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The Interface Between the Trade Rules and Climate Change Actions Read chapter Read first chapter

2016 | OriginalPaper | Chapter

Compatibility of Eco-Labeling Scheme with WTO and Its Potentially Conflicting Impacts

Author : Soyoung Lee

Published in: Legal Issues on Climate Change and International Trade Law

Publisher: Springer International Publishing

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Abstract

As there is an overwhelming global consensus that greenhouse gas emissions must be reduced to mitigate global warming, many countries have established eco-labeling or other similar schemes at regional, national and international levels. And the incentive to use eco-labeling to products for the purpose of providing information pertaining to environmental friendliness continues to rise. Although eco-labeling scheme is considered a means to protect and conserve the environment while promoting sustainable production and consumption, it may constitute a protectionist measure and operate as a trade barrier in international trading system. For instance, eco-labeling schemes that countries establish and develop as part of their commitment to taking action on climate change have tendency to influence international trading system. As eco-labeling informs consumers about the environmental friendliness of products, including their environmental characteristics and the environmental impact of their performance, they may influence preference and behavior of consumers. Consequently, this may significantly affect the trading system as market is likely to shift in response to change in consumer demand in products.

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previous chapter The Interface Between the Trade Rules and Climate Change Actions
next chapter The U.S. Proposed Carbon Tariffs, WTO Scrutiny and China’s Responses
Footnotes
1
ISO has classified eco-labels in three following categories: Type I: voluntary, multiple criteria (life-cycle or PPM analysis) based third-party practitioner programs that award labels (Germany’s Blue Angel, Nordic White Swan); Type II: informative environmental claims awarded by the industry association or company itself (‘organically-grown’, ‘energy-efficient’, ‘ozone-friendly’); Type III: quantified product information labels based on independent verification using an agreed set of parameters (‘eco-toxic’, ‘biodegradable’). See www.​iso.​org.
 
2
The ENERGY STAR program was established by EPA in 1992. Under the authority of the Clean Air Act Section 103(g), the EPA Administrator is directed to “conduct a basic engineering research and technology program to develop, evaluate, and demonstrate non-regulatory strategies and technologies for reducing air pollution.” In 2005, Congress enacted the Energy Policy Act. Section 131 of the Act amends Section 324 (42 USC 6294) of the Energy Policy and Conservation Act, and “established at the Department of Energy and the Environmental Protection Agency a voluntary program to identify and promote energy-efficient products and buildings in order to reduce energy consumption, improve energy security, and reduce pollution through voluntary labeling of or other forms of communication about products and buildings that meet the highest energy efficiency standards.” (Energy Star n.d.).
 
3
ENERGY STAR products must be third-party certified based in EPA recognized laboratories in order to earn the label. Approximately 85 % of Americans recognize the label, about 75 % of those households that knowingly purchased a product with the label considered the label as an important factor in their decision to purchase (Energy Star n.d.).
 
4
Timberland’s Green Index measures three areas of product footprints: (1) Climate impact: The greenhouse gas emissions from the raw materials and manufacturing of products; (2) Chemicals used: The use of toxic chemicals in manufacturing of products and materials; (3) Materials used: The use of organic, recycled or renewable materials used in products (Ecolabel Index n.d.).
 
5
In 2001, the Doha Ministerial Conference made this an issue of special focus for the regular CTE. See paragraph 32(iii) of the Doha Declaration. See also (WTO n.d.).
 
6
The GATT 1994 also contains rules potentially applicable to eco-labeling schemes. However, the panel is likely to review whether the measure at issue is compatible with the TBT Agreement before reviewing the GATT 1994. In EC-Asbestos case, the Panel found that “Both the GATT 1994 and the TBT Agreement form part of Annex 1A to the WTO Agreement and may apply to the measures in question. Consequently, although we do not in principle exclude application of the TBT Agreement and/or the GATT 1994 to the Decree, we have to determine the order in which we should consider this case. According to the Appellate Body in European Communities – Regime for the Importation, Sale and Distribution of Bananas, when the GATT 1994 and another Agreement in Annex 1A appear a priori to apply to the measure in question, the latter should be examined on the basis of the Agreement that deals ‘specifically, and in detail,’ with such measures.” (WTO 2001, para. 8.16).
 
7
It is important to note that the WTO rules apply only to eco-labeling schemes administered and regulated by the government, not voluntary, schemes developed by private bodies. Thus, the TBT Agreement is applicable only to WTO members, but not private bodies. However, the TBT Agreement ensures that members must “take such reasonable measures as may be available to them” to ensure that all bodies within their territories comply with the TBT Agreement.
 
