29 Human Rights, Environmental rights or trade
Ms. Pallavi Arora
AIMS OF THE CHAPTER:
- To understand relationship between trade and environment.
- To learn about the interplay between trade liberalization and human rights.
- To understand the jurisprudential evolution of environment related trade disputes by the WTO Dispute Settlement Body (DSB).
I. INTRODUCTION
With the conception of the General Agreement on Tariffs and Trade, 1994,1 under the auspices of the World Trade Organization, the international community has committed itself towards the pursuit of trade liberalization. The international community has also given substance to its concerns for the protection of the environment and human rights by negotiating several international instruments. However, the interaction and collision between such diverse international regimes and commitments are inevitable. This article seeks to examine the interaction of the WTO, a trade liberalization regime, with obligations concerning noneconomic interests, namely environment protection and human rights. The article is divided into two parts. The first part examines the relation between free trade and environmental protection, while the second part explores the interplay between trade liberalization and human rights concerns.
II. FREE TRADE AND ENVIRONMENT PROTECTION
With the evolution of international trade, there has been lingering discontent with the global trade agenda from the perspective of environment protection. The developed world has championed the claim that developing states must adopt stricter environmental standards in their production for export. This assertion is grounded in the belief that the anti-environment practices of the developing world not only reduce the cost of production but also run amuck their ecological obligations under the customary international law. When such products are exported to the developed world, their domestic producers claim to be unfairly saddled with higher costs than their foreign competitors — thereby, discouraging environmental preservation in the importing countries as well. To minimize the impact of trade on the environment, developed countries often resort to unilateral trade sanctions against importing countries that indulge in ecologically unsustainable production practices.
The developing countries retort that such supposed environment concern is nothing but a refuge for ‘green protectionism’ — an attempt to keep out imports from the developing countries. The developing countries claim that they are no less committed to the protection of the environment, but that standards must evolve during development. When the first world states were in the nascent stages of development, comparable to that of the third world at present, they committed rampant environmental degradation — but are now imposing much stricter environmental standards on the developing states. Further, environmental concerns lie within the domain of the relevant UN bodies and not the WTO, a trade body. The central thesis of this part is to examine whether the WTO is, in fact, an anti-environment establishment as is being purveyed by the first world.
A. Tracing the Development of International Environment Law in Relation to Trade The earliest deliberation on environmental protection can be traced to the Trail Smelter Arbitration which expounded the customary principle of sic future top utalienon ladies – use your property so as not to injure the property of another.4 The said principle was reiterated in Principle 21 of the Stockholm Declaration, 1972,5 adopted under the auspices of the UN Conference on Human Environment.6 The said conference also led to the establishment of the United Nations Environment Program and an allied Environment Fund and Action Plan, which set in motion wide ranging environmental diplomacy culminating in several multilateral agreements.
The principle recognizing sustainable development as the basis of economic activity surfaced for the first time in the Brundtland Report (1987) and was subsequently endorsed by the Rio Conference, generally known as the Earth Summit (1992). In addition to sustainable development, the Earth Summit also codified the Polluter Pays Principle10 and called for an Environment Impact Assessment prior to commencing any commercial activity.11 The Rio Declaration is significant for two prime reasons. Firstly, it was influential in creating international instruments that linked the disjointed policies of trade and environment; namely the Declaration on Environment and Development, the Convention on Biodiversity, Convention on Climate Change and Agenda 21.Secondly, the Earth Summit reflects the ‘grand bargain’ between North and South, through cooperation on the environment by the South and commitment to development by the North.
The interface between trade and environment was finally acknowledged by the WTO in 1994 through the establishment of the Committee on Trade and Environment (CTE). The establishment of the CTE notwithstanding, the adequacy of the GATT regime in reconciling the competing interests of environmental protection and free trade has featured recurrently the various WTO Ministerial Conferences.
