Konrad von Moltke works on international environmental relations. Recent work has focused on environmental policy and international economic relations: debt, trade and development. Dr. von Moltke is a Senior Fellow at World Wild life Fund in Washington,D.C., and Adjunct Professor of Environmental Studies at Dartmouth College. He is editor of International Environmental Affairs, a journal for research and policy. He is President of Bioprime, Ltd., a Vermont corporation devoted to the transfer of environmental technology from Europe.
Dr. von Moltke studied mathematics at Dartmouth College (B.A. 1964) and medieval history at the University of Munich and the University of Gottingen (Ph.D.) 1970. He taught at the State University of New York/Buffalo where he was also a member of the administration.
From 1972 to 1974, Dr. von Moltke lived in Europe where he developed American Studies curriculum materials and was active in founding a number of private European policy-oriented institutions in the European Cultural Foundation (Amsterdam). Between 1976 and 1984, he was founding Director of the Institute for European Environmental Policy (Bonn, Paris, London), a private institution devoted to the analysis of policy alternatives for European environmental problems.
Dr. von Moltke is a citizen of the Federal Republic of Germany and lives in Norwich, Vermont. He has published extensively on medieval history, comparative education and curriculum development, and international environmental policy.
Portions of this report are based on work currently being undertaken under contract to the U.S. Congress, Office of Technology Assessment.
Dispute Resolution and Transparency
Dispute Resolution and Transparency Konrad von Moltke
Dispute settlement is a central feature of the General Agreement on Tariffs and Trade (GATT) and related regimes. Like most other international regimes the GATT is based on implementation of international obligations through action by its member states. The dispute settlement procedure provides a joint mechanism to settle differences arising from conflicting interpretations of these obligations and serves to develop a body of "case law" which stands alongside the legal texts as a consensus view of the meaning of these texts. The dispute settlement procedure can serve to shift the accepted boundaries of the regime or to adapt it to circumstances not foreseen when it was established.
The interpretative aspect of dispute settlement has not generally been emphasized but is clearly significant from an environmental policy perspective. Because it provides a dynamic element in the regime outside the formal and cumbersome negotiating rounds, the dispute settlement procedure has been the focus of much attention and has evolved only very slowly under the watchful eye of the member states.
In theory, dispute settlement could be the basis of a pragmatic approach to reconciling the goals of environmental management and trade liberalization. In practice, this is unlikely to occur. Without clear guidance from the GATT Council, interpretation of the General Agreement will continue to be restrictive. Moreover, trade dispute settlement procedures are not a forum likely to develop solutions which are adequate from an environmental perspective.
International environmental regimes hardly use dispute settlement procedures. They are also based, like other international regimes, on the principle of member state implementation of international obligations. Like other regimes, this approach has severe limitations in practice so that ancillary means are required to ensure implementation in environmental regimes, these ancillary means are not based on dispute settlement. They typically incorporate public awareness, consumer pressure and the potential for embarrassment for governments seen not to be living up to their commitments. Some examples may illustrate this point.
A complex regime has developed around the North Sea. Until recently, this regime did not lead to satisfactory results. Public pressure in the Netherlands and Germany forced governments to act and led to a series of ministerial conferences which brought impetus to implementation of the existing agreements.
The Montreal Protocol as recently amended in London provides for a rapid phase out of several controlled substances which deplete the stratospheric ozone layer. Apart from the problem of noncompliance by signatories, parties must cope with loopholes created by non-signatories which can serve to nullify the effect of the agreement everywhere. It transpires that a British firm, ICI, which is phasing out halons--which are severely ozone depleting--in its home market is quite legally promoting their use in India, a non-signatory. The British government, and other parties to the London agreements, are powerless to stop this activity. However publicity can exert strong pressure on ICI to discontinue the sales in India. Certainly, a purely Indian company could produce the substances and market them legally under the international accords, still defeating their effectiveness. However, such a company would need to acquire the necessary technology and production know-how and could be severely hampered in attempts to trade intentionally, again by consumer pressure. No dispute settlement procedure can cope with these difficulties, only publication of crucial information concerning production, marketing and use of the substances in question.
This example illustrates the complexities of potential relationships between environment and trade regimes. Many other environmental management issues--such as global warming, acid rain, toxic substances control, waste reduction, pollution prevention procedures--have already or will develop similar kinds of problems. In the absence of adequate international environmental regimes such as the Vienna Convention and its protocols for stratospheric ozone depletion, many of these issues will become the subject of trade disputes, severely straining the existing dispute settlement process. It is important to consider how the dispute settlement process has evolved, how it has handled environmental issues in recent years, and what kinds of issues it is likely to face in the future. This is the essential basis for an assessment of needed environmental management tools, possible modifications to trade dispute settlement procedures and the scope for developing viable relationships between them.
2.1 GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
The General Agreement on Tariffs and Trade is an unusual international institution, based on an unratified executive agreement between governments. This somewhat tenuous legal status reflects the origins of the GATT which evolved from negotiations which were to create an International Trade Organization. When the ITO failed to be ratified, the General Agreement was the residue which governments could work with. The General Agreement, which was concluded prior to the Havana Conference, incorporated the fundamental principles of trade liberalization underlying the ITO without creating a formal international organization. It lacks in particular provisions to confront social policy issues related to trade. Indeed, the Agreement does not explicitly provide for the establishment of a Secretariat but only mentions the need for a "secretary" in three places.
The structure of the GATT directly reflects its legal status. It is the servant of the governments which created it. The GATT Secretariat is less independent than that of other international organizations. The dispute settlement process also reflects the institutional status of the organization. During the first 25 years, the panels were composed primarily of "insiders," persons with direct experience of the GATT and its operations or who had participated in formulating the Agreement. This dispute settlement process could be described as a "club."
In view of widespread and growing dissatisfaction with the dispute settlement procedure, it became a negotiating issue in the Tokyo Round of trade talks. The result was a modest reform of the principal procedure based on Art. XXIII of the General Agreement and the development of separate dispute settlement procedures for some of the newly established codes, for example on non-tariff barriers to trade (NTBs). In particular, the rules of access were tightened, outlining conditions for panel formation, and the panels now began to include "outsiders," persons with expertise on the contentious issue but with limited experience of the GATT and its functioning.
Despite these reforms, the basic problems have persisted. The principal issues have been delays and composition (and competence) of the panels. Delays occur in establishing the panels, in adoption of panel reports by the Council and in the implementation of panel decisions by the losing party. The Uruguay Round Midterm Agreement on Dispute Settlement, implemented in May 1989 sought to address the issues of delay and panel composition. It creates procedures which should ensure that a panel is created within two months of the beginning of a dispute. While "automatic" procedures create automatic tensions and countries will hesitate before pursuing their position with excessive zeal, the Midterm Agreement does provide a means for determined parties to obtain a panel. It also gives additional support to the practice of using "non governmental" experts--although in practice these are frequently persons with close links to trade policy.
Dispute resolution has continued to be under negotiation in the final stages of the Uruguay Round. The focus of attention has continued to be the formation and functioning of panels. The Draft Final Act circulated in December 1991 included two sections further addressing dispute settlement, including the creation of an integrated dispute settlement system and the establishment of an appellate review system.
