Theory and Policy in the Context of EU Enlargement and Economic Transition
The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development
Edited by John W. Maxwell and Rafael Reuveny
Chapter 5: Trade and the Environment in the Perspective of EU Enlargement
Alexey Vikhlyaev* INTRODUCTION This chapter is organized as follows. The following section provides an overview of general issues relating to trade measures for environmental purposes, with special references to the World Trade Organization (WTO) and European Union (EU) regimes. The chapter goes on to deal with domestic, extra-jurisdictional and institutional aspects of trade and the environment in the WTO and EU. Finally, conclusions and policy recommendations are oﬀered. TRADE MEASURES: GENERAL ISSUES The rationale for using trade measures for environmental purposes is that cost diﬀerentials arising from lower environmental standards are unfair and distort the prices in the market place.1 However, to eliminate every cost diﬀerential is to eliminate all gains from trade. The issue is whether the cost diﬀerentials reﬂect a legitimate comparative advantage or a market or policy failure. The most radical type of trade measure is a ban on imports of a product that has been produced under standards more lax than those imposed on domestic producers. Article XX – the General Agreement on Tariﬀs and Trade’s (GATT) general exceptions – allows import bans as well as other deviations from the GATT’s rules in speciﬁed circumstances, including some relating to human, animal or plant life, health or safety, and some relating to the conservation of exhaustible natural resources. The Agreement on Sanitary and PhytoSanitary Measures (SPS), concluded as part of the Uruguay Round of agricultural negotiations, covers measures relating to human, animal and plant health and safety in agriculture, including, inter alia,...
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