B. GATT and Environment Protection
Considering the re-appearance of the trade-environment issue in every successive round of the WTO trade negotiations, the question is: how green is the GATT? The GATT, 1947, contained no specific linkage to the protection of the environment. However, the Preamble to the GATT, 1994, refers to the goal of ‘… optimal use of the world’s resources in accordance with the objective of sustainable development’. The significance of the preambular paragraph was noted by the WTO Appellate Body in the Shrimp-Turtle case as follows:
[T]his preambular language reflects the intention of the negotiators of the WTO Agreement, we believe it must add color, texture, and shading to our interpretation of the agreements annexed to the WTO … [it shows that] the signatories to the Agreement were in 1994, fully aware of the importance of the legitimacy of environmental protection as a goal of national and international policy.
Besides the Preamble, the Final Act contains many Agreements that are relevant apropos of the trade-environment issues. These include the Agreement on Sanitary and Phytosanitary Measures, the Agreement on Technical Barriers to Trade, the Agreement on Agriculture, the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and the Agreement on Subsidies and Countervailing Measures.
Albeit the GATT, 1994, does not contain any explicit linkage to the environment, yet the WTO Dispute Settlement System has interpreted GATT Articles I, III, XI, and XX in a manner to incorporate trade related environment measures. Art. I, III and XI of the GATT comprise the core obligations of member states, while Art. XX embodies the general exception clause.
Article I codify the Most Favored Nation principle, which concerns the external parity and nondiscriminatory treatment that every member must reserve to products imported from other members. Article III, on the other hand, entails national treatment on internal taxation and regulation between imported and domestic products so as not to afford protection to domestic products. Article XI calls for the general elimination of quantitative restrictions. Article XX entitled general exceptions allows states, to depart from GATT obligations to serve legitimate policy objectives which include measures necessary to protect human, animal or plant life or health and the conservation of exhaustible natural resources. But the said exceptions are subjected to certain exceptions stated in the chapeau, i.e., the measure should not be applied in a “manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade”.
Article I, III, XI and XX of the GATT have been interpreted by the WTO Dispute Settlement System in a manner to safeguard environment concerns whilst promoting free trade. The following section examines the WTO jurisprudence in the context of integrating environmental concerns within Article I, III, XI and XX of the GATT.
C. Trade and Environment: The WTO Jurisprudence
i. TUNA/ DOLPHIN CASE I (1991)
It was in 1991 that the perceived tension between environmental concerns and international trade law came to the fore in the Tuna/Dolphin case. The facts before the GATT Panel can be summarized as follows. Commercial tuna fishing has been carried using purse seine nets. In the absence of special protective measures, dolphins get trapped in the purse seines along with the tuna, and many are fatally wounded or drowned. Since some dolphin species are threatened with extinction, the incidental killing of dolphins in the process of tuna fishing was considered ecologically unsustainable. Consequently, the US Congress by amending the Marine Mammal Protection Act placed an embargo on the imports of tuna from Mexico and several other countries that failed to meet the above said compatibility requirement.
According to the GATT Panel, the US embargo on imports could not pass muster. It found the US measure to be violative of GATT Article XI (1) because instead of adopting unilateral trade measures, the US could have undertaken other measures, such as negotiation of an international agreement. The Panel also took strong objection to the extra-jurisdictional application of the US law in Mexico. Furthermore, the US action could not be exempted under Article XX. The Panel emphasized that the word ‘necessary’ in Article XX (b), holding that if other, less trade- restrictive measures are available, the challenged measure could not be found to be necessary. Further, the measures also failed to satisfy the requirements of the chapeau to Article XX.
The environmentalist community contended that ‘necessary’ as interpreted by the Tuna/Dolphin I Panel is too great a constraint on the priorities and values of member states. As a result, they rejected outright the pro-trade leaning in the Panel’s interpretation of Article XX, as applied to measures designed to conserve threatened species.
ii. US SHRIMP TURTLE CASE (1998)
The Appellate Body in the Shrimp Turtle case went a long way in arriving at a balanced view on the relationship between trade and environment. In the instant case, shrimp trawlers adopted modern techniques of harvesting shrimp involving the use of large nets. In addition to the shrimp, the said nets tended to catch sea turtles, which are classified as endangered species under the CITES. Accordingly, the US passed a regulation requiring all shrimp trawlers to use ‘turtle excluder devices’ (TEDs) and barred shrimp imports from all countries which had not adopted TEDs.
