201 Panels under trade agreements sometimes have difficulty separating product from production regulation. This is illustrated in the Lobster case where the Panel did not recognize that the US was regulating Canadian «production» extraterritorially rather than merely setting a product standard. Canada had presented evidence that the earlier sexual maturity of Canadian lobster from the Gulf of St. Lawrence region (and therefore the smaller size of Canadian lobster at maturity) was part of Canada’s comparative advantage in lobster production (Lobster at Paragraph 3.2.5 and Paragra 7.14.4): Canadian lobsters from this region attain sexual maturity, and therefore reproductive capacity, before some of their American counterparts. The stated rationale for US restrictions on minimum lobster size was to ensure that lobsters were not captured before they reached reproductive capacity which would lead to a collapse of the lobster stock. By setting a minimum size, however, the US government effectively eliminated the comparative advantage of Canadian lobsters’earlier sexual maturity (due to Canada’s natural endowment of warmer waters), without the US measures having any benefit for the conservation of Canadian lobster stocks. (See Lobster at Paragraph 4.2.1.4.)
202 This case will be examined in some detail below.
203 George Graham, »US urged to tackle its structural flaws», Financial Times (London), November 26,1991. Note that some countries may benefit from stringent environmental Controls. Cleaner technologies may be cheaper and countries which have compelled their industries to develop environmental technology may have a lead over other countries which are slower to establish environmental regulations.
204 The study, US-Mexico Trade: Some US Wood Furniture Firms Relocated from Los Angeles to Mexico which was conducted by the US General Accounting Office, found that 70% of manufacturers cited stringent air pollution emission control standards in California as a reason for their move. This study was cited in Robyn Berry, «Dingell Presses Administration on New Study Contradicting its NAFTA Arguments», Inside US Trade, May 10, 1991 at 16.
205 Article 1114(2) of the North American Free Trade Agreement, Text dated September 6.
206 See the response of LDCs to the activation of a working group on environment within GATT in «Third World Cool to GATT Role in Environment», Third World Economics 1 — 15 March 1991 at 8.
207 The Eastern Tropical Pacific Ocean (or ETP) is defined as the area of the Pacific Ocean bounded by 40 degrees north latitude, 40 degrees south latitude, 160 west longitude and the coasts of North, Central, and South America.
208 Tuna/Dolphin at Paragraph 2.5.
209 Ibid, at Paragraph 2.9.
210 See Appendix for text of this Ad Note.
211 Ibid, at Paragraph 5.14
212 Ibid, at Paragraph 5.11.
213 Ibid, at Paragraph 5.12.
214 Id. at Paragraph 5.12
215 Id.
216 Ibid, at Paragraph 5.13
217 Ibid, at Paragraph 5.10
218 Ibid, at Paragraph 5.14
219 Ibid, at Paragraph 5.27
220 Ibid, at Paragraph 5.32
221 Ibid, at Paragraph 5.40
222 This problem will be addressed in Subsection C, below, on the legality of international environmental agreements.
223 See Subsection D, below
224 Kirgis 1972 at 902.
225 For instance, differences in standards might not translate into differences in environmental quality. See the section on Harmonization in Subsection D of this Part.
226 Oliver 1988 at 173, paragraph 8.13.
227 [1974] ECR 837 at 860.
228 Ibid, at 2149.
229 Sands 1991 at 698.
230 See Part VI for discussion of the concept of the common heritage of mankind.
231 Hardin 1968.
232 Ian Brownlie, ed., Basic Documents in International Law, 3rd edition, Oxford University Press, 1988 at 349. The Convention entered into force on 27 January 1980.
233 See Beacham 1992 at 668.
234 Article 30(4)(b) of the Vienna Convention.
235 McDorman 1992 at 484.
236 See McDorman 1990 for a discussion of the failure of the FTA Panel to consider international fisheries law in FTA Salmon and Herring.
