A Legal View on Border Tax Adjustments and Climate Change: A Latin American Perspective

Author:Valentina Durán Medina - Rodrigo Polanco Lazo
Position:J.D., Universidad de Chile School of Law - J.D. and LL.M. in Economic Law, Universidad de Chile School of Law (2000)
The General Ag reements on Tariffs and Trade (“GATT”)
as amended by the Uruguay Round Amendments, which
created the World Trade Organization (“WTO”), contains
rules on Border Tax Adjustments (“BTAs”).1 No single section
of this agreement deals exclusively with BTAs; however, rules
addressing BTAs can be found throughout, namely in Articles
II, III, and XVI.2
According to the Organization for Economic Cooperation
and Development (“OECD”) Worki ng Part y, BTAs are “any
fiscal mea sures that put into effect the destination principle in
whole or in part.”3 In other words, BTAs relieve exported prod-
ucts of some or all of the tax the exporting country charged on
similar dom estic products in the home marke t and enables the
importing country to charge some or all of the tax on imported
products that it charges on similar domestic products. The term
“border tax adjustment” is somewhat confusing because it sug-
gests that a fiscal measure is applied at the border, which is not
always the case.4 Although in many cases imports are taxed on
entry, cert ain countries apply a ta x to impor ts after the goods
have crossed the border and have been sold to other merchants or
consumers. Moreover, the OCED has noted that certain tax sys-
tems do not tax exports at all and make no adjustment at the bor-
der.5 Considering these varying tax systems, the OECD Working
Party has recommended the replacement of the term “border tax
adjustments” with “tax adjustments ap plied to go ods entering
into international trade.”6
The OECD’s careful treatment of BTAs illustrates that they
are not a novel concept to internatio nal trade. However, BTAs
have only recently been considered as an innovative policy
option for addressing the challenges of climate change. The con-
cept of climate change BTAs is as follows: carbon-taxing coun-
tries would levy import fees on goods tha t non-carbon-taxing
countries manufacture. The motivating factor for these measures
is—at least in theory—to inter nalize the real costs of producing
goods and services with respect to international climate change
regulation, thereby leveling the playing field between producers
of like products from different countries.7
A BTA would tax imported goods the equivalent of what the
producers would h ave had to pay to produce them in the home
market they are entering. Under this system, domestic produc-
ers in countries with carbon taxes will not f ace costly climat e
change measures that foreign producers do not face in their
home countries. An alternative approach would be to impose
taxes on imported goods that are equivalent to the enforcement
of emissi ons allowance trading.8 T herefore, in ord er to import
products from a nation tha t does not comply with the carbon
taxes applied in the importing c ountry, an importer o f goods
would be required to purchase emission rights in his home coun-
try, compensating for the difference.9
Some commentators h ave mentioned t hat these measures
should be called Border Carbon Adjustment (“ BCA”), because
“requirements t o buy into domest ic cap-and-trade schemes are
more like regulations than taxes.”10 However, while recognizing
BCA as a more precise concept, considering BTAs have usually
been proposed to address climate change in the form of taxes, we
will continue using the term BTA. This article will first provide a
background on climate change and multilateral efforts to resolve
the problem. It will then move on to a discussion of the potential
treatment of BTAs under WTO law. Finally, we will discuss the
implications of this analysis in Latin Americ a with a focus on
cLImaTe change background
and muLTILaTeraL eFForTs
Climate change is a widely recognized, global problem
caused by humans, and the time for action is now; current trends
indicate that we will likely arrive at a point of no return between
2015 and 2020.11 C ommentators note that the cost of taking
measures now is much less expensive than waiting until 2020 or
2030.12 Climate change is regulated by a multilateral treaty and
protocol in the context of t he United Nations Framework Con-
vention on Climate Change (“UNFCCC”).13 Even if measures
to address climate change are both multilateral and domestic, the
a legal view on borDer tax aDJuStmentS
anD climate change:
a latin american perSpective*
by Valentina Durán Medina and Rodrigo Polanco Lazo**
*An earlier draft of this paper was presented by the authors at the panel “The
International Climate Change Regime and Multilat eral Trading Rules: A Latin
American Perspective” organized by the International Centre for Trade and Sus-
tainable Development (“ICTSD”) at the Second Biennial Global Conference of
the Society of International Economic Law (“SIEL 2010”) held in Barcelona,
Spain on July 8, 2010.
** Valentina Durán Medina, J.D., Univ ersidad de Chile School of Law. DEA
(Master) in Environmenta l Law, Universi ty of Paris I Pantheón-Sorbon ne.
Environmental Law Clinic P rofessor at Univ ersidad de Chile School of Law,
and Centre for International Sustainable Developmen t Law (“CISDL”) Senior
Research Fellow.
Rodrigo Polanco Lazo, J.D. and LL.M. in Economic Law, Universidad de Chile
School of Law (2000). LL.M. International Legal Studies, New York University
School of Law (200 4). Assistant P rofessor of Inte rnational Economic Law at
Universidad de Chile School of Law.
SPRING 2011 30
perspective fr om Latin America, and especially from Chile, is
that environmental issues and global problems should be treated
The official position of the Government of Chile’s foreign
policy, u nchanged in recent decades, is “t o contribu te to the
strengthening of multilate ralism.15 In thi s sense, Chile aims to
strengthen the climate regime in the United Nations. The Chilean
government officially promotes the joint action of nations on the
global agenda in areas such as security threats, natural resources,
energy, environment, sustainable development, climate change,
international violations, poverty, and governance.16
In the context of multilateral solutions, Border Tax Adjust-
ments seem to be a unilateral answer to the problem of climate
change. BTAs can be politically feasible for the adoption of
national regulations in countries like the United States, but they
are seen as a threat to the international trading system and could
potentially violate international trade law under the WTO.
Resolving this potential co nflict between climate change
mitigation measures and international trade law is of paramount
importance. Since the early nineties, multilateral environmental
agreements, soft law instruments, and the OECD have encour-
aged the use of a broad range of instruments , and especially
the us e of market-b ased instruments, to reduce environmental
impacts.17 States are i ncreasingly employing eco nomic instru-
ments, such as taxes and charges, as instruments of environmen-
tal policy-making to address inputs and production processes.18
Even though no Border Tax Adjustments have been imple-
mented yet, the United States and the Eur opean Unio n have
considered the possibility of imposing BTAs ever since the Cli-
mate Conference held in Copenhagen on December 2009 failed
to produce a global deal to reduce greenhouse gas (“GHG”)
european union
BTAs have been a subject of debate in the European Union
since 2006 when the EU’s High Level Group (“HLG”) on Com-
petitiveness, Energy, a nd Environment advised the European
Commission to analyze the viability of all potential policy mea-
sures, including border tax adju stments, that could encoura ge
EU trading partners to decrease GHG emissions, so as to reduce
climate change risks and the impact of a carbon premium on
European competitiveness.20 However, consensus to implement
BTAs has not been reached and European heads of state remain
divided on the subject. In December 2006, EU Trade Commis-
sioner Peter Mandelson pointed out that:
[A] specific “clim ate” tariff on c ountries that have
not ratified Kyoto . . . would be highly problematic
under cu rrent [WTO] rul es, and almost impossible to
implement in practice. [D]eveloping countries are not
required to make specific emissi ons c uts un der t he
Kyoto Protocol; also . . . some U.S. states have a mbi-
tious climate policies. 21
John Hontelez, Secretary General of the European Environ-
mental Bureau22 affirmed that:
[BTAs] might be the answer which allows the EU to
develop responsible climate policies without having
to wait for other countries. They would result in prod-
ucts imported from the US being taxed to compensate
for resulting differences in production costs. Thus EU
firms would be protected against unfair, carbon-care-
less competition from outside.23
In 2006, then French Prim e Minister Dominique de Ville-
pin suggested that countries that do not join a post-2012 interna-
tional treaty on climate change should face extra tariffs on their
industrial exports.24 De Villepin argued that “[c]ountries like the
U.S. and China . . . should not be allowed to benefit from efforts
to reduce climate change without having to shoulder some of the
costs or suffer from any related loss in competitiveness.”25 Sub-
sequent repor ts of the HLG do not reach th e subject of Border
Tax Adjustments and instead called for other measures as inter-
national action on climate change.26
uniteD StateS
The relationship between the U.S. and the international cli-
mate change regime has been controversial. As the Byrd-Hagel
Resolution of 1997 asserts, the United States should not sign or
agree to any co nvention or protocol on any subject mat ter con-
taining new commitments to limit or reduce GHGs unless it also
mandates developing countries to do the same , or that “would
result i n serious har m to the economy of the United States.”27
It h as been reported that some sec tors of U.S. “industry have
lobbied hard for climate legislation to include border measures,
citing competitiveness concerns, the need to encourage la rge
developing country emitters to adopt binding emissions targets,
and fears of ‘carbon leakage’”—the relocation of firms to coun-
tries with fewer carbon restrictions, increasing global emissions
or leaving them unaffected.28
In this context, in Jun e 2008 the Lieber man-Warner Cli-
mate Secu rity Act29 was intr oduced in the U.S. Congress with
the intention of establishing measures to reduce GHGs, includ-
ing a cap-and-tra de program and a measure requiring cer tain
importers to submit special allowances.30 Rather than impose a
Border Tax Adjustment, this bill would have required importers
of GHG-inte nsive products from other countries without com-
parable GHG reduction schemes to buy inter national credits or
other emission certificates from the federal government or from
a U.S. regulatory program.31
The sam e year, another bill, The Cl imate Market Auction
Trust and Trade Emissions Reduction System Act of 2008 (“Cli-
mate Matters Act of 2008”), included measures to reduce GHGs
emissions, including offering developing WTO participant coun-
tries “access t o the carbon mar ket . . . includ[ing] additional
incentives such as the ability to choose t he base year or maxi-
mum level of allowable gre enhouse gas emissions for its emis-
sions trading system, rather than requiring it to match the [U.S.]
system.”32 This measure targeted the large emerging economies
and gave exceptions to: “least developed countries” and “coun-
tries that generate less than [five percent] of global emissions.”33
Moreover, the income of the BTA “would be used to offset the
negative effects of climate change in developing countries (e.g.,
through technology transfer).”34
On June 26, 2009, the American Clean Energy and Security
Act of 2009 (“ACES”) was approved by the House of Represen-
tatives by a narrow 219-2 12 margin.35 Although the bill never
passed t he Senate, it aimed to reduce emissions with a gradu -
ated schedule through 2050 by calling for extra import charges
on goods from countries that do not cap greenhouse gas emis -
sions.36 Pr esident Barack Obama considers ACES’s border tax
adjustments clauses to be tariffs penalizing goods from coun-
tries that are not actively limiting GHG emissions, and criticism
has arisen due to concerns of protectionism and because the bill
appears to make ta riff penalties the rule.37 Obama recognized
a legitimate concern that American businesses not be disadvan-
taged by higher energy costs, but emphasized that various forms
of transitional assistance for energy-intensive industries already
existed without the need for “a tariff approach.”38
All U.S. legislative proposals have two common features:
they exempt goods fr om borde r tax adjustments if imported
from countries with minimum GHG emissions, and apply BTAs
to “p rimary products” with high GHG emiss ion levels dur ing
their production process, such as: iron, steel, aluminum, cement,
glass, paper and pulp, chemicals, and industria l ceram ics.39
ACES al so covers any “manufacture d item for consumpt ion”
that gen erates “a substa ntial quantity o f greenhouse g as emis-
sions.”40 These policies specifically target developing countries
like China, Brazil, and India that are considered large emitters
of GHGs because most developed countries already have emis-
sions reduction plans and exports from smaller countries would
be exc luded by t he legislation as they emit less than 0.5% of
global emissions.41 Nevertheless, because of their drafting, these
measures could easily affect other d eveloping countries if they
increase their GHG emissions, even if overall they contribut e
minimally in the context of global emissions, as we will explain
border TaX adJusTmenTs and The WTo
As we will see, economists and lawyers in the field of both
internation al trade and environme ntal law have discussed the
legality of BTA measures under WTO law. However, up to now
neither BTAs nor climate change policies have been challenged
under the WTO dispute settlement system. Commentators have
opined that a case regarding a BTA before the WTO would be
difficult and controversial for lack of precedent at the WTO and
before the international climate regime.42 Indeed, even the Kyoto
Protocol provides in Article 2.3 that parties included in Annex I
“shall strive to implement policies and measures under this Arti-
cle in such a way as to minimize adverse effects, including the
adverse effects of climate change, effects on international trade,
and social, environmental, and economic impacts on other Par-
ties, especially developing country Parties.43
Articles 2.1 and 2.2 of the Kyoto Protocol list various poli-
cies and measures by which industrialized countries can achieve
emission limitations, including tax and dut y exemptions and
subsidies in all greenhouse gas emitting sectors.44 Nevertheless,
the protocol lacks specificity because it does not offer concrete
steps or targets to achieve those policies and measures. Due to
this la ck of specifi city, i t is difficul t to claim jurisdiction over
such behavior and to authorize a body or mechanism to address
it. As a consequence, policies and measures are not included in
the UN climat e regime’s compliance syst em and dispute settle-
ment procedure.45
It is not clear that the Kyoto Pro tocol’s permissive rules
on polici es and measures are in co nflict with WTO law, either
directly or i ndirectly, and some commen tators believe that
properly designed BTAs could meet WTO r ules, yet others dis-
agree.46 Discussions revolve around the legality of BTAs under
the inte rnational trade system, the relation between BTAs a nd
subsidies, the difficulty of assessing or calculating BTAs, and
the justification of such measures under climate change regime.
