment, members decide to establish a Working Party on Trade in Services and Environment to examine and report, with recommendations if any, the relationship between trade in services and environment including sustainable development. Although the legal level of the Working Party is inferior to the CTE because it is under the command of the Council for Trade in Services, the Decision on Trade and Environment demands that the CTE shall regard this Working Party as an integral part of its work, that is to say, this Working Party is also an institutional ground for environmental regulation.
In addition, in order to carry out the work programme on trade and environment of the CTE of the WTO, the WTO established some working groups, such as the Working Group on Exports of Domestically Prohibited Goods. To a certain extent, these working groups shall be looked upon as the institutional ground of the WTO for environmental regulation.
Part II Impacts of Environmental Protection on the WTO Law
Although the WTO has awared that the international trend of environmental protection has had and would have significant effects on international trade and multilateral liberal trading system, and has provided the legal and institutional grounds for environmental regulation on international trade, the WTO law as the international legal foundation is still challenged greatly by environmental protection. The challenges against the WTO law from environmental protection are omni bearing and multi-level, and the entire framework, system, basic principles, legal regimes and specific rules of the WTO law are challenged in varying degrees. Among these, the basic principles are both the legal foundation of the multilateral trading system and the core of the WTO law, so the challenges the WTO law is faced with are focused on those challenges against principles. The author will analyze the environmental challenges against principles of the WTO law one by one in the following parts.
1.The Non-discrimination Principle
Non-discrimination is the fundamental principle of the WTO law, the only object of which is products, and the obligation of non-discrimination is applied limitedly to imported and domestic “like products” of contracting parties. According to the existing rules of the WTO law, the products produced by different production and process methods (PPMs) but with the same end use and physical characteristics shall be treated as the “like products”. Other standards not embodying the end use and physical characteristics of products shall not be used to differentiate whether or not like products. From the point of view of environmental protection, the like products produced by PPMs but with the same end use and physical characteristics, however, may have quite different impacts on environment. In consideration of this problem, many countries developed environmental standards for PPMs and prohibited or restricted products produced by PPMs which may cause serious environmental pollution or ecological destroy, and required imported products to meet the requirements of domestic environmental standards for PPMs of importing contracting parties. From the environmental perspective, it gives no cause for much criticism, but from the trade perspective, it will inevitably violate the non-discrimination principle and constitute discrimination between like products. This is the main challenge against non-discrimination principle.
Nowadays, many Multilateral Environmental Agreements (MEAs) required their parties to restrict or prohibit trade with non-parties in order to protect specific environmental factor, natural resources or endangered species. Supposed that both A and B are members of the WTO, and A is also a party to a MEA, but B is not. If A restricts or prohibits importation of regulated substance or relevant products against B pursuant to the trade provisions in the MEA, does A violate the non-discrimination and constitute a discrimination against B? Under such circumstances, which obligations are prior, obligations under the WTO law or those under the MEAs?
In addition, when a transnational corporation (TNC) invested in a developing country with lax environmental requirements, which kind of environmental standards shall be applied? If the environmental standards of hosting country are applied, it is bound to bring about shifts in large scale of “sun-setting” industries or polluting products from developed countries to developing countries. If the environmental standards of TNC''s own countries, obviously it will constitute dual-standards, with suspicion of violating national treatment.
All these dilemmas expose the conflicts between non-discrimination, the first principle of the WTO law, and needs of environmental protection.
2.The Tariff Commitments Principle
This principle shows that the WTO law recognizes the status and role of tariff in trade regulation and does not advocate all other kinds of protectionism measures in non-tariff form. Article II of GATT authorizes members to, based on national treatment, impose special environmental customs duty for environmental purpose on imported like products in the light of its own environmental plan; allows members to levy taxes adjustments on imported products without exceeding those on domestic like products; and recognizes members have rights to impose resources exportation tax or environmental tax surcharge on those primary products or semi-manufactured goods which had consumed a great quantity of natural resources of its own countries but have no or less pollution to the importing countries for the purpose of replenishing and renewing resources. These measures are clearly favorable to protection of domestic environment of members, but meanwhile it brings a problem: on one hand, environmental taxes or charges will urge producers to adopt environmental friendly technology and process, on the other hand, it will bring producers heavy burden of costs. If a member only requires domestic producers to pay environmental taxes or charges, it will add the cost of domestic products, and its products is bound to be a disadvantage position in intensive competition in international market. In order to bring about a change in the situation, domestic producers will energetically insist that government should impose equivalent environmental duty or taxes adjustments. But if the member actually does so, it is sure to be believed to provide protectionism to domestic production and cause trade conflicts. For example, the case of GATT Canada-USA Imposing Tax on Petroleum and other Imported Materials of 1987 lied in that USA imposed higher taxes adjustments on petroleum imported from Canada than those on domestic petroleum.
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