Does Trade Protect the Environment?

By Jean-Michel Cousteau

Last October, on the eve of the Third Ministerial Conference of the World Trade Organization, the WTO released a report on "Trade and the Environment." In it, the organization for the first time publicly responded to critics who accuse it of sacrificing the welfare of workers and the environment to the corporate bottom line.

At least, it meant to respond. In fact, it passed the buck. For those new to the debate, the WTO is the offspring of the General Agreement on Tariffs and Trade (GATT), which has since 1945 set the rules for international trade. The WTO's job is to apply the GATT policies to real-life situations. Where two nations disagree about trade policy, a WTO tribunal decides who is right and who is wrong (i.e. whose policies constitute a restraint of trade). The offending nation must then alter its policies to conform with GATT. And that's where the problems begin. Critics charge that the WTO tends to represent the interests of large multinational corporations at the expense of the poor. They believe that the nations of the world have signed away their own sovereignty, because domestic and labor laws can be overridden by the WTO, and their decisions seem to bear this out. For example, the WTO pronounced that the U.S. embargo of dolphin-unsafe tuna was improper, then it rejected the U.S. ban on the import of endangered sea turtles.

The WTO has a different view. It believes that by fostering trade it helps create wealth, and that wealth ultimately benefits all levels of society as well as the environment. So it's not surprising that the report first establishes that there is much work to be done. It admits the global environment is in trouble, and that this condition is worsened by a growing population, excessive resource consumption and wasteful practices. It admits economic growth is harmful for the environment "unless production becomes cleaner and less resource consuming..." And it embraces the concept that environmental regulations do not harm the bottom line, but "bring significant benefit to society and the quality of life." It even admits that, "in a perfect world," the costs of pollution abatement would be borne by producers through taxation and regulation. And it recognizes that where people have more political freedom, they have a better chance of demanding a clean environment.

Finally, it makes a case for international environmental cooperation in an age of global threats to the environment, such as climate change. But it is too easy on itself and the role of trade in general. The report says that trade structures can make a bad situation worse or a good situation better, but do not really cause the situations by themselves. I believe this is wishful thinking. The decisions of the WTO are intended to set precedents. They create incentives and disincentives, and have the power to encourage or discourage certain policies. After the WTO rejected the U.S. ban on dolphin-unsafe tuna, for example, the Clinton administration gave up trying to regulate this industry and signed on to a weak compromise (the Panama Declaration) favorable to the tuna industry.

In light of this, it renders the report's encouragement of domestic environmental regulation a little suspect. After all, why should we bother to regulate an industry if those regulations will only be overturned at a higher level? The same goes for the report's support for democratic institutions. The people should indeed have a voice-but if that voice will not be heard in the halls of the WTO, then what is the point? And how democratic is the WTO? The members of the elite tribunal are not elected by the people. Even the report's main point, that international environmental accords are necessary in an age of global economics, is flawed. Yes, global accords are good, but only if they help to right a wrong. What kind of accords does the WTO have in mind? Stringent, meaningful limitations on resource use and pollution? Or so-called "win-win" compromises in which industry enjoys business as usual at the expense of the biosphere?

Overall, what I find missing is a clear and compelling statement that environmental responsibility is a standard by which WTO decisions will be made. Instead, I get the feeling that the WTO believes environmental law to be a handmaid of trade. Where these laws facilitate trade, they are good. Where they restrain trade, they must be reworked into a more "realistic" form. To be fair, it is not the purpose of the WTO to enunciate laws. Yet it enjoys the power to override them. So it enjoys power without responsibility. That must change.

At this point, it's impossible to tell whether the report will lead to a greening of the WTO. We must await-and demand-further developments. Until then, the WTO should use the report not as a wall to insulate itself against criticism, but as a doorway to a deeper exploration of our economic future.