bTas are PermIssIbLe under WTo LaW
BTAs are explicitly allowed by the GATT as long as th e
tax imposed on imported goods is no greater than the tax estab-
lished for similar domestic products.47 It has been noted that
“the GATT does not impose any requirement that nations adopt
a tax bas e that can be ad ministered without double taxation, in
fact or in principle. For example, countries can impose a BTA on
imports without any corresponding rebate for exports.”48
However, it is still uncertain whether BTAs can be used
for taxable inputs that are not physically incorporated
into the final traded product. For instance, it is not clear
if an import tax could vary based on the amount of car-
bon dioxide emitted during a good’s production—WTO
rules would have to be interpreted in a way that consid-
ers products not to be “like” each other based on their
carbon footprints.49
The latter would be true only if this factor could be consid-
ered a “relevant comparat or.”50 To do so would require advanc-
ing the argument that any product which emits one ton of carbon
is a “like product” akin to any other product which emits one ton
of carbon. 51
Some commentators assert t hat BTAs “ra ise the costs of
imported products based o n the amount of greenhouse gases
emitted occurring abroad during the manufacturing of each prod-
uct. In international trade, this type of regulation is a process and
production method (“PPM”) measure and cannot be used to dis-
tinguish between like products.52 Therefore, the argument goes,
“BTAs on environmental taxes embodied in pollution-intensive
traded goods are or shoul d be barred when the tax is on emis-
sions or a polluting input rather than the good itself.”53
The non-ad opted report of the GATT Tuna-Dolphin Panel
was the origin of the process/product distinction:
under the nat ional treat ment princip le of Article II I,
contracting parties may apply border tax adjustments
with regard to those taxes that are bor ne by products,
but not for domestic taxes not directly levied on prod-
ucts (such as income taxes). . . . The Panel considered
that it would be inco nsistent to limit the appli cation
of th is Note to taxes tha t are bo rn by prod ucts while
SPRING 2011 32
permitting its application to regulations not applied to
the product as such.54
However, l ike the Tuna-Dolphin decision itself, neither the
GATT contracting parties nor the WTO have ever ad opted the
process/product approach. Several scholars “have observed that
the process/product distinction itself was rooted in a misunder-
standing by the panel of the GATT rules governing BTAs.55
Moreover, from a historical point of view, “it was the intent of
the or iginal GATT negotiators that process as well a s product
charges be border adjustable.”56
In addition, further G ATT and WTO Dispute Set tlement
decisions have moved away from the process/product approach
and have since considered other methods fo r determining what
“like prod uct” is. Some of those co nsider the motivation for a
government’s product categorization in deter mining its legiti-
macy, including the Japan A lcohol Panel Report (1987),57 the
U.S. Alcohol case,58 and the U.S. Taxes on Automobiles Report.59
This approach is potentially much more sensitive to environmen-
tal policy goals like climate change. We must also keep in mind
that according to Ar ticle III, Section V of the Unit ed Nations
Framework C onvention on Cl imate Change (“UNFCCC”),
“measures taken to combat climate change, including unilateral
ones, should not constitute a means of arbitrary or unjustifiable
discrimination or a disguised restriction on international trade.”60
Even if a BTA were permitt ed and properly assessed, it
would still need to overcom e other legal trad e hurdles. Once
found to be covered by GATT Article III, the BTA must also
meet the substantive test i n that provision, which requires that
imported products not be treated less favorably than like domes-
tic products (“national treatment”).61 In addition, the BTA must
avoid discrimination between imports from different cou ntries,
as re quired by t he “most-favored nation” obligation of GATT
Articl e I .62 For some authors, a unila terally imposed BTA
on imported good s would most likely go against WTO rules,
whereas using national treatment and most-favored nation prin-
ciples63 p revents different treatment of foreign p roducts vis-à-
vis domestic like products.64
Furthermore, there is uncertainty as to what would happen
with a cap-and-trade system and whether “the obligation to hold
emission credits or allowances up to one’s actual level of carbon
emissions be qualified as an ‘internal tax or other internal charge
of any k ind’ which, under GATT Article III:2, can be imposed
also on imports.”65
noT ImPosIng bTas Is eQuIVaLenT To a subsIdy
One of the most famous scholar s to advoc ate BTAs is
Joseph Stiglitz who affirmed that “[n]ot paying the cost of dam-
age to the environment is a subsidy, just as not paying the full
costs of workers would be.”66 According to Stiglitz, “in most of
the developed countries of the world today, corporations are pay-
ing the cost of polluting the global environment, in the form of
taxes imposed on coal, oil, and gas.67 However, American firms
are bein g massively subsidized because of the relative lack of
this taxation in the U.S. He proposes a remedy:
[O]ther countries should prohibit the impor tation of
Americ an goods pr oduced usi ng energy in tensive
technologies, or, at the very least, impos e a hig h tax
on them, to offset the subs idy that those goods cu r-
rently are receiving . . . [T]he United States itself has
recognized this principle. It prohibited the importation
of Thai shrimp that caused unnecessary deaths of large
numbers of endangered species . . . [and] the WTO sus-
tained the impor tant principle that global environmen-
tal conce rns trump na rrow commercial int erests . . . .
[I]f one can justify restricting importation of shrimp .
. . to protect t urtles, certainly one can justif y restrict-
ing importation of goods produced by technologies that
unnecessarily pollute our atmosphere.68
The EU also considers not applying BTAs as a potential ille-
gal subsidy that causes two major problems:
The first is the c ompetitiveness of energy-intensive
industries in the EU v is-à-vis competing ind ustries in
jurisdi ctions without simil ar environmental restr ic-
tions. Normally, a for eign pro ducer th at opera tes at
lower costs i s simply more c ompetitive and should . .
. be able to out -compete its dom estic rival. But when
lower costs result from the lack of environmental costs,
the advantage is artificial . . . . The second p otential
problem is “carbon leakage,” which means that any
domestic carbon reduction would be offset in the global
environmental commons by an increase in carbon emis-
sions elsewhere.69
But what happens if we apply this solution to developing
countries? Should we not consider the principle of Common but
Differentiated R esponsibility? This principle is one of the cor-
nerstones o f sustainable development, emerging in the context
of the 1992 Rio Earth Summit and underpinning the UNFCCC
and the Kyoto P rotocol.70 However for developing countries,71
Stiglitz suggest s something different: a common (global) envi-
ronmental tax on emissions that addresses their social cost.72
But, should we consider the absence of emission cuts a sub-
sidy or a carbon tax? It is clearly not a subsidy in a traditional
sense, but as some commentators have pointed out:
The problem is not th at the Chinese governme nt is
paying Chinese producers or is otherwise transferring
funds; rather, th e problem is that the government fails
to act, that is, it fails to impose and collect a carbon tax
or to o therwise force Chinese pr oducers to internalize
the full cost of carbon emitted in China.73
Thus, even if not imposing a carbon tax or not req uiring
producers to internalize the cost of carbon could be qualified as
a “subsidy” under the WTO Agreement on Subsidies and Coun-
tervailing Measures, countervailing duties to offset subsidies by
foreign governments can only be levied in the case of a particu-
lar subsidy74 to “an enterprise or industry or group of enterprises
or industries.”75
A further question arises if “carbon credits” would be con-
sidered a subsidy if they are distributed for free. What would
happen if, using the cap-and-trad e system, domestic producers
who face co mpetition from comp etitors who manufac ture in
countries without GHG laws were given free credits? This pro-
posal would most likely provide a subsidy to the industry in
comparison to other domestic industries and could potentially
violate trade law, but this conclusion is arguable.
bTas are dIFFIcuLT To assess or caLcuLaTe
We have seen that BTAs could be used to “level the playing
field between taxed domestic manufacturers and untaxed foreign
competitors.”76 Under GATT Articles II and III, WTO members
may impose “internal charges” on imported goods.77 Neverthe-
less, while internal charges can be relatively easy to identify, “it
is difficult to assess the quantity of carbon emissions resulting
from the production of a par ticular good. Could carbon taxes or
higher energy costs linked to a cap-and-trade system qualify for
a similar adjustment?”78
Another key question is whether it is even possible to estab-
lish a trade appropriate BTA. A true BTA would tax the actual
GHG emissions resulting from manufacture, which seems nearly
impossible to quantify. Moreover, it is not yet clear whether a
BTA could be administered in a way that is truly free trade neu-
tral, or if due to its administrative difficulty it would inevitably
be a trade barrier.
Proposed BTAs are gener ally based on the average addi-
tional cost of the GH G law an d raise the following pertinent
question under WTO law: i f a general tax on carbon emissions
is imposed based on the local corporation’s actual carbon emis-
sions (so a low emissions factory pays less), and an international
company with the same low emissions pays the industry average,
would this be legal under WTO rules?
bTas can be JusTIFIed To PreVenT cLImaTe change
Even if BTAs conflict with international trade law, they
might still be legal if jus tifiable u nder G ATT A rticle XX,79
which specifies the conditions under which State Members can
be exempted from WTO general rules. Two of these enumerated
exemptions could be relevant in the case of BTAs: if doing so is
necessary “to protect human, animal, or plant life or health,”80 or
“relating to the conservation of exhaustible natural resources.”81
In add ition, we must keep in mind that the introductory para-
graph (“Chapeau”) of Article XX allows such measures as long
as they “are not applied in a manner which would constitu te a
means of arbitrary or unjustifiable discrimination between coun-
tries where the same conditions prevail, or a disguised restriction
on international trade.82 Such an exemption would most likely
“center on whether, under th e introd uctory phrase of GATT
Article XX, a [BTA] . . . is applied on a variable scale that takes
account of local conditions in foreign countries, including their
own efforts to fight global warming and the level of economic
development in developing countries.”83 The refore, a govern-
ment “would also have to show that the measure is being applied
squarely to avoid ‘leakage,’ rather than to offset competitive con-
cerns.”84 Additionally, to qualify as an exception under Article
XX, t he BTA would als o have to be the least trade restrictive
A rece nt article also claims that BTAs “will only survive
a WTO challenge if they successfully i nvoke one of the GATT
Article XX environmental exceptions,” which would be difficult
because BTAs a re designed with the pri nciple intent of main-
taining economic competitiveness.86 In contrast, if a BTA based
on a do mestic carbon tax neither discriminates against imp orts
as compared to dome stic produ cts nor as compared to other
imported goods, it might be permissible without resorting to the
exemptions embodied in GATT Article XX.87
border TaX adJusTmenTs and deVeLoPIng
counTrIes: LaTIn amerIcas case
Some “targeted ” countries of future BTAs have expressed
their opposition t o these measures, mos t notably China88 and
India.89 However, for the most part, Latin America has not pre-
sented either support or opposition for BTAs. In analyzing why
this may be the case, it is first important to examine the contribu-
tion of Latin American countries to global GHG production and
the exports from Latin America on which BTAs could be applied
in the future. Chile is presented as a case study.
In 2004, Chilean emissions were only 0.2% of total global
emissions.90 However, while the annual per capita emission level
of 3.9 tons of CO2 per inha bitant is very modest compar ed to
developed na tions, Chile is second i n total GHG emissions in
South America only to Venezuela,91 and has emissions simi lar
to Portugal when it undertook its Kyoto reduction obligations.92
Furthermore, the economy of Chile is becoming more and
more dependent on coal. University of Chile studies show that
by 2030 electric generation in Chile will be sixty percent depen-
dent on coal. That means that CO2 emissio ns may grow from
14.2 to 85 million tons of CO2 between 2006 and 2030 and that
emission per capita may grow from 3.6 ton s of CO2 in 2005 to
13.8 tons by 2030, more than China and OECD countries.93 On
March 1, 2011, the Central Castilla coal-fired power plant of the
Atacama region,94 the largest coal-fired power plant in South
America, was approved by th e Chilean impact ass essment sys-
tem (“SEIA”). The day after, SEIA approved a project aimed at
extracting coal to be sold to coal-power plants. These develop-
ments have generated public concern and controversy.95
Directly related to BTAs is the question of the carbon foot-
print of exported products. This was conceptualized as a way to
internalize climate costs generated by the production and trans-
portation of products. Studies have shown that Kyoto Protoco l
Annex I countries are net impor ters of carbon and that develop-
ing countries are carbon exporters.96
Chile has begun to measure the carbon footprint of its main
products, particularly exported ones. But in the end, t he ques-
tion is how dee p the carbon footprint of each of those products
and sectors is, and ultim ately: are the co untries, which receive
Chilean exports , going to adopt a BTA that affects Chilean
products? Copper mining, which accounts for the largest por-
tion of exports, is energy intensive. Chile has become an OECD
member,97 and the OECD recommended that Chile increase its
application of the polluter pays pr inciple (“PPP”) in the Ch il-
ean economy.98 The WTO recommends imple menting this PPP
SPRING 2011 34
through measures such as a carb on tax and trada ble permits.
Internati onal trad e rules require Chile to a ssume the cost of
the “carbonization” of its economy or to accept the cost of lost
At first glance, BTAs appear to have the potential to reduce
global GHG emissions, but there are some important caveats to
consider: a) BTAs are unilateral in a world of multilateral climate
change r egimes;100 b) BTAs could be used aga inst developing
countries, reversing t he principle of common but differentiated
responsibility ; c) the permissibility of BTAs u nder the GATT
depends on th e legal interpretation of the relevant international
treaties, colored by political and admi nistrative c oncerns; d)
BTAs most likely would no t fit under WTO law, because it is
unlikely that they would be the least trade restrictive measure;
and e) if BTAs ar e feasible they will most likely be difficult to
administer or enforce.
Indepe ndent from consi derations of pr otectionism an d
transparency, BTAs could be a thre at to Latin America through
the pressure from foreign markets, in this case pushing towards
a low carbon economy. Other su ch pressure is embodied in the
October 2009 Loi Grenelle 2 in France, which states that after
January 2011, food i mports will b e regulated for carbon foot-
prints, and that for Fre nch expor ts GHG emissio ns must be
reported and included in labeling.101
If a carbon BTA could be perfectly designed and ad min-
istered, th eoretically there would be no effect on the share of
exports to the country imposing the BTA. It would still be almost
equally as profitable to export to that country, and would just
be more expensive to buy the goo ds within the country (fro m
either domestic or international suppliers). Some demand would
shift from the carbon heavy items to cheaper, carbon-light items,
but an ideal BTA should not have a large effect on the expor t
economy of the developing country. A perfectly designed system
could have neutral pressure on the economy of Chile and other
countries. However, the issue is whet her or not such an ideal
BTA could be unilaterally imposed.
For a BTA to be effec tive, accurate calcul ation of c arbon
footprints would be necessary. Moreover, c onsidering the P PP
and the Common but Differentiated Responsibility principle,
the main question relates to who must pay the costs of carbon
produced by production and tra nsportation: the c onsumer o r
producer? In a competitive world economy, if t he price of an
input is raised uniformly, the end product must rise or else the
producing firms would find a better use for their capital and stop
making the product. It seems that making a producer pay for the
carbon directly is an administratively eas ier way to differenti-
ate between production methods. These pressures, expressed by
unilateral measures that should be avoided to address ecologi-
cal problems, could mean that mitigation obligations might pass
from developed to developing countries, reversing the Common
but Differentiated Responsibilities principle.
Noting the passing of mitigation obligations in the unilat-
eral application of BTAs, former Chilean President Lagos, Spe-
cial U N Commissioner for Climate Change, proposed that, in
addition to Chile’s conformi ty with unilateral requirements for
exporting to the United States or France, exporters to develop-
ing countries should equally consider the transportation costs of
their goods, and the transportation of those goods.102
However, from an environmental perspective, Chile should
support BTAs b ecause without them some high carbon indus -
tries might relocate to Chile, increasing the carbon foot print
per capita dispropor tionately f aster than would otherwise occur
without carbon taxes in the developed countries. In early 2 011,
the Executive Secretary of the UNFCCC, C hristiana Figueres,
warned the Americas have become “fossilized,” rather than using
renewable energy, and mentioned that Chile has already reached
levels of emissions of gases typical of European coun tries.103
Where does the responsibility for the increased carbon footprint
in Chile lie? Should it be considered the responsibility of Chile,
or that of the countries that induced industries to relocate unnec-
essarily? A s this problem demon strates, any truly su stainable
application of BTAs will require a multilateral approach, taking
into con sideration the complex interactions between the many
participants in the global trading system.
