The Economic Times
reportsIndian goods being exported to the European Union may face higher barriers if the 27-member grouping goes ahead with a proposal to place a carbon tax on goods imported from advanced developing countries. While the EU justifies the proposed tax as a measure to create a level-playing field between polluting developing countries and countries that have agreed to cut emissions under the Kyoto protocol, India feels that the move may be yet another step to render exports from certain countries non-competitive.The role of climate change policy in international trade can hardly be understated. It is also perhaps one of those areas where the thin line between legitimate and protectionist measures lose their distinction. The news is obviously bad news for countries like India , China and even Brazil in which industries are primarily run by environment unfriendly fuels. The point of the whole debate is whether a remedy exists at the World Trade Organization for such a measure.
NATIONAL TREATMENTThe legal provision in question is the national treatment clause of GATT, 1994. The provision essentially requires that goods imported into the country be treated in the same way as good originating in the home country. Now the requirement is that
like products be treated in the same way. So the next question is whether two product identical in all aspects except the process through which it is manufactured could be considered
not like, which would legitimize the measure as far as provisions of national treatment are concerned. This remains a grey area of
WTO law. While there does exist a precedent for such distinction if reliance is to be put on a
pre WTO , GATT panel decision in US- Superfund case , the likeness test in
WTO law is still without a definite answer. The Japan Alcohol jurisprudence also put forth a likeness test which does not seem to encompass a likeness test based on process.
ARTICLE XX EXCEPTIONSThe Economic Times also draws attention to Article 20 of the GATT, citing Shrimp Turtle jurisprudence as a basis for a contention that a measure of the nature that could be initiated by the EC, could find justification under the General Exceptions under GATT.
Article XX (g)It makes sense to remember that the
WTO Appellate Body found the US consistent with Article XX (g) of the GATT, which is an exception with regard to conservation of
exhaustible natural resources. Interpretation of climate as an exhaustible natural resource seems a permissible
interpretation. And the measure indeed could find justification under this exception. However the question is as far as the
UNFCCC or the Kyoto protocol itself recognize differential responsibilities for developing countries and developed and underdeveloped countries could the
WTO General Exception authorize such measure. It is important to note that both the Community as also India for instance is a party to
UNFCCC and Kyoto and interpretation of a treat like GATT should be in adherence to principles of public international law. The requirement imposed by international law is that treaties be interpreted in their
context which would include the climate change treaty and the subsequent protocol. It may make sense to remember that the Shrimp Turtle jurisprudence imposed on the US a requirement to negotiate or
at least try to, to be clear of the arbitrary discrimination clause in the chapeau of Article XX. As long as a negotiated agreement on climate remains, its importance has to be given due
bearance.
Article XX(b)Article XX(b) is an exception when
a measure is necessary to protect human, animal or plant life or health. Necessary would entail a search for less
WTO inconsistent alternatives comparable in effectiveness though the measure need not be the least inconsistent measure. The measure may find itself under a lot of scrutiny when nations have come together and arrived at a multilaterally agreed mode of combating climate change (to which the EC is a party) through an international protocol. This the EC acknowledges is an effective mode of combating climate change by becoming a party to Kyoto. While the post Kyoto scenario is interesting its unlikely it would lead to a substantial change in the present responsibilities.
The developments may finally set the stage for a much anticipated dispute on climate change and its role in international trade.