The Greening of the WTO

Michael M. Weinstein and Steve Charnovitz

From Foreign Affairs, November/December 2001

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Summary:  The WTO is often portrayed as a dangerous threat to the environment. But this reputation is largely undeserved, because the trade body has in fact developed principles that accommodate both trade and environmental concerns. There are several steps it can take, however, to make sure the green trend continues.

Michael M. Weinstein is Acting Director of the Geoeconomic Center and BP Senior Fellow for International Economics at the Council on Foreign Relations. Steve Charnovitz practices law at Wilmer, Cutler & Pickering and was Director of the Global Environment and Trade Study at Yale University.

SAVE THE TURTLES

Anyone who has followed the negative press coverage of the World Trade Organization over the last few years would be shocked to learn that the WTO has started to develop an environmental conscience. With only a few tweaks, it can turn greener still.

The most memorable assault on the WTO's environmental record came at its 1999 meeting in Seattle, where antiglobalization demonstrators dressed as sea turtles to highlight the alleged damage wrought by the organization's policies. Similar protests have dogged multilateral trade meetings ever since. But a careful look at the WTO's record shows that such attacks are unwarranted. The organization is in fact developing constructive principles for accommodating both trade and environmental concerns. A series of rulings by the WTO's dispute-resolution bodies -- judicial panels that settle conflicts among member states -- has established the principle that trade rules do not stand in the way of legitimate environmental regulation.

The gradual greening of the WTO throughout its seven-year life reflects changes made to international rules when the organization was created in 1994. In particular, the preamble to the WTO agreement noted the importance of protecting the environment and the need for enhanced means of doing so. Environmental sensitivity has also been heightened by the stalwart efforts of environmentalists in and out of government to influence the system of global trade. The environmental movement has, in fact, achieved most of the goals it pursued in the early 1990s -- although the need to keep their supporters energized makes some groups loath to say so.

Moreover, and contrary to what protesters often claim, further progress can take place within the current system. This is reassuring, because modest reform is the only politically realistic way to further the green agenda. The WTO's rules can be changed only by a consensus of its 142 members, and many developing nations want no part of a costly environmental program they regard as an imposition by the wealthy industrialized powers. Radical demands in this area would increase friction between rich and poor countries and sabotage efforts to start a new round of global trade negotiations -- a round that the WTO's director-general proposes be focused on the needs of the poorest countries. Moderate proposals, backed by sound public explanations, have a much better chance of achieving significant results.

As the WTO struggles to handle environmental concerns, one issue looms above all others: the organization needs to figure out how to manage the clash between its open trade agenda and unilateral attempts by some member governments to protect the environment through trade restrictions. The WTO must strike a balance between two extremes. Cracking down too hard on the use of environmental trade restrictions invites environmental damage. But excessive leniency in imposing sanctions invites two other abuses: pressure on poorer countries to adopt standards that are ill suited to their strained economies, and suppression of trade that will lead to higher prices and stunted growth.

SEDUCTIVE SANCTIONS

Trade policy must have an environmental dimension ...

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