RESTRICTED
WORLD TRADE WT/CTE/W/2
16February 1995
ORGANIZATION(95-0331)
Committee onTrade andtheEnvironment Original: Spanish
COMMUNICATION FROM CHILE
TheChilean delegation would liketocalltheattention oftheTrade andEnvironment Committee
tothevitalfuture roleofpanel reports incases where therules oftheGeneral Agreement, itscodes
andthenewprovisions oftheUruguay Round Agreements thatamend itoverlap withtheconsiderable
body ofinternational environmental lawsthathavecome intobeing inrecent years.
Although there hasbeenconsiderable concern forthefuture institutional arrangements that
willregulate therelations between themultilateral trading system andtheworld ofenvironmental
agreements andpolicies, theSub-Committee onInstitutional, Procedural andLegal Matters ofthe
Preparatory Committee oftheWTO having decided thattheGeneral Council oftheOrganization is
theappropriate body toruleonthekindofcooperation tiestobeestablished withtheUnited Nations
system, theproblem ofreconciling thetwoextensive bodies oflawthatregulate trade andthe
environment respectively, through thejurisprudence arising from thedispute settlement procedures,
hasnotbeensufficiently studied.
Regarding thesubstantive aspects oftheabove-mentioned relationship, theAustrian delegation
produced anexcellent document (TRW/W/19) towhich delegations made further contributions during
thedebate.
Nevertheless, thisapproach could bedeveloped toinclude theeffects onthedevelopment of
thetrade andenvironment issue oftrends inthejurisprudence stemming from thedispute settlement
procedures.
Thecredibility oftheagreements forming thestructure ofthenewWorld Trade Organization
restsonadisputesettlementsystemcapableofverifyingandguaranteeingcompliancewiththeprinciples,
norms, rules anddisciplines which uphold themultilateral trading system. IntheUnderstanding on
Rules andProcedures Governing theSettlement ofDisputes, wehaveanautomatic mechanism, having
greater transparency inconsidering abuse, deadlines andeffective application, which canonlybelimited
byanegative consensus.
Behind many ofthecriticisms oftheGATT panel system isalackofawareness ofthebalance
onwhich theUnderstanding isbased. Recourse toapanel isneither taken forgranted norencouraged
untilallother means ofconsultation totrytoreach amutually acceptable solution havebeenexhausted.
Therights ofdeveloping countries toinvoke theApril 1966Decision oftheCONTRACTING
PARTIES arespecially protected.
Notonlyaretherights oftheparties involved guaranteed butalsothose ofallthemembers
oftheWTO, through thepossibility ofappeal, which tends toguarantee aconsistent interpretation
oftheagreements, andthrough thefunctions provided fortheChairman oftheDispute Settlement Body
incaseofconflict between therulesofthevarious agreements thatmake upthestructure oftheWTO.WT/CTE/W/2
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Lastly, thelevel ofretaliation isregulated andsubject tomultilateral scrutiny. Moreover,
recourse toarbitration isprovided forifdifferences ariseregarding theproportionality between the
measures taken andtheinjury sustained asaresult oftheviolations committed.
Most oftheinternational environmental agreements include dispute settlement provisions;
butmost ofthem stress theimportance ofconciliation, consultation andcooperation.
Inpracticeinthisfieldtherehavebeenfewcaseswherecompulsorydisputesettlementprocedures
have been invoked, andfewer stillinthefield oftheapplication oftrade measures under the
aforementioned agreements. There aremany reasons whyStates parties tothese agreements continue
toprefer collective negotiation toindividual arbitration.
Lookingahead,wecanimagineafutureinwhichinternationalenvironmentallawwillproliferate
more andmore, withapredominance ofrule-making activity together withasmall body oflegal
precedents derived from thejurisdictional bodies which parties willtrynottoresort to.
Ontheother hand, thedevelopment oftrade willcontinue tomake recourse tothebodies and
mechanisms oftheUnderstanding necessary. Thecombined effect ofgreater rule-making activity in
thefieldofenvironment protection andthecasuistical approach prevailing inGATT practice, aswell
asinthefuture WTO, hasledsomeexperts tobelieve thatbigger conflicts andcontradictions arepossible
inthefuture.
However, wetakeadifferent view. Asfarasprinciples areconcerned, theRioDeclaration
andtheAgenda 21oftheUnited Nations Conference ontheEnvironment andDevelopment consolidated
thefoundationsonwhichtheconductofStatesshouldbebased,demonstratingthebasicharmonybetween
themultilateral trading system andtheactions thatmembers oftheinternational community canor
must undertake toprotect theenvironment andpromote sustainable development.
TheSecretary-General oftheUnited Nations hasemphasized thehistorical importance ofthe
entry intoforce oftheConvention ontheLawoftheSea. Inthiscontext, itisextremely important
topoint outthattheConvention explicitly recognizes theauthority oftheGeneral Agreement.
InSection 6oftheAgreement relating totheImplementation ofPartXI,entitled Production
Policy:
- "The provisions oftheGeneral Agreement onTariffs andTrade, itsrelevant
codes andsuccessor orsuperseding agreements shallapply withrespect to
activities intheArea (International Seabed Area)".
- "There shallbenosubsidization ofactivities intheArea except asmaybe
permitted under theagreements referred toinsubparagraph (b)(GATT, codes
andsuccessor agreements). Subsidization forthepurpose ofthese principles
shallbedefined interms oftheagreements referred toinsubparagraph (b)."
