The Commission for Environmental Co–operation and Cozumel Case

• DOI: http://doi.org/10.1111/1467-9388.00098
• Date: 01 July 1997
• Author: Pierre Marc Johnson
• Published date: 01 July 1997

Volume 6 Issue 2 1997 Case Notes

54. The European Commission argues that even among like pro-

cably linked to expanded North American economic inte-

ducts, panels have f‌lexibility to allow tax gradations based on

gration. While the Canada-United States Free Trade

certain product characteristics. Japan–Taxes on Alcoholic Bever-

Agreement had been negotiated in 1988-89 with little

ages, Report of the Panel, n.4 above, at para. 4.45.

attention to the environment, NAFTA brought a com-

55. While environmental regulationswill also affect imports, Article

III may be less critical for regulations. This is because the WTO

plete set of environmental issues to the table that

contains two separate agreements – ‘Technical Barriers to

stemmed from the fact that it is a trade agreement nego-

Trade’ and ‘Sanitary and Phytosanitary Measures’ – with tighter

tiated between two developed countries, whose econom-

disciplines than Article III.

ies were already closely integrated, and a developing

56. See generally Henry L. Thaggert, ‘A Closer Look at the Tuna-

Dolphin Case: “Like Products” and “Extrajurisdictionality” in the

country, whose economy had a long-standing history of

Trade and Environment Context’, in James Cameron et al. (eds),

being relatively closed. Many of these environmental

Trade and the Environment – The Search for Balance, Vol. 1

issues were similar to those being raised by some inter-

(Cameron May Publishers, 1994).

est groups in the lead up to the creation, in 1994, of the

57. See Steve Charnovitz, ‘Green Roots, Bad Pruning: GATT Rules

World Trade Organization and an optimism, momentum

and their Application to Environmental Trade Measures’, Tulane

Envtl L J, 7 (1994) 299, 311–23.

and sense of unique opportunity existed among a con-

58. United States– Measures Affecting Alcoholic and Malt Beverages,

stituency heretofore omitted from traditional bilateral

n.8 above, at para. 3.35.

and multilateral trade negotiations: environmentalists.

59. Id., at paras. 3.34, 3.36.

60. Id., at para. 5.19. The panel did not seem to use the ‘aim or

effect’ test it articulated elsewhere in its report. According to

Among the most important environmental issues asso-

one participant, the Canadian Government told the Panel that

ciated with the NAFTA negotiations were: that increased

if it allowed the US tax credit, then Canada could respond by

competition would encourage countries to lower their

giving a tax credit to its breweries, all of which are smaller than

environmental standards in order to attract investment,

the large US breweries.

thereby creating so-called pollution havens; that

61. United States– Standards for Reformulated andConventional Gaso-

line, Report of the Panel, 29 January 1996, reprinted in (1996)

increased industrial activity would lead to increased pol-

35 ILM 274, at para. 6.11. See Steve Charnovitz, ‘The WTO Panel

lution (particularly on the US-Mexican border) and

Decision on U.S. Clean Air Act Regulations’, Int’l Env’t Rep ,19

increased consumption of natural resources including

(1996) 191.

fossil fuels; that domestic and implementation of inter-

62. United States – Standards for Reformulated and Conventional

Gasoline, Report of the Appellate Body, 29 April 1996, (1996) 35

national environmental laws would be challenged as cre-

ILM 603.

ating unnecessary trade barriers thereby threatening the

63. Id.;Japan–Taxes on Alcoholic Beverages, Report of the Appellate

integrity of multilateral agreements such as the Montreal

Body, n.1 above. As this article went to press, two new reports

Protocol or the Convention on the International Trade

of the Appellate Body were circulated.

in Endangered Species (CITES) that include trade-

64. See, e.g., P.J. Kuyper, ‘The Law of GATT as a Special Field of

International Law’, Neth YB Int’l Law, (1994) 227–30, 255–56.

restricting provisions to facilitate their enforcement;

65. United States– Standards for Reformulated andConventional Gaso-

and, that countries would maintain high levels of

line, Report of the Appellate Body, n.62 above, at 22; Japan–

environmental protection in theory, but in practice

Taxes on Alcoholic Beverages, Report of the Appellate Body, n.1

would reduce their emphasis on the enforcement of

above, at 17, 24.

66. United States– Standards for Reformulated andConventional Gaso-

environmental laws in order to gain a competitive advan-

line, Report of the Appellate Body, n.62 above, at 16, 29; Japan–

tage.

Taxes on Alcoholic Beverages, Report of the Appellate Body, n.1

above, at 14, 21–22, 26–27, 30, 32.

In response to a strong domestic environmental lobby,

67. Japan–Taxes on Alcoholic Beverages, Report of the Appellate

the US Administration made a commitment to consider

Body, n.1 above, at 21.

68. Id., at 31.

environmental issues in the negotiation of NAFTA and

69. Id., at 16.

once negotiated in 1992, NAFTA was hailed as the

‘greenest’ trade agreement ever. It did indeed include a

Written by: Steve Charnovitz, Director of the Global number of important provisions on the environment that

Environment and Trade Study, Yale University. went some way to addressing a number of the issues

that the environmental community and other interest

groups had been lobbying hard for.

The Commission for

In its preamble, NAFTA recognizes sustainable develop-

Environmental Co-operation

ment as one of its goals. In order to address the concern

that countries would lower standards in order to attract

and the Cozumel Case

investment and to avoid a so-called ‘race to the bottom’,

NAFTA’s Article 1114 states that a Party should not

Introduction

attract investment by waiving environmental obligations

The North American Agreement on Environmental Co- or lowering standards. In an attempt to protect the integ-

operation (NAAEC), negotiated among Canada, the rity of the trade-restrictive enforcement provisions in

United States, and Mexico, went into effect along with multilaterally negotiated environmental treaties, NAF-

the North American Free Trade Agreement (NAFTA) on TA’s Article 104 exempts from challenge certain multilat-

1 January 1994. It is the f‌irst time that an agreement for eral agreements including the Montreal Protocol, CITES

regional co-operation on the environment has been and the Basel Convention on the Transboundary Move-

negotiated alongside a trade agreement. ment of Hazardous Waste. However, these provisions,

along with additional measures on dispute settlement

did not fully address the concerns of many North Amer-The underlying pressure for this new trinational

approach to environmental co-operation was inextri- icans regarding NAFTA’s potential negative effects on

Blackwell Publishers Ltd. 1997.

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