It is possible to characterize the GATT dispute settlement process as being in a state of cautious evolution. It is seen as successful because it is reaching "good decisions in the sense of continuing to strictly enforce the GATT." The success of the GATT dispute procedure depends on narrow and predictable interpretation of the General Agreement and subsequent accords. However, to adapt the General Agreement to environmental needs requires creative interpretation. Despite a legislative history of the GATT which is suggestive of environmental sensitivity, attempts to achieve silent amendments of the GATT through interpretation of the Agreement in dispute procedures are uncertain at best, and more likely doomed from the start. Indeed, the likelihood is that the dispute settlement process will contribute to conflicts between trade and environmental policy goals until it is given an unambiguous mandate on how to handle these
2.2 CANADA-UNITED STATES FREE TRADE AGREEMENT
Dispute settlement was one of the motivating factors which led to the negotiations on the Canada-United States Free Trade Agreement (FTA). Canadians felt unsure of the future of dispute settlement under the GATT, in particular the role of the more heavily politicized U.S. institutions responsible for adjudicating disputes before they reached the GATT. In view of the importance of the United States as a trading partner for Canada, this uncertainty was disturbing and developing a better dispute settlement process was a Canadian priority in the negotiations. "Canada wanted binding dispute settlement and a wholly new regime to deal with the practices addressed by trade remedy law. U .S. officials on the other hand, countered that it would be very difficult if not impossible to accept binding dispute settlement, to establish any permanent institutional machinery, or to negotiate a new trade remedy regime that would stretch disciplines beyond those enshrined in the GATT.''[1O]
This is significant because bilateral negotiations tend to reveal the positions of the countries involved in greater clarity and detail (since each country must articulate a position on every issue that arises and cannot leave development of the debate to other participants). In a real sense, the FTA defines the current limits of dispute settlement in trade regimes: it is highly unlikely that many countries will agree on procedures which these two countries were unable or unwilling to adopt in a bilateral negotiation.
The dispute settlement process under the FTA is a complex compromise between the two countries. It has been the subject of extensive commentary, particularly from the Canadian perspective. While the major provisions are contained in Chapters 18 and 19 of the FTA, dispute settlement provisions permeate the entire Agreement. The overriding goal is, of course, the avoidance of disputes, hence notification and consultation are provided for prior to action by one government affecting the trade interests of the other country. This aspect of the regime, going far beyond the provisions of the GATT, reflect the advantages of limited membership (only two countries are involved) and geographic proximity (much trade being local or regional in nature and involving the national governments to a lesser extent). It is important to recognize the significance of these provisions since they represent the nucleus of a process which could be used to achieve joint agreement on environmental issues before they turn into trade disputes.
Chapter 18 of the FTA creates the structure which applies to all trade disputes between the two countries except those related to trade remedies (which are covered by Chapter 18) and financial services (which are excluded from the FTA). It is based on a number of obligations:
* Mandatory notification of any measure which might materially affect the operation of the FTA.
* Mandatory provision of information on any measure (without restriction) once requested to do so.
* Consultations at the request of either party regarding any actual or proposed measure, with an obligation to make every attempt to arrive at a mutually satisfactory resolution.
* Referral to a Canada-United States Trade Commission (composed of the cabinet level official primarily responsible for international trade, or their designees), should resolution through consultation fail. This initiates formal proceedings with provision for an informal resolution prior to undertaking formal dispute settlement.
* Dispute settlement procedures, involving
- compulsory arbitration, binding on both parties, for disputes arising from the interpretation and application of the safeguards provision,
- binding arbitration in all other disputes where both parties agree,
- panel recommendations to the Commission
- A special committee of judges can serve as ultimate review body if one of the parties feels the panel is so corrupted, or so manifestly exceeds its jurisdiction, that it would bring the whole FTA system into disrepute
The FTA dispute settlement process is directly related to the GATT Article XXIII process. The FTA stipulates that disputes arising under both the FTA and the GATT may be settled in either forum, according to the rules of that forum, at the discretion of the complaining party. Once a forum has been chosen, it will be used to the exclusion of the other. In practice, both parties have preferred the bilateral process which has resolved numerous issues without recourse to formal panel proceedings. Over the past three years, four disputes have been taken to the GATT, including two which concern conservation. Of the disputes handled under FTA procedures, none has direct environmental application. The FTA incorporates numerous sections from the GATT, including Article XX(g) concerning exceptions based on conservation of exhaustible natural resources.
It has been suggested that the reference to Secretariat offices in Art. 1909 could open the door to further institutionalization of the FTA. This is clearly a Canadian interpretation, and a close reading of the text suggests that this is not very likely. The Secretariat is initially tied closely to the Chapter 19 proceedings. Involving it in Chapter 18 procedures (which are more numerous and likely to provide the more dynamic substantive elements) is placed in the discretion of the Commission. More importantly, the Secretariat is in reality two separate offices, and the FTA makes no provision for their joint operation. Compared to the construct of the International Joint Commission (IJC), itself a cumbersome instrument by modem standards, this is a weak institutional arrangement. It is unlikely that the governments will act to strengthen it at a time when they are backing away from the IJC as well.
The FTA dispute settlement procedure has been satisfactory thus far, although it is being strained by a continuing argument over pork exports from Canada. In general, the number of disputes has declined in the past few years, and the volume of trade affected is large in only a few cases.[l6] In the pork dispute, however, the findings have been against the United States at every stage, yet the U.S. Administration has been unwilling to implement them for political reasons. It has now brought the issue before the panel of judges which was to have been used in extremis. This draws into question the adequacy of the institutional structure, since the criteria for appeal to the judges' panel have not been met. The Canadian trade minister is reported to have been "outraged over what he regarded as a gross abuse of the system.''[l7]
At the heart of the FTA dispute settlement issue is a delicate balance between binding forms of international dispute settlement which override national institutions on the one hand and procedures leading to recommendations carrying heavy international pressure on national institutions to comply on the other. It has been pointed out that the need for more elaborate, increasingly binding international dispute settlement is a function of the extensiveness of the substantive obligations in sensitive areas: the more important the international obligations, the more need for international institutions which all parties can recognize as reasonably representing their interests.
In negotiating the FTA the range of substantive obligations was steadily reduced, also reducing the need for fully institutionalized dispute settlement procedures. This experience holds important lessons from an environmental perspective. Indeed, the result has been summed up as follows: "... a basis has been laid for expanding rights and obligations, and negotiations will undoubtedly progress into potentially more difficult areas, such as subsidies or phytosanitary regulations. More extensive dispute settlement obligations may then be required to keep the peace.''
2.3 EUROPEAN COMMUNITY (EC)
The European Community is distinctively different from the GATT or the FTA, yet it is also an international free trade area. Over the past decade, the EC Treaties have twice been significantly modified: the single European Act (SEA) of 1987 and the Maastricht treaties adopted in December 1991. Both amendments involved an important expansion of the Community's substantive responsibilities as well as changes in the institutional relationships. They illustrate the axiom that expanded substantive responsibilities require expanded institutional capabilities.
The SEA formalized the Community's role in environmental management. In Part Three of the EEC Treaty, dealing with Community policy, it introduced the process towards "Economic and monetary union" (commonly known as "1992" because of the date by which internal barriers to trade were to have been eliminated) as well as new Titles on "Economic and social cohesion," "Research and technological development" and "Environment." The three new policy areas are not fortuitous: they represent the three areas in which trade liberalization creates additional needs for substantive international policy coordination. The Maastricht treaties dramatically developed the move towards economic union and joint social policy.
The EC is unique among international organizations in its ability to legislate through its own institutions, binding its Member States without further accession or ratification procedures. The institutions involved in this process are the Commission, the Council, the European Parliament, the Economic and Social Committee and the (European) Court of Justice. Most of the amendments of the EEC Treaty concern the legislative process rather than dispute settlement and judicial review. Clearly, sound rule-making is the basis for avoiding disputes. As the EC's range of responsibility has been enlarged, its legislative process has been adapted to ensure greater scope for advance participation of interested parties, through the Commission, the Parliament and the Economic and Social Council. The Council, the ultimate legislative body, remains remarkably inaccessible and closed, with not even the minutes of the meetings rendered public. However, the introduction of qualified majority voting will certainly increase pressures to render the proceedings public, since not all participants can be assumed to have approved every measure adopted by majority vote.
