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A Troubling Trade Ruling
A Troubling Trade Ruling
February 28, 1999
The World Trade Organization’s recent decision in the so-called "shrimp-turtle" case may have fundamentally re-written world trade rules concerning environmental regulation. The WTO struck down a U.S. trade embargo on shrimp as an unfair trade barrier, ruling that the embargo discriminated against imports from India, Pakistan, Thailand, and Malaysia. The world body determined that the U.S. trade measure was not an innocent sea turtle conservation measure permitted under world trade rules – an apparent victory for the principle of free trade. However, the decision may be a pyrrhic victory, for ultimately the WTO "shrimp-turtle" decision may make it easier to disguise protectionist trade barriers as legitimate environmental protections.
The WTO’s decisions are binding, unlike under the old GATT, and its appellate body renders the world trade equivalent of a Supreme Court ruling. Though the latest ruling broadly reinforced the GATT’s longstanding opposition to green protectionism, the WTO departed from earlier precedents in important respects. As a result of pressure from the environmental lobby and the Clinton administration, world trade rules may have been altered in ways that could fundamentally change the way international trade disputes are arbitrated in the future. The shift could have adverse long term consequences for the international trading system.
The most revolutionary feature of the WTO ruling was its decision to accept amicus-style court briefs from non-governmental organizations (NGOs). The decision is a victory for environmental pressure groups, which have been zealously pursuing formal participation rights in the WTO similar to the special lobbying privileges they already enjoy at the United Nations. The environmental establishment’s aims are fully supported by the Clinton administration, which bundled NGO briefs on the shrimp-turtle dispute along with its own legal submissions to the WTO.
The "public participation" process pretends to give the general population a voice in international decision-making. In reality, most NGOs are not concerned citizens, but well-financed, professional lobbying organizations whose fortunes hinge on the propagation of international regulatory controls. The "public participation" racket confers extraordinary powers on specialized economic and ideological interest groups that seek to manipulate governmental decisions for their own benefit. Consumer interests and values, such as competition, freedom of choice, and lower prices, are not well represented in "public participation" forums.
The self-appointed ideological crusaders in the NGO movement claim to represent the common good, but they often organize around causes designed to confer moral legitimacy on trade protectionism. Most activists do not believe the purpose of trade is to better enable entrepreneurs to meet the needs of consumers for mutual benefit. Nor do they see economic freedom as a virtue. Instead, they see trade barriers as tools by which they can cleverly manipulate producers and consumers into "making the world a better place." For these activists, trade restrictions can be used to compel countries all over the globe to adopt politically correct social and environmental policies.
The WTO also introduced a novel interpretation of world trade rules in the "shrimp-turtle" decision. The WTO appeals panel found that, although this particular U.S. embargo was unjustifiable, other similar embargoes might be WTO-legal under the fine print of GATT’s Article XX, which allows trade barriers for specific purposes like conservation. The tribunal indicated that import barriers could be based on so-called process and production methods – incorporating not only the physical characteristics of the imported product, but also a hodgepodge of loosely related production practices and environmental standards in the country of origin.
The WTO’s reversal of 50 years of precedent under the GATT, if exploited widely, could open up a potentially gaping loophole in world trade rules. Countries around the world may interpret the decision as a green light to obstruct trade using creative non-product related rationales. The Clinton administration – influenced by the environmental lobby and its chief ally, Vice President Al Gore – has already demonstrated its willingness to use coercive trade measures in an effort to impose U.S. regulatory standards on the rest of the world.
A well-funded environmentalist movement in the First World believes that trade-driven economic growth is a threat to the planet, and it is seeking to legitimize non-tariff trade barriers as acceptable tools of environmental policy. Political alliances between activist groups and economic special interests pose a unique threat to the economic future of developing countries, which are least able to afford the First World’s costly and complex trade barriers that masquerade as regulatory standards. If the WTO legitimizes green protectionism, the Third World countries that won the "shrimp-turtle" dispute may ultimately wind up the losers.
James M. Sheehan (email@example.com) is director of international environmental policy at the Competitive Enterprise Institute and is the author of Global Greens: Inside the International Environmental Establishment (Capital Research Center, 1998).