1 General Agreement on Tariffs and Trade 1994, Apr. 15, 1994, Marrakesh
Agreement Establishing the World Trade Organization, Annex 1A, 1867
U.N.T.S. 187 [hereinafter GATT 1994].
2 Id. See J.C. Phillips, Border Tax Adjustments in International Trade, 9 u.
QueenSlanD l.J. 151, 151 (1975-1976) (noting that “[t]here is no single section
in the GATT dealing exclusively with border tax adjustments but GATT rules
in this regard are found scattered through several Articles of the agreement, in
particular, Article II, Article III, and Article XVI.”).
3 GATT Working Party on Border Tax Adjustments, Report of the Working
Party on Border Tax Adjustments, L/3464 (Dec. 2, 1970), www.worldtradelaw.
4 Id.
5 Id.
6 Id.
7 Borders, carbon tax ctr., http://www.carbontax.org/issues/border-adjust-
ments/ (last visited Mar. 29, 2011).
8 John Whalley, On the Effectiveness of Carbon-Motivated Border Tax
Adjustments 5 (Asia-Pacific Research & Training Network on Trade, Working
Paper No. 63, 2009).
9 Id. at 4-5.8.
10 aaron coSbey, intl inSt. For SuStainable Dev., borDer carbon aDJuSt-
ment 1, n. 3 (2008), http://www.iisd.org/pdf/2008/cph_trade_climate_bor-
der_carbon.pdf; Sofia Persson, Practical Aspects of Border Carbon Adjustment
Endnotes: A Legal View on Border Tax Adjustments and Climate
Change: A Latin American Perspective
Endnotes: A Legal View on Border Tax Adjustments
and Climate Change continued on page 43
1 World Summit on Sustainable Development, 26 Aug. – 4 Sept. 2002, Plan
of Implementation of the World Summit on Sustainable Development, ¶ 84, pas-
sim, U.N. Doc. A/CONF.199/20 (Sept. 23, 2002).
2 Iron Rhine Railway (Belg. v. Neth.), ¶ 59 (Perm. Ct. Arb. 2005) [hereinafter
Iron Rhine Railway].
3 Vienna Convention on the Law of Treaties, art. 31.3.c, 1155 U.N.T.S. 331, 8
I.L.M. 679 (1969).
4 David Gantz, Potential Conflicts Between Investor Rights and Environmen-
tal Regulation Under NAFTA’s Chapter 11, 33 geo. waSh. intl l. rev 651,
656 (2001).
5 General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, 55
U.N.T.S. 194 [hereinafter GATT], http://www.wto.org/english/docs_e/legal_e/
6 Appellate Body Report, European Communities – Regime for the Importa-
tion, Sale, and Distribution of Bananas, ¶ 231, WT/DS27/AB/R (Sep. 9 1997).
7 Robert E. Hudec, “Like Product”: The Differences in Meaning in GATT
Articles I and III, in regulatory barrierS anD the principle oF non-DiScrim-
ination in worlD traDe law 101-23 (Thomas Cottier & Petros Mavroidis eds.,
2000); Edward Laing, Equal Access/Non-Discrimination and Legitimate Dis-
crimination in International Economic Law, 14 wiS. intl l.J. 246, 273 (1996).
8 Barnali Choudhury, Recapturing Public Power: Is Investment Arbitration’s
Engagement of the Public Interest Contributing to the Democracy Deficit?, 41
vanD. J. tranSnatl l. 775, 828 (2008).
9 Id.
10 Andrea Bjorklund, National Treatment, in StanDarDS oF inveStment pro-
tection 29, 49 (August Reinisch ed., 2008).
11 First Partial Award Methanex Corp. v. United States, ¶ 158 (NAFTA Ch. 11
Arb. Trib. Aug. 7, 2002).
12 World Conference on Human Rights, June 14-25, 1993, Vienna Declara-
tion and Programme of Action, ¶ 8, U.N. Doc A/CONF.157/23 (July 12, 1993).
13 See Mitsuo Matsushita, Some Issues of the SPS Agreement, in the role
oF the JuDge in international traDe regulation 193, 202 (Thomas Cottier &
Petros Mavroidis eds., 2003).
14 See generally Marcos Orellana, The Role of Science in Investment Arbitra-
tions Concerning Public Health in the Environment, 17 yb. intl envl l. 48
15 robert e. huDec, eSSayS on the nature oF international traDe law 376
16 First Partial Award, S.D. Myers v. Canada, ¶¶ 130, 137 (NAFTA Ch. 11
Arb. Trib. Nov. 13, 2000).
17 Methanex Corp. v. United States, Part II, Chapter I (NAFTA Ch. 11 Arb.
Trib. Dec. 5, 2003). Such practice certainly raises questions on standards of evi-
dence, and it was strongly condemned by the Methanex Tribunal.
18 Agreement on the Application of Sanitary and Phytosanitary Measures,
Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organiza-
tion, Annex 1A, 1867 U.N.T.S. 493 [hereinafter SPS Agreement].
19 Id.
20 Kojo Yelpaala, Fundamentalism in Public Health and Safety in Bilateral
Investment Treaties (Part II), 3 aSian J. wto & intl health l. & poly 465,
466, 475-79, 492-93 (2008).
21 SPS Agreement, supra note 18.
22 Id.
23 Nicholas DiMasio & Joost Pauwelyn, Nondiscrimination in Trade and
Investment Treaties: Worlds Apart or Two Sides of the Same Coin?, 102 am. J.
intl l. 48, 87-88 (2008).
24 See Report of the International Law Commission on the Work of its Thir-
tieth Session, 33 UN GAOR Supp. (No. 10) at 31, commentary arts. 9-10,
¶ 18, UN Doc. A/33/10 (1978), http://untreaty.un.org/ilc/documentation/
25 John Wickham, Toward a Green Multilateral Investment Framework:
NAFTA and the Search for Models, 12 geo. intl envtl. l. rev. 617, 631
(2000) (referring to United States Trade Representative (“USTR”), Briefing
Paper for Staff of the U.S. Trade and Environment Policy Advisory Committee,
TEPAC at 1, 5 Aug. 1998).
26 Cross-Border Trucking Services (U.S. v. Mex.), ¶ 247 (NAFTA Ch. 20
Arb. Trib. Feb. 6, 2001) [hereinafter Cross-Border Trucking Services]; see also
Wickham, supra note 25, ¶ 276.
27 The fact that the Cross Border Trucking Services case involved issues of
services trade and investment may have influenced the panel’s reading of the
operation of the exception clause in the NAFTA services chapter. See Cross-
Border Trucking Services, ¶122 (NAFTA Ch. 20 Arb. Trib.).
28 Id. ¶ 250.
29 Id. ¶¶ 122, 258. Article 1402 of the U.S.-Canada FTA contains other
requirements besides the one quoted above, including prior notification of pro-
posed treatment and that such different treatment is equivalent in effect to the
treatment accorded by the Party to its persons for such reasons. See id. ¶ 250.
30 The Panel also noted that the Preamble reflects a recognition that the Par-
ties intended to “preserve their flexibility to safeguard the public welfare.” See
id. ¶ 219.
31 Id. ¶ 260.
32 Id. ¶¶ 258-59 (“With regard to objectives, it seems unlikely to the Panel
that the ‘in like circumstances’ language in Articles 1202 and 1203 [NT & MFN
in Services] could be expected to permit maintenance of a very significant bar-
rier to NAFTA trade, namely a prohibition on cross-border trucking services.
Similarly, the Panel is mindful that a broad interpretation of the ‘in like circum-
stances’ language could render Articles 1202 and 1203 meaningless”).
33 In this regard, NAFTA Article 1114 on Environmental Measures is rather
circular in that it allows what it does not prohibit. But see, NAFTA Article 2103
concerning taxation.
34 First Partial Award, S.D. Myers v. Canada, ¶ 250 (NAFTA Ch. 11 Arb. Trib.
Nov. 13, 2000) (emphasis added).
35 Parkerings-Compagniet AS v. Lithuania, ICSID Case No. ARB/05/8, ¶¶
371, 392 (Sept. 11, 2007) (decided by the International Centre for Settlement of
Investment Disputes (“ICSID”) based on a treaty between the Government of
the Republic of Lithuania and the Government of the Kingdom of Norway).
36 Id.
37 Id.
38 Id.
39 See Avena and Other Mexican Nationals (Mex. v. U.S.), 2004 I.C.J. 12, ¶ 55
(Mar. 31); Military and Paramilitary Activities in and against Nicaragua (Nicar.
v. U.S.), 1984 I.C.J. 392, ¶ 101 (Nov. 26).
40 See oecD, national treatment For Foreign-controlleD enterpriSeS 22
41 Giorgio Sacerdoti, Foreign and Foreign-Owned Corporations in Interna-
tional Economic Law, in Foreign inveStment in the preSent anD a new inter-
national economic orDer 289, 302 (Detlev Chr. Dicke ed., 1987).
42 Cf. Appellate Body Report, European Communities – Measures Affecting
Asbestos and Asbestos-Containing Products, WT/DS135/AB/R (Mar. 12, 2001).
43 Gami Inv., Inc. v. United Mexican States, ¶ 114 (NAFTA Ch. 11 Arb. Trib.
Nov. 15, 2004).
44 peter muchlinSki, multinational enterpriSeS anD the law 571 (2d ed.
45 Id.
46 Award on the Merits of Phase 2, Pope & Talbot Inc. v. Canada, ¶ 79
(NAFTA Ch. 11 Arb. Trib. Apr. 10, 2001), http://www.appletonlaw.com/cases/
P&T-Merits%20Award-April%2010,%202001.pdf (“A formulation focusing on
the like circumstances question, on the other hand, will require addressing any
difference in treatment, demanding that it be justified by showing that it bears
a reasonable relationship to rational policies not motivated by preference of
domestic over foreign owned investments.”).
47 Id. ¶ 78 (stating that differences in treatment will presumptively violate
Article 1102(2)).
48 Occidental Exploration and Prod. Co. v. Ecuador, Case No. UN 3467
(London Ct. Int’l. Arb. July 1, 2004) [hereinafter Occidental Exploration].
Ultimately, the Occidental Tribunal found that Ecuador breached its non-
discrimination and fair and equitable obligations and awarded compensa-
tion in the amount of US$71,533,649.00 plus 55% of the arbitration costs
49 Id. ¶¶ 167-79. The Occidental Tribunal addressed both the MFN and NT
standards under the same heading, perhaps due to the fact that both standards
are included in the same article II(1) of the BIT.
50 Id. ¶ 167-68.
51 Id. ¶ 168.
52 Id. ¶ 171.
53 Id. ¶ 172.
54 Id. ¶ 173.
endnoTes: inveStment agreementS & SuStainable Development continued from page 8
SPRING 2011 36
55 See Fabrizio Pagani & Marie-France Houde, Most-Favored-Nation Treat-
ment in International Investment Law 16 (OECD, Working Paper No. 2004/2),
56 See Jürgen Kurtz, National Treatment, Foreign Investment and Regulatory
Autonomy: The Search for Protectionism or Something More?, in new aSpectS
oF international inveStment law 311 (Philippe Kahn & Thomas Wälde eds., 2007).
57 OECD, 1976 Declaration and Decisions on International Invest-
ment and Multinational Enterprises, DAFFE/IME(2000)20 (Nov. 9, 2000),
58 Pagani & Houde, supra note 55.
59 Occidental Exploration, supra note 48, ¶ 177.
60 Aloysius Llamzon, The Final Award in Occidental v. Ecuador, in the
reaSonS reQuirement in international inveStment arbitration 211, 227
(Guillermo Aguilar Alvarez & Michael Reisman eds., 2008).
61 See Kurtz, supra note 56.
62 OECD, Chairman’s Note on Environment and Related Matters and on
Labour, at 5 DaFFe/mai(98)10 (mar. 9, 1998), http://www1.oecd.org/daf/mai/
1 Barack Obama, Inaugural Address (Jan. 20, 2009). The transcript may be
accessed at http://www.whitehouse.gov/blog/inaugural-address/.
2 See Phil Stewart & Daniel Flynn, G8 Pledges $20 Billion in Farm Aid
to Poor Nations, reuterS (July 10, 2009, 1:44 PM), http://www.reuters.com/
article/2009/07/10/us-g8-summit-idUSTRE5662VJ20090710 (noting that the
money pledged would assist in addressing the lack of seeds, irrigation, and
mechanisms for farmers in Africa to obtain a fair price for their produce).
3 See Press Relase, USAID Administrator Dr. Rajiv Shah Announces 20
Feed the Future Initiative Focus Countries, uSaiD (Apr. 24, 2010), http://www.
usaid.gov/press/releases/2010/pr100424.html (stating that the focus of Feed the
Future would be to target the causes of hunger and reduce poverty, hunger, and
undernutrition particularly in twenty focus countries).
4 Strategic Review: Feed the Future, uSaiD, 25, 29–30 (Dec. 17, 2010),
5 See Pascal Lamy, The Final Countdown Starts Now, wto (Nov. 30, 2010),
(calling for an “intensive work programme” to finish the Doha Round by the
end of 2011).
6 Press Release, USTR Ron Kirk Remarks on Trans-Pacific Partner-
ship Negotiations, Office of the U.S. Trade Representative (Dec. 4, 2009),
7 See Kelly Olson, South Korea, US Sign Revisions to Free Trade Deal,
bloomberg (Feb. 11, 2011, 6:18 AM), http://www.bloomberg.com/news/2011-
02-10/south-korea-us-sign-revisions-to-free-trade-deal.html (noting however,
that the issue involving beef was not included in the agreement).
8 Doug Palmer, Lawmaker Eyes Early 2011 Votes on Trade Pacts, reuterS
(Dec. 7, 2010, 4:08 PM), http://www.reuters.com/article/2010/12/07/
9 U.S. Agricultural Trade: Exports, uSDa (Mar. 5, 2010), http://www.ers.
10 E.g., Reports: Egyptian and Tunisian Riots Were Driven in Part by the
Spike in Global Food Prices, climate progreSS (Jan. 30, 2011, 3:16 PM), http://
weather-and-high-oil-prices/ (noting that Egyptians and Tunisians were unhappy
with the dramatic increase in the price of rice, cereals, cooking oil, and sugar);
Reports: Third Person Killed in Algerian Riots; Food Prices Drop, cnn worlD
(Jan. 9, 2011), http://articles.cnn.com/2011-01-09/world/algeria.tunisia.pro-
tests_1_food-prices-government-websites-tunisian?_s=PM:WORLD (report-
ing that the rising food prices and the housing crisis led to the recent riots in
11 See generally antonio la vina et al., worlD reSourceS inSt., agri-
cultural SubSiDieS, poverty anD the environment: Supporting a DomeStic
reForm agenDa in Developing countrieS (Jan. 2007), http://pdf.wri.org/
aspe_domestic_reform.pdf (arguing that a reform agenda should accompany a
subsidy reform).
