New Zealand Yearbook of International Law
The original General Agreement on Tariffs and Trade (GATT) was adopted in 1947 in an attempt to promote the liberalisation of tariffs and trade. It was negotiated without any reference to the need for sustainability in the pursuit of economic growth. It also did not consider the environmental effects of its trade rules on the production of goods. Essentially, environmental protectionism was treated as a non-tariff barrier.
In response to increasing concerns about the environmental effects of international trade, some GATT members formed a group on environmental measures and international trade (EMIT) in 1971. In 1993, a new GATT was created, which both incorporated and built upon the principles of GATT 1947. This new Agreement known as GATT 1994, established the World Trade Organization (WTO), and gave it responsibility for the international legal and institutional framework of the international trading system.
However, like GATT 1947, the primary aim of GATT 1994 was to facilitate free and open international trade, with environmental concerns being a secondary concern. This is reflected in the decisions of the WTO’s Dispute Settlement Body, where the panellists often lack experience with the complexities of international environmental problems, and consequently often fail to give environmental factors sufficient weight.
This article will analyse the environmental implications of four of the WTO Agreements. Specifically, it will focus on the interaction between these agreements, the environment, and the textiles and agricultural sectors.
The article will argue that many non-tariff barriers have been created by the operation of these agreements. Known as green protectionism, these barriers impede the ability of developing countries to create environmentally sustainable industries, and also create the conditions for the over exploitation of natural resources. This, combined with a lack of technical and financial assistance to developing countries, is likely to lead to further environmental degradation.
The article will also focus on the need to implement the commitments made by developing countries in various international environmental agreements. It will argue that without such implementation, the aims of both the WTO Agreements and the environmental agreements will remain unfulfilled.
Part II will outline some of the theoretical justifications for trade liberalisation. Part III will examine the Agreement on Technical Barriers to Trade (TBT), with particular focus on the issues surrounding Process and Production Methods (PPMs). Part IV will examine the Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures, and Part V will analyse the North-South dynamics lurking behind both the TBT and SPS Agreements. Part VI will outline the environmental provisions of the Agreement on Agriculture, and Part VII will examine the environmental implications of the newly expired Agreement on Textiles and Clothing.
The Agreements establishing the World Trade Organization, as well as the Agreements on Agriculture, Textiles, TBT and SPS all emphasise the need for trade liberalisation. The underlying theory supporting trade liberalisation is the Ricardian model of comparative advantage. Developed by the British economist David Ricardo in the early nineteenth century, the theory asserts that international trade liberalisation will facilitate economy-wide specialisation in production, leading to improvements in productivity and national income.
The theory is built upon several assumptions and abstractions. Firstly, it abstracts the world into two trading States that only trade two goods, and use only one type of material to produce these two goods. An example of such a world may be the United States and Bangladesh that only trade computers and calculators between themselves, and, there is no difference in the quality of the computers and calculators produced by these two countries. Secondly, it assumes that there are no costs associated with international trade (for example it assumes that the costs of transportation and the creation of legally binding contracts and so on are zero). Finally, it assumes that there will be no deleterious consequences of specialising production into a particular good (for example there is no such thing as environmental deterioration caused by over-exploitation). While these assumptions may seem unrealistic, the purpose is not to draw a definitive conclusion on all matters relating to international trade, but rather to abstract from reality into a simpler world that is easier to model. In effect, this model acknowledges that the real world would be impossible to model accurately in this manner.
Once this process of abstraction is complete, the Ricardian model is able to provide a theoretical justification for the process of trade liberalisation. Put simply, if Bangladesh is comparatively more efficient (that is, more productive) than the United States in producing calculators, it will be able to sell them at a lower price compared to the United States. Similarly, if the United States is more productive in producing computers, it will be able to sell them at a lower price than a producer in Bangladesh. Thus, if trade is allowed between these two countries, taking into account the assumptions articulated above, the consumers of both States will benefit. United States consumers will purchase computers from local producers and calculators from Bangladesh, and Bangladesh consumers will purchase calculators from local producers and computers from the United States. In essence, the effect of free trade in this example is to reduce the prices of goods both in the United States and Bangladesh. According to the theory, the reduction in prices will leave the consumers of both States ‘better off’.
However, the above analysis only applies where one state is more productive in one good, and the other state is more productive in another. An alternative scenario is where one state is more productive in producing both goods. Prima facie, assuming that the United States owing to its superior technological position is able to produce both computers and calculators more efficiently than Bangladesh, there would be no point in opening trade with Bangladesh. This is because if calculators and computers were more expensive to produce in Bangladesh, then importing these devices from Bangladesh would result in higher prices being faces by United States consumers of these calculators and computers.
However, the Ricardian model delves further into this issue, and argues that even if the United States is more productive at producing both calculators and computers than Bangladesh, the United States still can benefit from trading with Bangladesh. Adopting the example above, say the United States is three times more productive than Bangladesh in producing computers, but only twice as productive in producing calculators. The theory of comparative advantage shows that if the United States allows for trade with Bangladesh, the total number of calculators and computers available for consumption would be higher compared to the situation where no trade with Bangladesh was allowed. The reason for this is that the United States under free trade could specialise in the production of computers, and not produce any calculators at all. Any excess supply of computers to the United States market could be sold to Bangladesh in exchange for calculators. In this sense, the United States is able to indirectly produce calculators by manufacturing computers and trading them for calculators. In this sense, the United States is able to increase the amount of items available for consumption in its domestic market. Before free trade, it had to produce calculators itself. After free trade, the United States is able to produce a greater number of computers, and sell this excess in order to obtain calculators. The net effect, according to the Ricardian theory is to increase the items available for consumption both in the United States and Bangladesh markets.
Generalising this example, the overarching proposition of liberal trade theory is that free and open trade will benefit all States, regardless of their comparative levels of productivity. Also, another positive effect of liberalised trade may be that competition between suppliers of products across many States are encouraged, resulting in a reduction in prices, and improvements in the quality of the product.
However, not all of the assumptions of the Ricardian model will hold in reality. Thus, the generalisation of the above strictly specified model into overarching propositions should be extremely qualified. To suggest that the Ricardian model provides a theoretical basis for the WTO’s activities seems to be problematic. Throughout this article, the consistency between the Ricardian model and the reality of the WTO will be tested via an examination of the Agreements on Textiles, Agriculture, SPS, and TBT.