India, Pakistan, Malaysia, and Thailand, failed to comply with the US regulationsand brought a complaint under Article XI GATT. United States defended its restriction because it was carrying out the intent of CITES and that the Act was consistent with Article I, III, XX (b) and (g).
Relying on the precedent of Tuna/Dolphin, the GATT Panel stated that the US had abused Article XI by unilaterally evolving a trade policy instead of proceeding down the multilateral path. Moreover, the Panel also found the US measure in theissue to be outside the scope of measures permitted under the chapeau of Article XX.
Aggrieved by the findings of the GATT Panel, the US instituted proceedings before the Appellate Body. In principle, the Appellate Body also upheld the finding that the US import ban was incompatible with GATT. However, some of the interpretations developed by the GATT Panel in Tuna/ Dolphin and US Shrimp Turtle were subsequently rejected by the Appellate Body in a bid to reconcile trade and environment. The following discussion elucidates the jurisprudential contribution of the Appellate Body in US Shrimp Turtle towards integrating environmental concerns within the GATT.
a. Interpretation of the Chapeau to Article XX
The GATT Panel in the US Shrimp Turtle case had refused to look at the legitimacy of the measures under Article XX (a) to (j), before proceeding to see if the same were justified under the chapeau to Article XX.30 The Appellate Body reversed the Panel’s approach to Article XX. The Appellate Body approvingly cited the two-tier test laid down in the Imported Gasoline case.31Firstly, the specific provisions of Article XX (a) to (j) must be examined. If a challenged measure is found to fit under one of the exceptions under Article XX (a) to (j), it must then be tested under the chapeau, i.e., whether the measure is applied in a manner that would constitute unjustifiable discrimination or a disguised restriction on international trade. Thus, what is in issue in Article XX chapeau is not the design of the measure itself but the way a measure was applied.
In the instant case, the US measure in issue was held valid under Article XX (g) – as it pertained to the conservation sea turtles which are exhaustible resources. But the said measure was applied in a manner that constituted an ‘unjustifiable discrimination between states where the same conditions prevail’, and was accordingly short of the criteria prescribed by the chapeau to Article XX.
The manner of enforcing the impugned measure was held as an unjustifiable discrimination on two fundamental grounds. Firstly, prior to applying the import embargo on shrimp the US had negotiated with some but not with all other member states, including the complaining parties. The effect was plainly discriminatory and in the view of the Appellate Body, unjustifiable within the meaning of the chapeau of Article XX. Secondly, the US discriminated between States that did and did not adopt regulatory programs comparable to its own, i.e. requiring the use of TEDs.
b. Extra-Jurisdictional Application of the US Law
Having classified the US measure in issue as inconsistent with the mandate of the chapeau, the Appellate Body was posed with the question whether the extra-jurisdictional application of the US law was the reason for terming the impugned measure as ‘unjustifiable discrimination’? The Appellate Body clarified that what it was not doing was to find the US turtle conservation measures GATT illegal because it led to the extra-jurisdictional application of the US law, but because it required all countries to have policies comparable to the US. According to the Appellate Body, [I]t is not acceptable in international trade relations, for one WTO member to use an economic embargo to require other members to adopt essentially the same comprehensive regulatory program, to achieve a certain policy goal, as that in force within the member’s territory, without taking into consideration different conditions which may occur in the territories of other members.
This decision significantly departs from the position of the GATT Panel in the Tuna/Dolphin case, which used the extraterritorial application argument to find the concerned environmental protection measure GATT illegal.
c. Unilateral Measures
A critical question before the GATT Panel and Appellate Body in the US Shrimp Turtle case was whether the unilateral action taken by the US, as opposed to obtaining a multilateral consensus, had breached the trade liberalization commitments of the GATT/WTO regime.
From a policy perspective, unilateral action presents certain advantages. Firstly, once a state has undertaken a treaty commitment to protect certain environmental standards, it may adopt effective national measures to implement those standards. Secondly, it does not require lengthy negotiations with other nations to agree upon common environmental standards. But all the same, this practice also presents some serious drawbacks. Such unilateral measures may become illegal through the arbitrary or protectionist way they are applied. Furthermore, the unilateral actions may be ineffective in improving the target states’ environmental record.
