Trade, sustainability, and the WTO: environmental protection in the Hong Kong SAR.

• Author: Hsu, Berry F.C.
• Position: World Trade Organization - Special Administrative Region

1. INTRODUCTION

   Environmental well-being affects human health. An important yardstick in measuring the environmental well-being of coastal states is the sustainability of fisheries. (1) A recent study has suggested that the world's fish catch might be much smaller than previously reported. (2) Nevertheless, the decline of world's fishery has become a matter of international concern. (3) As a coastal jurisdiction, the Hong Kong Special Administrative Region ("HKSAR") is obliged to ensure through proper conservation and management measures that the maintenance of the living resources in its exclusive economic zone is not endangered by over-exploitation. (4) Notwithstanding that the fishery sector is not substantial from a global economy aspect, the fishery sector has a major impact on some coastal nation states and fishery products are a major component in world trade. (5) The most important factors contributing to the depletion in fishery resources are environmentally harmful fishery subsidies and inadequate fishery management. (6) Fishery subsidies have partly contributed to the over-expansion of fishing boats, and, as a result, created excessive harvesting. (7) Inadequate fishery management includes lack of implementation and poor enforcement of environmental protection legislation regulating air and water pollution in ensuring a sustainable environment.

   The United Nations Convention on the Law of the Sea ("UNCLOS") provides sovereign rights over an exclusive economic zone to each coastal state. Every state has sovereign rights for the purpose of conserving and managing the marine resources and protecting and preserving the marine environment. (8) These measures are designed to maintain or restore populations of harvested species at levels which can produce the maximum sustainable yield. (9) The People's Republic of China ("China") is a signatory state to the Convention. (10) As the HKSAR is now a special administrative region of China, it inevitably has a duty to honor the international obligations made between China and other members of the international community, as they apply to the HKSAR. (11) Accordingly, the HKSAR has to operate within the ambit of the UNCLOS, to which China is a signatory state. (12)

   The Basic Law of the HKSAR ("Basic Law") authorizes the HKSAR to participate in relevant international organizations and to enter into international trade agreements on its own. (13) However, it also provides that the Central People's Government ("CPG") shall be responsible for the foreign affairs relating to the HKSAR. (14) However, the CPG has to consult the HKSAR Government before such international agreements are extended to the Region. (15) International agreements made prior to resumption of exercise of sovereignty by China over Hong Kong on July 1, 1997, remain unchanged. (16) These include the founding membership in the World Trade Organization ("WTO").

   International environmental law is a developing area in the HKSAR, which is subject to seventeen multilateral environmental agreements ("MEA") dealing with water pollution and conservation as of December 200. (17) It was not until 1977 that an Environmental Protection Unit was established in the HKSAR. (18) Its powers, however, were merely supervisory. (19) This unit was upgraded to an Environmental Protection Agency in 1981. Finally, in 1986, the Environmental Protection Department was established and was empowered with pollution prevention and control measures. (20) While the then colonial administrative did not give environmental issues a high priority, (21) a number of these MEAs were made, including the Montreal Protocol on Substances that Deplete the Ozone Layer ("Montreal Protocol") and the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal ("Basel Convention").

   Although the HKSAR is allowed to exercise a high degree of autonomy, (22) it may not enter into any international agreement on its own other than trade agreements. Accordingly, international environmental agreements which touch and concern trade will fall within the ambit of the high degree of autonomy of the Region. (23) Under the Basic Law, the HKSAR Government is responsible for formulating policies on trade but should also take into account the protection of the environment. (24) The Basic Law does not specifically deal with the environment by an independent section. When it was enacted in 1990, environmental consciousness was still at its infancy in the HKSAR and most people were more concerned with the legal system, democracy, and the rule of law after China resumed the exercise of sovereignty over Hong Kong on July 1, 1997. (25) There simply was no support for environmental protection in the HKSAR. The population was more concerned with economic opportunity than environmental enhancement. (26)

   The application of trade law on environmental protection issues is a topic of interest. Although there is no general international agreement on environmental protection, a framework for a sustainable environment can be formulated under international trade law. (27) International trade law may be invoked to promote an international economic system that would lead to economic growth and sustainable development. (28) There are two main legal aspects of international trade which can serve to promote a sustainable environment in the HKSAR. The first aspect is the application of subsidy provisions to protect the environment under the WTO Agreement. The second aspect is trade restrictions which can serve as a policy instrument in enforcing environmental standards and controlling environmentally harmful products and waste. (29) This paper proposes a competing values framework as a means of encompassing the conflicting aims of short term economic gains and long term environmental sustainability through the moderation mechanisms provided by appropriate domestic legislation and international trade laws.

2. TRADE AND THE ENVIRONMENT: COMPETING VALUES FRAMEWORK

   Legal scholars have related free trade and environmental concerns in the context of sustainable development. (30) A "competing values" framework (31) is proposed here in analyzing trade and the environment. This framework encompasses the development of legislation and other governmental policies

   towards environmental sustainability of economic activities, notably in aquaculture. The competing values which direct policy-making are modeled in the following figure along the opposing x-y axes of short term (economic exploitation) versus long term (resource sustainability) and flexibility (free trade) versus control (trade laws).

   [FIGURE OMITTED]

   In the above figure, it is postulated that short-term economic exploitation through excessive harvesting of fishery resources creates water pollution (32) and is detrimental to the environment. The opposing long-term value is to maintain sustainable resources in the environment through promoting legislative policies and social conscience. The y-axis constitutes competing values of flexibility which advocates no trade barriers, no trade restrictions and no protectionism, (33) and control, where trade restrictions are used as a policy instrument in enforcing environmental standards and controlling environmentally harmful products. (34)

   The integrative effect of the x and y axes in the above figure gives rise to four quadrants of economic, socio-economic, legal and socio-environmental systems; with two further pairs of competing values, namely subsidies versus sustainable economic growth, and trade expansion versus sustainable environmental development.

   In the economic system in the above figure, it is postulated that fishery subsidies made available by the HKSAR government result in the increase of short-term economic gains in the fishery community. The many forms of fishery subsidies can be categorized into direct assistance to fishermen, lending support programs, capital and infrastructure support programs, marketing and price support programs and fishery management and conservation programs. (35) These subsidies result in the depletion of fishery stocks. As fishing activities take place in the common areas and fish is owned upon capture, the fishermen are not concerned with the costs associated with the depletion of the resource. (36) Sooner or later, the competitiveness of the fishery industry will be adversely affected. (37) While subsidies may enhance economic gain for the fishermen in the short term, their effect on resource depletion of fishery stocks is opposed to the long-term value of sustainable economic growth in terms of increase in productivity and maximization of revenue. (38)

   Moreover, marine fish culture may cause water pollution and changes in benthic community structure. (39) The pollution, which results from the economic opportunities of the expansion of such aquaculture activities, is opposed to the competing value of creating a sustainable environment. In the progress from the economic system to the socio-economic system, short-term economic gains for particular fishery communities are assessed in a wider social context. Social goals dictate that government actions are required to control the effects of the negative environmental consequences of these economic activities. Thus, progress is made to the legal system where legislative measures are taken to preserve fishery resources and to maintain public goods. (40) Trade restrictions may be adopted as a policy instrument to enforce environmental standards. (41) In the HKSAR in the early 1990s, (42) however, there simply was no support for environmental protection as the population was more concerned with economic opportunities than environmental enhancement. (43) Hence, it is argued that the ideal state of a sustainable environment in the socio-environment system in the above figure is reached only through the commitment and participation of all societal members. Trade laws...