Much to the chagrin of some environmentalists, WTO members will not agree to any change in the interpretation of nondiscrimination that would give it a standard-setting and enforcement role. This is not because trade officials are any less caring than other sections of society about protecting the environment. It is instead a manifestation of the belief that such matters are not the business of trade policy. Trade officials have neither the expertise nor the mandate to deal with the environment, and their agenda is already overloaded. The WTO does not want to become an environmental policy-making or enforcement body—nor should it become one.

Divergent Visions

So what is the solution when multilateral efforts to protect the environment are certainly a priority for all nations? In principle, the solution lies in the fact that the WTO has left room for other international treaties to establish standards and compliance mechanisms regarding the environment. If such standards are agreed to by all WTO members, then the signatories can certainly choose effectively to forgo their right to nondiscrimination if they violate the terms of, for example, an environmental treaty. After all, WTO members already agree that there should not be trade in stolen goods, endangered species, narcotics, and a variety of other goods and services.

Unfortunately, the space left by the WTO has not been filled with treaties that have the same power as WTO agreements. In particular, the dispute-settlement mechanism of the WTO provides for retaliation and compensation if WTO rights and obligations are not respected, a feature not found in any multilateral environmental agreement. This lack of balance creates a situation where the tools are not at hand to address a number of vital environmental issues.

One such example is the controversy over the Precautionary Principle, perhaps the most divisive issue separating the European Union and the United States in the trade and environment debate. The Precautionary Principle, central to many key environmental treaties, is the presumption that in situations where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing cost-effective measures to prevent environmental degradation. At the most fundamental level, what is at stake is how to deal with risk assessment and different preferences for risk management when goods are traded.

The WTO approach to precaution is different from that found in environmental agreements. WTO rules permit any country to determine its own standards to protect the environment, public health, and other areas within its own borders. The WTO rule of national treatment, the second pillar of nondiscrimination in the trading system, ensure that imported goods should not be discriminated against with respect to these standards vis-a-vis national producers. But WTO agreements also exist to prevent these standards from being used to create unnecessary barriers to trade. This is done by requiring scientific evidence to justify any import restrictions.

The WTO approach to precaution is evident in the Sanitary and Phytosanitary (SPS) Agreement that could constitute scientifically unfounded barriers to trade in agriculture and food products. In the SPS, any country is free to determine its own standards to protect the health of human, animal, and plant life. International standards (such as those developed by the Codex Alimentarius Commission) are presumed to be consistent with the requirements of the SPS Agreement and not disguised barriers to trade, which the SPS Agreement is designed to avoid. More exacting standards can be applied on a provisional basis, but cannot be justified in the long term on the grounds of precaution alone. According to the SPS Agreement, scientific evidence to justify the legitimacy of the restriction of imports must be provided within a reasonable period of time. For example, in a recent ruling of the WTO Appellate Body relating to EU restrictions on imported hormone treated beef from of the United States, it was remarked that the precautionary principle remains unclear, and still awaits authoritative formulation in international law.

The Precautionary Principle has already led to considerable dispute. For example, faced with the same scientific evidence on the implications of consuming hormone-treated beef, the United States and the European Union have not been able to agree on how possible health risks associated with consumption should be managed. When the European Union restricted imports of hormone-treated beef from the United States, the United States brought its complaint to the dispute-settlement system of the WTO, leaving the WTO deep in controversy over public-health standards. Due to the absence of sufficient scientific evidence, the WTO panel and appellate body ruled that there had been illegitimate discrimination against the United States, provoking a powerful negative reaction from EU consumer groups and the public at large. The scientific evidence was not in dispute; instead, the disagreement lay in different social preferences in the United States and the European Union as to how to manage the risk.

Global Rules, Global Prosperity

In a perfect world, formulating mutually supportive and consistent policies at the global level would require a coherent approach to trade, the environment, and other social and economic matters. This system would have to be coupled with an effective institutional structure that could determine substantive and procedural policies that would clearly delineate the responsibilities of the various actors involved. The goal of this system should be to facilitate the attainment of agreed policy objectives through cooperation while providing for the avoidance and resolution of any disputes that may arise. Unfortunately, we are far from having such a structure today, and trade policy in the global economy is suffering.

Moreover, there is no world government or supranational body to determine the appropriate division of labor among existing multilateral institutions. In these circumstances, a strong argument can be made that a trade-policy organization such as the WTO should not be responsible for the non-trade issues that gravitate toward it. Instead, the United Nations and its related agencies should be charged with advancing the causes of the environment as well as those of development, human rights, and labor. A case can be made that the United Nations should be strengthened and given the resources it needs to successfully carry out its tasks, leaving the WTO to deal with a narrower agenda. Not surprisingly, this view has been expressed on a number of occasions by Kofi Annan, Secretary-General of the United Nations, and by the heads of several UN agencies.