The Role of the WTO in Planetary Sustainability
Steve Charnovitz
6 April 2024
Promoting planetary sustainability is within the legal competence of all multilateral organizations. As a result, no international organization is likely to have an exclusive competence to effectuate any major sustainability goal. A recognition of such overlapping legal jurisdiction can be seen as early as the 1972 Stockholm Declaration which affirms that States "shall ensure that international organizations play a co-ordinated, efficient and dynamic role for the protection and improvement of the environment" (Principle 25).
Environmental sustainability should be, and should be viewed as, a fundamental purpose of the World Trade Organization (WTO)* This normative point should be self-evident. Anyone doubting this proposition should consider that: (1) opportunities to trade have always been an important driver for economic prosperity, especially for the small and mid-size economies; (2) the Preamble to the General Agreement on Tariffs and Trade (GATT) affirms that international relations "in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand", and (3) the Preamble to the Agreement Establishing the WTO anticipates trade relations as "allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development...." One should also note that the centrality of sustainable development for the WTO was reinforced in the early jurisprudence of the WTO judiciary. In its notable Shrimp decision, the WTO appellate tribunal relied upon the " the explicit recognition by WTO Members of the objective of sustainable development in the preamble of the WTO Agreement....' (para. 131).
In early 2024, a transnational group of Experts proposed the "Villars Framework for a Sustainable Global Trade System "(https://shridathramphalcentre.com/wp-content/uploads/2024/02/Villars-Framework-2.0.pdf). This document (2.0) puts forward numerous recommendations for improving the international trading system and includes several specific proposals for the WTO. In future discussion of these proposals within (and alongside) the WTO, the question may arise as to whether the WTO is an optimal, or at least an appropriate forum, for agreeing to new rules and/or recommendations regarding global sustainability.
Let me offer five reasons why the WTO is an appropriate platform for promoting sustainability.
First, WTO's critical mission is to help governments maintain and enhance the channels of trade in an open international trading system. Doing so is consistent with the basic principles of Rio Declaration (1992) which provides that "states should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation" (Principle 12).
Second, in its role of sponsoring trade negotiations, including those "directed to the substantial reduction of the general level of tariffs and other charges on imports and exports..." (GATT Art. XXVIIIbis:1), the WTO should assure that such negotiations do not undermine sustainable development. Moreover, even when such multilateral negotiations fail — and one can contrast the WTO's weak record with that of the GATT which sponsored eight successful trade negotiating rounds — the WTO continues to be in the best position to assess how the failure of such negotiations is undermining sustainable development. The WTO is also in a good position to analyze the impact of the movement of trade on pollution and resource depletion. Like any human freedom, the freedom to trade, and the freedom to travel, has consequences beyond the benefits to those who voluntarily exercise their freedoms.
Third, although the WTO certainly does not have the exclusive competence to govern national subsidies, the WTO contains numerous sub-agreements regarding subsidies such as accession agreements, the Agreement on Subsidies and Countervailing Measures (SCM), the Agreement on Agriculture, and the Agreement on Fishery Subsidies. The common principle of this anti-subsidy space is to restrict government subsidies, and this can be very important to sustainability when subsidies undermine environmental protection, for example, with fossil fuel subsidies. Of course, subsidies can also have positive effects on the environment, but so far, no WTO sub-agreement seeks to increase subsidies for public goods.
Fourth, the WTO is the best-positioned international organization to supervise the use of governmental protectionist measures that externalize costs on other countries (or deprive expected benefits to them). A robust WTO role is especially important when governments weave in protectionist features into so-called green measures. Such a supervisory role for the WTO helps to achieve one of the key norms of the United Nations Framework Convention on Climate Change (UNFCCC) which states that "Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade" (Art. 3.5).
Fifth, governments have long recognized that international cooperation will often be useful to provide solutions to problems that transcend national territorial borders. For many classes of problems, cooperation can be essential among the specially affecting countries. Sometimes the essentiality is a physical or economic one. For example, if four states are responsible for overfishing, cooperation by three of them may be ineffectual. Sometimes the essentiality is political (or geopolitical). Governments may decline to regulate if regulatory action will put their economic actors at a competitive disadvantage vis-a-vis other countries and markets. One tool of international law in promoting collective action is the concept of reciprocity, viz., that governments move (if they move at all) in tandem with each other. The quantum of reciprocity sought in a treaty differs across the fields of international law. One design feature (and in my view flaw) of the climate regime is that it does not build in much reciprocity.
The multilateral trading system is notable in inscribing a principle of reciprocity. For example, the Preamble to the WTO Agreement suggests that WTO contracting parties are "desirous of contributing" to WTO "objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations." To be sure, the WTO contains many derogations from reciprocity. But the WTO's legal commitment to reciprocity, combined with its reciprocity-sensitive negotiating practices, can make it a good forum for negotiating issues of clean energy implementation in which reciprocity may be an important contributor to successful new collective action.
*Steve Charnovitz, "The WTO as an Environmental Agency," in Institutional Interplay: Biosafety and Trade (United Nations University Press, 2008).