The Panel and the Appellate Body in US Shrimp Turtle had held that the unilateral adoption of a measure, without multilateral consensus, does not per se lead to the conclusion that it will devour the multilateral trading system. Such fear is to be tempered by an examination of the measure itself. Thus, the specific provision of Article XX must be examined first, followed by an examination of the manner of applying the measure under the chapeau. Thus, it was asserted that unilateral measures are not always excluded and a party may take recourse to them particularly after serious attempts have been made to negotiate.
In the instant case, the impugned US measure was declared GATT illegal, not because of its unilateralist character, but because of the measure though exempted by Article XX(g), had been applied in a manner that was considered discriminatory under the chapeau.
When the US based its defense on Article XX(g), the complaining parties argued that ‘exhaustible natural resources’ referred to finite resources such as minerals, not to living creatures. In contrast to the decision of the GATT Panel in the Tuna Dolphin case, the Appellate Body rejected this view. It held that modern biological science had shown that living species, though in principle capable of reproduction, are in certain circumstances susceptible of depletion, exhaustion, and even extinction, frequently because of human activities. Accordingly, the Appellate Body called for an evolutive interpretation of GATT provisions, in the light of contemporary concerns of the community of nations about the conservation of the environment.36
iii. EC- HORMONES CASE (1998)
The EC-Beef Hormones is the first case brought before the Dispute Settlement Body under the Agreement on the Application of Sanitary and Phytosanitary Measures. In this case, the European Union had restricted the importation of meat and meat products derived from farm animals that were administered specified hormones, which were allegedly carcinogenic. The United States and Canada filed a complaint with the DSU asserting a violation of the SPS Agreement. Though the decision of the Appellate Body affirmed the stand taken by the USA, its interpretation of the SPS Agreement grants wide latitude to states in applying SPMs. In other words, the Appellate Body advanced several interpretations of the SPS Agreement which go a long way in integrating trade and environment objectives. Some key findings of the Appellate Body have been discussed below:
a. Burden of Proof
It in the instant case the prohibition by the European Community had not been based on an internationally agreed standard. But the SPS Agreement allows members to maintain higher levels of protection than called for by international standards, provided the measure is not protectionist in nature. According to the Appellate Body, in such a situation the burden should fall on the states challenging such a measure. It is submitted that the said stance by the Appellate Body gives greater latitude to states in the adoption of sanitary and phytosanitary measures (SPMs).
b. Risk Assessment
The imposition of any trade restrictive measure under the SPS Agreement is subject to the qualification of a risk assessment. Based on the definition in the SPS Agreement, the Appellate Body pointed out that risk assessment is a cost-benefit analysis involving the below-mentioned steps.
The first step involves the identification of the adverse effects posed by the challenged product, on human, animal or plant life or health. It also entails the evaluation of the probability of occurrence of such effects. The Appellate Body had held that such risk evaluation is not just limited to the views of the relevant scientific community. It may also include the risk as is perceived in human societies, i.e., the actual potential for adverse effects on human health in the real world. Secondly, the measure should not be protectionist in nature or more trade-restrictive than required to achieve their appropriate SPS objectives.
In the present case, the EC based its argument on the opinion of one expert who estimated that the challenged meat products would cause approximately one out of every million women to develop cancer. However, the said study failed to conclusively establish the probability of the occurrence of such effects. Therefore, the EC measure was incongruous with the risk assessment under the SPS Agreement.
D. Aids in Interpreting the Chapeau to Article XX
The ratio in US Shrimp Turtle has acknowledged a two-tier test to determine the legitimacy of a measure under Article XX. Firstly,the challenged measure must be exempted by some clause under Article XX (a) to (j). Secondly, the manner of applying the said measure should satisfy the mandate of the chapeau; i.e., the impugned measure should not be applied in a manner that constitutes (i) an arbitrary or unjustifiable discrimination between states where the same conditions prevail, or (ii) a disguised restriction on international trade.