The Technical Barriers to Trade (TBT) Agreement deals with product regulations relating to quality, size and performance. Where these regulations are mandatory, they are referred to as technical regulations, and where they are optional, they are referred to as standards. They are mechanisms that both governments and non-government bodies use to specify the characteristics that products must conform to, for reasons of safety, health, or for environmental purposes.
Overall, the Agreement was designed to combat the trade distorting effects of different national regulations on products. It does this by encouraging the adoption of international standards, while at the same time allowing individual members to impose their own standards where appropriate. In this sense, it can be said to be liberalising trade in accordance with the Ricardian model by decreasing certain non-tariff barriers to trade. By doing this, States with a comparatively higher level of productivity will face less restrictions in exporting their goods to markets with comparatively lower levels of productivity. According to the Ricardian model, this will benefit both the exporting state (by increasing their income) and the importing state (by decreasing the price they have to pay for certain goods).
The TBT Agreement defines a technical regulation as a document which lays down “product characteristics, or their related processes and production methods”. In EC-Asbestos, the appellate body suggested that a product characteristic may include “any objectively definable ‘features’, ‘qualities’, ‘attributes’, or other ‘distinguishing mark’ of a product”.
However, the Agreement only covers technical regulations and standards that constitute “related processes and production methods”. This phrase would seem to indicate that only those regulations or standards which affect the final characteristics of a product would be covered by the TBT Agreement. The more common non-product related process and production methods, such as pollution emissions standards, would not be covered by the Agreement.
As a result, an importing member can impose non-product related PPMs without contravening the TBT Agreement. As Gaines noted, these non-product related PPMs are often used to regulate the acquisition of primary resources, and have regulated the practices of fisheries, farms, loggers, miners, and hunters. Given that developing countries often rely heavily on their primary industries for economic development, there is a strong potential for this aspect of the TBT Agreement to disadvantage them.
This would also appear to be contrary to the Ricardian model insofar as these non-product related PPMs are able to give rise to trade restrictions. This is because it will make it more difficult for comparatively efficient exporters to gain access to markets with these regulations, and thus competition will be inhibited. In essence, trade is being denied not on the grounds of comparative productivity, but rather on a (potentially) arbitrary ground of not complying with a certain non-product related PPM.
The Preamble to the TBT Agreement, as well as articles 2.2, 5.1.2, 12.2, 12.7 and Annex 3 read together emphasise that international and domestic standards, regulations, and conformity assessment procedures should not constitute an “unnecessary obstacle to international trade”. This requirement is interesting in that it appears to delineate the point at which the Ricardian model is displaced for other concerns. Where there is a pressing non-trade concern, such as serious environmental degradation, the desired benefits of the Ricardian model are outweighed by the negative effects of allowing the non-trade concern to continue unaddressed. However, the Ricardian model will remain in place where to address the supposed non-trade concern via trade measures would be an “unnecessary obstacle to international trade”.
However, there are many ways in which this phrase may be interpreted. It may be interpreted widely, and therefore give preference to the notion that the creation of international standards, prima facie, leads to distortions in the international market. This is because consumers are denied choice in regards to the characteristics of goods or services that they wish to purchase. Alternatively, a narrow interpretation would give preference to the concern that a lack of international standards may lead to environmental deterioration, and long-term economic decline.
Article XX of the General Agreement on Tariffs and Trade (GATT) contains certain grounds upon which a barrier to trade may be created in order to pursue environmental objectives. These include measures that are necessary to protect human, animal or plant life and health (article XX(b)), or measures related to the conservation of exhaustible natural resources (article XX(g)). It is not entirely clear whether or not these provisions are a part of the TBT Agreement, and therefore it is difficult to determine whether a wide or narrow approach to the phrase “unnecessary obstacle to international trade” should be adopted. 
In article 2, it is stated that something may be said to not constitute an unnecessary obstacle to trade if the measure is “not more trade restrictive than necessary to fulfil a legitimate objective”. The Agreement goes on to provide a non-exhaustive list of such legitimate objectives, and includes measures designed to protect human health and safety, as well as animal and plant life, and the environment. However, this definition does not eliminate ambiguity in regards to what will constitute an unnecessary obstacle to international trade. For example, the recent European Community labelling requirements in regards to the use of genetically modified organisms in products may or may not fall within one of the legitimate objectives exception. This is because consumer preferences are not contained in the list of legitimate objectives in the TBT Agreement. However, if the EC could establish that the labelling requirements relate to human health and safety, then the regulations would not contravene the Agreement.
The relationship between this principle and the Ricardian model is uneasy. Strictly speaking, allowing a so-called legitimate objective to be used to apply trade restrictions would contravene the Ricardian model. This is because the use of trade barriers to inhibit competition would prevent comparatively more productive firms from exporting their goods. On the other hand, the application of trade measures to pursue a legitimate objective may be simply recognition that there are non-market costs to the production of certain items. For example, environmental deterioration may be an inevitable consequence of a certain production technique, and the only way to remedy this is to change the technique, and in the process expend resources. This has the effect of reducing productivity. Thus, an environmentally damaging method may often be more productive in the Ricardian sense than the environmentally sound method. The use of trade measures in order to impose a cost on environmentally polluting industries may be consistent with the Ricardian model in that it provides a more holistic view on the true cost (market and environmental) of producing a good, and hence true productivity, rather than relying simply on the cost of production to the producer as the best indicator of productivity.
The WTO TBT Committee has created a set of principles and procedures that bodies should observe when developing international standards, guidelines, or recommendations. Among other things, the principles state that the process should be transparent, and membership to the body must be open to all WTO Committee members. More importantly, the international standards
…should not distort the global market, have adverse effects on fair competition, or stifle innovation and technological development.
As with the TBT Agreement, the TBT Committee has decided that preference ought not to be given to the characteristics of a good from a particular country or region. That is, the international standard, ideally, should be performance based, and not based on certain design characteristics specific to certain countries or regions. This is consistent with the Ricardian model in that it requires that producers compete with each purely on the grounds of quality and productivity, rather than an arbitrary selection based on geographical location.
The Committee has also indicated that the difficulties faced by developing countries in participating in the development of international standards, should be ‘taken into consideration’. The Committee has encouraged developed members to provide technical assistance in accordance with article 11 of the Agreement, to facilitate developing member’s involvement in the international standardisation process.
