Globalization and the Environment

Globalization and the Environment

Risk Assessment and the WTO

Edited by David Robertson and Aynsley Kellow

One of the unforeseen consequences of the WTO agreements has been controversy over risk. This volume explores aspects of risk with special reference to the WTO, where national instruments to reduce risk may conflict with international trade rules. The book is divided into sections dealing with: accounting for risk in trade agreements; risk and the WTO; managing risk in policy making; negotiating experience with risk; national risks and quarantine standards; and managing biotechnology.

Chapter 16: Trade and risk management: exploring the issues

Ian Holland and Aynsley Kellow

Subjects: economics and finance, environmental economics, international economics, environment, environmental economics

Extract

Ian Holland and Aynsley Kellow The conclusion of the Uruguay Round negotiations in 1994 was heralded as a new era in international trade relations which would promote closer economic integration and new levels of prosperity. The strengthening of trade rules and the expansion of coverage to new trade-related areas in WTO agreements, and an expanding membership, were expected to establish a new order in commercial relations. One of the consequences of formalizing trade rules into WTO agreements has been to make arbitration and interpretation necessary to resolve trade disputes – sometimes referred to as the lawyers’ revenge because GATT disputes had previously been resolved by negotiation. Unfortunately, legal processes seem to have increased controversy and uncertainties in the multilateral trading system, because legal judgements require enforcement which was not necessary with negotiated settlements. Tensions over enforcement of decisions and US resort to trade sanctions when the EU refused to implement the dispute settlement decision on beef-hormones, contradicted the fundamental principle of non-discrimination. These set dangerous precedents for trade sanctions to be adopted in other circumstances. Many of the new agreements also introduced the concept of ‘risk’ into the process of trade liberalization. Adoption of international standards (technical and quarantine regulations) requires judgements about the consequences of change, whereas in traditional trade negotiations the participants attempted to balance once-only reductions in protection (sometimes phased over several years). This ‘risk’ element has become important in quarantine (SPS agreement) and adoption of other international standards (TBT agreement), where disputes have arisen over ‘excessive protection’...

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