The EC's dispute resolution process has not changed significantly since its inception in 1954. Indeed, the stability of the European Court of Justice is one of the more remarkable features of the institutional pattern established almost forty years ago. The European Court has some essential attributes of a true court of justice, in that it has an independent panel of judges deciding on the basis of both the EC Treaties and subsequent EC legislation. Judges are appointed for renewable terms of six years.
At present the Court of Justice has thirteen Judges who sit either in plenary session or in Chambers each consisting of three or five judges, according to the issues to be adjudicated. It is assisted by an Advocate-General (at present six) who are also appointed to six-year renewable terms. The composition of the Court can be adjusted to the case load by action of the Council.
Clearly such a court is also able to develop its own case law and contributes significantly to the development of the institutional character of the EC through interpretation of the law. The Court determines whether instruments adopted by the EC and actions of Member States are in conformity with the EC Treaties and rules on the adequacy of the implementation of EC directives by Member States. Over the years, the Court has found against all Members states, sometimes on issues which were politically extremely sensitive. While Member States have on occasion been dilatory in complying with the Court's rulings - occasionally to the point of a second judgment against them - none has thus far failed to ultimately meet the Court's requirements, despite the absence of any direct sanctions to enforce compliance.
Until recently, only the Commission of the EC and Member States or courts within them could bring actions before the Court of Justice (except that the Court has jurisdiction over disputes between the EC and its servants). The SEA made provisions for the creation of a new court, "attached to the Court of Justice," with jurisdiction to hear and determine in the first instance certain classes of action or proceeding brought by natural or legal persons.
This entire system of dispute settlement appears remote from the experience of any other trade regime in its elaborateness, powers and effectiveness. Its significance in a broader context derives from the fact that certain kinds of international trade disputes are liable to arise before the European Court of Justice before they emerge in any other forum (for example the Danish bottle bill case) and because it illustrates once again that the dispute settlement procedure needs to be adjusted to meet the extent of powers and substantive issues which are liable to arise under a trade regime. The European Court took its current shape well before the extensions of the European Community which have been undertaken in the past decade. A special link exists between the Court of Justice and the GATT insofar as justices of the European Court serve on GATT dispute settlement panels. Indeed, one justice - Judge Pescatore - served on four such panels to issue decisions in 1990. It is interesting to note that justices of the European Court are viewed as "non-governmental" panel members within the GATT.
The General Agreement is ambiguous concerning environmental management priorities. Article XX might be read to cover a wide range of issues, and the legislative history is suggestive that this may be consistent with the intention of the drafters. The Canada-United States Free Trade Agreement is extraordinarily silent in this regard, implicitly leaving the GATT as the governing document. Since adoption of the SEA, the EC has a clear mandate to be proactive on environmental management.
Nevertheless, in the absence of a clear declaration of intent by the relevant authorities--in practice the member states of each trade regime--the main source of guidance concerning the adaptability of the respective regimes to environmental priorities is the "case law" of past disputes and what is known about the likely outcome of current disputes.
The number of trade disputes with implications for environmental management is remarkably high. They are indicative of the need to confront the potential conflicts between environmental management and trade policy. A review of the disputes from an environmental perspective needs to focus on the lessons which may be drawn from them rather than on specifics of each case. These disputes provide an indication of the issues which are likely to arise, and of the extent to which they can be managed within the existing framework or may require some degree of change in current trade regimes.
3.1 GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
3.1.1. U.S. Taxes on Petroleum and Certain Imported Substances.
The U.S. Superfund Act of 1986 reauthorized a program to clean up hazardous waste sites. It reimpose an excise tax on petroleum at higher rates than before, re-imposed a tax on certain feedstock chemicals, and imposed a new tax on certain imported substances produced or manufactured from taxable feedstock chemicals. Taxes were thus increased to 8.2 cents per barrel for "crude oil received at a U .S. refinery," and 11.7 cents per barrel for crude oil entering into the United States. Imported substances were taxed at a rate equivalent to the tax for imported crude oil; comparable domestic products were not taxed since they were presumed to have internalized the cost of the tax on crude oil and feedstocks.
Following complaints from Canada, the EC, and Mexico, a GATT Panel found against the differential tax on petroleum. It stated that the Agreement's rules on tax adjustment give the contracting parties the possibility of following a polluter pays principle but do not require them to do so.
The Superfund Case involves a number of issues of broad relevance to the relationship between GATT and the environment: consequences of unilateral attempts to manage environmental issues; effects of a carbon tax; application of the polluter pays principle.
The differential tax in effect exacted a higher contribution from importers than from domestic sources, a politically attractive way to raise revenue. However, in the absence of internationally agreed principles of environmental management-including their application in practice-this leads to trade conflicts.
The tax on crude oil and certain imported substances bears a striking resemblance to a carbon tax. The Superfund Case raises the issue of "double jeopardy," that internationally traded products are taxed twice, once in the country of production and again at importation. The approach suggested by the Superfund Panel report is based upon the fact that such taxes are adjustable at the border (i.e. can be refunded at export or imposed at import, as the case may be). A carbon tax would be adjustable, but the process of adjustment would become convoluted as the implied content of products made from substances or intermediates subject to tax would need to be calculated. The alternative is to ensure that application of the polluter pays principle is undertaken in a sufficiently comparable manner in all states participating in a trade regime.
The Superfund Panel took a rigorously national view of the environment, considering countries' interest and authority to be limited to protecting their own environment. There is no suggestion in the panel report that the GATT system is capable of confronting national actions taken to protect global resources.
The Panel declined to take a position on the application of the polluter pays principle, considering this to be beyond its mandate. It pointed out, however, that the Group on Environmental Measures and International Trade would provide the EC with a forum in which to obtain consideration of these matters. Since the Group had never met--as the Panel must have known--this remark implied that the issues were of no consequence to the GATT. No systematic consideration has thus far been given to the position of the polluter pays principle within the GATT.
3.1.2 United States Tuna Ban
Through the Marine Mammal Protection Act (MMPA), the United States seeks to "impose its conservation and management standards on the incidental taking of marine mammals by foreign fishermen by imposing an import ban on fish or fish products harvested by fishermen using technologies where the incidental taking exceeded U.S. standards, unless 'reasonable proof' was provided that the U.S. standards were being met."Meeting U.S. standards is defined as an incidental taking not in excess of 125 percent of actual incidental takings per unit by the U.S. fleet in any given year. For dolphin protection, this applies in particular to the Eastern Tropical Pacific, an area including the EEZ of several countries as well as international waters, with ships from many countries participating in the catch. Through the Dolphin Protection Consumer Information Act (DPCIA) optional labeling to identify "Dolphin Safe" tuna products is possible. Like the Superfund Act Case, the tuna/dolphin case demonstrates that equitable international solutions cannot be found through unilateral national legislative procedures. The solution to this dilemma is an adequate international regime for protection of small cetaceans, an approach strongly suggested by an analysis of the tuna/dolphin panel.
The GATT case arose from an embargo imposed against Mexico under the MMPA. It included a complaint against the DPCIA.