237 In Italy v. EEC Commission (Case 13/63), ECR 165, [1963] CMLR 289, the ECJ stated that the principle of non-discrimination does not mean that treating non-comparable situations differently constitutes discrimination. Discrimination in form may therefore correspond to the absence of discrimination in substance. Discrimination in substance could mean treating either similar situations differently or different situations identically.
238 Lyster 1985 at 240.
239 Note that Mexico argued in the Tuna/Dolphin case that XX(b) referred only to the protection of health of humans, animais or plants as a population and not as separate individuals. See Paragraph 3.37.
240 Lyster 1985 at 256.
241 See McDorman 1992 at 485 where he argues that while technically GATT would prevail over CITES as between two parties one of whom is not a party to CITES, CITES now exists as an exception to GATT given subsequent treaties and State practices. He contends further that it is the «will of States» regarding trade in endangered species that GATT obligations «must be modified even for countries not a party to CITES». In support of this proposition, he makes the following arguments: there is overwhelming international support for CITES (more States are party to CITES than to GATT), CITES specifically concerns endangered species in contrast to the generality of the GATT and only creates a narrow exception to the GATT, and CITES is a complete regime and is obviously inconsistent with GATT. McDorman would generalize this argument to the Basel Convention and the Montreal Protocol as well.
242 P.J.Kuyper, «International Legal Aspects of Economic Sanctions», in Sarcevic and van Houtte 1990 at 148-151. «[A]n economic sanction constitutes a reprisai: 1. If it infringes upon a rule of economic treaty law, but constitutes a proportional response to an illegal wrong inflicted upon the State imposing the economic sanction; 2. If it constitutes an economic intervention, i.e. the economic measures taken aim to restrict a state’s freedom to choose and operate a favored socio-economic and political System or to interfere with its policies in such a way that the measures taken are disproportionate to policies which are legal and deserving of protection, but still commensurate with the illegal wrong previously inflicted on the State imposing the sanctions.» (Ibid, at 151.)
243 Tuna/Dolphin at Paragraph 6.3.
244 Id.
245 As noted above, this option was proposed by the Panel in the Tuna/Dolphin case at Paragraph 6.3 as a means for GATT to approve extraterritorial measures. In addition, there is a proposai by OECD to waive GATT obligations for CITES, the Montreal Protocol, and the Basel Convention. See Beacham 1992 at 680.
246 McDorman 1992 at 482.
247 Ibid, at 481.
248 «Sharing: A Survey of the Global Environment», The Economist, May 301992, at 15.
249 See Part VI for elaboration of the concept of the common heritage of mankind.
250 See William Stewart, «Canada’s Troubled Trees», Time Magazine, July 8, 1991 at 32.
251 Nicolaides 1987 at 156.
252 See comments by the World Bank’s chief economist cited in Michael Prowse, «Save Planet Earth from Economiste», Financial Times (London), February 10, 1992. See also Jackson 1989 at 209.
253 In the Tuna/Dolphin case, the US argued that it should not be required to allow access to its market to serve as an incentive to deplete the populations of species that are vital components of the ecosystem. Underlying this argument is the notion that access to a country’s market is a privilege which will not be granted indiscriminately. Not only is this a protectionist view but it would also appear to violate the unconditionality inherent in the trade liberalization ethos.
254 Nicolaides 1987 at 156 citing Culbertson, The Folly of Free Trade, Harvard Business Review, 1986, 64(5) at 122-3.
255 See article by Mandel 1989. In the Belgian Family Allowances case, the Contracting Parties invalidated a Belgian surcharge on products purchased by public bodies from countries whose System of family allowances did not meet specifie requirements.
256 In Belgian Family Allowances, a levy on imported products purchased by Belgian public bodies for their own use was held to be inconsistent with Article I since exemptions from the levy were not granted unconditionally to like products from all contracting parties, but only to some contracting parties. See Paragraphe 3 and 8.
257 See Kenneth S. Komoroski 1988 at 189.
258 See article by Nancy Dunne, «Environment rules set stage for GATT conflicts», Financial Times (London), December 5, 1991.
