Seattle's legal legacy and environmental reviews of trade agreements.

• Author: Salzman, James
• Position: World Trade Organization

[Executive Order 13,141 will] revolutionize the way the environment is dealt with in all future trade talks.(1)

Former Vice President Al Gore

From day one, we will be considering environmental issues, and integrating them throughout.(2)

Ambassador Susan Esserman Former Deputy U.S. Trade Representative [A] bad [trade] agreement is likely to be defined in Congress and the media as any agreement that doesn't have labor and environment in it. The developing world will see that as a threat to its ability to progress and won't go along. And Republicans in Congress know the provisions will be used for protectionism.(3)

Ambassador Robert Zoellick U.S. Trade Representative I. INTRODUCTION

Expectations ran high last December at the World Trade Organization's (WTO) ministerial meeting in Seattle. Intent on launching the new Millennial Round, the Clinton administration hoped to set the capstone on its trade legacy. But demonstrators had high hopes, as well, and instead of a bold trade initiative marking the twenty-first century, the event is now remembered as the "Battle in Seattle," with ministerial statements overshadowed by riots on the streets outside. While reverberations of the protests continue to echo, the most important legal consequence of these events has been overlooked. One month earlier, on November 16, 1999, President Clinton issued Executive Order 13,141 ("E.O. 13,141" or the "Order"), committing the U.S. government for the first time to conduct environmental reviews of trade agreements.(4)

E.O. 13,141 was intended to woo the environmental community in the run-up to Seattle. Indeed the Order was issued the same day as the administration's "Declaration on Environmental Trade Policy" (Declaration).(5) The Declaration, music to many environmentalists' ears, pledged to:

pursue trade liberalization in the new round of trade negotiations in a manner that is supportive of our commitment to high levels of protection for the environment ... by [t]aking fully into account environmental implications throughout the course of the negotiations, including by performing a written environmental review.(6) The Seattle ministerial is now well behind us, yet E.O. 13,141 and the Declaration remain. Perhaps they will be forgotten in a few years--transient political gestures to entice environmentalists' support. Or, as this Article suggests, they may trigger an important shift in the trade and environment debate.

Environmental reviews hold the potential to drive two significant developments. The first is integration of environmental considerations into a trade policy process traditionally dominated by commercial concerns. Reviews can characterize, and possibly quantify, the likely environmental impacts of a trade agreement as well as uncover potential environmental opportunities and vulnerabilities. Thus, reviews heighten the environmental awareness of negotiators. Done well, this analysis can also provide practical, constructive options that mitigate or eliminate negative impacts and, better yet, enhance positive ones (so-called "win-win" solutions). These reviews may persuade governments to modify specific provisions of the draft agreement, propose additional domestic policies or institutions, or create entirely separate agreements. In fact, all three occurred in the North American Free Trade Agreement (NAFTA) negotiations.(7)

The second goal is more daunting--meaningful public involvement in the negotiation process. The environmental community's traditional distrust and opposition to trade and investment liberalization are no secret. However, the formation of negotiating positions largely is. The creation of U.S. trade policy to date has effectively been a closed process, with little opportunity for direct public participation.(8) Formal reviews could possibly temper environmentalists' opposition by opening up the process. Engaging the public in a true dialogue over the environmental consequences of proposed trade rules and their alternatives can allay the fears of hidden deals and policies dictated by powerful economic interests. More important, this constructive partnership creates an alternative to environmentalists' largely binary view of trade--trade as either an unmitigated environmental harm that degrades the environment and promotes the race-to-the-bottom, or trade sanctions as a useful stick to bludgeon undesirable practices of trading partners. Reviews create the space for a third possibility--proactive trade policies that promote environmental protection and increased commerce.

Understanding the history and implementation of E.O. 13,141 is important for trade and environment scholars. Because the United States is a key party in many trade negotiations, its integration of environmental and trade policies will likely influence not only its own final agreements, but trade policy development in other States and international organizations (IGOs) as well. Moreover, any State or IGO attempting to review the environmental impacts of its trade initiatives will surely confront similar policy and methodological choices to those faced by the drafters of E.O. 13,141. Part II of this Article recounts the history of environmental reviews of trade agreements, from the unfulfilled promise of the National Environmental Policy Act (NEPA)(9) to recent reviews both at home and abroad. Part III describes the current practice of trade policy development, examining why integrating reviews into this process will prove politically and analytically challenging. Parts IV and V set out the requirements of E.O. 13,141 and the debates over its implementing guidelines. Part VI explores the implications of the Order for domestic practice, developing countries, and the WTO. This Article concludes that environmental reviews, such as those required by E.O. 13,141, are important to the creation of a trade policy that truly promotes sustainable development. The Annex presents the text of the Order.

2. PAST ENVIRONMENTAL REVIEWS OF TRADE AGREEMENTS

   1. NEPA and Its Progeny

      The fountainhead of environmental reviews springs from the 1969 National Environmental Policy Act (NEPA). It mandates environmental impact statements (EISs) for major federal actions significantly affecting the quality of the human environment.(10) EISs have since become a matter of course for federal and many state agency operations, ensuring that environmental impacts of alternative courses of action are considered in agency decisions.

      Environmental reviews have become a cornerstone of environmental law, not only in the United States but globally as well. Over seventy percent of the world's nations have now adopted environmental impact assessment (EIA) requirements for certain types of government projects.(11) When one takes into account subnational requirements, well over two hundred governmental authorities mandate reviews.(12) Principle 17 of the Rio Declaration reflects this widespread practice, stating that "environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority."(13)

      Environmental reviews have extended their reach beyond national laws through the 1991 Espoo Convention on Environmental Impact Assessment in a Transboundary Context, the Convention on Biological Diversity, the Convention on the Law of the Sea, the World Charter for Nature, and other international legal instruments.(14) The World Bank and regional development banks routinely require environmental assessments at the design stage for major development projects.(15) Ideally, this requirement builds environmental management capacity in the host countries, screens out environmentally harmful projects, and provides a means to challenge projects with inadequate reviews.(16) In sum, environmental reviews of State actions have become such a widespread practice that some commentators have argued this now represents customary international law.(17)

      Given the ubiquity of environmental reviews for proposed policies and projects, one might expect they would be routinely undertaken for trade agreements. After all, trade agreements obviously have the potential to increase environmental impacts. The greater flows of investment, goods, and services one might expect from trade liberalization will induce relative price changes, thereby reallocating productive resources from certain sectors to others and influencing the levels and patterns of both production and consumption. Whether this leads to increased pollution, resource extraction, energy consumption, or land development will depend upon the nature of the liberalized commerce and the countries involved, but impacts will surely occur.

      Perhaps surprisingly then, while NEPA calls on all agencies to "recognize the worldwide and long-range character of environmental problems,"(18) it has not been applied to trade agreements.(19) Case law has affirmed the need for an EIS in situations where extraterritorial activities may have domestic impacts(20) or activities may cause impacts in the global commons.(21) However, courts have not extended NEPA's reach to federal activities with impacts exclusively in foreign jurisdictions, citing foreign policy and treaty concerns.(22) President Carter's Executive Order 12,114 calls for the review of major federal actions significantly affecting the environment of the global commons, natural or ecological resources of global importance, or foreign nations not participating in the action, but its application has been limited as well.(23)

      As a result, by 1990, the Office of the United States Trade Representative (USTR) had never prepared an environmental impact statement for a trade agreement. Newly sensitized by the Tuna/Dolphin cases(24) to the potential significance of trade agreements, however, in 1991 environmental groups lobbied for an EIS of the NAFTA...