As noted above, article 2.4 encourages members to adopt international standards where appropriate. However, the article further states that a contracting party is under no obligation to use the relevant international standards if to do so would be ‘inappropriate or ineffective’ to fulfil a ‘legitimate objective’. This list applies only to the appropriateness of a technical regulation or measure, and does not aid in the definition of whether the measure constitutes an unnecessary obstacle to trade.
The preamble to the TBT Agreement also emphasises that the imposition of standards and technical regulations by individual members must not constitute ‘unjustifiable discrimination between countries where the same conditions prevail’. This appears to be recognising that the GATT principles of ‘Most Favoured Nation’ and ‘National Treatment’ are incorporated into the Agreement.
The TBT Agreement has made special provision for developing countries in relation to international standards and regulations. Article 12.4 recognises that while international standards may exist, developing members may adopt “certain technical regulations, standards, or conformity assessment procedures aimed at preserving indigenous technology and production methods”. As a result, developing members are not required to use “international standards as a basis for their technical regulations […] which are not appropriate to their development, financial and trade needs”.
Despite these principles, in practice, the legitimate objectives exception can be used as an excuse for members to introduce more stringent regulations, even if international standards exist. The requirements of the TBT Agreement regarding standards should thus be regarded as a floor rather than a ceiling. Once again, these standards will need to be imposing a non-market (for example, environmental) cost on the producer that they would not otherwise face in their cost of production in order to be consistent with the Ricardian model.
The Sanitary and Phytosanitary (SPS) Agreement is concerned with the application of food safety, animal and plant health regulations. Under article 1.1, the Agreement applies to “all sanitary and phytosanitary measures which may, directly or indirectly, affect international trade”.
The preamble and Article 3.1 encourage WTO member countries to use international standards, guidelines and recommendations where they exist. However, article 5.5 as well as the preamble require that members should avoid arbitrary or unjustifiable discrimination between countries where the same conditions prevail. In this sense, the SPS measures must be consistent with GATT’s non-discrimination principles of MFN and national treatment, and they may not be used as a disguised restriction on international trade (article 2.3). Similarly, the SPS measures may not be used if another, less restrictive measure is reasonably available which will achieve the appropriate level of protection (article 5.6).
Article 2.1 recognizes the right of individual governments to take SPS measures. However, article 2.1 states that the measures must be “necessary for the protection of human, animal, or plant life or health”. Furthermore, article 2.3 states that the risk to human, animals or plants must be based on “scientific principles, and not maintained without sufficient scientific evidence”.
The requirement of “sufficient scientific evidence” introduces a certain level of ambiguity into the SPS Agreement, because scientists are often not unanimous on all issues. The ambiguity of this concept may in turn provide developed countries with the opportunity to apply non-tariff barriers in the guise of advanced SPS technologies. The agreement also does not deal with import restrictions aimed at protecting the global commons of a foreign environment.
In the absence of sufficient scientific evidence, a government may provisionally adopt a precautionary restriction under article 5.7. However, the government imposing the precautionary measure must seek further information within a reasonable period of time.
The precautionary principle is not unique to the SPS Agreement, and has its expression in the Rio Declaration on Environment and Development. Under article 15 of the Rio Declaration, where there is a lack of scientific certainty in regards to the effect a good or practice may have on the environment, States have the discretion to engage cost effective measures to prevent environmental degradation. The test for the exercise of this discretion is where there is a “threat of serious or irreversible” environmental damage.
However, what constitutes a threat of serious or irreversible damage is open to interpretation. Specifically, the seriousness of a threat to the environment is not only subjective, but also inextricably linked to the context in which it is being considered. This is because the environmental standards partly depend on the level of economic development of the country in question. As a result, a particular measure undertaken in response to a perceived threat of serious environmental damage may be financially viable and justifiable in a developed country, but on the other hand impose disproportionate economic costs on a developing country. The SPS Agreement, however, does not recognise the fact that often there will be asymmetric economic impacts of particular environmental measures. On a wide reading of the Ricardian model, the threat of environmental damage could be factored into the comparative cost of production/productivity by viewing it as a potential future cost that would be discounted to the present. That said quantifying the cost of “serious environmental damage” is not only highly problematic, but also uncertain. This creates the potential for States to apply massive trade sanctions to guard against a threat of environmental damage that they perceive to be high, but developing countries believe to be low. This demonstrates one of the serious limitations of the Ricardian model, that is, the notion that all costs are perfectly known, including costs of production, opportunity costs and environmental costs and that they can be factored into the international market seems unrealistic. This is where the generalisation that liberalised trade will always leave countries better-off because higher levels of trade will lead to higher levels of productivity begins to unravel. The effect of entirely free trade here would be to provoke a ‘race-to-the-bottom’ in terms of environmental standards. When one firm employs a cheaper, more polluting method, another firm will employ and even cheaper and even more polluting method, and so on. The effect of the Ricardian model may be to not only destroy the environment, but also in the long term will undermine international trade due to the over-exploitation of natural resources.
Also, while the SPS Agreement emphasises the need for the risk and scientific assessment, developing countries often lack the capacity to adequately access and assess the scientific evidence upon which a measure is based. Without access to scientific expertise, developing countries may have difficulty in assessing these concepts of scientific risk and serious environmental damage. This has been borne out of the WTO dispute settlement mechanism, where developing countries rarely bring complaints regarding SPS and TBT measures because of the cost, and their lack of resources to carry out scientific tests required.
In order to see the benefits of the SPS agreement, developing countries need to be ‘willing and able’ to participate fully in the institutes and practices established by it. In order to do this, they require membership of the WTO and the opportunity and expertise to actively participate in the setting of international standards, to ensure that such standards take adequate account of their needs and special circumstances. It is significant that only 64% of least developed countries are members of the WTO, especially in the light of the 92% membership of high income countries. It is also significant that only 33% of the low and lower middle income countries who are members of the WTO, are also members of the international standards organisations known as OIE and Codex Alimentarius. This is compared with 64% membership of upper middle and high income countries.
Most critical to the operation of the SPS agreement is transparency. In this regard, the agreement requires members to establish specific contact points for the facilitation of communication regarding SPS members, in a single national ‘enquiry point’ and a national notification agency. As at June 1999, only 65% of low and lower middle income countries had specified an enquiry point, and only 59% had specified a national notification agency. Given the importance of these requirements to the implementation of the SPS agreement, these numbers suggest a critical weakness in the participation of developing countries.