The Panel found against the United States on several counts. The criterion established by the MMPA for admissible levels of dolphin by catch is impossible to meet since Mexicans (and nationals from other countries) were being held to a standard which only became known after the U.S. fleet had docked. The United States had not exhausted all avenues of bilateral negotiation to establish mutually agreed criteria for dolphin protection. The United States was not allowed to legislate to protect humans, animals or plants outside its jurisdiction, including species found in international waters outside any country's jurisdiction This ruling applied the standard view of marine law that the flag country has jurisdiction over ships and opened the possibility that U.S.ships seeking to escape the stricture of U.S.law concerning species protection could simply reflag. The United States could not discriminate against "like" products because of their mode of production; in other words, the manner in which tuna were caught was immaterial to the rules governing trade. Finally the panel threatened to rule against any use of the Pelly Amendment to protect dolphins, essentially because there is no international agreement to which this would refer. The Panel ruled that the United States could maintain the labeling requirement of the DPCIA since it applied to all tuna in a uniform manner.
The tuna/dolphin Panel report has not been brought before the GATT Council so it has not yet been formally adopted. It is possible that it will not be adopted. Nevertheless there is no doubt that it represents a viable interpretation of the General Agreement which presumably has the support of the GATT Secretariat. Thus any other cases to come before the GATT which involve comparable issues are likely to be settled in a comparable manner, unless the Contracting Parties move to avoid such an occurrence.
From an environmental perspective, the tuna/dolphin panel report is one of the most important documents to come from the GATT. It takes strong positions on several issues which are likely to prove crucial to establishing adequate international management of the environment. It demonstrates that the GATT as currently constituted is in conflict with important principles of environmental management and that the dispute settlement process is incapable of handling this conflict in a sensitive manner.
The GATT is an institution fashioned fifty years ago according to traditional views of sovereignty and international order. Without adequate institutional structure, it has evolved to meet new challenges of trade but it has not evolved to confront fundamental changes in international relations. Environmental management has confronted the international order with problems which transcend sovereign control: stratospheric ozone protection, global warming, protection of Antarctica and ocean resources, migratory or endangered species, ubiquitous toxic substances such as DDT, BCBs or dioxins. These require cooperative forms of management not envisioned under the GATT which views each country's jurisdiction as strictly delineated against any other country's, a comfortable fiction which allows border adjustment to function as the balancing tool. The tuna/dolphin panel finding highlights this difference between trade policy and environmental management.
International trade policy has been evolving from Most Favored Nation Treatment (MFN) towards National Treatment; that is, from treating all foreign products alike towards treating all products alike. Its initial focus is on products(services representing an important additional category). It generally assumes that "like" products will be treated alike. This is the principle underlying the tuna/dolphin panel report. For environmental management, however, the product phase of a controlled substance is but a small part of the problem. The overriding need is to ensure environmentally sound management throughout the product life-cycle, including production, commercialization, use, and recycling or disposal . Thus "like" products are only those which have like life-cycles. For environmental purposes it is important to be able to distinguish products according to the characteristics of their production, a principle explicitly rejected by the tuna/ dolphin panel.
Finally, the tuna/dolphin dispute illustrates the consequences of a lack of openness and transparency in GATT dispute proceedings. There is no indication that those involved in deciding this case were aware o f its broad implications for environmental policy, going far beyond dolphin protection. Lacking any experience in modern environmental management, they can hardly be expected to understand its operation; operating in a closed system with ex post public accountability they could not be told what they were doing.
3.2. CANADA-UNITED STATES FREE TRADE AGREEMENT
3.2.1. Measures on Export of Unprocessed Herring and Salmon
Canada wishes to maintain a prohibition on the exportation of unprocessed herring and pink and sockeye salmon, claiming that this is a necessary measure to preserve the fragile stocks of these fish. It claims that the vulnerability of these species to depletion requires a detailed catch reporting system, that the highly cyclical nature of fisheries create complex management problems and a need to provide a steady supply of fish to Canadian processing plants and that these particular species are sensitive to quality control problems both prior and during processing. The United States claims that Canada's restriction is to protect Canadian processors and maintain jobs in British Columbia.
Canada claimed protection under Art. XX(g). In doing so, it that Art. XX(g) should be interpreted broadly and that later fisheries conventions modified Canada's obligations under GATT. In rebutting this claim, the United States took the view that "the preamble to Article XX made it very clear that all the exceptions to that Article should be narrowly construed so as to prevent disguised restrictions on international trade." The United States also noted that other international agreements did not modify obligations under the General Agreement.
The panel found the Canadian prohibitions contrary to Art X:1 of the GATT. It further found that the prohibitions could not be deemed to be primarily aimed at the conservation of salmon and herring stock sand therefore concluded that they were not justified by Article XX(g). After discussing the precise wording of Article XX, the panel concluded that "while a trade measure did not have to be necessary or essential to the conservation of an exhaustible natural resource[such as fish], it had to be primarily aimed at the conservation of an exhaustible resource to be considered as' relating to' conservation within the meaning of ArticleXX(g)." It enunciated four conditions for application of Article XX(g): a measure must relate to an exhaustible natural resource; domestic production of the resource must be likewise restricted, the measure must not involve arbitrary or unjustifiable discrimination between foreign countries, and the measure must be primarily aimed at conservation. These conditions have become GATT guidelines for interpreting Article XX(g). The panel declined to consider the relationship of the GATT to international agreements on fisheries and the Law of the Sea, believing this to be beyond its mandate.
The panel findings state clearly, albeit in diplomatic language, that the Canadian restrictions represent a classic case of using measures claimed to be for conservation as a pretext for the creation of non-tariff barriers to trade. It also indicates that GATT panels are likely to take a restrictive view of the application of Article XX(g), suggesting that a different interpretation will only be possible if member states give panels clear guidance to this effect. It is certainly unfortunate that such a dubious case of conservation should provide the occasion for defining the limits of Article XX(g), since the resulting principles are liable to be affected by the nature of evidence put before the panel which does not provide an adequate argument for the needs of conservation.
3.2.2. Lobsters from Canada
Both the United States and Canada maintain minimum size requirements for American lobsters which are widely distributed over the continental shelf of the Western North At]antic ocean. The purpose of these size limitations is to allow lobsters to reach reproductive age before they are taken, thus ensuring continued stability of the resource. It may take a lobster up to 10 years to attain maturity in cold waters and only five years in warmer waters, where the lobster molts more frequently. Canadian size limitations allow the taking of smaller lobsters but while the U.S. stocks continue to be under pressure, Canadian scientists believe Canadian stocks are now healthy. In other words, the smaller size limitation more effectively achieves the desired conservation goal. In 1989, an amendment to the Magnuson Fishery Conservation and Management Act prohibited whole live lobsters smaller than the U.S. minimum size from entering into interstate commerce. This amendment gave rise to the Canadian complaint.
Canada argued that, because the ban on importation of smaller sized lobsters affects only Canadian imports, the size limitation was in effect a "trade restriction which the United States is attempting to disguise as a conservation measure." It claimed that Canadian lobster enjoy a "competitive advantage" because they mature earlier. The United States claimed that the measures were consistent with the principle of "National Treatment" under the FTA since U.S. and Canadian lobster were being treated alike. Moreover, it argued that the U.S. size limitation could not in practice be enforced in the presence of indistinguishable undersized lobsters from Canada on the U.S. market. Citing the Herring and Salmon report, the United States argued that its regulations met all the requirements set out there for application of Article XX(g).