12 See victoria tauli-copuZ et al., thirD worlD network, the impact oF
globaliSation anD liberaliSation on agriculture anD Small FarmerS in
Developing countrieS: the caSe oF the philippineS 53 (Apr. 2006), http://www.
twnside.org.sg/title2/par/vicky_ifad_paper.rev_21_april_2006.doc (“When
more cheap, subsidized importation of chicken and chicken parts become the
norm, the poultry industry in Alaminos could also be engulfed in a serious
13 Calculations based on USDA and OECD data in Sophia murphy et
al., inSt. For agric. & traDe poly, wto agreement on agriculture: a
DecaDe oF Dumping 2 (Feb. 2005), http://www.iatp.org/iatp/publications.
14 Id.
endnoTes: making u.S. traDe policy Serve global FooD Security goalS continued from page 13
15 For a comprehensive discussion of this transition, see Daryll e. ray et al.,
agric. poly analySiS ctr., rethinking uS agricultural policy: changing
courSe to Secure Farmer livelihooDS worlDwiDe (Sept. 2003), http://www.
16 Id. at 9 (noting that the U.S. government agricultural subsidies rose from seven
to thirteen billion dollars in the 1990s to over twenty billion dollars by 1999).
17 Farm and Commodity Policy: Government Payments and the Farm Sector,
uSDa (Mar. 17, 2010), http://www.ers.usda.gov/Briefing/Farmpolicy/gov-pay.
18 Id.
19 Tackling the Global Food Crisis, unctaD (UNCTAD Policy Briefs No.
2, June 2008), http://www.unctad.org/en/docs/presspb20081_en.pdf (identify-
ing contributing factors to the global food crisis and proposing a number of
20 Id. (listing the increased demand for food, global financial volatility, and
the declining agricultural productivity in developing countries as among the
contributing factors).
21 See, e.g., Derek heaDey & Shenggen Fan, intl FooD policy reSearch
inSt., reFlectionS on the global FooD criSiS. how DiD it happen? how haS
it hurt? anD how can we prevent the next one? 40, 50–51 (2010), http://
22 See generally Commodities Market Speculation: The Risk to Food Security
and Agriculture, inSt. For agric. & traDe poly (2008), http://www.iatp.org/
iatp/publications.cfm?refid=104414 (stating that commodity speculation aids in
protecting commodity traders and processors from short-term price volatility).
23 Steven ZahniSer & Zachary crago, u.S. Dept oF agric., naFta at 15:
builDing on Free traDe 16 (Mar. 2009), http://www.ers.usda.gov/Publications/
24 Id.
25 Id. at 27–28.
26 timothy a. wiSe, boSton univ., reForming naFta’S agricultural provi-
SionS, the Future oF north american traDe policy: leSSonS From naFta 35
(Nov. 2009), http://www.bu.edu/pardee/files/2009/11/Pardee-Report-NAFTA.
27 Id. at 36.
28 See William P. Egan, NAFTA and American Organizational Behavior, 5
pub. aDmin. & mgmt. 138, 153 (2000), http://www.spaef.com/file.php?id=319
(noting that the state of Pennsylvania lost 17,978 jobs according to the NAFTA
Transitional Adjustment Assistance unemployment program).
29 robert a. hoppe et al., u.S. Dept oF agric., Small FarmS in the uniteD
StateS, perSiStence unDer preSSure 27 (Feb. 2010), http://www.ers.usda.gov/
30 Id.
31 Mary Hendrickson & William Heffernan, Concentration of Agricultural
Markets (Apr. 2007), http://www.foodcircles.missouri.edu/07contable.pdf.
32 See great lakeS commn For the u.S. army corpS oF engineerS, the
potential impactS oF increaSeD corn proDuction For ethanol in the great
lakeS-St. lawrence river region 7–11 (2007), http://www.glc.org/tributary/
pubs/documents/EthanolPaper121807FINAL.pdf (discussing the rise in both
energy prices and corn production, which has been influenced at least in part by
the expansion of ethanol and biodiesel production).
33 Sandy Shore, Wheat, Corn Prices Rise As Export Sales Increase, bloom-
berg (Feb. 25, 2011), http://www.bloomberg.com/news/2011-02-25/wheat-corn-
34 Foreign Agricultural Trade of the United States (FATUS), u.S. Dept oF
agric. econ. reSearch Serv. (Mar. 11, 2011), http://www.ers.usda.gov/Data/
35 Rural Economy Strong; Farm Exports Up, Delta Farm preSS
(Sept. 13, 2010, 5:10 PM), http://deltafarmpress.com/markets/
36 Farm Income and Costs: 2011 Farm Sector Income Forecast, u.S. Dept oF
agric. econ. reSearch Serv., http://www.ers.usda.gov/Briefing/FarmIncome/
nationalestimates.htm (last visited Jan. 26, 2011).
37 Analysis of Food Production Systems, StanForD univ., http://www.stanford.
edu/group/FRI/indonesia/documents/foodpolicy/chapt3.fm.html (last visited
Mar. 24, 2011) (discussing government interventions that could change the per-
formance of the food production sector).
38 See intl aSSeSSment oF agric. knowleDge, Sci. & tech. For Dev., buSi-
neSS aS uSual iS not an option: traDe anD marketS (2008), http://www.
agassessment.org/docs/10505_Trade.pdf (discussing the problems of underin-
vestment in developing countries and the result of the weakening of the small-
scale farm sector).
39 ZoraiDa garcia, FooD & agric. org., agriculture, traDe negotiationS
anD genDer (2006), http://www.fao.org/docrep/009/a0493e/a0493e04.htm#bm4
(presenting case studies conducted in countries including Ghana and the Philip-
pines supporting this finding).
40 Id.
41 FeeD the Future, FeeD the Future guiDe 3 (May 2010), http://www.
42 Arantxa Guereña, Halving Hunger: Still Possible? 9 (Oxfam Briefing Paper
139, 2010), http://www.oxfam.org.uk/resources/policy/debt_aid/downloads/
43 Id. at 9-10.
44 Id. at 10.
45 “We Made a Devil’s Bargain”: Fmr. President Clinton Apologizes for Trade
Policies that Destroyed Haitian Rice Farming, Democracy now! (Apr. 1, 2010),
46 The President’s 2010 Trade Policy Agenda at 12, http://www.ustr.gov/
webfm_send/1673 (last visited Mar. 24, 2011) (stating that the purpose of this
expansion was “to stimulate market-led growth in the poorer countries of the
world and to lift their national income levels”).
47 Least Developed Countries, worlD traDe org., http://www.wto.org/eng-
lish/thewto_e/whatis_e/tif_e/org7_e.htm (last visited Mar. 24, 2011) (stating
also that twelve more least-developed countries are currently negotiating to join
the WTO).
48 Alexandra Topping, Food Crisis Threatens Security, Says UN Chief, guarD-
ian (Apr. 21, 2008), http://www.guardian.co.uk/environment/2008/apr/21/food.
49 Transcript: Press Conference After WTO Ministerial in New Delhi, India,
oFFice oF the u.S. traDe repreSentative (2009), http://www.ustr.gov/press-
office/transcript-press-conference-after-wto-mini (providing the insights of
Ambassador Kirk).
50 “More Poor” in India than Africa, bbc (July 13, 2010, 1:18 AM), http://
www.bbc.co.uk/news/10609407 (presenting the findings of a study finding the
Indian states have 421 million “poor” people).
51 karen hanSen-kuhn, actionaiD intl uSa, policieS anD prioritieS:
Salvaging Special proDuctS From the wreckage oF global traDe talkS 5
(Nov. 2006), http://actionaidusa.org/assets/pdfs/food_rights/policies_priori-
ties_fall2006_bplan.pdf (stating even countries that are not classified as least-
developed countries such as Kenya are experiencing high-levels of poverty and
a fragile economy as a result of climatic challenges).
52 See id. at 1 (specifying that “Special Products are agricultural commodities
that are particularly important for achieving national development goals,” and
that Special mechanisms allow qualified countries to “adjust trade protections in
the face of import surges”).
53 See Developing Countries, worlD traDe org., http://www.wto.org/eng-
lish/tratop_e/agric_e/negs_bkgrnd14_devopcount_e.htm (Dec. 1, 2004) (noting
that developing countries wish to identify some products as “special products,”
to make lower tariff reductions on these products); Aileen Kwa, Why the SSM
Became a Major Issue at the WTO, Southcentre, http://www.southcentre.
catid=144%3Asouth-bulletin-individual-articles&Itemid=287&lang=en (last
visited Mar. 24, 2011) (noting that “[m]ost developing countries want a spe-
cial safeguard mechanism (SSM) in the WTO to defend small farmers from
import surges” but that agricultural exporting countries will counter by arguing
that it affects their exports and defining a special safeguard mechanism as an
instrument proposed by a number of countries that “would allow countries to
impose a safeguard (i.e. an additional duty) if i) agricultural import volumes
are increasing rapidly so that they surpass a certain volume trigger level or ii) if
prices of the imported products are on the decline, and go below a certain price
54 See Kwa, supra note 53.
55 See generally Heikki Lehtonen & Sanna Kujala, agriFooD reSearch
FinlanD/economic reSearch, Climate Change Impacts on Crop Risks and
Agricultural Production in Finland, mtt (2007) http://ageconsearch.umn.edu/
bitstream/9259/1/sp07le01.pdf (analyzing the changes in agricultural produc-
tion due to climate change).
56 E.g., Christoph Müller et al., Climate Change Risks for African Agriculture,
pnaS early eDition, Feb. 8, 2011 (reviewing the impact of climate change on
African agriculture and food security).
57 See high level taSk Force on the global FooD Security criSiS, com-
prehenSive Framework For action 8-9 (July 2008), http://www.un.org/issues/
food/taskforce/Documentation/CFA%20Web.pdf (emphasizing the importance
of establishing physical or virtual humanitarian food reserves to provide better
access to food stocks).
58 Rudy Ruitenberg, Agriculture Ministers Call for G20 Action to End Food
Price Manipulation, bloomberg (Jan. 22, 2011, 4:47 PM), http://www.bloom-
59 Sophia murphy, inSt. For agric. & traDe poly, grain reServeS: a Smart
climate aDaptation policy 2 (Nov. 2010), http://www.iatp.org/climate/files/
60 Id.
61 Sophia Murphy, Eyes on London for Global Food Aid, iatp think ForwarD
blog (Mar. 2, 2011), http://iatp.typepad.com/thinkforward/trade/.
62 The Agreements, WTO, http://www.wto.org/english/thewto_e/whatis_e/
tif_e/utw_chap2_e.pdf (last visited Mar. 24, 2011) (“Developing countries
do not have to cut their subsidies or lower their tariffs as much as developed
countries, and they are given extra time to complete their obligations. Least-
developed countries don’t have to do this at all.” Many of them, however, have
already implemented substantial tariff cuts under previous negotiating rounds or
as a result of structural adjustment programs.).
63 For a fuller discussion of WTO rules and reserves, see Sophia murphy,
inSt. For agric. & traDe poly, traDe anD FooD reServeS: what role
DoeS the wto play? (Sept. 2010). http://www.iatp.org/iatp/publications.
64 See FooD & agric. org., policieS For the eFFective management oF FooD
price SwingS in aFrica 6 (2008), http://www.fao.org/docs/up/easypol/825/
mng_fd_mrkts_213EN.pdf (noting however, that “in an environment of increas-
ing prices, ceilings are difficult to defend and therefore, targeting a certain price
level may not be practical”).
65 Id.
66 Id.
67 See arZe glipo, ecoFair traDe Dialogue, achieving FooD anD livelihooD
Security in Developing countrieS: the neeD For a Stronger governance oF
importS 49 (Dec. 2006), http://www.ecofair-trade.org/pics/en/EcoFair_Trade_
Paper_No2_Glipo_new.pdf (stating that price bands can “stabilize internal
prices for agricultural commodities [and] can be calculated according to domes-
tic production and transaction costs of peasant production within a region or
68 WTO Mini-Ministerial Ends In Collapse, wbriDgeS Daily upDate, Vol. 10
(Int’l Ctr. for Trade & Sustainable Dev., Geneva, Switz.) July 10, 2008, at 1-2,
69 hanSen-kuhn, supra note 51, at 6.
70 See generally antoine bouët et al., intl FooD poly reSearch inSt., the
eFFectS oF alternative Free traDe agreementS on peru (Nov. 2008), http://
71 Malaysia Officially Joins TPP Talks, tranS-paciFic p’Ship DigeSt (Oct. 6,
2010), http://www.tppdigest.org/index.php?option=com_content&view=article
72 Trans-Pacific Partnership Agreement, auStl. Fair traDe & inv. network
ltD., http://aftinet.org.au/cms/trans-pacific-partnership-agreement/trans-pacific-
partnership-agreement (last visited Mar. 22, 2011).
73 See S. Korea to Exclude Rice, Beef Pacts from FTA Talks with U.S., bilater-
alS.org (Feb. 23, 2006), http://www.bilaterals.org/spip.php?article3922 (noting
that the recently signed US-Korea FTA excludes liberalization of trade in rice).
74 Ivy Mungcal, Feed the Future Targets Larger-Scale Projects in Fewer
Countries, Devex (May 21, 2010), http://www.devex.com/en/blogs/
38SPRING 2011
75 See generally Laura Pillsbury, Global Food Safety Policy: Coordinat-
ing Science, Technology and Society across the Government, Industry and
Consumer Sectors, worlD oF FooD Sci., http://www.worldfoodscience.org/
cms/?pid=1003865 (last visited Mar. 24, 2011).
76 See Childhood Obesity—2010 Update of Legislative Policy Options,
natl conFerence oF State legiSlatureS (2011), http://www.ncsl.org/default.
77 See Donald Carr, Corn Subsidies Make Unhealthy Food Choices
the Rational Ones, griSt (Sept. 21, 2010), http://www.grist.org/article/
78 Mike Conlon and Dan Plunkett, NAFTA Gives U.S. Exporters an Edge in
Mexican Market, uSDa (Oct. 14, 2004), http://www.fas.usda.gov/info/agex-
79 See generally FooD & agric. org., traDe reFormS anD FooD Security:
conceptualiZing the linkageS 133-40 (2003), http://www.fao.org/docrep/005/
80 Sarah Clarke et al., Exporting Obesity: How U.S. Food and Farm Policy is
Transforming the Mexican Consumer Food Environment (discussion draft on
file with author).
81 Christian Nordqvist, USA and Mexico are the Fattest Countries in the
World, meDical newS toDay, Sept. 23, 2010, http://www.medicalnewstoday.
82 Corinna Hawkes & AnnMarie Thow, The Implications of the Central
American Free Trade Agreement (CAFTA) for the Nutrition Transition in Cen-
tral America, 24 pan am. J. oF pub. health 345 (2008), http://journal.paho.org/
83 See Jen Ross, Brazil Makes Headway in Bid for ‘Zero Hunger, chriStian
Science monitor (Sept. 11 2006), http://www.csmonitor.com/2006/0911/
84 See generally Scott Sinclair, canaDian ctr. For policy alternativeS,
negotiating From weakneSS (Apr. 2000), http://www.policyalternatives.ca/
Weakness%20EU%20Canada.pdf (exemplifying the Canada-EU trade treaty as
indicative of this proposition).