Similarly, during the period from November 1995 to September 1998, almost 50% of developing countries did not attend any of the 10 (of 12) meetings of the SPS Committee for which participant lists were available. Less than 20% of developing countries attended five or more of these meetings. While these low participation levels may be reasonably explained, they are nonetheless another indicator of low levels of participation by developing countries in the institutions and thus the standard-setting of the SPS agreement.
Given this context, it is probably not surprising that some developing countries have expressed concern regarding their ability to participate effectively in the implementation of the SPS Agreement. They have suggested that the key issue is not only whether they are able to attend SPS Committee meetings, but whether they are able to understand and contribute to the discussions that take place at such meetings. In essence, shortcomings in delegates’ technical and scientific expertise can be a significant hurdle for developing countries to overcome, and therefore participate actively in the SPS agreement.
Under article 4.1, importing members are required to accept the SPS standards of other members as being equivalent, if the exporting member “objectively demonstrates… that its measures achieve the importing Members appropriate level” of SPS protection. Developed countries remain reluctant to accept the equivalence of sanitary and phytosanitary measures in developing countries. Developing countries have reported that in several cases, the inspectors of developed importing countries have sought identical specification rather than equivalency. This had two effects. Firstly, it deprives article 4 of its function, which is to give countries flexibility regarding the measures they adopt, as long as they achieve the same level of sanitary and phytosanitary protection. Secondly, given that developed countries’ sanitary and phytosanitary requirements are generally created with a view to the structure and modus operandi of their own domestic industry, they can be incompatible with the production and marketing methods in developing countries.
Unless developed countries are willing to accept equivalency in these cases, developing countries may be required to undertake large-scale investment over extended periods of time in order to comply. This is well illustrated by one of the most in-depth analyses of the impact of SPS requirements on developing country exports of agricultural and food products undertaken so far. The subject of analysis was the Bangladesh frozen shrimp sector. From August to December 1997, the European Commission banned exports of frozen shrimp from Bangladesh over concerns about hygiene standards in processing facilities and the efficiency of controls undertaken by Bangladesh government inspectors. It has been estimated that the result of this ban was lost revenue in the sum of US$14.6 million. The upgrading of sanitary conditions in Bangladesh’s frozen shrimp industry has been estimated at US$17.6 million over the period from 1997 to 1998. The maintenance of the required standards in Bangladesh shrimp plants is likely to cost the industry $2.2 million per annum and the government expects to pay US$225,000 per annum to maintain a monitoring program.
Those who cannot afford to implement the changes necessary to adhere to such standards lose what would otherwise be a key instrument in the enhancement of market access for their products.
Article 4.2, allows members to enter into mutual recognition agreements (MRAs), under which two countries reciprocally agree to import products meeting the other country’s standards, tests, or technical regulations. However, developing countries have only a limited capacity to carry out the functions required in order to gain the necessary certification and accreditation. The result is that only a very small number of MRAs involve developing countries, which in turn limits their ability to access the markets of developed countries.
Under article 9 of the SPS Agreement, developed members “agree” to provide technical assistance, particularly to developing country members, in order to assist them in attaining the sanitary and phytosanitary protection required for their export markets. Under article 9(2), importing members should particularly consider providing such assistance where substantial investment would be required in order for the exporting member to fulfil the SPS standards of the importing member. However, developing countries report that the level and type of technical assistance provided to them to facilitate the implementation of the SPS agreement, and/or to comply with the sanitary and phytosanitary requirements of developed countries, often fails to address the day-to-day problems faced by developing countries. Many of these problems relate to overall levels of economic development.
Article 10 of the Agreement allows for the special and differential treatment of developing and particularly least developed countries in the preparation, application and phased introduction of new sanitary and phytosanitary measures in order to maintain opportunities for these members’ exports. However, as with the technical assistance obligation, the provisions of article 10 promises made have not led to any substantial financial or technical assistance. Developed countries often appear to be unwilling to provide additional time for developing countries to respond appropriately.
Similarly, procedures for the negotiation and agreement of international standards within Codex Alimentarius, OIE and IPPC fail to take account of the needs and special circumstances of developing countries.
The overall picture is that developing countries have been unable to participate actively in the workings of the SPS agreement, and thus are unlikely to see any benefits from it. Their failure/inability to attend SPS Committee meetings means that such meetings have a higher likelihood of being driven by the priorities and agendas of developed countries. In addition, developing countries face a number of other constraints which prevent their full participation in the SPS Agreement, such as the notification of new SPS measures, risk assessment and the implementation of international standards. In a survey of developing countries, the most significant constraint to participation was found to be an insufficient ability to assess the implications of the sanitary and phytosanitary requirements of developed countries following notification. Other major constraints were considered to be insufficient ability to participate effectively in the dispute settlement procedures, and the demonstration of equivalency of domestic SPS measures. In a 1999 survey of low and lower middle income countries, it is significant that the greatest impediment to exports to the European Union (EU), Australia and the United States (US) was considered to be SPS requirements.
Developing countries feel that both the SPS and the TBT agreements are dominated by the interests of developed countries, and also that the various committees and decision making processes lack their input, and make great use of multilaterally established standards determined by an economically/politically skewed process.
The authenticity of these concerns is illustrated by the fact that, until recently, debate in standard-setting bodies such as the International Organization for Standardisation (ISO) and the Codex Alimentarius Commission was exclusively the domain of rich, technologically advanced nations. This has resulted in a set of international standards which have largely failed to take into account the characteristics/technology/ production methods of the products exported by developing countries, and which often require developing countries to adhere to standards more appropriate for their industrialized counterparts. This process has been labelled ‘techno-imperialism’ by some observers.
Some developing countries argue that current rules still give developed countries too much discretion when it comes to setting standards. It has been argued that, in the aftermath of the liberalisation undertaken during the Uruguay Round, many nations have simply replaced protectionist tariffs with less obvious but equally restrictive non-tariff barriers. These include the use and enforcement of stringent technical standards, which in turn impose substantial financial costs on developing countries which may undermine their trading competitiveness. However, whether such higher standards are a reflection of a community’s concerns for their health and environment, or are an attempt to protect domestic industries, is often difficult to tell. Product standards for example, are often determined on moral values to which certain groups attach importance, and which values may not be understood by other countries of different income levels.
