The Intersection of Trade and the Environment: An Examination of the Impact of the TBT Agreement on Ecolabeling Programs
By Erik P. Bartenhagen
INTRODUCTION
The world community has made a concerted effort over the past half-century to eliminate tariffs and other trade barriers in the name of free trade. The creation of the General Agreement on Tariffs and Trade (GATT) in 1947 signaled the beginning of this effort, and the reduction of protectionist measures has continued unabated since that time. After successfully dispatching obvious trade-inhibiting measures, GATT parties have shifted their focus in the last decade to the elimination of non-tariff trade barriers following the Uruguay Round of Multilateral Trade Negotiations which created the World Trade Organization (WTO). The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement) are examples of two recent GATT/WTO efforts to prevent states from using domestic regulations as a means of indirectly protecting their own industries.
One of the biggest disputes to emerge as a result of this intense trade liberalization is the conflict these measures may have with international and domestic regimes of environmental protection. Recently, GATT/WTO members explicitly recognized the need to address the compatibility of international trade and environmental issues. In January 1995, the WTO established the Committee on Trade and Environment (CTE) to explore such conflicts and to recommend solutions. The CTE adopted a report in November 1996 and outlined its conclusions to the WTO Ministerial Conference in Singapore in December.
The report discussed the current debate surrounding ecolabeling programs and the TBT Agreement. Ecolabeling, or environmental labeling, is a policy tool that is used by the issuing entity as a means of distinguishing between products based on their relative impact on the environment in an attempt to influence consumer purchasing decisions in favor of “environmentally-friendly” products. While ecolabeling programs vary widely, they all use market incentives to promote “green” products with the ultimate goal of influencing behavior among both consumers and producers. Such programs operate through market incentives and do not involve any “command-and-control” regulations. Consequently, many believe that ecolabeling has very little impact on the world trading system, and thus presents an ideal international approach to environmental problems.
Despite such sentiment, ecolabeling schemes have encountered some opposition on the international level. For example, there is currently a heated debate over whether certain types of ecolabeling programs are subject to the requirements of the TBT Agreement. Beyond this basic debate, GATT/WTO parties disagree about the requirements the TBT Agreement would impose on ecolabeling programs, and the resulting implications for ecolabeling in general as a viable tool for environmental protection under the current international trade regime.
The purpose of this Note is to examine the applicability of the TBT Agreement to various ecolabeling programs, and to determine what significance the treaty might have on the efficacy and viability of such programs. Parts II and III provide the backgrounds of ecolabeling programs and the TBT Agreement respectively, discussing the history of and purpose behind each. Part IV analyzes the TBT Agreement and its potential effects on domestic ecolabeling programs, and concludes with some observations and suggestions in an attempt to clarify the debate.
II. Description of Ecolabeling Programs
The use of ecolabeling schemes to encourage market-driven environmental changes within industry has greatly expanded worldwide since the first such program, Germany's “Blue Angel,” emerged in 1977. Twenty years later, approximately 28 countries have established national ecolabeling programs. A rise in the number of ecolabeling programs has been accompanied by a marked increase in the diversity of such schemes, both in scope and administration. Ecolabels may be coordinated by producers, governments, or independent certifiers, and may be based on the environmental impact of a product's manufacture, packaging, use, or disposal. Ecolabeling programs may utilize either positive or negative endorsement schemes relating to the environmental impact of a single attribute or a combination of attributes of a product. Programs can be either voluntary or mandatory, and may use a wide variety of methods to communicate their environmental messages to consumers, including “eco-seals,” graphics, and textual information.
Despite this variety of ecolabeling schemes, a number of scholars have identified three broad categories as particularly relevant in the international trade area: (1) mandatory, government-sponsored schemes; (2) voluntary, government-sponsored schemes; and (3) non-governmental schemes.
The world community has made a concerted effort over the past half-century to eliminate tariffs and other trade barriers in the name of free trade. The creation of the General Agreement on Tariffs and Trade (GATT) in 1947 signaled the beginning of this effort, and the reduction of protectionist measures has continued unabated since that time. After successfully dispatching obvious trade-inhibiting measures, GATT parties have shifted their focus in the last decade to the elimination of non-tariff trade barriers following the Uruguay Round of Multilateral Trade Negotiations which created the World Trade Organization (WTO). The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement) are examples of two recent GATT/WTO efforts to prevent states from using domestic regulations as a means of indirectly protecting their own industries.
One of the biggest disputes to emerge as a result of this intense trade liberalization is the conflict these measures may have with international and domestic regimes of environmental protection. Recently, GATT/WTO members explicitly recognized the need to address the compatibility of international trade and environmental issues. In January 1995, the WTO established the Committee on Trade and Environment (CTE) to explore such conflicts and to recommend solutions. The CTE adopted a report in November 1996 and outlined its conclusions to the WTO Ministerial Conference in Singapore in December.
The report discussed the current debate surrounding ecolabeling programs and the TBT Agreement. Ecolabeling, or environmental labeling, is a policy tool that is used by the issuing entity as a means of distinguishing between products based on their relative impact on the environment in an attempt to influence consumer purchasing decisions in favor of “environmentally-friendly” products. While ecolabeling programs vary widely, they all use market incentives to promote “green” products with the ultimate goal of influencing behavior among both consumers and producers. Such programs operate through market incentives and do not involve any “command-and-control” regulations. Consequently, many believe that ecolabeling has very little impact on the world trading system, and thus presents an ideal international approach to environmental problems.
Despite such sentiment, ecolabeling schemes have encountered some opposition on the international level. For example, there is currently a heated debate over whether certain types of ecolabeling programs are subject to the requirements of the TBT Agreement. Beyond this basic debate, GATT/WTO parties disagree about the requirements the TBT Agreement would impose on ecolabeling programs, and the resulting implications for ecolabeling in general as a viable tool for environmental protection under the current international trade regime.
The purpose of this Note is to examine the applicability of the TBT Agreement to various ecolabeling programs, and to determine what significance the treaty might have on the efficacy and viability of such programs. Parts II and III provide the backgrounds of ecolabeling programs and the TBT Agreement respectively, discussing the history of and purpose behind each. Part IV analyzes the TBT Agreement and its potential effects on domestic ecolabeling programs, and concludes with some observations and suggestions in an attempt to clarify the debate.
II. Description of Ecolabeling Programs
The use of ecolabeling schemes to encourage market-driven environmental changes within industry has greatly expanded worldwide since the first such program, Germany's “Blue Angel,” emerged in 1977. Twenty years later, approximately 28 countries have established national ecolabeling programs. A rise in the number of ecolabeling programs has been accompanied by a marked increase in the diversity of such schemes, both in scope and administration. Ecolabels may be coordinated by producers, governments, or independent certifiers, and may be based on the environmental impact of a product's manufacture, packaging, use, or disposal. Ecolabeling programs may utilize either positive or negative endorsement schemes relating to the environmental impact of a single attribute or a combination of attributes of a product. Programs can be either voluntary or mandatory, and may use a wide variety of methods to communicate their environmental messages to consumers, including “eco-seals,” graphics, and textual information.
Despite this variety of ecolabeling schemes, a number of scholars have identified three broad categories as particularly relevant in the international trade area: (1) mandatory, government-sponsored schemes; (2) voluntary, government-sponsored schemes; and (3) non-governmental schemes.