In the event, the panel concluded that Article III:4 was applicable but Article XI not. Its decision turned to a significant degree on the question whether U.S. controls on Canadian lobster applied at the border or internally. Because it determined that these were not border controls, U.S. administrative needs for enforcing its own size limitation provided adequate grounds for finding in favor of the United States. Since Article XI was considered inapplicable by the majority, only a minority of the panel addressed the question whether Article XX(g) provided an exception. This minority followed the view of the United States that the Herring and Lobster Case had established clear criteria for application of Article XX(g). Its argument turned on the question whether alternative methods to enforce the U.S. size restriction were available and considered by the United States. The minority concluded that "the objectives of the 1989 amendment were both of a conservation nature and a trade restriction."
The Lobster Case reinforced the restrictive interpretation of Article XX(g), again without advancing to consider the conservation merits of the case. The conundrum arises from the fact that like products can have different environmental consequences or different products-in this instance smaller lobsters can achieve the same conservation goal, namely protection of the stock. Current trade regulations appear to be incapable of considering these two related issues, both of which are vital to the conduct of effective environmental policy. In effect, neither process standards nor environmental quality standards are relevant from a trade perspective, only product standards-narrowly defined-being taken into account. The Lobster Case report is particularly unsatisfactory from a conservation point of view since it clearly sets out the conservation issues in its statement of facts and then proceeds to decide the case on exclusively procedural grounds, entirely ignoring the conservation evidence.
3.3. EUROPEAN COMMUNITY
The European Community has developed a comprehensive body of environmental law, comprising more than 200 binding legal instruments. Only two are discussed here because they raise issues of broad significance for environmental management and trade regimes.
3.3.1. Sixth Amendment
The "Sixth Amendment" is the most important of 17 EC directives concerned with testing of new chemical substances and with classification, packaging and labeling. It establishes testing requirements for all new substances coming to market as well packaging and labeling requirements for all substances. Its salient characteristic is a system of testing, beginning with a minimum data set for all new substances and increasing step by step, depending on total production volume. It provides a notification system by which manufacturers can notify the competent authority in one Member state (providing the required data) and within 90 days may market the substance in all Member States. Whereas the U.S. Toxic Substances Control Act is directed towards controlling risk prior to manufacture of new substances, the Sixth Amendment focuses on marketing, reflecting the trade orientation of the EC.
The directive has been updated regularly, mainly through Commission Directives (i.e. instruments adopted by the EC Commission alone, based on recommendations of a technical committee established by the directive).
The right to market in all countries following notification in one only has established an intensive relationship between the "competent authorities" (i.e. the government agency or agencies responsible for toxic substances control). In effect, each agency depends on the appropriateness of the response of the receiving agency to a notification.
The differences between the Sixth Amendment and national legislation in the United States or Japan are indicative of the structures likely to be needed for international management of risks from chemicals. The focus on pre-market control rather than pre-manufacture (in effect leaving the control of manufacturing risks within national jurisdiction), the use of explicitly defined steps in the testing sequence to reduce administrative discretion, and the intensive linkages between competent authorities all reflect not only the specific needs of the EC but also tendencies in the international management of risks from chemicals.
The OECD Chemicals Program has developed the basis for broader cooperation between the developed market economies, including definition of a minimum set of data (which has, however, not been adopted by the United States), good laboratory practice, shared testing of high volume chemicals, and steps towards an initial joint risk evaluation by member states.
3.3.2. Danish Bottle Bill
The Danish Bottles case arose from Danish regulation, adopted in 1981, requiring all beer and soft drinks to be sold exclusively in returnable containers. German and Dutch beverage companies immediately protested that the need to establish a return cycle for their containers imposed a discriminatory penalty on importers who had to cope with longer distances and smaller turnover in the Danish market, rendering the marginal cost noticeably higher than for domestic brewers and soft drink manufacturers.
Following extensive negotiations between the EC Commission and affected Member states, the Commission took Denmark to Court, arguing that the Danish bottle bill was contrary to the EC Treaties because of its discriminatory impact on imported beverages. This argument, while made under the EEC Treaty, could presumably have been made equally under the GATT, for example by Sweden or Norway, since both countries were not at the time members of the EC.
The European Court did not deny that the Danish law was potentially discriminatory and thus in conflict with Art. 30 of the EC Treaties. However, it accepted the Danish contention that the bottle bill was necessary to achieve overriding goals of environmental policy, and was thus covered by the exceptions of Article 36 which is modeled after Article XX of the GATT: "The provisions of Articles 30 to 34 [concerning the elimination of quantitative restrictions between Member States] shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of . . . the protection of health and life of humans, animals or plants. . . Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction to trade between Member States."
As always, it is necessary to recognize that the Danish bottle bill arose within the EC, an organization very different from other trade regimes. Nevertheless, the European Court of Justice's decision resides on principles which the EC shares with the GATT and which are therefore potentially of broad application, particularly in light of the informal linkages which exist between the European Court of Justice and GATT dispute settlement panels. It would at least suggest that Article XX of the GATT could be interpreted in a similar fashion, allowing more scope for environmental issues and opening the way to a balancing of trade and environmental policy priorities.
The significance of the Danish Bottle decision transcends, however, the immediate concern of beverage containers, a small but visible corner of the overwhelming problem of waste management which is dominated by the need to decrease total volume and eliminate toxic components. Indicative of the wider purport of the Danish bottle bill decision is the German response to the opening thus created in the international discipline of the EC Treaties. Over the past two years, the German government has been moving aggressively to put in place new regulations governing not only beverage containers but all forms of packaging and ultimately aiming at dramatic reductions in the volume of wastes. Essentially, the German regulations require all packaging to be returned and recycled. The impact of these regulations is comparable to the Danish bottle bill, except that they apply comprehensively to all forms of packaging. Companies that are unable to establish a return cycle in Germany will not be able to sell into that market. Presumably these regulations are not reversible and will set a pattern for the EC, and possibly beyond.
3.3.3. European Environment Agency
The need to consider substantive environmental issues at the European level rather than just legislate and adjudicate has led directly to a decision to establish a European Environment Agency. The initial mandate for this Agency is quite severely limited. It will not be responsible for direct enforcement, and the extent of its independent monitoring remains to be determined. The launching of this Agency has been held up pending settlement of a dispute concerning its location.
The number of past trade disputes of environmental significance, even outside the EC, is striking. They highlight many of the difficulties in balancing environmental and trade policy priorities in institutions which reflect the procedural needs of trade management. In effect, the forum, its procedures and its terms of reference tend to promote a restrictive interpretation of possible environmental exceptions in the General Agreement and to render substantive consideration of environmental issues virtually impossible.
Past trade disputes already define a broad agenda requiring the attention of environment and trade policy makers. In addition there are several emerging disputes which raise additional important issues, or are likely to focus issues more sharply. The EC has proven remarkably capable of adjusting to the challenges posed by changing requirements of environmental policy. Consequently the most difficult issues are liable to arise in the for a less capable of satisfactory resolution--GATT and the FTA.
Bovine Growth Hormone (BGH) enables dairy farmers to increase their milk production dramatically. A rapid rise in milk production threatens the stability of agricultural subsidy programs in the United States and the EC. There are remaining uncertainties about the potential effects of the product which may be harmful to animals or to consumer health, particularly under conditions of use in farms. In the EC, a major public scandal in the eighties has made public opinion and health authorities extremely cautious in accepting the use of hormonal veterinary products. Producers of veal had overused growth hormones in calves, leading to residues in meat which was used for infant food. Consequently the EC has additional hesitations concerning the use of BGH . The U.S. federal government believes BGH to be safe under normal use and some U.S. states already permit it. The ensuing dispute has not yet reached the stage of a formal GATT proceeding but it raises crucial questions concerning the process by which science assessments are introduced into trade disputes. In terms of trade regulation, the BGH case hinges on the evaluation of the scientific evidence, with a wide range of interpretations propounded by varying researchers and governments. The GATT is incapable of evaluating scientific evidence and requires the assistance of independent, scientifically credible institutions, which must be internationally based to rule out interference of national policy considerations. The U.S. government suggested using the Codex Alimentarius Commission to undertake such an evaluation. The Commission, a body under the auspices of the Food and Agriculture Organization (FAO) but cosponsored by the World Health Organization(WHO),is currently dominated by scientists closely linked to transnational corporations which produce agricultural chemicals or process food and thus has little scientific credibility. It appears susceptible to political pressure, in the case of BGH from the EC.
