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Global Environment

Harmonizing Environment and Trade Policies

Annex 2. GATT

GATT Secretariat Report (1992) (Excerpt)

Protecting the nation’s own environment

Under GATT’s rules, governments can employ many different measures to protect and improve the local environment. Thus, sales taxes on products that can create pollution (those containing chlorofluorocarbons for example), deposit refund schemes for recyclable waste (bottles, scrap cans), or favorable tax treatment of environmentally friendly products (lead-free gasoline, solar panels for home heating), and other nondiscriminatory measures ensuring a pattern of domestic consumption that minimizes pollution would not normally be open to challenge.

There is also nothing in the GATT that prevents contracting parties from taxing or regulating domestic producers who engage in polluting activities -- even to the extent of prohibiting the production and sale of particular goods. For instance, ceilings on air pollution levels, and levies on companies that discharge pollutants into lakes and rivers, are fully consistent with GATT rules.

GATT "Group on Environmental Protection Measures and Trade"
Chairman’s Report (1994) (Excerpt)

There is wide agreement in the Group that GATT does not prevent any contracting party from adopting appropriate domestic environmental politics by providing countries with very considerable scope to use trade-related policies to protect national environmental resources without calling into question their GATT obligations. As long as the policies are applied without discrimination to domestically produced and imported products (national treatment rule) and do not discriminate against imports from different sources (most favored nation rule), they are very unlikely to face a challenge under the GATT. Where it is felt necessary to use trade measures in MEAs, many delegations have expressed the view that most often their design and implementation need not involve action that extends beyond that available to contracting parties under the GATT.

In addition, recourse can be taken to the provisions of Article XX of the GATT in exceptional circumstances. These provisions permit a contracting party to apply trade measures that could otherwise be considered inconsistent with its GATT obligations but that are felt to be necessary to protect human, animal or plant life or health, or that relate to the conservation of exhaustible natural resources. However, such measures must not constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail nor create a disguised restriction on international trade. Checks and balances such as these are needed as essential safeguards against protectionist abuse, which would be as detrimental to the environmental agenda as to trade, and to avoid unduly disturbing the balance of rights and obligations accruing to contracting parties from the GATT system.

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