8
Conformity assessment procedures are applicable to technical regulations and standards. They are used to determine whether a technical regulation or standard has been complied with. This paper will focus on “technical regulations” and “standards” only.
 
9
The criterion of mandatory or voluntary nature is not always clear in practice. The finding of U.S.-Tuna II appears to have blurred the distinction between a mandatory technical regulation and voluntary standard. See WTO (2011c, 2012c).
 
10
“Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create. Such legitimate objectives are, inter alia: national security requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the environment. In assessing such risks, relevant elements of consideration are, inter alia: available scientific and technical information, related processing technology or intended end-uses of products.” The use of “inter alia” indicates that a list of legitimate objectives is not exhaustive. See Article 2.2 of TBT Agreement.
 
11
“The standardizing body shall ensure that standards are not prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to international trade.” See Annex 3, Paragraph E of Code of Good Practice.
 
12
“The national treatment obligations of Article 2.1 and Article III: 4 are built around the same core terms, namely, ‘like products’ and ‘treatment no less favourable.’ We further note that technical regulations are in principle subject not only to Article 2.1 of the TBT Agreement, but also to the national treatment obligation of Article III: 4 of the GATT 1994, as ‘laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use’ of products. The very similar formulation of the provisions, and the overlap in their scope of application in respect of technical regulations, confirm that Article III: 4 of the GATT 1994 is relevant context for the interpretation of the national treatment obligation of Article 2.1 of the TBT Agreement. We consider that, in interpreting Article 2.1 of the TBT Agreement, a panel should focus on the text of Article 2.1, read in the context of the TBT Agreement, including its preamble, and also consider other contextual elements, such as Article III: 4 of the GATT 1994.” (WTO 2011b, para. 100).
 
13
In U.S.-Clove Cigarettes case, the panel stated that “As indicated above, at the time of writing this Report, examining the concept of likeness under Article 2.1 of the TBT Agreement remains an issue of first impression, as the only report that has addressed this provision until now. The Panel is therefore tasked with interpreting for the first time the concept of likeness under Article 2.1 of the TBT Agreement.” (WTO 2011b, paras. 7.80–7.81).
 
14
The Panel found that the concept of “like products” in Article 2.1 should be based on the regulatory purpose of the technical regulation at issue (WTO 2011b, paras. 7.91–7.117).
 
15
The Panel further ruled in favor of the U.S. concluding that the dolphin-safe labeling was not in violation of Article 2.4, which requires “technical regulations to be based on relevant international standards where possible.”
 
16
Label A: meat that is born, raised, and slaughtered in the U.S.; Label B: meat with multiple countries of origins (born in Mexico or Canada, but slaughtered in the U.S.); Label C: meat from animals not born or raised in the U.S. but imported to the U.S. for immediate slaughter; Label D: meat from animals neither born, raised, nor slaughtered in the U.S. (WTO 2011a, para. 7.89).
 
17
As to whether the Panel erred in finding the trade-restrictiveness of COOL measure, the U.S. made it clear the Panel’s finding of violation for the COOL measure for the purpose of Article 2.2 must be reversed once that Article 2.1 is reversed, because the Panel relied on its finding on Article 2.1 to conclude that the COOL measure is trade restrictive for the purpose of Article 2.2. The issue was not further considered as the Appellate Body upheld the Panel’s finding on the issue (WTO 2012a, para. 381).
 
18
Originally, the Report on Border Tax Adjustment only provided the first three criteria. The fourth criterion was added by the Panel in U.S.-Reformulated Gas case (WTO 1996b, para. 3.22).
 
19
Some academic writings maintain the view that by adding the test of legitimate regulatory distinction, the Appellate Body has effectively added an “exception provision” similar to that of Article XX of the GATT 1994 to the TBT Agreement (Carlone 2014; Shaffer 2013).
 
20
There are also criticisms that the Appellate Body relied too much on Article 2.1 in order to avoid finding violation under Article 2.2 (Carlone 2014; Pauwelyn 2012).
 
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Metadata
Title
Compatibility of Eco-Labeling Scheme with WTO and Its Potentially Conflicting Impacts
Author
Soyoung Lee
Copyright Year
2016
Book
Legal Issues on Climate Change and International Trade Law

Print ISBN: 978-3-319-29320-2

Electronic ISBN: 978-3-319-29322-6

Copyright Year: 2016

DOI
https://doi.org/10.1007/978-3-319-29322-6_2

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