As was significantly remarked in Agenda 21 of the United Nations Conference on Environment and Development, ‘standards that are valid in the most advanced countries may be inappropriate and of unwarranted social cost for developing countries’, For the purposes of the Ricardian model, a trade barrier will have the same negative effects on competition, regardless of whether it is tariff or non-tariff. An impossible question is then raised: when should the goal of free trade be displaced in favour of environmental protection? It would seem, given the above analysis that developed countries will tend to favour environmental protection, and developing countries will favour free trade.
Agriculture and agricultural trade are economically important for virtually all regions of the world. While highly industrialized economies such as the US are overwhelmingly dominant as both exporters and importers of agricultural products, the relative importance of agricultural trade to economies in Asia, Latin America and Africa is rising. In these countries, approximately 2 billion small-scale farmers still live a traditional agricultural way of life in which ecological sustainability is a prerequisite for economic survival. Because of their relatively lower wages and greater land area, developing countries also tend to have a comparative advantage in the production of primary agricultural products.
While agriculture is important from an economic perspective, its environmental consequences can be equally as serious. For example, in many countries, the largest single use of water is irrigation. Also, agricultural runoff and seepage of fertilizers and pesticides are major sources of groundwater pollution. Changing patterns of land use, for example from forest to agriculture, can destroy the habitats of plant and animal species. Intensive livestock operations in many countries have grown so large that they pose major problems of waste management and disposal, and are sources of air and water pollution.
While the WTO Agreement on Agriculture does not directly address environment-related issues, it has allowed WTO members to continue to provide subsidies to their farmers. This seems to be entirely contrary to achieving the goals of the Ricardian model. The Agreement on Agriculture also allows for the creation of specific agreements by member States in order to improve market access, and reduce trade-distorting subsidies in agriculture with the ultimate goal of trade liberalisation. Under this Agreement, domestic support measures whose trade-distorting effects are minimal are excluded from the requirement to reduce protection measures. These measures include expenditure incurred under environmental protection programmes, provided that they meet certain conditions.
It is notable that the Agreement did not provide for the creation of a global trading system which could accommodate the development of environmentally compatible agriculture. The farm subsidies and trade protections employed by developed countries in accordance with the Agreement on Agriculture are increasingly forcing developing countries to employ environmentally unsound practices such as deforestation, the intensification of production, monoculture, the overexploitation of soil, the expansion of farming to biodiversity-rich areas and the use of fertilizers and pesticides. The incentives to undertake such overproduction are huge: in 2001, OECD countries provided a total of $311 billion in subsidies to the agricultural sector. This exceeded the total amount of foreign aid given to all countries by almost 600%, and was actually greater than the total GDP of Sub-Saharan Africa, which was $301 billion in 2001.
Agricultural support is also a key development issue. Many developing countries have an advantage in agricultural products compared with their developed country trading partners, but are unable to harness this potential engine for growth. This is because the subsidized exports of surplus agricultural production from developed countries depresses prices on international markets, resulting in agriculture becoming a less profitable proposition for individuals residing in countries whose governments cannot afford to subsidize their industry. The result is a reduced comparative and competitive advantage on the world market, and results in developing countries being forced to put increased pressure on their natural resources which are an alternative source of export earnings.
Agriculture is seen a priority sector for developing countries. This is because in free market situations, agriculture is an excellent source of income, which can then be used by developing countries to address environmental issues. The Chairman’s summary of the G15 Ministerial Conference in Bangalore, India, in August 1999 states that to ‘show the mutual supportiveness of trade and environment, trade distortive agricultural export subsidies should be removed by developed countries’ as there are close links between government intervention in the market access of products, domestic support policies, export subsidies and environmental degradation.
The commitments made in the Uruguay Round began to address these problems. Developed countries were given six years to cut their average agricultural tariffs by 36 per cent, to reduce their aggregate measures of support by 20 per cent and to cut export subsidies by 36 per cent. Developing countries were also obliged to make cuts in these areas, but theirs were not as large (for many, their levels of support were much lower to begin with), and were stretched over 10 years rather than six. Despite these provisions, the agricultural sector remains more protected than almost any other. The average tariff remains relatively high at around 40 per cent, and some countries continue to employ "megatariffs" of up to 350 per cent to protect certain products.
The G8 in its meeting in 2005 committed itself to reducing agricultural subsidies. In paragraph 3 of the document titled ‘trade’ the G8 members stated that: “we are… committed to eliminating all forms of export subsidies and establishing disciplines on all export measures with equivalent effect by a credible end date”.
These types of commitments notwithstanding, the 1995 Agreement on Agriculture has generally not effectively decreased subsidies or increased market access. The comparative advantage of developing countries continues to decline as developed countries continue to provide subsidies to their own farmers, and as those in developing countries try to compete, the decrease in traditional farming methods causes degradation of the environment, without producing the substantial increase in market access through which they might acquire the finances to mitigate environmental damage.
The recent WTO ministerial conference in Hong Kong has gone some way towards providing a final date for the elimination of agricultural subsidies. Under paragraph 6 of the declaration, “states agree to ensure the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of 2013.” The declaration goes on to provide that the elimination of subsidies will occur in a progressive manner in accordance with yet to be negotiated “modalities”.
The purpose of the Agreement on Textiles and Clothing was to promote trade liberalisation via the reduction of tariff and non-tariff barriers to trade, the expansion of existing quotas, the eventual integration of textiles and clothing products into the WTO/GATT, and the introduction of safeguards to deal with cases of market disruption during the integration of the sector into the WTO/GATT.
On 31 December 2004 the Agreement in Textiles and Clothing ceased to operate, and with it the quota system for international trade in textiles and clothing. The new, quota free system does not mean that trade will be entirely liberal however. While new markets will open up eventually, in the short to mid-term, Europe and the US are expected to remain the most important markets for clothing and textiles. At present, these markets attract two thirds of the world’s imports in this sector. With the quota phase-out, many small countries will lose guaranteed markets and countries like Bangladesh, for example, which has a 75 per cent share of garment exports in total merchandise exports, will have to struggle to maintain their present markets or they will face higher unemployment rates and deeper poverty. If they are not prepared for the expected business and market changes following the phase-out, such countries may lose their existing markets. On the other hand, countries with modern textiles factories such as Bangladesh may actually increase their market share under the new quota-free system. However, it should also be noted that the efficiency of the textiles industry in various countries will also depend on various costs of production which cannot be controlled by the producer. Thus, governments of developing countries will need to invest in infrastructure such as roads, utilities and ports in order for a country to retain its competitive edge.