While not strictly speaking an environmental issue, the BGH case highlights the need for science assessment to deal with the newly emerging substantive issues confronting trade regimes, of which environmental management is arguably the most important. GATT must seek out internationally credible science assessments to conduct its business. In environmental management, most decisions hinge on science assessments, so trade disputes with an environmental dimension are bound to involve contentious scientific issues. In the absence of appropriate environmental institutions, trade panels will be unable to handle the disputes which are liable to arise.
An example of such a dispute in the environmental field concerns asbestos imports from Canada to the United States. The United States has banned all uses of all forms of asbestos. Canadian asbestos producers claim such a ban is based on flawed interpretation of scientific data: while certain forms of asbestos are indeed very carcinogenic, the Canadian product represents a limited and acceptable risk. The trade issues in this instance revolve around the assessment of the hazards of asbestos and whether the U.S. ban is discriminatory against Canada and a border or an internal measure. While it is theoretically conceivable that the U.S. ban could be illegal under trade law if it is shown to be discriminatory and a border measure and contrary to sound scientific evidence requiring such a measure to protect public health, such an outcome is unlikely since the issues are substantive rather than procedural. To believe that the U.S. asbestos ban is illegal under the GATT assumes that the U.S. regulatory process is so flawed as to produce fundamentally erroneous decisions. Nevertheless, a GATT panel incapable of considering the scientific evidence could reach conclusions which are procedurally correct but scientifically flawed. Thus far the Canadian government has not adopted the position of the asbestos manufacturers, and it is unlikely that it will push the asbestos issue so far as to create a crisis because it is well aware of the implications for U.S. environmental policy.
Asbestos is in many respects a special case of a broader phenomenon known as "sunset chemicals." As knowledge about the environmental hazards of certain chemicals increases, a growing number of substances may need to be phased out entirely from use. Several chlorofluorocarbons (CFC's) have been identified as posing exceptional hazards for the stratospheric ozone layer and are slated to be phased out. Other CFC's remain in use while posing a lesser threat to the ozone layer; they will need to be controlled in the coming years, and some phased out. A range of industrial chemicals have already been widely banned, including PCB's and DDT. And certain heavy metals, cadmium in particular, have been banned in some countries which are now pushing for wider controls. Some countries are demanding zero emissions of certain of these substances as a condition of licensing industrial facilities. This entire process by now represents a comprehensive international toxics control program, currently focused in large measure on the EC and the Chemicals Group of the OECD. Over the years, as this process gathers momentum, differences will arise in the interpretation of the scientific evidence and in the approach chosen by individual countries to control risks which have been identified. Unless a sound international environmental management structure has been created, these differences are liable to be carried into the trade dispute settlement process, which is virtually incapable of resolving them.
More complex than the chemicals control issues, for which practical international steps have atleast been identified, is the need to distinguish between "like" products according to their environmental impacts. This is exemplified by the dispute about hydropower from the James Bay generation complex in Northern Quebec in Canada. A large hydropower complex has been created in that region and is already supplying a major portion of the electricity used in Quebec. plans exist for dramatic enlargements. The dams involved are likely to impact natural resources in the region and will disrupt the traditional lifestyle of the Cree Indians who inhabit the area. Electricity is also exported to several U.S. states and consumers in these states are complaining that the environmental consequences of the dams have not been adequately considered so that they do not wish to purchase the electricity. That is their right, if they can convince the public utilities, or the regulators who oversee them, not to buy power. But electricity is transported in large grids. There is no way to distinguish between the source of the electricity, and trade law does not allow such distinctions to be made. In practice, virtually any utility which is part of the grid can receive power from James Bay at some point without knowing it. No adequate solution to the problems created by this situation exists, short of environmental assessments in Canada which are accepted as comprehensive and fair by U.S. consumers. That has not yet happened, but U.S. regulators have indicated that they need to be convinced by the Canadian process if they are to purchase power. In addition to the issue of "internationalizing" environmental assessments in Canada, electricity currently being generated at James Bay is being used by Quebec authorities to attract large natural resources processing industries to the remote northern region of the province. A strong suspicion exists that these enterprises are receiving concessionary power contracts, in effect a subsidy which compounds the problems associated with James Bay by encouraging wasteful use of power. This issue may also ultimately become the topic of trade disputes, and prove difficult to manage in the absence of clear rules governing energy policy.
What constitutes a subsidy is at the heart of another potential trade dispute between Canada and the United States. Within GATT, the subsidies code provides an operational definition. However, U.S. forest products industries have been complaining that provincial governments in Canada take a fee for the right to cut trees on public lands ("stumpage") which does not reflect the true value of the lumber, nor the public costs of making it available. They have claimed that this "subsidy" represents an unfair trade practice. The issue of stumpage would present FTA (or GATT) with a range of issues arising from the pricing of public goods and services used by private interests. Typical examples of subsidies in this area are road building in U.S. national forests or water pricing in the American West. In both instances, environmental and trade policy would equally seek elimination of the subsidies. However, this would require revision of the subsidies code, which is currently unlikely to occur. The stumpage case is to be welcomed because it raises issues of public policy which are important from an environmental perspective.
Related to the stumpage case, but requiring quite different management techniques, is the issue of tropical forestry. The market for tropical forest product is international in nature, since the suppliers are typically in developing countries while the consumers are in the developed world. The pricing and structure of international timber markets have not allowed tropical countries to enforce sustainable management practices in their forests since this would tend to price their product out of the market which does not make allowances for responsible timber management but is oriented towards cheap, destructive harvesting methods. Consumers in the developed world are increasing]y willing to pay premium prices for "sustainably" harvested tropical forest products but wish to boycott all others. This requires reliable identification of sustainably harvested products (an extremely complex scientific task) and market differentiation, based on the mode of production. Further, environmental policy will require an end to destructive harvesting since that threatens the destruction of a key global ecosystem. Consequently the need is for bans on some tropical forest products, and regulation of others so as to allow producers to capture a greater economic rent which is a condition of introducing sustainable management practices. The international trade system is not currently equipped to handle such a structure. Other international organizations which might achieve that result may exist, but they are not effective and have not established working relations with the trade regimes.
The Danish bottle bill--and the German follow-up in the area of packaging and waste in general--raise numerous issues relevant to trade which will require attention. Most trade rules seek to eliminate barriers to trade other than the costs of transportation. Introducing a requirement to take back and recycle all packaging material creates an additional structure which may disadvantage products transported over large distances. Producers of such products must either pay for the return of packaging, or pay an agent in the consumer country to discharge their obligations under waste management laws. It can reasonably be argued that manufacturers are responsible for producing products which are safe and environmentally benign in their entirety, and that internalizing the costs of waste disposal into the product is both good economics and good environmental policy. Nevertheless, the scope for problems in trading regimes remains significant. Germany will now seek to universalize its approach; other countries may feel that this is either inappropriate for them, or that it provides German manufacturers with an unfair trading advantage, and may create systems which have different characteristics. Such differences can be handled--if there is a forum (such as the EC) to do so; in the absence of such a forum, the likelihood is once more that they will give rise to trade disputes.