To facilitate the objective of properly interpreting the chapeau, the GATT commentators have ascribed the fulfillment of a few other conditional requirements, discussed hereunder.
i. NECESSITY AND PROPORTIONALITY
Article XX (a) and (b) permit the adoption of measures “necessary to protect human, animal or plant life or health” and “public morals” respectively. In the Korea-Beef41and E.C.-Asbestos, the Appellate Body had pronounced the following test for necessity: the importance of the societal values that the measure intends to protect, and a reasonable nexus between the challenged measure and its ability to realize the said social values. GATT commentators widely held that the concept of necessity must be assessed by referring to international standards. In the absence of international standards, the applicability of necessity must rest on an adequate risk assessment, provided for in the SPS Agreement.
Once pursuant to the above test a given protective measure is ascertained to be necessary, the proportionality principle comes into play. The proportionality test focuses on whether the means exceed the goals and whether the same goal could be protected by a less-trade restrictive measure. In other words, it seeks to strike a balance between the cost imposed on trade by a national measure and the environmental benefits that it seeks to provide.
ii. PRECAUTIONARY PRINCIPLE
The legitimacy of the concept of precaution in the field of environment and health is justifiable. However, the possibility of an excessive measure in the guise of the precautionary principle cannot be negated. Thus, there are dangers in allowing a general, open-ended precautionary principle. Accordingly, it is desired of a GATT Panel to define the extent of applicability of the precautionary principle and the circumstances under which it might be used.
iii. MULTILATERAL ENVIRONMENTAL AGREEMENTS (MEAs)
Fostering effective MEAs will provide a common base for tackling environmental problems, a practice that seems clearly preferable to unilateral action. Further, there is a need to encourage compatibility between MEAs and WTO rules. For instance, where an MEA commands wide support amongst WTO members, then WTO trade rules must accommodate necessary trade measures to be taken under such an MEA.
III. FREE TRADE AND THE PROTECTION OF HUMAN RIGHTS
As free trade agreements gain prominence under the aegis of the WTO, we have been witnessing intensive trade liberalization between states. But this has prompted advocates of human rights to question the extent to which such free trade policy considerations have eroded human rights and labor standards. There is an emerging claim that certain human rights such as the right of children not to be abused by extreme forms of child labor and the right of workers to be free from violent suppression must not be subservient to the principle of free trade.
Developed countries argue that the unacceptable labor practices prevailing in developing countries substantially aid in reducing the cost of production. It seems obvious that when these products are exported to developed countries, it creates an atmosphere of unfair competition in relation to the importing state’s domestic products. As a result, western countries should have the prerogative to impose unilateral trade sanctions that deny market access for countries responsible for the egregious violations of the core human rights values. The developing countries, on the other hand, condemn such trade distorting practices as not only protectionist but also counterproductive in nature. Such sanctions, it is alleged, function as the “GATT-sanctions version of gunboat diplomacy,” placing weaker countries at a disadvantage.
The divergent views on the issue lead us to consider the possibility of facilitating a convergence between trade policy and human rights, in a manner like that as indicated by environmental values. The central premise of this part is to explore the possible links between human rights, laborstandards, and trade.
A. Development International Human Rights and Trade Law
The movement toward incorporating international human rights within the realm of international trade law can be traced to the Constitution of the International Labour Organization in 1919. The unique tripartite institutional structure of the ILO comprising the government, labor, and business representatives encouraged the infusion of social and economic rights. Another significant point of discussion is the Havana Charter45 which envisaged the ambitious International Trade Organization and for the first time explicitly recognized the link between trade and the respect for labor standards. Notwithstanding the fact that the Havana Charter never came into force, it remains a major milestone in the development of labor rights in the context of trade liberalization. Contrary to the Havana Charter, the GATT, 1947, did not contain any explicit clause guaranteeing labor rights whilst promoting free trade. Nonetheless, just after the adoption of the GATT 1947, the United Nations adopted the Universal Declaration of Human Rights, 1948,47 which contains a catalog of socio-economic rights of direct relevance for structuring the international trading system. This was followed by the two UN Covenants on civil and political rights and economic, social and cultural rights that were adopted in 1966, and entered into force ten years later. In 1998, the ILO adopted the Declaration of Fundamental Principles and Rights at Work which lays down certain core principles such as the right to collective bargaining, the prohibition of exploitative child labor, of forced labor and of gender discrimination. However, the receptiveness of international trade law towards incorporating and enforcing these labor rights is still doused in ambivalence.
