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The Permissible Reach of National Environmental Policies

  • Horn, Henrik

    ()

    (Research Institute of Industrial Economics (IFN))

  • Mavroidis, Petros C.

    (Columbia Law School, New York)

Trading nations exchange tariff concessions in the context of trade liberalizing rounds. Tariffs, nonetheless, are not the only instrument affecting the value of a concession. Domestic instruments affect it as well, but public order is not negotiable, and, consequently, is not scheduled. Public order is unilaterally defined, but must respect the default rules concerning allocation of jurisdiction which are common to all WTO Members and bind them by virtue of their appurtenance to the international community. In this paper, we focus on the interaction between trade and environment. The purpose of this study is to highlight how these rules and the GATT/WTO jointly determine the scope for unilateral environmental policies for WTO Members. In the study we examine the relevant multilateral framework dealing with this issue, as well as the relevant GATT and WTO case-law. We also briefly present the jurisdictional default rules in Public International Law. As a means of focusing the discussion, we consider a series of scenarios, partly building on factual aspects of cases that have already been brought before the WTO. These scenarios are intended to isolate issues of specific interest from a policy point of view. For each scenario we then seek to determine what would the outcome be, in case WTO adjudicating bodies were to explicitly take account of the default rules concerning allocation of jurisdiction, something which has not been done to date. Our main conclusions are two-fold: on occasion, the outcome would be different, had WTO panels observed the default rules concerning allocation of jurisdiction; more generally, the default rules can help us understand the limits of some key obligations assumed under the WTO. Crucially, absent recourse to the default rules concerning allocation of jurisdiction, one risks understanding non-discrimination (the key GATT-obligation) as an instrument aimed to harmonize conditions of competition across markets, and not within markets, as the intent of negotiators has always been.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 739.

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Length: 133 pages
Date of creation: 02 Apr 2008
Date of revision: 20 Jun 2008
Publication status: Published in Journal of World Trade, 2009, pages 1108-1178.
Handle: RePEc:hhs:iuiwop:0739
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
Web page: http://www.ifn.se/
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  1. Horn, Henrik, 2006. "National Treatment in the GATT," Working Paper Series 657, Research Institute of Industrial Economics.
  2. Grossman, Gene M. & Sykes, Alan O., 2005. "A preference for development: the law and economics of GSP," World Trade Review, Cambridge University Press, vol. 4(01), pages 41-67, March.
  3. Henrik Horn & Giovanni Maggi & Robert W. Staiger, 2006. "Trade Agreements as Endogenously Incomplete Contracts," NBER Working Papers 12745, National Bureau of Economic Research, Inc.
  4. Alvin K Klevorick & Alan O Sykes, 2007. "United States Courts and the Optimal Deterrence of International Cartels: A Welfarist Perspective on Empagran," Levine's Bibliography 843644000000000307, UCLA Department of Economics.
  5. Alvin K. Klevorick & Alan O. Sykes, 2007. "United States Courts and the Optimal Deterrence of International Cartels: A Welfarist Perspective on Empagran," Cowles Foundation Discussion Papers 1617, Cowles Foundation for Research in Economics, Yale University.
  6. Steve Charnovitz, 2007. "The WTO's Environmental Progress," Journal of International Economic Law, Oxford University Press, vol. 10(3), pages 685-706, September.
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