These problems will further proliferate as countries move to full product life cycle management, with manufacturers responsible not only for safe production and recycling of packaging but also for safe recycling or disposal of the product itself. In Germany, one automobile manufacturer (Volkswagen) has already announced that it will take back, disassemble and recycle all of its products. Such an undertaking becomes increasingly difficult with decreasing market share, creating entry barriers and obstacles for foreign producers with low volume in a given market. Virtually no consideration has thus far been given to the appropriate response by trade institutions.
Maybe the most complex issues concerning trade and environment are liable to arise in relation to major global negotiations with regard to stratospheric ozone depletion, global warming and the related issues concerning technology transfer and international terms of trade. The Montreal Protocol on Substances Which Deplete the Ozone Layer in Article 4 contains provisions on the control of trade which have been called "in effect the only enforcement mechanism in the Protocol."( These provisions involve bans on import and exports of controlled substances, bans of imports from states not party to the Protocol of products containing controlled substances, and bans on imports from such states of products produced with, but not containing, controlled substances. Only the first of these provisions has entered into force, and complex trade policy issues remain to be resolved as the further provisions are activated. Indeed, the relationship between obligations under the Montreal Protocol and the General Agreement remains unresolved although the presumption must be that the later Protocol which is a formally ratified treaty takes precedence over obligations under the unratified General Agreement, the Herring and Salmon decision not withstanding.
Matters will get more rather than less complicated as agreements on measures to combat global warming emerge. The Montreal Protocol established relatively straightforward measures (bans) on a readily identifiable, limited number of industrial chemicals involving very limited economic interests by global standards. Management of global warming will affect naturally occurring substances which are part of life processes and at the same time central to energy supply. There can be no question of out right bans, so that international tools need to be developed which equitably apportion a limited supply of currently free environmental resources. It is difficult to conceive of such measures without superimposing an additional level of regulation on current trade regimes. This conclusion is readily reached and can be implemented in national jurisdictions; there are no precedents for such an undertaking at the international level. While a more equitable and more efficient economic system will ultimately emerge--as has happened through domestic regulation of otherwise free markets--the transition will be marked by major conflicts. These conflicts are likely to focus on international economic relations: trade, finance, and technology transfer.
The trade dispute settlement process highlights potential conflicts surrounding the dual policy priorities of environmental management and trade liberalization. The difficulties which can already be anticipated threaten to grow into major crises unless measures are taken soon to defuse the conflict. Apart from the examples listed, it is difficult to predict where a crisis may erupt; certainly, few would have predicted that protection of dolphins could grow into the kind of major trade issue which it has become.
A number of options are available to lessen the chances of conflict between trade and environmental priorities. Since trade regimes are international, the available options are all necessarily oriented towards international procedures.
5.1 Strengthen International Environmental Institutions
Several cases with environmental implications which have already come before the GATT, in particular the tuna/dolphin and the lobster disputes, illustrate how failure of international environmental management can lead to trade disputes. Most of the currently identifiable disputes also reflect this basic fact. The most important measure which could be taken to protect trade regimes from the risks of mishandled environmental disputes would be a systematic strengthening of international environmental management capability which remains rudimentary.
This is not the place to describe the strengths and weaknesses of current international environmental regimes. Judged by the needs of substantive agreement on significant environmental management strategies for issues ranging from global warming to small cetaceans, the current management structure is rudimentary at best. There are no environmental institutions which correspond to the dimensions of the North American Free Trade Area. The traditional forms of intergovernmental cooperation suffer from a serious lack of accountability and have no means to attract public participation and support. They may serve to bridge the immediate need in bilateral relations; they are seriously inadequate for the multilateral issues typical of environmental management.
The environmental imperative arose in the sixties and emerged on the international agenda in the seventies. The past twenty years have been a period of extreme resistance to institutional innovation at the intentional level, presumably because of international polarization and because most countries were still engaged in domestic debates to identify the contours of environmental issues. Now that international relations has changed and the permanence of the environmental agenda is no longer under dispute, the time has presumably come to move creatively on the institutional front. This paper illustrates that this is not just necessary for environmental policy reasons, but also a priority when viewed from a trade perspective. It is hard to imagine a conflict more harmful to the prospects for environmental management and trade liberalization than one which pits these two policy priorities against each other.
5.1.1 IMPROVE INTERNATIONAL TRANSPARENCY OF ENVIRONMENTAL POLICY
Environmental policy depends almost entirely on the consent of those directly affected by it, in the event every person on the planet. Authoritarian regimes have not responded well to the environmental imperative because it is typically a democratic concern. Thus the democracies have consistently been in the forefront of environmental management innovation.
It is inconceivable that democratic rights will permanently end at a nation's frontier. As an increasing number of issues require international action, the basic principles of democratic societies must also extend to their international management. In other words, freedom of information, rights of participation, and procedural guarantees of due process in decision-making which are central to environmental management must also be incorporated into international decision-making. This represents a significant departure, going well beyond the limited rights currently available to citizens in international institutions, much closer to the procedural safeguards of the EC.
The lack of transparency is particularly salient on the North American continent where proximity can cause the issues to be of immediate concern for citizens.
5.1.2 PROVIDE INTERNATIONAL ACCESS TO INFORMATION
A first step in the direction of greater democratization of international decision-making would be the provision of much more open access to information held by international agencies and the networking of national information systems. This is not a trivial task, since it implies the creation of information management structures in addition to the establishment of rights of access. The exemplary openness of the preparatory process for the United Nations Conference on Environment and Development (UNCED) can provide an example for appropriate solutions.
5.2 Provide Guidance to Trade Panels on Interpretation of Article XX(g)
The GATT needs to become sensitive to environmental imperatives. This is not the same as seeking to transform the General Agreement into a tool of environmental policy. Nevertheless, measures must be adopted which ensure that the ecological limits to economic policy are equally respected internationally and nationally. Where they are, conflicts between environment and economy become readily manageable.
GATT panels have a long tradition of cautious, even conservative, interpretation of the General Agreement. The tuna/dolphin decision is a clear example, since nothing leads to believe that it was an error. Despite strong evidence that the drafters of Article XX(g) had an extensive view of an admittedly much more narrow agenda of public health and conservation issues, the GATT Secretariat will not change its role in assisting panels unless clearly instructed to do so by the Council. This should be the first priority for the Environment Working Group.
Clearly appropriate provisions should be included in the NAFTA from the outset.
5.2.1 ADOPT THE POLLUTER PAYS PRINCIPLE FOR TRADE REGIMES
The Polluter Pays Principle is a market-oriented principle of environmental management with far reaching consequences.There is no reason why the GATT should not adopt it as a bases for its own approach to environmental issues and as a guideline for its members.
5.2.2 ADOPT THE PRECAUTIONARY PRINCIPLE FOR TRADE REGIMES
The precautionary principle represents a vital bridge between technology and ecology. It needs to become the basis of all institutions which seek to balance economic policy priorities with environmental imperatives.
5.2.3 INCREASE THE TRANSPARENCY OF TRADE PROCESSES
International trade processes are even more cloaked in secrecy than international environmental issues. Without greater transparency, it will be difficult to allay public suspicions that important decisions of public policy are being made in secret. This has been an issue within GATT, since governments are subject to different rules of openness. The Draft Final Act at least recognizes the need for greater transparency, albeit only as a domestic issue.