B. The GATT as a Backdoor to Enforcement of Labour Standards and Basic Human Rights
In the absence of an explicit social clause under the GATT, the legality of imposing unilateral trade sanctions for ensuring compliance with basic human rights is shrouded in uncertainty. As an alternative, this part examines various GATT provisions that may be interpreted in a manner to accommodate the social clause concept within the WTO regime and serve as a backdoor to the enforcement of labor standards and basic human rights.
As far as human rights are concerned, no specific exception has been provided for under Art. XX and the jurisprudence developed by the WTO Dispute Settlement Mechanism hitherto is also at a nascent stage. However, as we shall see infra, some basis can be found for the adoption of trade- related human rights measures under Articles XX(a), XX(b) and XX(e) of the GATT, 1994.
a. Prison Labour Exception: Art. XX(e)
Art. XX(e) permits a State to adopt unilateral trade measures against the import of products produced by prison labor. The term ‘prison labor’ may be interpreted to denote situations of practical workers’ enslavement, political persecution and human rights abuses.
b. Protection of Health: Art. XX(b)
The text of Article XX(b) talks of measures necessary to protect human, animal or plant life or health. The WTO Panel in EC- Measures Affecting Asbestos and Asbestos Containing Products (2000) relied on Art. XX(b) to uphold national measures banning the import of asbestos products because they posed a threat to the public health of the importing state.
But it is only fair to argue that the right to life and health under Art. XX(b) should not just be limited to the health hazard posed by the impugned product to the importing state alone. It must also encompass matters involving production-processes that jeopardize basic human dignity, public health and minimum conditions of occupational health/safety in the exporting state as well. In other words, a product processed in a manner that gravely endangers the health of the workers in the exporting state should also be a valid basis to invoke the ‘public health’ exception.
Thus, Art. XX(b) should be interpreted dynamically considering the Preamble to the GATT, which advocates the conduct of international economic activities in a manner that raises living standards, in both the importing as well as the exporting countries. Such an interpretation of Art. XX(b) has been endorsed by the Panel Report in Thai – Cigarettes,53 which recognized that trade related human rights, such as working conditions, contribute towards uplifting living standards.
c. Public Morals: Art. XX(a)
Art. XX(a), more commonly known as the ‘public morals’ exception, allows countries to adopt or enforce trade measures “necessary to protect public morals”. But what exactly is encompassed within the scope of this clause, is a question that went unanswered for over fifty years, as no adjudicatory body expounded on its meaning. However, in 2005, the World Trade Organization (WTO) in the US-Gambling54case breathed new life into the exception by defining public morals as “standards of right and improper conduct maintained by or on behalf of a community or nation”. U.S.-Gambling alsoappeared to endorse an evolutive interpretation of public morals.55 The Panel stated unequivocally that “the content of [public morals] can vary in time and space, depending upon a range of factors, including prevailing social, cultural, ethical and religious values”; a position that was reaffirmed by the Appellate Body.
Various scholars have embraced this idea and dynamically interpreted the ‘public morals’ exception with a view to integrating fundamental human rights and labor values within the GATT regime.57 The United Nations High Commissioner for Refugees (UNHCR) has noted that ‘the very idea of public morality has become inseparable from the concern for human personhood, dignity, and capacity reflected in fundamental rights’.58 Thus, the ‘public morals’ exception should sustain trade sanctions on products related to extreme forms of child labor, forced suppression of workers’ rights, racial discrimination and other objectionable services such as prostitution, child pornography etc.
IV. CONCLUSION
The Seattle Round witnessed the discordant voices from the environmentalist and human rights lobby censure the WTO for vociferously promoting the neoliberal agenda, marked by an utter indifference towards non-economic interests. However, the claim that the WTO promotes free trade whilst displaying sheer disregard towards environmental values or human rights standards is far from the truth. Moreover, it is a policy misjudgment to presume that trade and noneconomic interests represent conflicting objectives that cannot be pursued contemporaneously.
Thus, the way forward lies in effectively balancing trade, environment and human rights concerns within the GATT/WTO regime. The said balancing act necessitates that the object of greening the GATT and humanizing the WTO should be pursued in a manner that keeps the protectionist forces at bay — thereby, allowing every WTO member to pursue an independent path to sustainable development.
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