85 See North American Free Trade Agreement, U.S-Can.-Mex., Dec. 17, 1992,
32 I.L.M. 289 (1993) (focusing on Chapter 11 as outlining investor state dispute
86 Id.
87 See generally Barbara Koremenos, If Only Half of International Agree-
ments Have Dispute Resolution Provisions, Which Half Needs Explaining?, J.
oF legal StuDieS, Jan. 2007, at 189-93, http://sitemaker.umich.edu/koremenos/
88 See Investment Rules in Trade Agreements, inSt. For policy StuDieS (July
21, 2010), www.ips-dc.org/reports/top_10_changes_investment_rules.
89 See generally Sarah anDerSon & Sarah grunSky, FooD & water watch,
challenging corporate inveStor rule (Apr. 2007), http://www.ips-dc.org/
90 NAFTA Chapter 11 Investor-to-State Cases: Bankrupting Democ-
racy, pub. citiZen (Sept. 2001), http://www.tradeobservatory.org/library.
91 Antonio Juhasz, Bolivian Water War Presents Alternative to Globalization
of Water, intl Forum on globaliZation (2010), http://www.ifg.org/analysis/
92 Mac Margolis, Slow Burn: A Row Over Cigarette-sales Restrictions Pits
Uruguay Against Philip Morris, newSweek (Dec. 9, 2010), http://www.news-
93 United States-Peru Free Trade Promotion Agreement, 19 U.S.C. § 3805 (2007).
94 earthJuStice et al., inveStment ruleS in traDe agreementS: top 10
changeS to builD a pro-labor, pro-community anD pro-environment tranS-
paciFic traDe agreement (Aug. 9, 2010), www.ips-dc.org/files/2352/Invest-
95 Jane Kelsey & AFTINET, Australian and NZ Groups Urge PMs to Reject
US Investment Demands Next Week, tpp watch (Dec. 3, 2010), http://tppwatch.
96 Korea-U.S. Free Trade Agreement, oFFice oF the u.S. traDe repreSenta-
tive, http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta (last
visited April 11, 2011) (noting that the KORUS FTA is pending congressional
97 The Trade Reform Accountability, Development and Reform Act (“TRADE
Act”) sets out a comprehensive process to review and reform these provisions.
98 See generally Tackling the Global Food Crisis, supra note 19 (stressing that
undercapitalization in many public sectors, including agriculture and infrastruc-
ture, were part and parcel of the food crisis).
99 See Geraldine Ryerson-Cruz, Obama’s Food Security Pledge at G8 a
Laudable Step; Now Must Meet Goals, Aid Agency Says, worlD viSion (2011),
100 See R. Dennis Olson et al., Towards Food Sovereignty: Constructing an
Alternative to the World Trade Organization’s Agreement on Agriculture 5
(2003), http://www.tradeobservatory.org/library.cfm?RefID=25961.
101 Id. at 7.
102 Id. at 8.
103 See John Ikerd, Professor, Presentation at Utah Bio-engineers Annual Con-
ference, Logan, UT: Your Food Systems: Are They Secure? (Oct. 2005), http://
104 The International Assessment of Agricultural Knowledge, Science and Tech-
nology for Development (“IAASTD”), a three-year process involving 400 experts
from around the world provides comprehensive recommendations on the sustain-
able agricultural practices and policies needed to meet these challenges.
1 Matthew L. Wald, Scientists Call for New Sources of Critical Elements,
n.y. timeS, Feb. 18, 2011, at B5 (highlighting a report presented to the White
House by the American Physical Society and the Materials Research Society
on the increasing scarcity of rare metals, and the need to harmonize growing
demand with a trade shortage and trade obstacles, namely Chinese monopoli-
zation); James Risen, U.S. Identifies Vast Mineral Riches in Afghanistan, n.y.
timeS, June 13, 2010, at A1 (discussing the potential for Afghanistan’s lithium
reserves in the global market); Jim Witkin, Building Better Batteries for Elec-
tric Cars, n.y. timeS, Mar. 30, 2011, at F4 (describing the use of lithium as a
key metal component of environmentally-friendly electric car batteries).
2 Wald, supra note 1.
3 Id.; see also Keith Bradsher, U.S. Called Vulnerable to Rare Earth Short-
ages, N.Y. timeS, Dec. 15, 2010, at B1.
4 Karl Russell, Many Want Rare Earths, but Few are Mining Them, N.Y.
timeS (Feb. 6, 2011), http://www.nytimes.com/2011/02/06/business/06metrics.
html?ref=global (documenting the low number of mines relative to demand, in
part because of the extensive environmental damage that results from extraction
to industrial application).
5 The UN Environment Programme (“UNEP”) held its second session of
the Intergovernmental Negotiating Committee to Prepare a Global Legally
Binding Instrument on Mercury (“INC2”)” in Chiba, Japan, Jan. 24-28, 2011.
Intergovernmental Negotiating Committee, un envt programme [hereinafter
INC2], http://www.unep.org/hazardoussubstances/Mercury/Negotiations/INC2/
tabid/3468/Default.aspx (last visited Apr. 17, 2011) (addressing global mercury
pollution by prioritizing source emission reductions, discouraging demand,
and employing current science and technological controls, driven by mer-
cury’s emission from coal-burning, artisanal gold-smelting, and other resource
6 See Wald, supra note 1.
7 These mandates expanded greatly through the 1990 amendments, but the
history of broad authority to regulate against endangerment stems from NRDC
v. Train, 545 F.2d 320 (2d Cir. 1976).
8 See, e.g., Massachusetts v. EPA, 549 U.S. 497 (2007) (recognizing the pos-
sibility of the EPA to make an endangerment finding of carbon dioxide under
§202(a)(1) of the Clean Air Act).
9 Recent caselaw includes NRDC v. EPA, 529 F.3d 1077, 1083 (D.C. Dir.
2008); Sierra Club v. Sandy Creek Energy Associates, 2010 WL 4725044 (5th
Cir. Nov. 23, 2010), and responsive EPA regulation includes National Emission
Standards for Hazardous Air Pollutants: Mercury Emissions From Mercury Cell
Chlor-Alkali Plants, 76 Fed. Reg. 13852 (proposed Mar. 14, 2011) (to be codi-
fied at 40 C.F.R. pt 63); National Emission Standards for Hazardous Air Pollut-
ants: Primary Lead Smelting, 76 Fed. Reg. 9410 (proposed Feb. 17, 2011) (to
be codified at 40 C.F.R. pt 63).
10 UN Economic Commission for Europe, Convention on Long-Range
Transboundary Air Pollution, Nov. 13, 1979, T.I.A.S. No. 10541, 18 I.L.M.
1442 (1979). Signatories include nearly all of Europe, Russia, the former
Soviet states, Canada, and the United States; the status of ratification may be
found at Status of Ratification of The 1979 Geneva Convention on Long-range
endnoTes: the lurking coStS oF green technology metalS in a global market continued from page 14
Transboundary Air Pollution as of 01 March 2011, un econ. commn For
europe, http://www.unece.org/env/lrtap/status/lrtap_st.htm (last visited Apr. 15,
11 Id.; see also INC2, supra note 5.
12 David Kirby, Made in China: Our Toxic Imported Air Pollution, DiScover
(Mar. 18, 2011), http://discovermagazine.com/2011/apr/18-made-in-china-our-
toxic-imported-air-pollution (“Even as America tightens emission standards, the
fast-growing economies of Asia are filling the air with hazardous components
that circumnavigate the globe.”).
13 Keith Bradsher, Taking a Risk for Rare Earths, N.Y. timeS, Mar. 8, 2011,
at B1 (detailing the Malaysian construction of a rare earth element refinery, to
“break China’s chokehold on the strategic metals crucial to products as diverse
as Apple’s iPhone, Toyota’s Prius and Boeing’s smart bombs.”).
14 Phil Taylor, Nev. Mining Firm Seeks Place in Emerging Lith-
ium Market, N.Y. timeS (June 17, 2010), http://www.nytimes.com/
15 See Russell, supra note 4.
16 Kirby, supra note 12.
17 An example of an international legal framework addressing waste manage-
ment includes the Basel Convention on the Control of Transboundary Movements
of Hazardous Wastes and Their Disposal, Mar. 22, 1989, 1653 U.N.T.S. 57.
endnoTes: Foreign inveStment contractS in the oil & gaS Sector continued from page 20
30 E.g., the 1994 Cairn Energy proDuction Sharing contract between the
government oF the peopleS republic oF banglaDeSh & banglaDeSh oil,
gaS & mineral corporation, cairn energy plc anD hollanD Sea Search
banglaDeSh b.v. (block 16) (1994) (Bangl.) (on file with the author) men-
tions the applicability of Bangladeshi law to the implementation of the contract
generally (art. 28.1), but the article specifically referring to the protection of the
environment only mentions “generally accepted standards of the International
Petroleum Industry” (art. 10.6). Similarly, the 2000 RSM proDuction Shar-
ing agreement For petroleum exploration, Development anD proDuction
between beliZe anD rSm proDuction corporation (area a) (Apr. 3, 2000)
(Belize) (on file with the author) is governed by the laws of Belize (art. 29.1)
but the section on environment (art. 23.1) refers only to “standards acceptable
to practices of the International Petroleum Industry.”
31 Ibibia Lucky Worika, Environmental Concepts and Terms in Petroleum
Legislation & Contracts: A Preliminary Study, in environmental regulation oF
oil anD gaS 393, 398-401 (Zhiguo Gao ed., 1998).
32 Id. at 401-02.
33 Id. at 402.
34 agreement between the royal government oF camboDia, camboDian
national petroleum agency, chevron overSeaS petroleum (camboDia) lim-
iteD, moeco camboDia co. ltD anD wooDSiDe South eaSt aSia pty. ltD.,
art. 1.2 Definitions (Aug. 15, 2002) (Cambodia) (on file with the author).
35 Environmental Principles, am. petroleum inSt., http://www.api.org/
aboutapi/principles/index.cfm (last updated Mar. 7, 2011).
36 Id.
37 E.g., am. petroleum inSt., Recommended Practice 51R, Environmental
Protection for Onshore Oil and Gas Production Operations and Leases (2009),
38 intl aSSn oF oil & gaS proDucerS, principleS anD guiDelineS For the
oil & gaS inDuStry, Report No. 6.88/307 (2000), http://www.ogp.org.uk/
39 auStrl. petroleum proD. & exploration aSSn, appea coDe oF envi-
ronmental practice (2008), http://www.appea.com.au/images/stories/Policy_-_
40 See TC 67–Materials, Equipment and Offshore Structures for Petroleum,
Petrochemical and Natural Gas Industries, intl org. For StanDarDiZation,
iso_technical_committees/iso_technical_committee.htm?commid=49506 (last
visited Apr. 2, 2011). The Association of International Petroleum Negotiators
also considered adopting model environmental clauses and standards for use in
negotiating host-government instruments but ultimately discarded the proposal
because it was viewed as too controversial by the Association’s members.
41 Alexandra S. Wawryk, Adoption of International Environmental Standards
by Transnational Oil Companies: Reducing the Impact of Oil Operations in
Emerging Economies, 20 J. energy & nat. reSourceS l. 402, 431 (2002).
42 conceSSion agreement For the exploration Development anD proDuction
oF oil anD natural gaS cl. 21-1 (2001) (Braz.), http://www.anp.gov.br/brnd/
43 agreement on the Joint Development anD proDuction Sharing For the
aZeri anD chirag FielDS anD the Deep water portion oF the gunaShli FielD
in the aZerbaiJan Sector oF the caSpian Sea, the State oil company oF the
aZerbaiJan republic- amoco caSpian Sea petroleum limiteD et al., art. 26.3
(Sept. 20, 1994) (Azer.), http://www.bp.com/liveassets/bp_internet/bp_caspian/
44 natl oil co. oF liberia, moDel proDuction Sharing contract, art. 6.5
(2009), http://www.molme.gov.lr/doc/MODEL%20PRODUCTION%20SHAR-
45 Lee, supra note 10.
46 See, e.g., Vingradov supra note 3, at 98-115.
47 moDel proDuction Sharing contract (1994) (Mauritania), http://
48 Shah DeniZ pSa excerpt, gaS export proJect Stage 1 Development,
environmental & Socio-economic impact aSSeSSment, Appendix I art. 26.1
(Aug. 2002) (Azer.), http://www.bp.com/liveassets/bp_internet/bp_caspian/
49 anDrea Shemberg, StabiliZation clauSeS anD human rightS, at vii (2008),
50 See generally peter D. cameron, aSSn oF intl petroleum negotia-
torS, StabiliSation in inveStment contractS anD changeS oF ruleS in hoSt
countrieS: toolS For oil & gaS inveStorS (2006), http://lba.legis.state.ak.us/
sga/doc_log/2006-07-05_aipn_stabilization-cameron_final.pdf; Abdullah Al
Faruque, The Rationale and Instrumentalities for Stability in Long-Term State
Contracts: The Context for Petroleum Contracts (2006) 7 J. worlD inv. &
traDe 85; A.F.M. Maniruzzaman, The Pursuit of Stability in International
Energy Investment Contracts: A Critical Appraisal of the Emerging Trends 1 J.
worlD energy l. & buS. (2008) 121.
51 Shemberg, supra note 49.
52 See id. at 17.
53 proDuction Sharing agreement in reSpect oF the north caSpian Sea
(kaShagan) among agip caSpian Sea b.v.; bg exploration limiteD; bp
kaZakStan limiteD; Den norSke StatS olJeSelSkap a.S.; mobil oil kaZakStan
inc.; Shell kaZakStan Development b.v.; total exploration proDuction
kaZakStan; JSc kaZakStancaSpianShelF; the republic oF kaZakStan anD JSc
national oil anD gaS company kaZakoil, art 40.2 (nov. 18, 1997) (Kaz.) (on
file with the author).
54 Lorenzo Cotula, Reconciling Regulatory Stability and Evolution of Envi-
ronmental Standards in Investment Contracts: Toward a Rethink of Stabilization
Clauses, 1 J. worlD energy l. & buS. 158, 174 (2008).
55 See generally id; Kyla Tienhaara, Unilateral Commitments to Investment
Protection: Does the Promise of Stability Restrict Environmental Development?
17 y.b. intl envtl. l. 139 (2008).
56 See, e.g., worlD bank, environmental governance in oil-proDucing
Developing countrieS 1 (Eleodoro Alba ed., 2010), http://siteresources.world-
57 Id.
58 See generally malta envt & planning authority, environmental impact
aSSeSSmentS (1994), http://www.mepa.org.mt/lpgdocuments/policies/eia.pdf.
59 kaShagan pSa supra note 53, at art. 5.2b.
60 miniStry oF petroleum anD natural gaS, moDel proDuction Sharing
contract (Seventh oFFer oF blockS), art. 14.5 (2007) (India), http://petro-
61 See, e.g., Arctic National Wildlife Refuge, 1002 Area, Petroleum Assess-
ment, 1998, Including Economic Analysis, u.S. geological Survey, http://pubs.
usgs.gov/fs/fs-0028-01/ (last modified Dec. 14, 2005).
