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The Permissible Reach of National Environmental Policies

Author

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  • Horn, Henrik

    () (Research Institute of Industrial Economics (IFN))

  • Mavroidis, Petros C.

    (Columbia Law School, New York)

Abstract

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.

Suggested Citation

  • Horn, Henrik & Mavroidis, Petros C., 2008. "The Permissible Reach of National Environmental Policies," Working Paper Series 739, Research Institute of Industrial Economics, revised 20 Jun 2008.
  • Handle: RePEc:hhs:iuiwop:0739
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    References listed on IDEAS

    as
    1. Steve Charnovitz, 2007. "The WTO's Environmental Progress," Journal of International Economic Law, Oxford University Press, vol. 10(3), pages 685-706, September.
    2. 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.
    3. Henrik Horn & Giovanni Maggi & Robert W. Staiger, 2010. "Trade Agreements as Endogenously Incomplete Contracts," American Economic Review, American Economic Association, vol. 100(1), pages 394-419, March.
    4. 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.
    5. Henrik Horn, 2006. "National Treatment in the GATT," American Economic Review, American Economic Association, vol. 96(1), pages 394-404, March.
    6. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Horn, Henrik, 2009. "The Burden of Proof in National Treatment Disputes and the Environment," Working Paper Series 791, Research Institute of Industrial Economics.
    2. Horn, Henrik, 2011. "The burden of proof in trade disputes and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 15-29, July.
    3. Henrik Horn & Petros C. Mavroidis, 2011. "To B(TA) or Not to B(TA)? On the Legality and Desirability of Border Tax Adjustments from a Trade Perspective," The World Economy, Wiley Blackwell, vol. 34(11), pages 1911-1937, November.
    4. Patrick Messerlin, 2012. "Climate and trade policies: from mutual destruction to mutual support," Sciences Po publications info:hdl:2441/faqom67ai2q, Sciences Po.
    5. Patrick Messerlin, 2010. "Climate change and trade policy: From mutual destruction to mutual support," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
    6. Grossman, Gene M. & Horn, Henrik & Mavroidis, Petros C., 2012. "The Legal and Economic Principles of World Trade Law: National Treatment," Working Paper Series 917, Research Institute of Industrial Economics.
    7. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.
    8. repec:spo:wpecon:info:hdl:2441/faqom67ai2qsojk9j15c04u8j is not listed on IDEAS
    9. Patrick Messerlin, 2012. "Climate and trade policies: from mutual destruction to mutual support," Post-Print hal-01024537, HAL.
    10. Patrick Messerlin, 2010. "Climate change and trade policy: From mutual destruction to mutual support," Working Papers hal-00972994, HAL.
    11. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h2q83h42k is not listed on IDEAS
    12. Horn, Henrik & Mavroidis, Petros C., 2009. "Burden of Proof in Environmental Disputes in the WTO: Legal Aspects," Working Paper Series 793, Research Institute of Industrial Economics.
    13. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.

    More about this item

    Keywords

    Trade and Environment; WTO;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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