259 For a discussion of this case, see Tougas 1988-89.
260 Canada later renounced the imposition of this export tax and the US imposed a countervailing duty.
261 Sorsa 1991 at 28.
262 Saunders, «The Legal Aspects of Trade and Sustainable Development» in Saunders 1990 at 376.
263 See GATT, Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade, BISD, 26th Supp. 56 (1978-79).
264 Komoroski 1989 at 192.
265 Ibid, at 203.
266 For a view supporting the existence of such an obligation, see Ibid, at 204 et.seq. Komoroski argues that there are three possible bases for an affirmative duty of governments to take environmental control measures over industry: 1.minimum international environmental standards as found in broad policy statements such as Principle 21 of the Stockholm Conference and the polluter pays principle; 2. arguments under US and GATT law that it is inconsistent with commercial considerations that a government fails to regulate a polluter in disregard of economic costs borne by citizens and governments alike; 3. moral and social considerations i.e. that pcople die from deleterious environmental conditions. He concludes that a minimum international obligation now exists. Once it is shown that a specific industry has benefited by comparing it with others and showing that it would be required to expend substantial resources to comply with minimum environmental standards, then a countervailing duty could be imposed.
267 Rehbinder 1984 at 360.
268 OECD, Guiding Principles Concerning International Economic Aspects of Environmental Policies, Recommendation of 26 May 1972C(72) 128, Annex, A(a)5, as cited in Saunders 1990 at 371. The financial burden which compliance with environmental regulation entails provides an incentive for industry to reduce that pollution or find less polluting products or technologies. See Alexander at 230, citing Council Recommendation (EEC) 75/436 (OJ L194 25.7.75 at 1).
269 The Rio Declaration at Principle 16 States: «National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment».
270 Alexender at 233.
271 Kramer 1991 at 3.
272 Ibid, at 9-10.
273 The instruments for approximation are the directive which establishes the resuit to be achieved but leaves the form and method of implementation to the Member State and the regulation which establishes directly applicable, specific instructions on how the objective is to be accomplished.
274 Article 906, NAFTA.
275 Ingo Walter, «International Economic Repercussions of Environmental Policy: An Economist's Perspective» in Rubin and Graham 1980 at 31.As noted in the section on implicit subsidies, the difficulty of establishing a common standard is also compounded by the different assimilative capacities of different countries which may complicate the process of international harmonization. If a standard is measured by, for example, ambient water quality, then a State like the UK can rely on strong winds to disperse the pollution. There are two consequences: first, the environmental protection may not be that effective since the pollution will cumulate in another State or in the global commons; and second, there is no levelling of the competitive advantage since Controls do not have to be as strong. Finally, as long as the GATT disallows certain product and production related environmental measures, polluter States will have less incentive to join harmonization efforts.
276 See arguments of Rehbinder and Stewart 1988 at 5.
277 Environmental standards which are higher than the harmonized levels are permitted, although these too must meet certain conditions: they cannot be disguised restrictions on trade or a means of arbitrary or unjustifiable discrimination.
278 See Jackson 1969 at 752.
279 This conclusion is suppported by Principle 12 of the Rio Declaration on Environment and Development, and Chapter 2 of Agenda 21 of the 1992 UNCED, both of which call for the avoidance of «unilateral actions to deal with environmental challenges outside the jurisdiction of the importing country» (Section I. Social and Economic Dimensions, Chapter 2 of Agenda 21). Agenda 21 (Chapter 2) and Principle 12 of the Rio Declaration also State that «environmental measures addressing transborder or global environmental problems should, as far as possible, be based on international consensus».
280 While trade instruments such as countervailing duties will likely reduce the pressure on industries in jurisdictions with stringent environmental regulation, it is not at all certain that they would lead to higher environmental protection in States with pollution-intensive production. See Grimmett 1991 at 16. She argues that surcharges «may act as a disincentive to countries to develop pollution Controls since products from such countries would be subject to added internai manufacturing costs as well as to the surcharge».