62 See generally Arctic National Wildlife Refuge, DeFenDerS oF wilD-
liFe, http://www.defenders.org/programs_and_policy/habitat_conservation/
SPRING 2011 40
1 See, e.g., Coal E xplained: How Much Coa l is Left, u.S. energy inFo.
aDmin., http://tonto.eia.doe.gov/energyexplained/index.cfm?page=coal_reserves
(last updated Feb. 19, 2010).
2 See Obama Announces Steps to Boost Biofuel s, Cl ean Co al, Dept oF
energy (Feb. 3, 2010), http://www.energy.gov/news/8596.htm.
3 JeFF Deyette & barbara FreeSe, union oF concerneD ScientiStS, burning
coal, burning caSh 13 (201 0), http://www.ucsusa.org/clean_e nergy/technol-
4 Mark Clayton, Why Coal-Rich U.S. is Seeing Record Imports, chriStian Sci.
monitor (Ju ly 10, 200 6), http://www.csmonitor.com/2006/ 0710/p02s01-usec.
5 See The Price of Colombian Coal, the wor lD, pub. raD io intl (Jan . 10,
2009, 10:33 AM), http://www.pri.org/business/global-development/price-colum-
bian-coal.html (detailing some of the environmental degradation experienced in
federal_lands/national_wildlife_refuges/threats/arctic/index.php (last visited
Apr. 2, 2011).
63 oFFice oF national mineS anD Strategic inDuStrieS, moDel oFFShore
proDuction Sharing contract, art. 37.6 (2006) (Madag.), http://www.omnis-
madagascar.mg/contrat/offshore%20contract.pdf (last visited Apr. 2, 2011).
64 DraFt proDuction Sharing agreement For petroleum exploration, Dev.
anD proDuction in the republic oF uganDa, uganDa-heritage oil anD gaS
limiteD, art. 5.3 (Uganda), http://www.platformlondon.org/carbonweb/docu-
ments/uganda/leaked_Uganda_PSA_Block3A_Heritage_part2.pdf (last visited
Apr. 2, 2011).
65 govt oF the republic oF moZambiQue, exploration anD proDuction con-
ceSSion contract, art. 27.8 (2007) (Mozam.), http://www.inp.gov.mz/content/
pdf (last visited Apr. 2, 2011).
66 proDuction Sharing cont. For taQ taQ anD kewa chirmila areaS in the
kurDiStan region, kurDiStan regional govt oF iraQ-genel entergy inter-
national limiteD-aDDax petroleum international limiteD, art. 2.8 (Feb. 26,
2008) (Iraq), http://www.krg.org/uploads/documents/02_Genel_Contract.pdf.
67 miniStry oF energy, proDuction Sharing contract (2008) (Kenya), http://
www.nockenya.co.ke/images/File/RECENT DRAFT PSC (3).DOC.
68 banglaDeSh oil, gaS, & mineral corp., moDel proDuction Sharing con-
tract, art. 9.2 (2008) (Bangl.), http://www.petrobangla.org.bd/MODEL%20
69 worlD bank, regulation oF aSSociateD gaS Flaring anD venting: a
global overview anD leSSonS 1 (2004), http://www-wds.worldbank.org/exter-
70 See generally miDDle e. & n. aFrica Forum on Flaring reDuction & gaS
utiliZation: aDDreSSing the imbalance between gaS DemanD anD Supply,
http://www.menaflaringforum.org (last visited Apr. 19, 2011).
71 A.S. Abdulkareem, Evaluation of Ground Level Concentration of Pollutant
Due to Gas Flaring by Computer Simulation: A Case Study of Niger Delta–
Area of Nigeria, leonarDo elec. J. oF practiceS & techS., Jan–June 2005 at 29,
30, http://lejpt.academicdirect.org/A06/29_42.htm.
72 See generally Global Gas Flaring Reduction Partnership, worlD bank,
http://www.worldbank.org/ggfr (last updated Mar. 21, 2011).
73 intl aSSn oil & gaS proDucerS, supra note 5, at 3, 28.
74 banglaDeSh oil, gaS, & mineral corp., moDel proDuction Sharing con-
tract, art. 15.3 (2008) (Bangl.), http://www.petrobangla.org.bd/MODEL%20
75 Id.
76 proDuction Sharing contract, peruSahaan pertambangan minyak
Dan gaS bumi negara-apex, ltD., art. 6.2.1 (Dec. 4, 1997) (Indon.),
77 RSM PSA supra note 30, at art. 14.1.
78 proDuction Sharing agreement between Sonangol, u.e.e., texaco
exploration angola Sumbe inc., eSSo exploration & proDuction angola
(block 22) limiteD & bhp petroleum (angola 22) inc. (block 22), art. 29.5
(Dec. 16, 1998) (Angl.) (on file with the author).
79 DraFt proDuction Sharing agreement For petroleum exploration,
Development anD proDuction in the republic oF uganDa by anD between the
government oF the republic oF uganDa anD heritage oil anD gaS limiteD,
art. 19.3 (Jan. 27, 2007) (Uganda), http://www.platformlondon.org/carbonweb/
80 See, e.g., kaShagan pSa supra note 53, at art. 21.1d.
81 intl aSSn oil & gaS proDucerS, supra note 5, at 2, 23.
82 See, e.g., kaShagan pSa supra note 53, at art. 5.2c; proDuction Sharing
contract between the government anD oil anD natural gaS corporation
limiteD (ongc), reliance inDuStrieS ltD., & enron oil & gaS inDia ltD.
(tapt block), art. 12.6 (Dec. 22, 1994) (India) (on file with the author).
83 See, e.g., aZeri anD chirag FielDS PSA supra note 43, at art. 26.2.
84 timor-leSte inSt. For Dev. monitoring & analySiS, moDel proDuction
Sharing contract unDer the petroleum act (Timor-Leste), http://www.lao-
hamutuk.org/Oil/PetRegime/PSC%20model%20270805.pdf (last visited Apr. 2,
85 petroleum agreement, republic oF ghana-tullow ghana limiteD-Sabre
oil anD gaS limiteD-koSmoS energy ghana hc, art. 17.7 (Mar. 10, 2006)
(Ghana), http://sec.edgar-online.com/kosmos-energy-ltd/s-1a-securities-regis-
86 See generally Tim Padgett & Stephan Kuffner, Chevron v. Ecuador: Will
the Plaintiffs Get Paid?, time, Feb. 22, 2011, http://www.time.com/time/world/
87 See generally timor-leSte inSt., supra note 84.
88 Id. at art. 1.5.
89 UNEP Secretariat, Liability & Compensation Regimes Related to Environ-
mental Damage (2002); see also A.E. Boyle, Globalising Environmental Liabil-
ity: The Interplay of National and International Law, 14 J. envtl. l. 3,
14 (2005).
90 See generally govt oF the republic oF moZambiQue, supra note 65.
91 See id. at art. 19.1.
92 Id.
93 Even in the absence of explicitly listed exceptions within the liability
clause, the extremely common “force majeure” clause provides a defense for
94 government oF camboDia supra note 34, at art. 20.7d.
95 RSM PSA supra note 30, at art. 27.3.
96 See timor-leSte inSt., supra note 84, at art. 19.2.
97 Id.
98 See generally Zhiguo Gao, International Law on Offshore Abandonment:
Recent Developments, Current Issues and Future Directions, in environmental
regulation oF oil & gaS (Zhinguo Gao ed., 1998); Agnieszka Rawa et al., Sus-
tainable Decommissioning of Oil Fields and Mines (World Bank Issues Paper,
2009), http://siteresources.worldbank.org/INTOGMC/Resources/wb_ogm_
99 oil exploration anD exploitation contract (oFFShore no. 1 anD Seme
block) between the government anD aDDax petroleum – abacan benin
conSortium, art.18.12 (Feb. 1, 1997) (benin), http://www.secinfo.com/
100 Id.
101 See Rawa, supra note 98, at 36-46.
102 moDel proDuction Sharing agreement (2008) (Tanz.), http://resources.
Agreement%202008.pdf (last visited Apr. 2, 2011).
103 Gao supra note 12.
Colombia); Emissions Standard s for Power Plants, 310 maSS. coDe regS. 7.29
(2010) (providing the regulation governing Massachusetts power plant emissions
for pollutan ts including, a mong other thi ngs, mercury, particu late matter, and
sulfur dioxide).
6 Coal Explained: Where Our Coal Comes From, u.S. energy inFo. aDmin.,
http:/ /tonto.eia .doe.gov/e nergyexplain ed/index. cfm?page=c oal_where (last
updated Oct. 6, 2010).
7 Robert C. Milici & Kristen O. Dennen, Production and Depletion of Appala-
chian and Illinois Basin Coal Reserves, in national coal reSource aSSeSSment
overview, Ch. H, 1 (Brenda S. Pierce & Kristen O. Dennen eds., U.S.G.S. Prof.
Paper 1625-F, 2009), http://pubs.usgs.gov/pp/1625f/downloads/ChapterH.pdf.
8 How Coal Works, union oF concer neD ScientiStS, http://www.ucsusa.org/
clean_energy/coalvswind/brief_coal.html (last visited Apr. 8, 2011).
9 Id.
endnoTes: global traDe: the impact oF maSSachuSettS energy policy on columbiaS mining inDuStry
continued from page 21
10 Milici & Dennen, supra note 7, at 4-5.
11 Susan J. Trewalt et al., World Coal Quality Inventory: Colombia, in worlD
coal Quality inventory: South america, Ch. 5 132, 140 (Al ex W. Karlsen
et al. eds., U.S.G.S Open File Rep. 2006-1241, 2006), http://pubs.usgs.gov/
12 See Clayton, supra note 4.
13 310 maSS. coDe regS. 7.29; Update on State Regulations that Affect Elec-
tric Power Producers, u.S. energy inFo. aDmin. (2005), http://www.eia.doe.gov/
oiaf/aeo/otheranalysi s/aeo_2005analysispapers/usaer.html (last v isited Apr. 8,
14 Milici & Dennen, supra note 7, at 5; Update on State Regulations that Affect
Electric Power Producers, supra note 13.
15 Update on State Regulat ions that Affect Electric Power Producers, supra
note 13.
endnoTes: leaDing while catching up?: emerging StanDarDS For chinaS overSeaS inveStmentS continued from page 26
16 See id. See, e.g., emiSSionS control plan Final approval, holyoke weSt-
ern regi on, power plant emiS Sion StanDarD, application no. 1 -e-01-072 3
(June 7, 2002), www.mass.gov/dep/air/community/mttomfin.doc.
17 aviva chomSky, linkeD labor hiStorieS: n ew englanD, colombia, anD
the making oF a global working claSS, 265 (2008); The Price of Colombian
Coal, supra note 5.
18 The Price of Colombian Coal, supra note 5.
19 Id.
20 chomSky, supra note 17, at 2 64-68; Aviva Chomsky & Cindy Forster,
Extraction: In Colombia, a Mine Takes Much More from the Land tha n Coal,
cultural Survival, Winter 2006, http://www.culturalsurvival.org/publications/
cultura l-surv ival-quar terly/c olombia /extract ion-col ombia-m ine-ta kes-much -
more-land-coal (discussing the impact of the mine on the Wayuu, an indigenous
people whose communities were destroyed to make way for the mine).
1 Samuel Maina, Social Justice Demonstration Day a Success, FrienDS oF
lake turkana (Feb. 22, 2011), http://www.friendsoflaketurkana.org/index.
2 Id.
3 Peter Bosshard, Grassroots Protests Against Chinese Dams
in Africa, intl riverS (Feb. 23, 2011, 1:48pm), http://www.
4 See id. (citing the Chinese Bank and Embassy’s refusal to respond to the
African peoples’ concerns).
5 intl riverS, ethiopiaS gibe 3 Dam: Sowing hunger anD conFlict 1-2
(Jan. 26, 2011), http://www.internationalrivers.org/files/Gibe3Factsheet2011.
6 Id. at 1, 5 (claiming as many as 500,000 people living in the area could be
harmed); Terri Hathaway, Chinese Loan Underwrites Lake Turkana Destruction,
int’ riverS (Sept. 17, 2010), http://www.internationalrivers.org/en/node/5819.
7 intl riverS, supra note 5, at 4.
8 Gibe 3 Dam, Ethiopia, intl riverS, http://www.internationalrivers.org/
africa/gibe-3-dam-ethiopia (last visited Apr. 10, 2011).
9 See id.
10 See intl riverS, supra note 5, at 2 (stating that at least 100,000 people
cultivate crops in the river’s flooded banks, which will not be possible when the
dam is completed).
11 Hathaway, supra note 6 (fishing); intl riverS, supra note 5, at 2 (herding
and trade).
12 intl riverS, supra note 5, at 3.
13 Hathaway, supra note 6.
14 Justin McCurry & Julia Kollewe, China Overtakes Japan as World’s Sec-
ond-Largest Economy, guarDian (Feb. 14, 2011), http://www.guardian.co.uk/
15 In July 2010, for example, the International Energy Agency estimated
that China had become the world’s largest energy consumer (although on a per
capita basis, it only consumes about one-third of the OECD average). China
Overtakes the United States to Become World’s Largest Energy Consumer, intl
energy agency (July 20, 2010), http://www.iea.org/index_info.asp?id=1479.
Likewise, oil demand for transportation is expected to quadruple by 2030.
World Energy Outlook 2007 Fact Sheet – China, intl energy agency, http://
(last visited Apr. 13, 2011).
16 thomaS lum et al., cong. reSearch Serv., chinaS Foreign aiD activitieS
in aFrica, latin america, anD SoutheaSt aSia (2009), http://www.fas.org/sgp/
17 China’s African Policy, Forum on china-aFr. cooperation (Jan. 2006),
18 lum et al., supra note 16.
19 China Becomes Africa’s Largest Trading Partner, cntv (Oct. 15, 2010),
20 See lum et al., supra note 16; China’s African Policy, supra note 17.
21 The 10th Five-Year Plan (2001-2005), gov.cn (Apr. 5, 2006), http://www.
22 See China Launches Two-Way Investment Strategy for Better Access to,
peopleS Daily (Sept. 21, 2001), http://english.peopledaily.com.cn/200109/12/
eng20010912_80006.html; David Barboza, China Seeks Known Brands to
Go Global, n.y. timeS (June 30, 2005), http://www.nytimes.com/2005/06/29/
23 China’s Phenomenal Demand for Natural Resources, china analySt (Bei-
jing Axis, Beijing, China), Aug. 2010, at 34, http://www.chinasourcingblog.org/
24 See id.
25 China has had an active foreign aid program since the 1950s. See Deborah
brautigam, the DragonS giFt: the real Story oF china in aFrica 22-42
(2008) (providing background on China’s early aid program).
26 martine Dahle huSe & Stephen l. muyakwa, china in aFrica: lenDing,
policy Space, anD governance (2008).
