The General Agreement on Tariffs and Trade (GATT) contains a set of general exceptions to its obligations—Article XX. Two of those exceptions (XX(b) and XX(g)) provide space for sheltering environmental measures from the strictures of GATT law, provided certain conditions are met. The General Agreement on Trade in Services (GATS) also contains exceptions, including an environmental exception, in Article XIV, as does the plurilateral Agreement on Government Procurement (Article XXIII).
Most modern RTIAs will contain provisions that echo GATT’s general exceptions (or simply incorporate them by reference). Some (but fewer) will do the same for GATS Article XIV. There are a few ways in which this might be done so as to grant greater policy space for environmental regulations.
First, the RTIA’s general exceptions could affirm that they cover threats to environment as an acceptable cause for breaching the agreement. GATT Article XX(b) covers measures “necessary to protect human, animal or plant life or health,” without mentioning the environment explicitly. While panels have repeatedly interpreted the exception as covering environmental measures,7 it is useful to have text in the RTIAs’ exceptions that indicates the parties’ explicit agreement that this interpretation is correct. Similarly, Article XX(g) covers measures “relating to the conservation of exhaustible natural resources,” without defining exhaustible natural resources as including living resources (e.g., animals) or the atmosphere, though the WTO’s Appellate Body has made it clear that both might be included.8
There is similar language in GATS, at Article XIV, though it does not include anything like GATT Article XX(g), and some RTIAs have similar language on exceptions for trade in services. As well, some RTIAs will have language similar to the WTO Agreement on Government Procurement exceptions in their chapters on government procurement. Those exceptions could benefit from a clarification similar to that made for trade in goods.
A second useful innovation is to have the general exceptions apply more broadly than they do in the WTO. The GATT only deals with trade in goods, and thus the general exceptions fail to cover such domestic measures as subsidies, investment, services, technical regulations and standards, and sanitary and phytosanitary (SPS) measures.
Option 1:Incorporation of GATS general exceptions in the RTIA’s services chapter
Many RTIA chapters on services trade do not contain exceptions, which means RTIA parties as between themselves have less leeway than granted under WTO law.
Examples
“The rights and obligations of the Parties in respect of general exceptions and security exceptions shall be governed by Article XIV and paragraph 1 of Article XIV bis of the GATS, which are hereby incorporated into and made part of this Chapter.” (EFTA – Hong Kong FTA, article 3.16)
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Option 2:Confirmation that GATT Article XX(b) and (g) formulations of general exceptions cover environmental measures
While the WTO’s Dispute Settlement Mechanism has confirmed that the environmental measures are covered under GATT Article XX(b) and living exhaustible natural resources are covered under XX(g), it is useful to make that understanding explicit.
Examples
“The Parties understand that the measures referred to in GATT 1994 Article XX (b) include environmental measures necessary to protect human, animal or plant life or health. The Parties further understand that GATT 1994 Article XX (g) applies to measures for the conservation of living and non-living exhaustible natural resources.” (CETA Chapter 32, Article 02(1))
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Examples
“For the purposes of [certain chapters of the agreement] Article XX of GATT 1994 and its interpretive notes are incorporated into and form an integral part of this agreement, mutatis mutandis. The Parties understand that measures referred to in Article XX(b) of GATT 1994 include environmental measures necessary to protect human, animal or plant life or health, and that Article XX(g) of GATT 1994 applies to measures related to conservation of living and non-living exhaustible natural resources.” (Mexico – Panama FTA, Article 19.2(1), unofficial translation)
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Option 3:Confirmation that GATT Article XX(g) covers clean air and the atmosphere
The WTO’s DSM has confirmed that clean air is covered (but not the atmosphere), but it is not explicit in the text. Making it explicit would ensure that it applied to measures to address, inter alia, climate change, ozone depletion and air pollution.
Examples
“The Parties understand that GATT 1994 Article XX (g) applies to measures for the conservation of clean air and a stable atmosphere.”
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Option 4:Confirmation that the GATS Article XIV formulation of general exceptions covers environmental measures
This proposition, while tested under the GATT exceptions, has never been tested in the context of services, and so it would be useful to make it explicit.
Examples
“For purposes of [the chapters on cross-border trade in services, telecommunications, and electronic commerce] Article XIV of GATS (including its footnotes) is incorporated into and made part of this Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article XIV(b) of GATS include environmental measures necessary to protect human, animal, or plant life or health.” (US-Korea FTA, Article 23.1(2))
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Examples
“For the purposes of [chapters on cross-border trade in services, temporary entry and stay of natural persons for business purposes, domestic regulations, financial services, international maritime transport services, telecommunications, electronic commerce, and sections on establishment of investments and non-discriminatory treatment of the chapter on investment], subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties where like conditions prevail, or a disguised restriction on trade in services, nothing in this Agreement shall be construed to prevent the adoption or enforcement by a Party of measures necessary:
…
(b) to protect human, animal or plant life or health;*
…
* The Parties understand that the measures referred to in sub-paragraph (b) include environmental measures necessary to protect human, animal or plant life or health.” (CETA, Article 28.3(2))
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Option 5:Drafting of an agreement-specific set of general exceptions (as opposed to referencing GATT), and explicitly including environmental measures
This has a similar legal effect to the options above, if the provisions are as comprehensive at those in GATT.
Examples
Coverage of measures “necessary to protect human, animal or plant life or health, including those environmental measures necessary to this effect.” (EU – Columbia RTIA, article 106.1(b))
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Option 6:Drafting the general exceptions such that they apply more broadly than just to trade in goods.
This could mean application to the whole agreement (recommended), or to specific elements.9
Valuable from a sustainable development perspective, as legitimate environmental measures may conflict with more than just the law on trade in goods.
Examples
TPP’s general exceptions explicitly cover technical regulations and standards and SPS measures. (Article 29.1(1))
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Examples
CETA incorporates GATT’s Article XX, and specifies that it covers not just goods but also SPS measures and the provisions from its investment chapter on non-discrimination and establishment of investments. (Article 28.3(1))
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Examples
CETA lists a sui generis set of exceptions based on Article XX (but not including XX(g)), and specifies that it covers inter alia cross-border services, and the provisions from its investment chapter on non-discrimination and establishment of investments. (Article 28.3(2))
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Examples
The EU-SADC Economic Partnership Agreement, which covers trade in goods, services, investment, TBT, SPS and other areas, has a general exceptions clause that covers the entire agreement (Article 97).
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The landmark case on this question was US – Gasoline (DS 2 and 4), where the Panel allowed (paragraph 6.21) that reducing air pollution could be considered protecting human, plant or animal life or health (as per GATT Article XX(b)). Recent cases such as China – Raw Materials (DS 394, 395 and 398) and China – Rare Earths (DS 431, 432 and 433) assumed without deliberation that protecting the environment could be covered under GATT Article XX(b).
- 8
See the Appellate Body report in US – Shrimp (DS 58), paragraphs 127–131.
- 9
Note that exceptions in the context of investment law are covered separately below—see Section 5.3.1.