There is no doubt that environmental matters will have a central role in the future development of the international textile and clothing markets, and so developed country rule makers will need to cooperate closely with developing country exporters/producers in this area. This is particularly evident in the context of developing countries’ concerns that eco-labelling, which is currently no more than a marketing tool, will become a barrier to imports in the future.
This is no unfounded concern, as the 1996 ban on AZO dyes in Germany has shown. The effect of this ban was that textile manufacturers in Thailand switched to AZO-free substitutes with additional costs estimated at between 5 and 20 per cent. Textile manufacturers in some other countries in the Asia-Pacific region, like India, encountered difficulties in obtaining substitutes. Small and medium enterprises were slower to adjust to eco-labelling demands and found the costs of adjustment difficult to absorb. Several of these enterprises preferred to divert sales to the domestic market or other overseas markets which did not have any eco-labelling requirements.
Changes in the area of ecologically friendly products, as well as the lack of a uniform, international eco-labelling scheme, already pose problems for developing countries in terms of acquiring eco-friendly certification, but if and when such labelling schemes form a barrier to market access or place developing countries at a disadvantage vis a vis local manufacturers, difficulties with market access will be compounded. During a June 1995 workshop on eco-labelling held by the ITC in Geneva, it became apparent that a number of issues were problematic for developing countries in this context, such as a lack of information regarding basic eco-labelling concepts and terminology, transparency and market factors. From this, it becomes clear that developing countries, which often depend very heavily on exports of clothing and textiles, need to be informed about developments in the field of environmentally sound products so they can prepare for forthcoming market changes, and understand which rules are mandatory, such as the banning of Azo-dyes in Germany. The ITC plans to set in place a monitoring system by which producers in this sector will be kept informed about latest trends in changes to the environment, the gradual integration of products into GATT rules as stipulated by the ATC.
Trade is a powerful engine for economic growth, which is vital to the creation of conditions that favour advancing environmental protection, improving social conditions and sustaining ethical values. Empirical research on the relationship between trade and the environment supports this view and affirms that trade and growth together can increase the stock of human capital and can lower pollution.
By opening markets particularly to exports in agriculture and textiles from developing countries, and by keeping markets open through clear and enforceable rules under the SPS and TBT Agreements, the global trading system is a natural ally of sustainable development. Sustainable development not only benefits the environment through the responsible use of resources, but also provides countries with the financial and technological capacity to engage in environment protection measures. Consequently, striving for an open international trading system may be an important economic instrument for developing countries to both engage in economic development, and protect the global environment. As a general theory, open markets encourage or facilitate the efficient allocation of resources and necessarily result in their application to the most profitable use. Thus efficiency essentially dictates that resources are not wasted or depleted through unsustainable practices. However, this Ricardian theory of free trade has been constructed by the developed trading nations under the auspice of the WTO, and as such has often failed to take into account or accommodate developing nations' interests and concerns, when implementing these policies and programmes of free trade. Namely, that the developing nations economies are not of sufficient strength to effectively participate in multilateral trade negotiations, due to the inadequacy of their financial resources, the level of market access and technological transfer. Consequently, striving for an open international trading system requires that these be addressed under the WTO, through international co-operation and capacity building for equitable economic development, which in turn may help mitigate environmental problems, through an increased capacity to engage in environmental protection of scarce resources.
However, as this article has noted, the trading system set up under the WTO is generally speaking not meeting the goal of equitable economic development across developed and developing countries, and is also not taking measures that will enhance environmental protection. These issues, however, must be contextualised within a general developing country mistrust of the process of globalisation, and whether in practice, it is delivering tangible economic benefits to developing countries. As the Secretary-General of the United Nations, Mr Kofi Annan, asserts:
Unless we convince developing countries that globalisation really does benefit them, the backlash against it will become irresistible. That would be a tragedy for the developing world, and indeed for the world as a whole
It is along this path that issues relating to standards, regulations and non-tariff barriers, and their relationship to development and the environment should be dealt with in the WTO.
[*] LLB (Hons), LLM, PhD; Lecturer, Centre for Environmental Law, Division of Law, Macquarie University, Sydney, Australia. email: firstname.lastname@example.org. Research for this article was supported by a research grant the author received from the Macquarie University Division of Law Research Fund in 2005. The author would like to acknowledge the invaluable research assistance of Rhys Manley in preparing this article.
 The World Trade Organization, ‘Early Years: Emerging Environment Debate in GATT/WTO’, online: <http://www.wto.org/english/tratop_e/envir_e/hist1_e.htm> (last accessed on 16 January, 2006).
 Kevin P Cummins, ‘Trade Secrets: How the Charming Betsy Canon May Do More to Weaken U.S. Environmental Laws Than the WTO Trade Rules’ (2000) 12 Fordham Environmental Law Journal 14; Craig A A Dixon, ‘Environmental Survey of WTO Dispute Panel Resolution Panel Decisions Since 1995: “Trade at All Costs?”’ (2000) 24 William & Mary Environmental Law & Policy Review 89; David Hunter, James Salzman, and Durwood Zaelke, International Environmental Law and Policy (Foundation Press 1998) 1210; Layla Hughes, ‘Limiting the Jurisdiction of Dispute Settlement Panels: The WTO Appellate Body Beef Hormone Decision’ (1998) 10 Georgetown International Environmental Law Review 915.
2 Rafiqul Islam, International Trade Law (Lawbook Company, 1999) 440.
 Paul Krugman, and Maurice Obstfeld, International Economics: Theory and Policy (Addison-Wesley, 5th ed, 2000) 12.
 Paul Samuelson, ‘Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalisation’ (2004) 18(3) Journal of Economic Perspectives, 137, 137.
 Ibid, 137-139.
 Ibid, 139.
 Agreement on Technical Barriers to Trade, see World Trade Organization, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations (Cambridge University Press, 1999).
 Veena Jha, ‘Overview of the TBT and SPS Agreements, and Possible Implications for India’, online: <r0.unctad.org/trade_env/docs/SPS%20and%20TBT%20doc.pdf> (last accessed on 17 July 2005).