27 Id. However despite rhetoric about “non-interference,” borrowing govern-
ments must often meet certain conditions to receive Chinese assistance. See
Chinese Government Concession Loan and Preferential Export Buyer’s Credit,
china exim bank, http://english.eximbank.gov.cn/businessarticle/activities/
loan/200905/9398_1.html (last visited Apr. 12, 2011). For example, when gov-
ernments borrow money from China’s Export Import Bank, they must meet cer-
tain political and financial conditions such as “1) The project shall be approved
by both the Chinese Government and the Government of the borrowing coun-
try; 2) The borrowing country shall have sound diplomatic relations with the
Chinese Government, and shall be politically stable and economically sound,
with debt servicing capacity and reliable contract-performance record; 3) The
project shall be technically feasible and shall fall within priority sectors that can
contribute to the economic development and sector planning of the borrowing
country while being able to yield sound economic returns or social benefits; 4)
Chinese companies shall be selected as the project contractor and for procure-
ment projects, equipment supply shall come from a Chinese exporter in prin-
ciple; In project procurement, priority shall be given to equipment, materials,
technology or services from China; 5) In principle, no less than 50% of total
procurement shall be made in China; 6) The counterpart funds for the project
shall be already in place.” Id.
28 org. For econ. co-operation & Dev., oecD inveStment policy reviewS:
china 2008, at 110 (2008) [hereinafter “OECD”].
29 uniteD nationS conFerence on traDe & Dev., economic Development in
aFrica 79 (2010).
30 Jeremy StevenS, StanDarD bank, economicS: china anD aFrica – prag-
matic partnerS maturing 5 (Apr. 2009), http://ws9.standardbank.co.za/sbrp/
31 Erica Downs, The Fact and Fiction of Sino-African Energy Relations,
china Security, Summer 2007, at 45, http://www.brookings.edu/~/media/Files/
32 Id. at 44.
33 Id. at 42, 63.
34 See Barry Suatman & Yan Hairong, Trade, Investment, Power, and the
China-in Africa Discourse, aSia-paciFic Journal: Japan FocuS (Dec. 28, 2009),
35 huSe & muyakwa, supra note 26, at 10.
36 Indira Campos & Alex Vines, Angola and China: A Pragmatic Partnership
1 (Ctr. for Int’l Studies, Working Paper, 2008), http://csis.org/files/media/csis/
37 Id.
38 See generally id.
39 Id. at 1.
40 Id. at 4-6.
SPRING 2011 42
41 Id. at 12-13.
42 Id.
43 Id. at 20.
44 Id. at 22.
45 Id. at 3.
46 alex vineS et al., chatham houSe, thirSt For aFrican oil: aSian
national oil companieS in nigeria anD angola 48 (2009).
47 Campos & Vines, supra note 36, at 9.
48 Id.
49 Id.
50 Id. at 6.
51 Id. at 22-23.
52 Id.
53 Id.
54 Id.
55 Louise Redvers, Angola: Questions About China’s ‘Win-Win’ Relationship
with Nation, all aFr. (Feb. 2, 2011), http://allafrica.com/stories/201102030058.
56 Id.
57 But see Legal Programs, earthrightS intl, http://www.earthrights.org/
legal (last visited Mar. 26, 2011) (describing EarthRights’ use of the Alien Torts
Claims Act to litigate in U.S. courts human rights and environmental abuses by
U.S. companies operating internationally).
58 Lisa Roner, JP Morgan’s Green-Lending Promise: A Point of No Return for
Financial Institutions?, ethical corp. (May 12, 2005), http://www.ethicalcorp.
59 See Steven herZ et al., worlD reS. inSt., Development without con-
Flict: the buSineSS caSe For community conSent 5 (2007), http://pdf.wri.org/
60 Id. When investing in developing countries, companies increasingly con-
sider harm to the environment and local communities can affect a project. Id.;
herbertSon et al., worlD reS. inSt., breaking grounD engaging communitieS
in extractive anD inFraStructure proJectS (2008), http://pdf.wri.org/break-
61 Id. at 13.
62 herbertSon et al., supra note 60.
63 herZ et al., supra note 59, at 15.
64 Id. at 14-19.
65 The World Bank safeguards are being updated in 2011-2012. See Kirk
Herbertson & Kim Thompson, Can the World Bank Regain its Lead on Sus-
tainable Development?, worlD reS. inSt. (oct. 5, 2010), http://www.wri.org/
66 World Bank Safeguard Policies, worlD bank grp., http://go.worldbank.
org/QL7ZYN48M0 (last visited Mar. 31, 2011).
67 See generally inDepenDent evaluation grp., worlD bank grp., SaFe-
guarDS anD SuStainability policieS in a changing worlD: an inDepenDent
evaluation oF worlD bank group experience (2010), http://lnweb90.world-
68 See generally Leadership in Environmental and Social Sustainability,
worlD bank grp, http://www.ifc.org/enviro (last visited Mar. 26, 2011); eQua-
tor principleS, http://www.equator-principles.com (last visited Mar. 26, 2011).
69 See generally Leadership in Environmental and Social Sustainability,
worlD bank grp, http://www.ifc.org/enviro (last visited Mar. 26, 2011).
70 See generally eQuator principleS, supra note 68.
71 The Review Process, worlD bank grp., http://www.ifc.org/ifcext/policyre-
view.nsf/Content/Process (last visited Mar. 31, 2011).
72 Some concerns with existing environmental and social standards include:
(1) limited leverage of financial institutions over a development project,
depending on when they become involved and the type of financing arrange-
ment; (2) many standards grant clients a wide range of discretion over how
to manage critical environmental and social issues; (3) financial institutions
sometimes conduct only limited oversight over their clients; (4) in general, each
financial institution creates its own standards, and these are often not entirely
consistent with international environmental and human rights standards; and (5)
increasingly, public financial institutions such as the World Bank provide bor-
rowing governments with general budget support rather than investing in spe-
cific projects, where the standards do not apply. See vince mcelhinny, bank
inFo. ctr., worlD bank anD DplS: what miDDle income countrieS want
(Feb. 2011), http://www.bicusa.org/en/Document.102530.aspx; Out of Sight,
Out of Mind? IFC Investment Through Banks, Private Equity Firms and Other
Financial Intermediaries, bretton wooDS proJect (Nov. 22, 2010), http://www.
73 Michelle Chan-Fishel, Time to Go Green: Environmental Responsibility in
the Chinese Banking Sector, FrienDS oF the earth 15-16 (May 2007), www.foe.
74 Id.
75 Gant Morgner, Two Major Developments in Chinese Capital Markets, eQui-
tieS magaZine (Jan. 28, 2010), http://www.cvca.com.hk/template/newstemplate.
76 For overview of the wide-ranging energy and climate-related measures
adopted by China, see WRI Fact Sheet: Energy and Climate Policy Action in
China, worlD reS. inSt. (Nov. 5, 2009), http://www.wri.org/stories/2009/11/
fact-sheet-energy-and-climate-policy-action-china-update; Deborah
Seligsohn, et al., China, The United States, and the Climate Change Challenge
(World Res. Inst., Policy Brief, Oct. 2009), http://www.wri.org/publication/
77 IFC in China, worlD bank grp., http://www.ifc.org/ifcext/eastasia.nsf/
Content/China (last visited Mar. 26, 2011).
78 Motoko Aizawa & Chaofei Yang, Green Credit, Green Stimulus, Green
Revolution? China’s Mobilization of Banks for Environmental Cleanup, 19 J. oF
envt & Dev. 19 (2010).
79 Erica Downs, The Fact and Fiction of Sino-African Energy Relations,
china Security, Summer 2007, at 48, http://www.brookings.edu/~/media/Files/
80 bo kong, chinaS international petroleum policy 14 (2010). See Downs,
supra note 31, at 48-50.
81 Downs, supra note 31, at 49.
82 Id. at 51-52.
83 Id. at 48-49.
84 kong, supra note 80 at, 67-68.
85 Duncan Freeman, China’s Outward Investment: A Policy Overview 9-10
(BICCS Policy Paper 2008), http://vub-be.academia.edu/DuncanFreeman/
86 OECD Glossary of Statistical Terms – Export Credit Agency Definition,
org. For econ. co-operation & Dev. (Aug. 28, 2003), http://stats.oecd.org/
87 See Tom Durkin, China’s Export Credit Agencies, china aFr. newS (Aug.
17, 2010), http://www.chinaafricanews.com/index.cfm?fa=contentGeneric.mva
88 Geoff Dyer et al., China’s Lending Hits New Heights, Fin. timeS (Jan. 17,
2011), http://www.ft.com/cms/s/0/488c60f4-2281-11e0-b6a2-00144feab49a.
89 See brautigam, supra note 25, at 115.
90 Id. at 80.
91 Sarah Wang, What Does China’s New Five-Year Plan Address?, bbc newS
(Mar. 3, 2011), http://www.bbc.co.uk/news/world-asia-pacific-12639898.
92 Id.
93 See Deborah Seligsohn et al., WRI Fact Sheet: Energy and Climate
Policy Action in China, worlD reS. inSt. (Nov. 5, 2009), http://www.wri.org/
94 Jesse L. Moorman & Zhang Ge, Promoting and Strengthening Public Par-
ticipation in China’s Environmental Impact Assessment Process: Comparing
China’s EIA Law and US NEPA, 8 vt. J. envtl. l. 281 (2007).
95 See Deborah SeligSohn et al., worlD reS. inSt., china, the uniteD
StateS, anD the climate change challenge 10-11 (Oct. 2009), http://pdf.wri.
96 OECD, supra note 28, at 264-65.
97 Measures on Open Environmental Information (for Trial Implementation)
(promulgated by State Envtl. Prot. Admin. Feb. 8, 2007, effective May 2, 2008)
(China), http://www.greenlaw.org.cn/files/laws/open_environmental.pdf.
98 ZaDek et al., reSponSible buS. in aFr., corporate Social reSponSibility
initiative 33 (Nov. 2009) (quoting President Hu Jintao speaking to CEOs at the
APEC summit in Peru in November 2008).
99 OECD, supra note 28, at 267.
100 China Construction Bank Releases CSR Report, china cSr (May 31,
2007), http://www.chinacsr.com/en/2007/05/31/1376-china-construction-
101 Annual Report 2008: Corporate Social Responsibilities (2008), china Dev.
bank, http://www.cdb.com.cn/english/NewsInfo.asp?NewsId=3140; Industrial
and Commercial Bank of China Limited Releases Its Annual Report of CSR
for the Year 2008, inDuS. & commercial bank oF china (Mar. 3, 2009), http://
of%20csr%20for%20the%20year%202008.htm; Corporate Social Responsi-
bility Reports, agric. bank oF china, http://www.abchina.com/en/about-us/
csr-report/ (last visited Mar. 26, 2011); Bank of China, CSR Report 2008, http://
www.boc.cn/en/aboutboc/ab1/200905/t20090506_690712.html (last visited
Mar. 31, 2011).
102 Press Release, International Finance Corporation, China’s Industrial Bank
Adopts Equator Principles (Nov. 3, 2008), http://www.ifc.org/ifcext/media.nsf/
103 Guidelines for Environmental and Social Impact Assessments of the China
Export and Import Bank’s Loan Projects, intl riverS (Aug. 28, 2009), http://
104 Id.
105 Id.
106 Li Jing, Environmental Guidelines for Firms Investing Abroad, china Daily
(Sept. 12, 2008), http://www.chinadaily.com.cn/bizchina/2008-09/12/con-
107 Li Jing, Green Rules Eye Chinese Firms Abroad, china Daily (May 9,
2009), http://www.chinadaily.com.cn/bizchina/2009-05/29/content_7952605.
htm. The Ministry of Environmental Protection and China Banking Regulatory
Commission are involved in drafting the new rules, which would be called Chi-
nese Overseas Direct Investment Environment Protection Guidelines.
108 Id.
109 Id.
110 Civil Society Recommendations Regarding China Exim Bank’s Environ-
mental Policy, intl riverS (Sept. 30, 2007), http://www.internationalrivers.org/
exim-banks-environmental-poli. For an unofficial translation of the policy,
see env. DeF. & intl riverS, international civil Society recommenDationS
regarDing china exim bankS environmental policy baSeD on interna-
tional gooD practice 13 (Sept. 2007), http://www.internationalrivers.org/files/
111 Scott Zhou, China as Africa’s ‘Angel in White,aSia timeS, Nov. 6, 2006,
112 Guidelines for Environmental and Social Impact Assessments of the China
Export and Import Bank’s Loan Projects, supra note 103.
113 guiDe on SuStainable overSeaS Silviculture by chineSe enterpriSeS,
State ForeStry aDmin. (Aug. 27, 2007), http://www.studioliq.org/clients/ca/
114 See Li Rongrong: Cooperation of Overseas Enterprises Must be Win-Win
and They Could Decide the Projects Independently, miniStry oF commerce oF
the peopleS republic oF china (Aug. 12, 2008), http://zgb2.mofcom.gov.cn/
115 See New Regulation Aims to Keep Chinese Firms within Law on Foreign
Contracts, miniStry oF commerce oF the peopleS republic oF china (July
29, 2008), http://english.mofcom.gov.cn/aarticle/newsrelease/common-
news/200807/20080705693072.html (reproducing article from Xinhua).
116 See Lin Liyu, Auditor to Step Up Scrutiny of Overseas State Assets, china
view (xinhua) (Aug. 11. 2008), http://news.xinhuanet.com/english/2008-08/10/
117 See Jing, supra note 107.
Measures: Using a Trade Facilitation Perspective to Assess Trade Costs 2 (Int’l
Ctr. for Trade & Sustainable Dev., Issue Paper No. 13, 2010).
11 Ricardo Lagos Escobar, Estado Actual de las Negociaciones de Cam-
bio Climático, in pilar moraga, centro De Derecho ambiental, FacultaD
De Derecho univerSiDaD De chile, el nuevo marco legal para el cambio
climático 225 (2009) (citing Ricardo Lagos, former Chilean President, in his
expression of a “point of no return” in several interviews during his service as
special envoy to the Climate Change Convention. See, e.g, Gerardo Jiménez,
Cerca, el “Quiebre” Climático: Lagos, el univerSal (Sept. 29, 2007), http://
www.eluniversal.com.mx/primera/29666.html. See generally Dr. Rajendra
Pachauri, Chairman, Intergovernmental Panel on Climate Change, Welcom-
ing Ceremony at the Copenhagen Conference of the Parties COP 15/CMP5
in Copenhagen, Den. (Dec. 7, 2009), http://www.ipcc.ch/pdf/presentations/
cop%2015/RKP-welc-cer-cop15.pdf (providing an illustration of the state of the
art of climate change science).
12 nicholaS Stern, Stern review: the economicS oF climate change 1
13 See Valentina Duran, Capítulo sexto: Atmósfera, in loS trataDoS ambien-
taleS: principioS y aplicación en chile 339-74 (2001) (providing a basic expla-
nation of Chile’s relationship with the International Climate Change regime).
