The Extra-Jurisdictional Effects of Environmental Measures in the WTO Law Balancing Process

Abstract

This article enlarges the discussion on trade and environment conflicts in World Trade Organization (WTO) law by examining different approaches on how to deal with extrajurisdictional effects. WTO Member States have the regulatory autonomy to define whether they want to protect an environmental concern or not. They decide on the level of protection and choose the respective instrument. If environmental policies restrict WTO free trade rules, they need to fulfil balancing requirements, that is the necessity test or the ‘relating to’ requirements and criteria to exclude disguised discrimination. These balancing approaches result mainly from case law where Article XX General Agreement on Tariffs and Trade (GATT)and Articles 2.1 and 2.2 Technical Barriers to Trade (TBT) Agreementwere interpreted. However, if environmental measures restrict not only free trade rules but also competing environmental policies, these tests might not always resolve the legal conflict conclusively. Even the least trade-restrictive measure without disguised discrimination might restrict competing environmental policies. WTO adjudicating bodies recognized this conflict and its dimension of extra-jurisdictional effects. Yet, either the problem was left open addressing other, more obvious violations of WTO law or a recognition of competing policy goals was required while ignoring the possibility of incompatible measures. If, however, parties bring up the extra-jurisdictional effects on their environmental policies being the only violation of WTO rules, more differentiated balancing approaches might be needed. The article discusses three approaches: the comparison of the intensity of extra-jurisdictional effects, the comparison of the connection to the environmental concern and the re-evaluation of the significance of the regulatory goal. It is asserted that they contain shortcomings.