- "There shallbenodiscrimination between minerals derived fromtheAreaand
from other sources."
- "Where theStates Parties concerned areparties tosuchagreements, (GATT
andWTO), theyshallhaverecourse tothedispute settlement procedures of
those agreements".WT/CTE/W/2
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- "Where oneormore oftheStates Parties concerned arenotparties tosuch
agreements, theyshallhaverecourse tothedispute settlement procedures set
outintheConvention".
Inthelastcase, regarding theapplication oftheprocedures established inPartXVofthe
Convention ontheLawoftheSea,andtaking intoconsideration thattheGATT andWTO rulesapply
broadly toproduction activities intheInternational Seabed Area, itisevident thatthearbitrator or
court chosen bytheparties tothedispute willhavetoapply therules oftheGATT/WTO asthe
substantive law.
Inouropinion, thisisanimportant precedent thatshows auseful wayofreconciling theinterests
ofenvironmental protection withthose ofthemultilateral trading system.
Thechanges introduced inPartXIoftheConvention ontheLawoftheSeaseektoensure
thatseabed producers havenoartificial competitive advantages overland-based producers, thereby
protecting themarine environment fromtheconsequences ofsubsidized anduncontrolled production.
Tothisend,theInternational Seabed Authority willestablish thecorresponding rules, butitissignificant
thattheGATT/WTO andthedispute settlement mechanisms intheUnderstanding havebeengiven
themainregulatory function forallthese activities through adjudication ofanydispute onthesubject
inconformity withtherules oftheGATT/WTO.
Itseems tousthattheapproach taken intheConvention ontheLawoftheSeahasseveral
advantages, including thefollowing:
1. Although theGATT/WTO isnotaccorded competence inenvironmental aspects of
theConvention ontheLawoftheSea,forwhich there arespecific dispute settlement
provisions, itdoeshavecompetence intrade aspects evenforcountries thatarenot
members oftheGeneral Agreement;
2. Thiscould beamechanism thatwould ensure theconvergence of,andrelationship
between, thevarious environmental agreements andtheWorld Trade Organization;
3. Forthese purposes itsingles outthesituation arising where parties toadispute are
notallmembers oftherespective agreements; and
4. Itsafeguards thespheres ofcompetence oftheagreements, overcoming theproblems
arising from theoverlapping orcoexistence ofjurisdictions.
Thispoint could beincluded inthedocumentation theSecretariat istoprepare forourwork
in1995. TheChilean delegation proposes setting upanagenda forfuture work onthissubject. Some
oftherelevant queries andquestions thatshould beanalysed areasfollows:
1. Consideration oftheparallels between environmental andtrade dispute settlement
systems. Inprinciple, itwould seem thatconcepts suchasnotification ofmeasures,
prior consultation, conciliation, investigation, mediation andrecourse toarbitration
arecommonelementsinbothfields.Nevertheless,themechanismsoftheUnderstanding
willprobablyhaveawiderapplicationthantheenvironmentaldisputesettlementsystems.
2. Inthiscontext, should alltradedisputes arising under rulescontained inenvironmental
agreements besubject tothedispute settlement procedures intheUnderstanding, or
onlydisputes where aStatehasgonebeyond therulesoftheagreement, byimposing
stricter environmental standards thataffect trade flows?WT/CTE/W/2
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3. Ineither case,could theparties tothedispute, when establishing theterms ofreference
oftherespectivepanels,includetherelevanttraderulesoftheenvironmentalagreement?
4. Ifso,would thepanels beestablishing some kindoflegalprecedents orinterpretation
oftheenvironmental agreements concerned?
5. Ifnot,byvirtue oftheadhocandcasuistical nature ofpanel rulings, would thesame
betrueoftheAppellate Body?
6. WoulditbedesirabletoexcludeorlimittheAppellateBodyincombinedenvironmental-
trade disputes inorder topreclude thebody ofoneinstrument from ruling onthe
application ofrules contained inanother international instrument?
7. Ifso,iftheAppellate Body wererestrained, would thisnotweaken itsglobal function
ofsafeguarding theunity andcoherence oftherulesoftheWTO anditscomponents?
8. Toavoid thiskindofproblem, andtaking intoaccount thetendency ofinternational
lawtosafeguard theautonomy ofthepurpose, would thebestsolution bearbitration
asprovided forintheUnderstanding, since theparties haveagreat dealofflexibility
todetermine theprocedure thatsuitsthem best?
9. Howcanforum shopping andthecoexistence ofparallel disputes intheWTO andin
therespective environmental agreement beavoided?
These questions onlyserve asanillustration andarenotintended todelimit allthepossibilities,
which areexpanding asdisputes increase innumber, variety andcomplexity. Greater specialization
ofpanellists; thefunctions oftheSecretariat; access todocumentation anddatabases; themoreorganic
anddefined structure ofthedispute settlement provisions; recourse tothetechnical opinion ofexperts,
alternative dispute settlement solutions andasystem ofappeals, together embody thepotential ofthe
Understanding tofacenewchallenges.
However, wearecrossing thethreshold from amore orlessself-contained system ofthe
GATT/WTO rules toasystem thatprogressively includes thestep-by-step progress made in
environmentallawandthereconciliationofthislawwiththeprinciplesofthemultilateraltradingsystem.
Inthisprocess, theimportant precedent oftheConvention ontheLawoftheSea,which transfers to
theGATT/WTO competence inallmatters relating tosubsidies andrestrictive trade practices, isan
interesting starting point from which allpossibilities should beexamined.