14 See Intereses de la Política Exterior de Chile, miniSterio De relacioneS
exterioreS, http://www.minrel.gov.cl/prontus_minrel/site/artic/20080802/
pags/20080802193244.php (last visited Mar. 29, 2011).
15 Id.
16 Id.
17 See, e.g., Org. for Econ. Cooperation & Dev., Government Policy Options
to Encourage Cleaner Production and Products in the 1990s, OECD/GD(92)
127 (1992).
18 erich vraneS, traDe anD the environment: FunDamental iSSueS in inter-
national law, wto law anD legal theory 331 (2009).
19 See United Nations Framework Convention on Climate Change, Copen-
hagen, Den., Dec. 7-19, 2009, Report of the Conference of the Parties on Its
Fifteenth Session, U.N. Doc. FCCC/CP/2009/11/Add.1 (Mar. 30, 2010), http://
20 SeconD report oF the high level group on competitiveneSS, energy,
anD the envt, contributing to an integrateD approach on competitive-
neSS, energy anD environment policieS (Oct. 2006), http://ec.europa.eu/
report_30_10_06_en.pdf. The High Level Group includes EU commissioners,
economic affairs ministers, business leaders, trade unionists, and delegates from
environmental NGOs.
21 John Hontelez, Viewpoint, bbc newS (Apr. 5, 2007), http://news.bbc.
22 european envtl. bureau, http://www.eeb.org (last visited Mar. 29, 2011).
The European Environmental Bureau (“EEB”) is a federation of more than 140
environmental citizen organizations based largely in European Union member
23 Hontelez, supra note 21.
24 Nairobi Climate Meeting Focuses on Future Climate Action, Adaptation
Needs, briDgeS weekly traDe newS DigeSt, Vol. 10, no. 39 (Int’l Ctr. for Trade
& Sustainable Dev., Geneva, Switz.) Nov. 22, 2006, http://ictsd.org/i/news/
25 Id.
26 See Fourth report oF the high level group on competitiveneSS, energy,
anD the envt, enSuring Future SuStainability anD competitiveneSS oF
european enterpriSeS in a low carbon anD reSource conStraineD worlD
(June 2007), http://ec.europa.eu/enterprise/policies/sustainable-business/files/
27 S. Res. 98, 105th Cong. (1997).
28 Obama Criticizes Border Tax Adjustments in House Climate Bill, briDgeS
weekly traDe newS DigeSt, Vol. 13, no. 24 (Int’l Ctr. for Trade & Sustainable
Dev., Geneva, Switz.), July 1, 2009, at 3, http://ictsd.org/downloads/bridg-
29 H.R. 3036, 110th Cong. (2008).
30 Analysis of the Lieberman-Warner Climate Security Act of 2008, pew ctr.
on global climate change, http://www.pewclimate.org/docUploads/L-Wonep-
ager.pdf (last visited Apr. 17, 2011).
31 katrin JorDan-korte & Stormy milDner, Forum For atlantic climate
& energy talkS, climate protection anD borDer tax aDJuStment: economic
rationale anD political pitFall oF current u.S. cap-anD-traDe propoSalS 3
(2008), http://www.facet-online.org/facet/wp-content/uploads/A001_JordanMil-
32 H.R. 6316, 110th Cong. (2008).
33 Id.
34 JorDan-korte & milDner, supra note 31, at 3.
35 H.R. 2454, 111th Cong. (2009).
36 Id.
37 Obama Criticizes Border Tax Adjustments in House Climate Bill, supra
note 28, at 1.
endnoTes: a legal view on borDer tax aDJuStmentS anD climate change: a latin american perSpective
continued from page 34
SPRING 2011 44
38 Id.
39 H.R. 3036, supra note 29; H.R. 6316, supra note 32; H.R. 2454, supra
note, 35.
40 H.R. 2454, supra note 35; H.R. 6316, supra note 32.
41 Obama Criticizes Border Tax Adjustments in House Climate Bill, supra
note 28, at 2.
42 Id. at 4.
43 Kyoto Protocol to the United Nations Framework Convention on Climate
Change, Dec. 10, 1997, 37 I.L.M. 22, http://unfccc.int/resource/docs/convkp/
kpeng.pdf (emphasis added).
44 Id.
45 Fariborz Zelli & Harro Van Asselt, The Overlap Between the UN Climate
Regime and the World Trade Organization: Lessons for Climate Governance
Beyond 2012, in global climate governance beyonD 2012: architecture,
agency, anD aDaptation (2010).
46 worlD traDe org. & uniteD nationS envt programme, traDe anD
climate change (2009), www.wto.org/english/res_e/booksp_e/trade_climate_
47 See GATT 1994, supra note 1, at art. III: 2 (“The products of the territory
of any contracting party imported into the territory of any other contracting
party shall not be subject, directly or indirectly, to internal taxes or other inter-
nal charges of any kind in excess of those applied, directly or indirectly, to like
domestic products. Moreover, no contracting party shall apply internal taxes .
. . to imported or domestic products in a manner contrary to the principles set
forth in paragraph 1.”). See also id. at art. III:1 (providing that internal taxes
“should not be applied to imported or domestic products so as to afford protec-
tion to domestic production.”); Id. at Addendum to art. XVI (“The exemption of
an exported product from duties or taxes born by the like product when destined
for domestic consumption, or the remission of such duties or taxes in amounts
not in excess of those which have accrued, shall not be deemed a subsidy.”).
48 Andrew Hoerner, The Role of Border Tax Adjustments in Environmental
Taxation: Theory and U.S. Experience 6-7 (Ctr. for a Sustainable Economy,
Working Paper presented at the International Workshop on Market Based
Instruments and International Trade of the Institute for Environmental Studies,
49 Obama Criticizes Border Tax Adjustments in House Climate Bill, supra
note 28. See also Lawrence Herman, Energy Trade, Carbon Emissions, and the
WTO, 2 J. worlD energy l. & buS. 196, 203-04 (2009).
50 See henrik horn & J.h.h. weiler, am. law inSt., european communitieS
– meaSureS aFFecting aSbeStoS anD aSbeStoS-containing proDuctS (2003),
51 See Daniel McNamee, Climate Change, the Kyoto Protocol, and the World
Trade Organization: Challenges and Conflicts, SuStainable Dev. l. & poly
41, Winter 2006.
52 Ryan Vanden Brink, Competitiveness Border Adjustments in U.S. Climate
Change Proposals Violate GATT: Suggestions to Utilize GATT’s Environmental
Exceptions, 21 colo. J. intl envtl. l. & poly 85, 85 (2010).
53 Hoerner, supra note 48, at 7.
54 Report of the Panel, United States – Restrictions on Imports of Tuna, ¶
5.13, DS21/R–39S/155 (Sept. 3, 1991), GATT B.I.S.D. (39th Supp.) at 155
55 Hoerner, supra note 48, at 8.
56 Id. See U.N. Econ. & Soc. Council [ECOSOC], Second Session of the Pre-
paratory Commission of the United Nations Conference on Trade and Employ-
ment, Verbatim Report: Ninth Meeting of Commission A, 18-19, U.N. Doc. E/
PC/T/A/PV/9 (June 5, 1947), http://gatt.stanford.edu/bin/object.pdf?90240083.
57 Report of the Panel, Japan – Customs Duties, Taxes, and Labeling Prac-
tices on Imported Wines and Alcoholic Beverages, L/6216 (Oct. 13, 1987),
GATT B.I.S.D. (34th Supp.) at 83 (1987).
58 Report of the Panel, United States – Measures Affecting Alcoholic and Malt
Beverages, DS23/R–39S/206 (Mar. 16, 1992), GATT B.I.S.D. (39th Supp.) at
206 (1992).
59 Report of the Panel, United States – Taxes on Automobiles, DS31/R (Oct.
11, 1994).
60 United Nations Framework Convention on Climate Change, art. 3, May 9,
1992, 1771 U.N.T.S. 107.
61 M. Benjamin Eichenberg, Greenhouse Gas Regulation and Border Tax
Adjustments: The Carrot and the Stick, 3 golDen gate u. envtl. l. J. 283, 317
62 Id.
63 Vanden Brink, supra note 52, at 101-05.
64 GATT 1994, supra note 1, at art. III.
65 Joost Pauwelyn, U.S. Federal Climate Policy and Competitiveness Con-
cerns: The Limits and Options of International Trade Law 21 (Nicholas Inst. for
Envtl. Policy Solutions, Duke University, Working Paper 07-02, 2007).
66 Joseph Stiglitz, A New Agenda for Global Warming, 3 economiStS’ voice
1, 2 (2006). Joseph Stiglitz has served as chair of President Clinton’s Council
of Economic Advisers and Chief Economist and Senior Vice President of the
World Bank.
67 Id.
68 Id.
69 Steven Nathaniel Zane, Leveling the Playing Field: The International
Legality of Carbon Tariffs in the EU, 34 b.c. intl & comp. l. rev. 199, 203
(2011), http://lawdigitalcommons.bc.edu/iclr/vol34/iss1/9.
70 ctr. For intl SuStainable Dev. law, the principle oF common but DiF-
FerentiateD reSponSibilitieS: originS anD Scope (2002), http://www.cisdl.org/
71 United Nations Conference on Environment and Development, Rio de
Janeiro, Braz., June 3-14, 1992, Rio Declaration on Environment and Develop-
ment, U.N. Doc. A/CONF.151/26/Rev.1 (Vol. I), Annex I (Aug. 12, 1992), http://
72 Stiglitz, supra note 66, at 3.
73 Pauwelyn, supra note 65, at 15.
74 Id.
75 Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994,
Marrakesh Agreement Establishing the World Trade Organization, Annex 1A,
the legal textS: the reSultS oF the uruguay rounD oF multilateral traDe
negotiationS 275 (1999), 1867 U.N.T.S. 14.
76 Obama Criticizes Border Tax Adjustments in House Climate Bill, supra 28,
at 4.
77 GATT 1994, supra note 1, at art. II, III.
78 Obama Criticizes Border Tax Adjustments in House Climate Bill, supra 28,
at 4.
79 GATT 1994, supra note 1, at art. XX.
80 Id. at art. XX (b).
81 Id. at art. XX (g); see also Obama Criticizes Border Tax Adjustments in
House Climate Bill, supra 28, at 4.
82 gatt 1994, supra note 1, at art. xx.
83 Pauwelyn, supra note 65, at 3.
84 Obama Criticizes Border Tax Adjustments in House Climate Bill, supra 28,
at 4.
85 See Panel Report, United States–Standards for Reformulated and Con-
ventional Gasoline, WT/DS2/R (Jan. 29, 1996) (finding that a state arguing a
measure excepted under Article XX must show that the measure is “necessary”
to meet the Article XX objective and be the least restrictive measure possible
under the circumstances).
86 Vanden Brink, supra note 52, at 86.
87 Pauwelyn, supra note 65, at 3.
88 See Pan Jiahua & Xie Laihui, Border Tax Adjustments (BTAs): for Climate
Protection or as a Barrier to Trade?, contemp. intl rel., Mar. 2009. See also
ZhongXiang Zhang, The U.S. Proposed Carbon Tariffs, WTO Scrutiny and Chi-
na’s Responses (Munich University Library, Munich Personal RePEc Archive
No. 19063, Dec. 2009), http://mpra.ub.uni-muenchen.de/19063.
89 In March 2010, India declared that it would bring a WTO challenge
against any “carbon taxes” that rich countries impose on Indian imports. See
India Threatens WTO Case Against Proposed ‘Carbon Border Taxes, briDgeS
weekly traDe newS DigeSt, Vol. 10, No. 6 (Int’l Ctr. for Trade & Sustainable
Dev., Geneva, Switz.), Apr. 6, 2010, at 5-6, http://ictsd.org/downloads/biores/
90 natl envtl. commn, Dept oF climate change, govt oF chile,
national climate change action plan 2008-2012 17 (2010), http://www.
mma.gob.cl/1257/articles-49744_Plan_02.pdf. In this sense, Chile is within the
exception initially considered in U.S. Senator Lieberman’s Project.
91 Id.; u.n. Dev. programme, human Development report 2007/2008, 69
(2007), http://hdr.undp.org/en/media/HDR_20072008_EN_Complete.pdf.
92 CO2 Emissions (kt) – Millennium Development Goals Indicators 1998,
2004, encyclopeDia oF the nationS, http://www.nationsencyclopedia.com/
WorldStats/MDI-indicators-co2-emissions.html (last visited Apr. 19, 2011).
93 Pilar Moraga, Evolución de la Política Nacional Energética Frente a la
Regulación del Cambio Climático, in pilar moraga, centro De Derecho ambi-
ental FacultaD De Derecho univerSiDaD De chile, el nuevo marco legal
para el cambio climático 122 (2009).
94 Chile Gives Green Light to US $4.4 Billion Coal-fired Power Plant, inDuS.
FuelS & power (Feb. 28, 2011), http://www.ifandp.com/article/0010054.html;
see also Ficha del Proyecto: Central Termoeléctrica Castilla, Servicio De
evaluacíon ambiental, https://www.e-seia.cl/expediente/ficha/fichaPrincipal.
php?modo=ficha&id_expediente=3409601 (last visited Apr. 19, 2011).
95 Federico Quilodran & Michael Warren, Chile Keeps to Nuclear Script
Despite Japan Crisis, buS. week (Mar. 16, 2011), http://www.businessweek.
com/ap/financialnews/D9M0HKQ81.htm; see also Ficha del Proyecto:Proyecto
Mina Invierno, Servicio De evaluacíon ambiental,
expediente=4326580 (last visited Mar. 29, 2011).
96 See Escobar, supra note 11, at 124-25.
97 Chile Signs Up as First OECD Member in South America,
oecD (Nov. 1, 2010), http://www.oecd.org/document/1/0,3746
98 org. For econ. cooperation & Dev., environmental perFormance
reviewS, chile: concluSionS anD recommenDationS (2005), www.oecd.org/
99 See Escobar, supra note 11, at 124.
100 This is very similar to what happened in the Shrimp/Turtle case. See Appel-
late Body Report, United States – Import Prohibition of Certain Shrimp and
Shrimp Products, WT/DS58/AB/R (Oct. 12, 1998).
101 See Escobar, supra note 11, at 125.
102 See id. at 282.
103 On February 15, 2011, during a meeting in Madrid of the Iberoameri-
can Secretariat of the Climate Change Convention titled “Implementing the
Cancun Agreements,” Cristiana Figueres, the General Secretary, warned of
the risk that Latin America remain mired in outdated energy technologies as
long as it has huge natural resources at hand. According to Figueres, the con-
tinent holds thirty-five percent of the world’s waters and nothing to prevent
an “alarming fossilization” of its energy systems. “Chile has already reached
levels of emissions of gases typical of European countries,” warned Figueres,
setting an example for the continent’s future economic growth. See Pablo
Ximénez de Sandoval, La ONU Alerta de que Latinoamerica se ‘Fosiliza’
en Vez de Usar Renovables, el paiS (Feb. 16, 2011), http://www.elpais.com/
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