 Preamble to the TBT Agreement, above n 8.
 Annex 1 of the TBT Agreement, above n 8 .
 European Communities – Measures Affecting Asbestos and Asbestos-Containing Products WTO Doc WT/DS135/AB/R (2001)  (Report of the Appellate Body).
 Sanford Gaines, ‘Products and Production Methods: How to Produce Sound Policy for Environmental PPM-based Trade Measures’ (2002) 27 Columbia Journal of Environmental Law 383, 397.
 Ibid, 399.
 Aaron A Ostrovsky, ‘The European Commission's Regulations for Genetically Modified Organisms and the Current WTO Dispute - Human Health or Environmental Measures? Why the Deliberate Release Directive is More Appropriately Adjudicated in the WTO Under the TBT Agreement’ (2004) 15 Colorado Journal of International Environmental Law & Policy 209; Norbert L W Wilson, ‘Clarifying the Alphabet Soup of the TBT and the SPS in the WTO’ (2003) 8 Drake Journal of Agricultural Law 703; Atsuko Okubo, ‘Environmental Labelling Programs and the GATT/WTO Regime’ (1999) 11 Georgetown International Environmental Law Review 599; David Hunter, James Salzman and Durwood Zaelke, above n 2, 1208.
 Brian Schwartz, ‘WTO and GMOs: Analyzing the European Community’s Recent Regulations Covering the Labelling of Genetically Modified Organisms’ (2004) 25 Michigan Journal of International Law 771, 801.
 Anderson Thomas, Carl Folke and Stefan Nystrom (eds), Trading with the Environment: Ecology, Economics, Institutions and Policy (Earthscan Publications Ltd, 1995), 92.
 Agreement on Sanitary and Phytosanitary Measures see The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations (Cambridge University Press, 1999) 61.
 The term “precautionary restriction” is not referred to in the Agreement. However, in EC-Hormones, the Appellate Body held that the article reflects the meaning of the precautionary principle; Steve Charnovitz, ‘The Supervision of Health and Biosafety Regulation by World Trade Rules’ (2000) 13 Tulane Environmental Law Journal 271.
 Halina Ward, ‘WTO Rules and the Application of the Precautionary Principle’ (2000) January-February, Bridges, (International Centre for Trade and Sustainable Development Monthly Publication), 15.
 Veena Jha, ‘Overview of the SPS and TBT Agreements and its Possible Implications for India’ Discussion Papers for the Havana Workshop on Trade and the Environment (30 May – 2 June, 2000) online: <http://r0.unctad.org/trade_env/discpapers2.htm> (last accessed on 6 January, 2006).
 World Trade Organization, ‘Understanding the WTO – Least Developed Countries’, online <http://www.wto.org/english/thewto_e/whatis_e/tif_e/org7_e.htm> (last accessed on 31 October, 2005).
 Spencer Henson, Rupert Loader, Alan Swinbank and Maury Bredahl, ‘The Impact of Sanitary and Phytosanitary Measures on Developing Country Exports of Agricultural and Food Products (draft for discussion)’ paper presented at The Conference on Agriculture and the New Trade Agenda in the WTO 2000 Negotiations, 1-2 October, 1999, held at Geneva (Section 6: ‘Problems with the SPS Agreement encountered by Developing Countries’), online: <http://www.cid.harvard.edu/cidtrade/issues/spstbtpaper.html> (last accessed on 31 October 2005).
 Spencer Henson, Rupert Loader, Alan Swinbank and Maury Bredahl, ibid, section 6.1: ‘Participation in the SPS Agreement’.
 The national notification agency is responsible for all procedures associated with the notification of new and/or amended SPS measures.
 Spencer Henson, Rupert Loader, Alan Swinbank and Maury Bredahl, section 6.1; ‘Participation in the SPS Agreement’, above n 25.
 While many developing countries do not have permanent missions in Geneva, those that do typically only have one person who is responsible for all WTO matters. It is unsurprising, given the importance of matters within the WTO itself, that attendance at SPS Committee meetings is so poor. See Henson, Loader, Swinbank and Bredahl, ibid, section 6.1: ‘Participation in the SPS Agreement’.
 Henson, Loader, Swinbank and Bredahl, ibid, section 6.1: ‘Participation in the SPS Agreement’.
 Ari Afilalo and Sheila Foster ‘The World Trade Organization's Anti-Discrimination Jurisprudence: Free Trade, National Sovereignty, and Environmental Health in the Balance’ (2003) 15 Georgetown International Environmental Law Review 633.
 As required under the SPS Agreement, art 4.1; Alexander M. Donahue, ‘Comment: Equivalence: Not Quite Close Enough For the International Harmonisation of Environmental Standards’ (2000) 30 Environmental Law 363.
 Under art 4 of the SPS Agreement, importing countries are permitted to inspect the sanitary and phytosanitary measures of the exporting country in order to ensure that they reach the necessary standards; Sanford Gaines, ‘Processes and Production Methods: How to Produce Sound Policy for Environmental PPM-Based Trade Measures?’ (2002) 27 Columbia Journal of Environmental Law 383
 Richard Jr Ferris, Zhang Hongjun, ‘The Challenges of Reforming an Environmental Legal Culture: Assessing the Status Quo and Looking at Post-WTO Admission Challenges for the People's Republic of China’ (2002) 14 Georgetown International Environmental Law Review 429; S Henson, R Loader, A Swinbank and M Bredahl, above n 24, section 4: ‘Problems experienced by developing countries due to SPS measures’.
 Spencer Henson, Rupert Loader, Alan Swinbank and Maury Bredahl, ibid.
 Cato and Lima dos Santas (1998) ‘European Union 1997 Seafood-safety Ban: The Economic Impact on Bangladesh Shrimp Processing’, Marine Resource Economics, 13, 215-225, in Henson, Loader, Swinbank and Bredahl, ibid.
 Cato (1998) in S Henson, R Loader, A Swinbank and M Bredahl, ibid.
 Henson, Loader, Swinbank and Bredahl, ibid, section 2: ‘SPS measures as barriers to trade’.
 SPS Agreement, art 4.2; Alexander M Donahue, ‘Comment: Equivalence: Not Quite Close Enough for the International Harmonisation of Environmental Standards’ (2000) 30 Environmental Law 363.
 SPS Agreement, art 9.1; above n 19, 64.