5.3 Institutionalize the GATT
The ambiguous legal character of the GATT has not hindered it from being an effective instrument for the reduction of tariffs and the negotiation of agreements to limit other restrictions on trade. As trade barriers fall, however, further liberalization will require increasingly substantive agreements which entail a much higher level of monitoring. In this respect, the potential conflicts between environmental management and trade policy are a symptom of a deeper institutional problem. It is unlikely that these difficulties will be resolved without the negotiation of a formal treaty establishing an international organization with authority to act within its charter to identify emerging issues and bring them to negotiation in a timely manner without requiring consensus on all details. The dreadful history of the Working Group on the Environment-- established in 1971 but never convened, reconstituted 1991 only after months of negotiation--provides ample illustration of the reasons for institutionalization.
5.4 Develop International institutions for Science Assessment
Science provides no clear answers to environmental problems until it is too late. Thus it is always necessary to undertake assessments of the scientific evidence with a view to establishing the need for policy action. Such assessments require an institutional framework and open debate if they are to be credible and comprehensive. The lack of adequate science assessment institutions at an international level will continue to hinder environmental policy formation and render its implementation controversial.
 Robert E. Hudec, Adjudication of International Trade Disputes (Thames Essay No. 16). London: Trade Policy Research Centre, 1978. Robert E. Hudec, William J. Davey, "Remarks,"  Robert E. Hudec, (see fn. 1): 7-11.  Robert E. Hudec, "GATT Dispute Settlement After the Tokyo Round: An Unfinished Business," Cornell International Law Journal, vol. 13 no. 2 (Summer 1980):145-203.  Agreements Reached in the Tokyo Round of Multilateral Trade Negotiations, H.R. Doc. No. 153, 96 Cong., 1st Sess. (1979).  Robert E.Hudec, "GATT Dispute Settlement After the Tokyo Round: An Unfinished Business," Cornell International Law Journal, voi. 13 no. 2 (Summer 1980):145-203.  Davey, "Remarks,": 138.  Multilateral Trade Negotiations, The Uruguay Round, "Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations," MTN.TNC/W/FA, Sections S,T.  Davey, "Remarks," :138.  Steve Charnovitz, "Exploring the Environmental Exceptions in GATT ArticleXX, " Journal of WorLd Trade vol.25(October 1991): 37-56.  Michael Hart,"A Lower Temperature: The Dispute Settlement Experience Under the Canada-United States Free Trade Agreement," The American Review of Canadian Studies, vol 23 no. 2/3 (Summer/Autumn 1991): 198.  Gary D. Horlick, Geoffrey D. Oliver and Debra P. Steger, "Dispute Resolution Mechanisms," in: Jeffrey J. Schott and Murray G. Smith, eds., The Canada-United States Free Trade Agreement: The Global Impact (Washington, D.C.: Institute for International Economics,1988). Alan Krugman, "U.S. Protectionism and Canadian Trade Policy," Journal of World Trade Law vol. 20 no.4: 363-379. Bruce H. Fisher, "Politics of FTA Trade Disputes," International Perspectives (Sep/Oct 1988): 17-20. See also Michael Hart (see fn. 8). Gordon Ritchie, "The Free Trade Agreement Revisited," The American Review of Canadian Studies, vol. 21 no. 2/3 (Summer/Autumn 191): 207-213.  FTA, Art. 1801..  FTA Art. 1201.  Michael Hart, (see fn. 10): 200.  There are three separate cases involving pork between the two countries: two FTA procedures and one GATT panel.  Michael Hart, (see fn. 10)  Gordon Ritchie, (see fn. 11): 211.  Michael Hart, (see fn.10) 199.  Michael Hart, (see fn. 10): 200.  Commission of the European Communities, Treaties Establishing the European Communities (ECSC, EEC, EAEC)-Single European Act--Other Basic instruments. Abridged Edition. Office for Official Publications of the European Communities, 1987). Although the legal name is "European Communities," the common name is now "European Community"-both abbreviated as "EC."  Cameron Keyes, The European Community and Environmental Policy. An Introduction for Americans. Washington, D.C.: World Wildlife Fund, 1991.  See below.  See General Agreement on Tariffs and Trade, "Trade and Environment. Factual Note by the Secretariat" (L/6896, August 1991) for a more limited interpretation. That a "factual note" should be a restricted document is an illustration of the lack of transparency in GATT proceedings.  Steve Charnovitz, 1991 (see fn. 7)  BISD (34th Supplement): 136-166.  Inside U.S. Trade, "Special Report: GATT Tuna Ruling Spawns Environmentalist, Congressional Backlash," Inside U .S . Trade, September 6, 1991.
 Ted L. McDorrnan, "The GATT Consistency of U.S. Fsh Import Embargoes to Stop Driftnet Fshing and Save Whales, Dolphins and Turtles," The George Washington lournal of International Law and Economics vol. 24 no. 3 (1991): 492.  BISD (35th Supplement): 98-115.  "Subject to the requirement that such measures are not 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, nothing in the Agreement shall be construecl 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; ..."  BISD, "Lobsters from Canada, Final Report of the Panel" (USA 89-1807-01), date of submission: May 25, 1990.  See Nigel Haigh, EEC Environmcntal Policy & Britain (2nd edition). London: Longmans, 1989. Ludwig Kramer, EEC Treaty and Environ$ncntal Protection. London: Sweet & Maxwell, 1990.  Directive amending for the sixth time Directive 67/548/EEC on the approximation of the laws, regulations and administrative provisions relating to the classification, pachging and labelling of dangerous substances (79/831 /EEC, OJ L259 15.10.79).  For a list of these adaptations, see Nigel Haigh (see fn. 31): 236.  Sam Gusman, et al., Public Policy for Chemicals. National and International Issues. Washington,D.C The Conservation Foundation, 1980.  Pascale Kromarek, "Environmental Protection and Free Movement of Goods: the Danish Bottles Case: Commission of the European Communities (supported by United Kingdom) v Kingdom of Denmark," Journal of Environmental Law Vol. 2 No. 1 (1990): 124-134.  See Steve Charnovitz, (see fn. 9) for a history of development of this text within the ITO negotiations.  Richare Weiner and stefan Tostmann, "What Can the EC Learn from Germany's Bold Legislation on Packagmg Waste?" International Environmental Affairs Vol. 3 No. 4 (Fall 1991): 282-291.8  See Jeffrey Foran, 'The Sunset Chemical Proposal," International Environmental Affairs Vol. 2 No. 4:303-316.  Richard Benedick, Ozone Diplomacy. New Directions in Safeguarding the Planet. Cambridge, MA: Harvard University Press, 1991.  Konrad von Moltke, The Regu1ation of Existing Chemicals in the European Community. Possibilitu!sfor the Development of a Community Strategyfor the Control of Cadmium. Brussels: Commission of the European Communities, 1985.  Mohammed T. El-Ashry and Diana C. Gibbons, Troubled Waters. New Policiesfor Managing Water in the American West. Washington, D.C.: World Resources Institute, 1986.  The International Tropical Timber Organization (ITTO) and the Food and Agriculture Organization through the Tropical Forest Action Plan (TFAP) share responsibility in this area.  Richard Benedick (see fn 39): 91.  Peter H. Sand, Lessons Learned in G$bal Environrnental Governance. Washington, D.C.: World Resources Institute,1990.  Organisation for Economic Cooperation and Development, "Guiding Principles Concerning International Economic Aspects of Environmental Policies," Recommendation adopted May 26, 1972, C(72)128.  Konrad von Moltke, 'The Vorsorgeprinzip in West German Environmental Policy," in Royal Commission on Environmental Pollution, Twelfth Report: Best Practicable Environmental Option. London: HMSO, 1988:57-70 (also: London: Institute for European Environmental Policy, 1987).  Final Act (see fn. 9), Page Y.1.