 SPS Agreement, art 9.2.
 Spencer Henson, Rupert Loader, Alan Swinbank and Maury Bredahl, above n 24, section 6.2: ‘Concerns about the operation of the SPS Agreement’; Norbert L W Wilson, ‘Clarifying the Alphabet Soup of the TBT and the SPS in the WTO’ (2003) 8 Drake Journal of Agricultural Law 703.
 Henson, Loader, Swinbank and Bredahl, ibid, section 6.2: ‘Concerns about the operation of the SPS Agreement’.
 Henson, Loader, Swinbank and Bredahl, ibid, section 6.2: ‘Concerns about the operation of the SPS Agreement’.
 Henson, Loader, Swinbank and Bredahl, ibid, section 6.1: ‘Participation in the SPS Agreement’.
 Henson, Loader, Swinbank and Bredahl, ibid, section 3: ‘Survey of SPS-related problems associated with developing country exports’.
 Center for International Development, ‘Sanitary and Phytosanitary Measures and Technical Barriers to Trade Summary’, Harvard University, online: <http://www.cid.harvard.edu/cidtrade/issues/spstbt.html> (last accessed on 31 October 2005).
 Vinod Rege, ‘GATT Law and Environment Related Issues Affecting the Trade of Developing countries’ (1994) 28(3) Journal of World Trade, 95-169.
 Vinod Rege, above n 47, 95-169.
 Agenda 21, UN Conference on Environment and Development, UN Doc A/CONF.151/26/Rev1 (1992). See also Vinod Rege, ibid, 95-169.
 The United Nations Environment Programme (UNEP) and International Institute for Sustainable Development (IISD), Environment and Trade: A Handbook, IISD, Canada, 2000, 51.
 Mogens Buch-Hansen, ‘The WTO Agreement on Agriculture and its impact on developing countries’, online: <http://www.ruc.dk/inst3/IDS/Public/workpapers/no29.pdf/> (last accessed on 6 January, 2006) 3.
 UNEP and IISD, above n 52, 56.
 The World Conservation Union, ‘Balancing Imbalances in the WTO – Agreement on Agriculture’, online: <http://www.iucn.org/en/news/archive/2001_2005/press/
mtgwtovilm.pdf> (last accessed on 3 April, 2006 ) 1.
 Ibid, 2.
 Human Development Report 2003 (2003) United Nations Development Programme, online: <http://hdr.undp.org/reports/global/2003/> (last accessed on 31 October 2005).
 Balancing Imbalances at the WTO, above n 57, 2.
 UNEP and IISD, above n 52. For example, the 2002 US Farm Bill and the Doha Round induced qualitative and quantitative shifts in domestic support policies. The impact of these two documents on world agricultural production and trade included the provision of incentives for increased agricultural output through an intensification of production. The result was a significant increase in agricultural production beyond the levels that would normally characterize free markets. The flow-on effect of this was support for export credit and food aid programmes, the depression of commodity prices and the distortion of agricultural trade flows. See Karel Maryand, Stephanie Dionne, Marc Paquin and Isaak Pageot-LeBel, ‘The Economic and Environmental Impacts of Agricultural Subsidies: An Assessment of the 2002 US Farm Bill and Doha Round’, Second North American Symposium on Assessing the Environmental Effects on Trade, Mexico, 26 March 2003, online: <http://www.cec.org/files/pdf/ECONOMY/Session-4-3-Mayrand-Dionne_en.pdf> (last accessed on 6 April, 2006).
 OECD, The Environmental Effects of Trade, Paris: OECD, 1994; UNCTAD/CON35, ‘Internalisation of Environmental Damages in Agriculture’ 25 April 1995.
 Report of the Committee on Trade and Environment to Ministers in Singapore, WTO Doc WT/CTE/1, 12 November 1996.
 The UNEP and IISD, above n 52, 52.
 IUCN, ‘Balancing Imbalances in the WTO – Agreement on Agriculture,’ above n 57, 2.
 Shahrukh Rafi Khan, ‘Environmental Impacts and Mitigation Costs of Cloth and Leather Exports from Pakistan.’ Online: <http://www.ictsd.org/dlogue/2001-03-29/RafiKhan.doc> (last accessed on 31 October 2005). See the WTO Agreement on Textiles and Clothing see World Trade Organization, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations (Cambridge University Press, 1999) 73.
 Antero Hyvarinen, ‘Introduction of the Agreement on Textiles and Clothing and its Implications on Developing Country Producers/Exporters: Eco-labelling and environmentally friendly products and production methods affecting the international trade in textiles and clothing’, online: <http://www.intracen.org/worldtradenet/docs/
information/referencemat/ecolabatc.pdf> (last accessed on 31 October, 2005), 7.
 Matthias Knappe, ‘Textiles and Clothing: What Happens After 2005?’ Reprinted from International Trade Forum, (2003) Issue no 2, online: <http://www.cacci.org.tw/
membership/Textiles%20and%20Clothing.PDF> (last accessed on 6 April, 2006), 16-20.
 SGIA, ‘The End of Textile Quotas: Impact on the World Textile Industry’, online: <http://www.sgia.org/feature_articles/pdfs/fa_0205_quotas.pdf> (last accessed on 31 October 2005).
 Antero Hyvarinen, above n 70, 6.
 Matthias Knappe, above n 71, 5.
 United Nations Conference on Trade and Development, A Positive Agenda for Developing Countries: Issues for Future Trade Negotiations, (United Nations, 2000), 217.
 Antero Hyvarinen, above n 70, 2.
 Ibid, 3.
 Ibid, 4.
 Ibid, 6.
 Renato Ruggerio, Director General of the WTO, in his speech in Bonn on the subject of sustainable development on 9 December 1997; see for details (1997) 1(6) Bridges 7 (International Centre for Trade and Sustainable Development Newsletter).
 Theodore Panayotou, ‘Economic Growth and the Environment’, Harvard University Centre for International Development, Working Paper No. 56, July 2000, 76-77.
 Ruggerio, above n 80, 7.
 Peter AG van Bergeijk, ‘International Trade and the Environmental Challenge’ (1991) 6 Journal of World Trade 106.
 Address by the Secretary General of the United Nations, Mr Kofi Annan, at Ministerial Conference of the World Trade Organization, Third Session, held at Seattle on 30 November 1999.